Europe Sets an Example

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Encouraging signs from Europe. By agreeing to backstop all banks by taking equity stakes, and by guaranteeing lending for five years, the governments there will force the banks to lend -- presumably, that's the quid pro quo of the equity stakes. The banks will basically become extensions of each country's treasury.

This coordinated approach is what I was looking for when I wrote earlier that I was staying very negative until I saw something. When you see these actions you can't be as negative. And given that the bond market is closed tomorrow, it is always possible that a "fix" could be in on light volume to drive the market up, something that could work with the Oscillator at minus-20. Nothing can be ruled out given the amazing volatility and the ability for the market to rally 900 points. If the market had been shut down at 3:25 p.m. we would be singing a different tune right now.

If we could extrapolate this European approach here, we would see Goldman Sachs (GS - commentary - Cramer's Take) and Morgan Stanley (MS - commentary - Cramer's Take) and whoever else would need it -- presumably all of the regional banks that are hurting -- taking federal equity and being able to get back in business again, as there has been very little lending going on anywhere. By the way, Morgan Stanley should have been able to get that money immediately from the Japanese, but our ridiculous approval system jeopardized the whole deal and allowed the shorts to kill it once the short ban was taken off.

Now, the question is, how much stigma would be attached to being in the program? If Bank of America (BAC - commentary - Cramer's Take), JPMorgan Chase (JPM - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take) could step in, then we would be through a major hurdle toward recovery. Of course, we could have done this program without the Treasury's huge Troubled Asset plan. It might not have needed congressional approval and could have been done quickly, but the administration's laissez-faire attitude stood in the way of it. Now we are going to have the equivalent of a bank nationalization because of that laissez-faire approach. May we never forget that a hands-off philosophy toward business has turned us into a socialized economy. C'est la vie -- at least a combination of bank injections and lending guarantees goes far toward clearing up the piecemeal picture of our government's attempts to save us.

Now what we need next is for the government to push for the potential for a merger of GM (GM - commentary - Cramer's Take) and Ford (F - commentary - Cramer's Take) -- something that will have to be done to save the auto industry, as well as the virtual elimination of Chrysler. This would go far toward taking care of the biggest issues. Finally, we need the government to offer insurance to guarantee annuities that are now hopeless. So many of the annuity companies failed to hedge or had Lehman hedging their downside to equities. Without that protection, we will simply be crippled with fear as most seniors and soon-to-be seniors believed these annuities to be iron clad and have little additional savings, other than decimated 401(k) plans, on which to rely.

Remember, the big issue is taking the systemic risk off the table so we can have a severe recession rather than a depression. Then we could begin to find stocks worth owning even in a severe recession. It would be no mean feat, but they could be found.

Random musings: GM has no plans for bankruptcy. These stories gall me so much, because no public company has ever had or announced a plan for bankruptcy until its credit was cancelled.

At the time of publication, Cramer was long JPM, GS and MS.

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