This Plan Will Work

The Europeans made us drop all pretense.

Knowing that our money and our business was about to go overseas we finally stopped with the half measures -- the treasury auctions and the collateral with the Fed and the seizures -- and we just created billions in capital and gave it to our banks as if we had our own sovereign wealth fund.

It is staggering, frankly. Staggering how big this is. You can see why the market rallied so much: this is the greatest expansion of credit in our nation's history and it is mind-boggling.

It is just huge and it will certainly go far toward ending the endless assault on our banks. It is the ultimate backroom deal that I proposed last week where we just shovel a ton of money to a few select banks, Bank of America (BAC - commentary - Cramer's Take), Wells Fargo (WFC - commentary - Cramer's Take), JPMorgan Chase (JPM - commentary - Cramer's Take), Citigroup (C - commentary - Cramer's Take) Goldman Sachs (GS - commentary - Cramer's Take) and Morgan Stanley (MS - commentary - Cramer's Take), whether they like it or not, and we end the madness of hedge funds making fortunes betting against them.

It is done in preferred stock, so we as taxpayers don't even get any upside. It is a total bailout and will make people furious, but it will eliminate the possibility of any of these banks going under. It will force them to lend because they have their solvency guaranteed.

It also means their current preferreds are golden and will skyrocket tomorrow. It is not elegant. It is brutal. They didn't even get a choice to take it or not. No stigma; they had to!

It should end the spiral of the hedge fund raids that have wiped out so much equity. It makes the credit default swap market on these vanish. It will cause a short squeeze of epic proportions, no doubt some of it borrowed today.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.