Financials Are a Broad Drag Once Again

The inability of this market to rally is just incredibly bad. Today's reversal may have been one of the ugliest affairs I have seen in ages. The fact that the financials collapsed is once again indicative of the need for bailout plans.

The behavior of this market is so negative as to make people wonder whether we are on the precipice of something even bigger than what has occurred already. We know that bear markets have usually led to much lower prices than we have. We also are seeing some totally remarkable declines in these financials that are breathtaking in their speed.

Everything negative that occurs takes off GOBS of points. The valuations, so often a protection against a crash, have meant absolutely nothing. Meanwhile, the value guys just keep taking a beating.

I have said for a while that someone has to take the hit on the personal mortgage defaults we have been seeing. We know that the outfits that insure batches of mortgages -- Ambac (ABK - commentary - Cramer's Take), MBIA (MBI - commentary - Cramer's Take), Radian (RDN - commentary - Cramer's Take), XL (XL - commentary - Cramer's Take) -- are in total denial. Now we are seeing cascading prices in the individual mortgage insurers that have some ability to stabilize things and have long been a staple of what Fannie Mae (FNM - commentary - Cramer's Take) and Freddie Mac (FRE - commentary - Cramer's Take) insisted on before they bought mortgages.

We can't have these financials go down every day without the S&P getting clobbered. The idea of a world where Fannie Mae and Freddie Mac may be allowed to crunch the common is just too hard to fathom, on top of the possibility of GM (GM - commentary - Cramer's Take) and Wachovia (WB - commentary - Cramer's Take) and Washington Mutual (WM - commentary - Cramer's Take) going the way of the dodo.

That's what caused the market to turn despite the bulls' best hope that oil would go down and reverse the market.

Notice that the government is just silent on these issues.

Silent.

And we get the vacuum we are seeing today in the financials and the markets themselves.

At the time of publication, Cramer had no positions in the stocks mentioned.

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