This Bailout Is a Big Piece of the Puzzle

The biggest canard of all: "This is not going to be a cure-all, nor will it solve the 'real problems' of the U.S. economy." Why is it a canard?

Because no one -- I repeat, no one -- is saying it is. Not even the biggest bulls.

This bailout of Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take) is a piece of the puzzle that is meant to stop house price depreciation. It is one of the major pieces. Mortgage rates are being called down big this morning, big, with some mortgage brokers thinking we will lop a full percentage point off of rates. In case you think they are biased, these people had been forecasting a big gain in rates.

What's driving me crazy here is the falseness of the critics. They are all assuming that things won't be happy. It is about being happier.

Let's take Bank of America (BAC - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take). These changes are huge for them. If you owned them, you are going to make a lot of money. Why? Because the competition just got diminished, and the company that was making them pay more for money is gone.

No, that doesn't cure their bad loans. It does make it better!

How about the option ARMs exposure of a Downey (DSL - commentary - Cramer's Take) or a Washington Mutual (WM - commentary - Cramer's Take)? Not much. Those are failed institutions with big deposit bases. Someone will buy them, but they are part of the problem that won't go away, because those home loans are 100% loan to value, so there is no equity in homes. Many of those people will lose their homes, but if Treasury/FNM/FRE gets those loans, they can give them a 20% mortgage haircut which might be enough to cover the decline in some parts of the country.

The most important change: We had seven dying institutions -- AIG (AIG - commentary - Cramer's Take), Ford (F - commentary - Cramer's Take), GM (GM - commentary - Cramer's Take), Washington Mutual, Citigroup (C - commentary - Cramer's Take), FNM/FRE and Lehman (LEH - commentary - Cramer's Take). The prospects of LEH or AIG to do a Merrill (MER - commentary - Cramer's Take) deal is better than before. That would leave just a handful that need bailing or closing, and you know that GM and Ford will not be closed -- they are too big to fail. Again, that's better than what it was.

That's the win.

Random musings: Bulls, bears and pigs -- the pigs who stayed short Ambac (ABK - commentary - Cramer's Take) and MBIA (MBI - commentary - Cramer's Take), amazing. ... Possible big winner here: HSBC (HBC - commentary - Cramer's Take) -- they can take over WaMu when that company can't raise the cash.

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

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