Congress Drops the Ball, and We All Lose

Commercial real estate mortgage market totally disappeared. The real estate that comes due in 2009 most likely will be starved even if the buildings are fully rented. That's how bad it is. Same with the last of the great 2-28 rollovers that come due this year, the Alt-A rollovers that will not be able to be refinance. According to RealtyTrac (the most definitive organization on the real estate numbers), the steep drop in foreclosures we saw in January was just temporary, mostly the deferred foreclosures from Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take). The real foreclosure rate as represented by the ferocious servicers who work for the CDOs, where some 60% to 70% of the mortgages are contained -- not that the system even knows the percentage -- is still continuing upward.

So what does Congress do? It adds $500 to a tax credit for first-time homebuyers.

I will simply come out and say it: These guys are idiots. They haven't a clue about what's ailing the system. Not a clue. It is real estate. And now it will be unemployment. The mainstream doesn't get this at all. The New York Times' front page: "It is a quick, sweet victory for the new president and potentially a historic one." Huh? Who edits that BS? That's extraordinary.

We who actually follow the economy know the stimulus package is a total joke. How do we know that? We read. We all know that unless more jobs are created, the mortgage businesses of Wells (WFC - commentary - Cramer's Take) and Bank of America (BAC - commentary - Cramer's Take) will be sunk (the Citigroup (C - commentary - Cramer's Take) balance sheet is being sunk less by residential mortgages than others, but it is ugly). We also aren't even dealing with the failing home equity lines.

It is really easy to see how things can't turn around. I expected more from Congress, which puts me distinctly in the moron category.

This news is terrible. I can't sugarcoat it.

The only silver lining is that they didn't give the homebuilders like Toll (TOL - commentary - Cramer's Take) and Lennar (LEN - commentary - Cramer's Take) and Horton (DHI - commentary - Cramer's Take) and Pulte (PHM - commentary - Cramer's Take) and KB Home (KBH - commentary - Cramer's Take) the credit they wanted for new homes. Hopefully that will make it so supply isn't added.

But it doesn't matter. The foreclosure numbers show that supply will be added this month once the forbearance expires. The stimulus package has come and gone.

It was no help whatsoever for the pressing problems of this economy.

Shameful and stupid.

Random musings: Gratz to Dave Peltier on the Harley-Davidson (HOG - commentary - Cramer's Take) play! ... Exxon's (XOM - commentary - Cramer's Take) really breaking down here. Can't avoid it. Another big leg down in Devon (DVN - commentary - Cramer's Take). No M&A in that group whatsoever. ... I expect the ProShares UltraShort ETFs will slaughter the market now. ... It really feels November-ish, or September-ish post-Lehman.

At the time of publication, Cramer was long Wells Fargo.

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