Nationalization Is a Big Win for the Shorts

If you are a short-seller, don't you come in with guns blazing today after an initial lift in the bank stocks and show the government who's boss, especially because the government communicates its plans through a few reporters in a chaotic and uncertain way, enabling the sellers to control the debate? The next 24 hours should be crucial for the short-sellers -- aided, no doubt by Professor Roubini and Meredith "Big Splash" Whitney, who need to show that only full nationalization that wipes out any chance for the common is the way to go. Whitney recommended shorting Citigroup (C - commentary - Cramer's Take) last week, and I figure that's a kind of "perma" recommendation. Roubini has become the shorts' best friend, and this man -- who has probably never come close to running a bank and has come a lot closer to running his debit card through an ATM -- can come out quickly and say not enough. Maybe he really rocks everyone's world and says all preferreds must be converted to common or be canceled.

You could come in with the ProShares UltraShort Financials (SKF - commentary - Cramer's Take) double short and lay all over the common, just long enough so the press says, "That didn't work ... only full nationalization will do." All of this is made relatively simple by the woefully overmatched Tim Geithner, who is so used to making calls discrediting Treasury and Bernanke and making his own elegant solutions look good that now he is without game plan. He can't blame the Treasury -- he is the Treasury. He can't blame Bernanke -- the Fed chief's the only one with ideas and an action plan.

Look, let's be clear about things. If I were long I would favor this plan. If I were short, I would favor Roubini. In fact, I would champion him as a genius and say we are Sweden and that the FDIC would have no problem managing the banks. I would say the FDIC has a deep bench and can run Bank of America (BAC - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take) and U.S. Bancorp (USB - commentary - Cramer's Take) at the same time ... not to mention SunTrust (STI - commentary - Cramer's Take) and PNC (PNC - commentary - Cramer's Take) and Huntington Bancshares (HBAN - commentary - Cramer's Take) and Fifth Third (FITB - commentary - Cramer's Take).

I would favor total wipeout of the system, because that's the win of a lifetime.

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