Maybe You Can Burn GM Stock for Warmth

GM's (GM - commentary - Trade Now) stock joins the ranks of stocks that shouldn't even be trading: AIG, Fannie (FNM - commentary - Trade Now) and Freddie (FRE - commentary - Trade Now). These are all zombie common stocks that just hang around because nobody has the guts to cancel them. If there are going to be equity stubs, they will not be the ones that are trading.

But why cancel them? They generate a huge amount of volume for the New York Stock Exchange as people continue to believe that these slivers of equity actually amount to something, that somehow you will own the upside to AIG after we work through the $200 billion that the government has spent and will spend to keep this outfit afloat.

Fannie and Freddie are basically bankrupt. They are like investing in the FHA or the Federal Home Loan Bank Board. They are public trusts -- or more like public mistrusts -- not companies that should have stocks.

And now comes GM. We heard about who might own the common stock yesterday, yet there is a common stock that currently trades. That piece of paper is basically a charade, a pretend piece of paper that might be turned (if you are lucky) into a warrant that will pay off when GM makes a lot of money. That piece of paper that trades now is so worthless that even the bondholders may be screwed out of the new equity! Total cramdown and cancellation coming. Yes, it could be that bad. The government will own 75% of the darned thing!

These securities are cynical excuses of paper, just nonsensical atavistic vestiges of a different age that cannot be uprooted because they make certain interests too much money to disappear, including brokerages and exchanges.

They make a mockery of the market. But there are no referees. And it is not in the interest of anyone to remove them, except the public, which is duped daily in the market, and these are fitting treats for those who do not know what they are doing and need to be protected at all costs if we are ever to get a market that can be embraced by all, not just the card sharps who dominate it.

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

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