The Bear Stearns Mess Will Correct Itself

Editor's note: Jim Cramer presents this special series on the fallout from Bear Stearns' hedge fund woes while he is on vacation. Check back every day through July 3 for more of his contrarian view. He'll return to his regular blogging on July 5.

1. Financial Losers: Bank of America, Citi 2. Cell Therapeutics on Dilution Watch: BioBuzz 3. The Six Top Tech Stocks of 2010 4. FedEx: Analysts' Upgrades, Dowgrades 5. Dry Bulk 2010: Five Stocks to Watch

Be sure to read Part 2, Part 3, Part 4, Part 5, Part 6 and Part 7.

Is the Bear Stearns (BSC - commentary - Cramer's Take) bailout the beginning or the end of the subprime nightmare?

First, let me just say that the "prudent" thing, once again, as always with the media, is to say that it's the beginning. There is no cost to saying that it's the beginning, except scaring people out of the financial asset stocks specifically and the stock market in general. That "cost" is never measured and is part and parcel of what I have been struggling mightily against -- and losing to -- for basically a generation now. I joined the fray only once, Oct. 8, 1998, and I still have the scars from when I did.

(This is not to say I haven't been bearish at times on many stocks in the market or that I never shorted; I made a ton of money being short back when I ran my hedge fund. People still ask me all of the time for my shorts, particularly in the Answers section of Stockpickr.)

I need you to know where I am coming from: a deep-seated belief that crises, even the worst ones, tend to get discounted in the market before people, particularly the media, get adjusted to them, which then causes regular, everyday investors to cash out after the crisis is deep into its recovery phase. Again, I would love to say this was the "tip of the iceberg," because if it was I could take great credit for getting you out and if it isn't, so what? Whoever got hurt for being cautious? There are no "trials" for those who get this wrong.

It is with that preamble that I tell you what really happened here and why I believe that while it won't be over, it is self-correcting.

First, you have to understand that there were two funds: the High-Grade Structured Credit Strategies Fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund -- let's call them Dumb and Dumber, for reasons I'll make patently clear. The former wasn't always such a mess. Both are run by the same manager, a guy named Ralph Cioffi, who was, until this debacle, a good manager, having compiled four years of good, steady numbers with no down quarters.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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