Junk Caused the Pain

These stupid securities established to gaffe customers keep clogging up the system.

You have to understand this junk. You have to understand that it was all unnecessary and the creation of these instruments was well beyond the ken of most of the clients out there who are easily seduced into reaching for yield and do stupid things because they are talked into them.

I say that because this whole decline is caused by pieces of paper based on mortgages chiefly from Florida and California and pieces of paper set up to mimic those pieces. It is so stupid it makes me scream.

The only reason we are in this jam is that the salespeople were able to sell the stuff to gullible accounts who didn't know any better and trusted their brokers. The brokers sold it because they wanted to make more money than selling Treasuries. The risks were unfathomable and the rewards so small that I can't believe anyone was fooled by this stuff.

In the end, until this stuff is all downgraded, digested, and written down to zero so it can bounce back, we are going to have to deal with these endless downgrades and the saga of the insurers who bet that there would be no downgrades. We are going to have to deal with the fact that we will not be able to bundle much of anything that should never have been bundled to begin with -- mortgages based on no docs and ever-rising prices -- and we are going to have days where the world seems like it is ending.

Today's one of those.

I blame not the service index and not the earnings but the recognition that there is still no home price appreciation yet visible to make it so the so-called structured product can bottom. Get ready for more of these days. They will be the norm until you see housing tick up or some relief from the lower rates the Fed is going to give us.

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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. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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