Rally on ABK News is Just Another Fakeout

The Ambac (ABK - commentary - Cramer's Take) rescue plan makes me laugh, even as it totally drives the market with its backing by the agencies. A group of banks that are most directly related to the problems with ABK are bailing out ABK. You can't make this stuff up. That's like the insured insuring the insurers. Who can believe that, other than the agencies who are totally vested in keeping the AAA ratings because so much of their work on the actual stuff that is insured would not have worked without insurance.

The ones who have most to lose, who need to keep the ratings up off Ambac because of what they hold, are going to bail out Ambac, and people think this deal has credibility? I guess everyone is so desperate to preserve ABK's ratings that they will do anything. Remember though, the real issue here, as always, is house price depreciation; as long as you keep getting that you will keep getting these worries and declines. You will keep getting the writedowns.

Of course, this incestuous insured-insurance relationship is nothing new. The insurers also insure each other, not that we really know what's going on as the disclosure of these companies is so opaque that you just have a lot of guesses. That's because they have always been ridiculously regulated.

So, the rally that came because of the deal will be chimerical and must be sold. All over again.

It never ends. It will not end until the Fed cuts rates to where the net interest margin increases and the Fed guarantees those loans of struggling homeowners who live in homes, courtesy of my FHA plan.

Then this stuff will insure itself. But the time for that is a long way off, because the Fed failed to take aggressive action last year.

Just another fakeout. Sorry.

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

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