Fannie and Freddie Face the Endgame

Freddie Mac (FRE - commentary - Cramer's Take) and Fannie Mae (FNM - commentary - Cramer's Take) are in crisis. They are just disappearing before our eyes. It is what is really causing the weakness, as it now looks like, without equity deals, these companies are in serious, serious trouble.

This is the big fear I have had for some time: an equity wipeout for these two companies. They just don't have enough money to be able to handle the problems that are coming for them.

They dawdled, they hemmed, they hawed. Now it looks like what they have to do is very difficult: cut the dividends or eliminate them, emasculate the common and do billions of dollars in preferred.

I don't know if it is enough. I do know that these two companies are just the biggest black hole I know.

Unlike all of the other financials, these can't find buyers.

It is an extremely precarious situation with, ultimately, bailout ramifications.

Random musings: "Oil's rapid rise is lending weight to predictions that prices could hit $200 a barrel this year," Page A6, C8.

"Bear Trap Opens for Resource Stocks," Page C1.

It's this stuff that drives me crazy about The Wall Street Journal. It is very much like the Journal to immediately pile on the notion of the resource stocks joining the bear. It is also very much like the Journal to focus on the idea that oil could be going to $200.

It is not possible, however, to have them both. Today's tug of war says that the commodity bears win. But the hedge allows the bulls to win tomorrow! I just can't stand the confusion coming from one voice.

Now, we at TheStreet.com's RealMoney have always enjoyed the combat of views. We are money managers, professionals, disagreeing and making the cases for pricing of everything from commodities to oil to stocks.

The issue I have with the Journal is, how can it not reference the total opposite view in its own pages? Basically I feel as if someone there should be saying "OK, which one's right?" We can't have both views, because we are not "opinion."

Of course, if you believe the "Money and Investing" segment, you have to sell everything oil and natural gas. If you believe the A section and the C section pieces, you have to buy everything natural gas.

I always feel that when I see "Bear Trap Opens for Resource Stocks," you get the input from all of the bears chatting about the most recent declines, but are they really signs that the bear is claiming everything? Or are they pullbacks to be expected in stocks that are based on commodities? I would think from the A and C section pieces that these are normal pullbacks.

I tend to want to side with the bullish commodity Journal, not the bearish commodity Journal. Either way, it leaves me flummoxed. Maybe new management should see the glaring whipsaw these two pieces give us.

Otherwise, what's the point?

Further random musings: Lots of confusion in the drug world; worries about deaths and Gardisil and possible further slowing of Vytorin for Merck (MRK - commentary - Cramer's Take). But the news that Pfizer's (PFE - commentary - Cramer's Take) Lipitor is not so hot, from another study, may cause people to embrace a drug that may do more than Lipitor, none other than Vytorin. Plus, the drug group is finally acting great! ... I am liking the piece about Sandisk (SNDK - commentary - Cramer's Take) elsewhere on the site. I soured about Sandisk a long time ago because of its commodity-based product. But it was a revolutionary at one point. It looks to me that it can be again. But I would caution that unless this stuff is 18 months away -- about the time horizon institutions are on -- it won't matter just yet and will just be something to keep your eyes on.

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

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

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.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.