No one did a deal. The financials rallied gigantically, there was tremendous enthusiasm, and yet no bank was ready with an offering. It is amazing, especially when you consider that the natural gas companies, like Chesapeake Energy (CHK - commentary - Cramer's Take) and XTO Energy (XTO - commentary - Cramer's Take) were ready, despite horrible declines in their stocks.
The moment that Citigroup (C - commentary - Cramer's Take) got through $20 or Merrill (MER - commentary - Cramer's Take) through $30 or Lehman (T - commentary - Cramer's Take) through $20, they should have peddled billions more in preferred stock or even common stock.
Just spot 'em right out there. For about a week, people decided the rally could - and would - last if these banks had built up some fortresses. They didn't.
And that's why we are back in the same predicament. I don't want to write here which bank is next to fail. There are enough of them (particularly one that just changed its CEO) that the FDIC will have to have a plan to keep the bad loans and sell the banks, maybe not even with the branches because all that's worth anything is the deposits.
But if we only have Wells Fargo (WFC - commentary - Cramer's Take), Bank of America (BAC - commentary - Cramer's Take), JP Morgan (JPM - commentary - Cramer's Take) and US Bancorp (USB - commentary - Cramer's Take) as possible buyers, we are not going to be able to get through this period without some major runs on the banks.
The other day, the head of the FDIC was on Squawk on the Street and Mark Haines playfully asked her to give him the names of banks that they might have to seize. She was coy. I wanted to throw up.
Everyone that knows how to read a balance sheet knows there are some banks with non-performers that are skyrocketing past where the banks can be saved. And we should expect bank lines.
The math will be done: Indymac knocked off a bunch of capital, leaving less capital for other banks. People will freak out. We don't have emergency funding in place for the FDIC. So we could be right back to where we were that weekend when Indymac collapsed without a plan, which led to an aggressive seizure and more bank-raised capital.
That's what could have occurred. Now the shorts are back in control and nothing got done.
P.S. Will you be there when Cramer makes his next move?
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Jim Cramer Blog This Energy Turn May Be for Real 7/24/2008 3:18 PM EDT If XTO and CHK can both participate after very different secondaries, we're seeing a change in direction.
At the time of publication, Cramer held no positions in companies mentioned.
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.
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