We're Finally Seeing Some Risk Capital Again

The Citigroup (C - commentary - Cramer's Take) bailout wasn't just a giveaway. It was a plan that recognized that the government had created, on its own, a level of risk aversion that was so thick that it had to reward those who had toughed it and made the choice to stay the course: those who owned Citigroup all the way down. With this bailout, for the first time, if you averaged down, you did well. With this bailout if you averaged down, you are still doing well. What a change!

Of course, it is also the change that has Ford (F - commentary - Cramer's Take) and GM (GM - commentary - Cramer's Take) giddy, because there is hope that they could get a similar bailout. I have said over and over that these stocks will be great speculations until we know for sure what Congress will do. That, of course, is the problem, because GM and F are all congressionally run, not Fed-run, so the likelihood of something good happening with these common stocks seems slim, but enjoy the ride nonetheless.

I remain more optimistic than I have been in some time, because the asset-backed plan that basically allows you to lever up asset-backed paper risk-free and get a great rate of return that is virtually guaranteed by the government seems too good for hedge funds to pass up on. I also like the buying of mortgage bonds, which will jump-start the refinancing wave, which will help retail and create more interest in homes.

We are not going to rebuild this economy in a day. But the first part of the rebuild was to get the train wreck cleared from the tracks so that the tracks can be fixed. For that, you need some risk capital in to take the chance that the trains can ever run again.

That's what's being provided for now, and it is most welcome.

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

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Know what you own: Cramer mentions Citigroup. Other companies in the banking industry include Goldman Sachs (GS - commentary - Cramer's Take), Morgan Stanley (MS - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take).

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