Make Sure to Dot the I's and Cross the T's

Does the private market have any appetite for bad assets? Does it make sense that investors join in the government to buy them?

Yes, if there is price discovery and financing; no, if it doesn't know their worth and can't get loans to buy the stuff.

Many people who don't know the biz often think that these purchases involve actual cash. They don't. The sidelined money wants financing to buy the stuff to magnify the returns. I know instinctively people hear "leverage" these days and don't want to play. Forget about it -- the hedge funds who have the ability to buy this stuff aren't going to touch it unless they can borrow against it.

They can only borrow against it with price discovery. I still don't know how they get that without a government trading desk that marries buyers to sellers. Right now no one makes a market in anything. They are too scared.

Plus, if the Fed or Treasury lends money to buy this stuff, what if it goes down in value? Who is hung? Are there margin calls?

All of these questions must be answered in order to have a plan credible enough to pass the Meredith Whitney test, meaning will she trash it from the get-go, particularly as it pertains to Citigroup (C - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take), which she's not going to stop hammering until something concrete and to her liking gets in there, whatever the heck "to her liking" is.

If Geithner brings her in, it would be brilliant. The initial take will matter. If she pans it as ineffectual, I am telling you in no uncertain terms it will be derailed.

Off, but true.

Random musings; Beazer (BZH - commentary - Cramer's Take) continues to be a disaster with cash so it can keep pumping out homes...

At the time of publication, Cramer was long Wells Fargo.

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Know what you own: Cramer mentions Beazer. Other companies in the homebuilder industry include Hovnanian (HOV - commentary - Cramer's Take), KB Home (KBH - commentary - Cramer's Take), Lennar (LEN - commentary - Cramer's Take) and Centex (CTX - commentary - Cramer's Take).

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