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Cramer: The Terrible Dollar Is Housing's Fault

Originally posted on RealMoney at 10:01 a.m. EST.

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I am tired of reading that the dollar's decline is a function of our interest rates and their need to decline further on the short end.

The dollar is a referendum on how badly President Bush, Treasury Secretary Paulson and Princeton Professor Ben Bernanke are handling the housing crisis and the economy. The dollar is a repudiation of their lack of creativity, their inability to recognize that the monoline problem plus the housing losses have eliminated the excess capital the banks have to lend, and their insistence that laissez-faire works when it comes to broken markets.

The dollar's decline is a statement that Ben Bernanke will not do what he said he would do in 1992, which is have the Fed buy the bad collateral that the banks are stuck with.

The dollar's plummet is a statement that the government would rather give out $600 to those who need it than take stakes in the companies that could have built the capital reserves, the PMIs (PMI), the MBIAs (MBI - Get Report), the Ambacs (ABK).

The endless slide has to do with the recognition that the markets are beyond the grasp of the president himself or the Democrats who think the answer is punishing the banks with bank holidays.

The government has to get involved to solve this problem. Without getting the FHA engaged, it makes too much sense to walk away from your home.

The government seems unable to recognize that the issue here is simply the need to get houses to stop depreciating.

Lots of people when I write that say that I favor bailouts, that I favor higher home prices, which are bad, that I want deadbeats helped.

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