360 Degrees of Subprime Lending

Editor's Note: In this edition of "360 Degrees," commentators Jim Cramer, Doug Kass and Joe Capone examine the subprime lending market.

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Subprime May Give Fed Crisis Cover

By James J. Cramer

This was originally published on RealMoney on Feb. 15 at 1:36 p.m. ET.

Bring on the bad!

I wish the bears understood how important subprime lending is to my thesis about the market going higher. But then again, if they did, they would be forced to cover everything.

For as long as I have been at this game, it has taken a crisis for the Federal Reserve to move. The Fed is always reluctant to move because it needs the crisis as a cover so it doesn't look like it's soft on inflation. Maybe you think we have good growth in this country; I think we just have easy retail comparisons because of nat gas and gasoline bills being down but that in reality we're in a slump that the international portions of our great businesses are saving.

That's not enough for the Fed to cut on. That's not obvious enough.

Ah, but if all of the subprime lenders pull out of that market and if Merrill(MER Quote) and Bear(BSC Quote) and Lehman(LEH Quote) -- big subprime lenders via acquisition -- start saying "it's a crisis" and New Century(NEW Quote) goes belly-up or Accredited Home(LEND Quote) takes down a big part of its book value or Countrywide(CFC Quote) leaves the business -- then we'll have a crisis that can justify not one but maybe three or four cuts.