Jim Cramer's Best Blogs

Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:

• the need for a bankruptcy;
• a swift move from the Fed; and
• the brokers.

Click here for information on RealMoney.com, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

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Why Won't They Die?

Originally published on March 12 at 9:20 a.m. EDT

Will someone please go bankrupt already? Will someone exit some game, banks, mortgages, anything financial, cable? The fact that Thornburg TMA is still alive and trading is an embarrassment. The fact that some of the truly defaulting homebuilders and developers haven't crushed common and moved on is crazy.

But I think I have the worst one, and it isn't related to homebuilding: Charter Communications CHTR.

Here comes still one more debt deal from these clowns who have had multiple opportunities to raise hundreds of millions in equity multiple times and never chose to do so.

This is one of those serial skaters that should just reorganize and crush the equity AND the junior bondholders. It is hilarious to see how it endlessly hangs on.

One of the defining parts of this particular era is the ridiculous nature of the hangers-on and how they create a false impression to common-stock holders that there is net worth for them.

We need to clean up the indebted companies and start over. We need combinations that weed out the deadwood. We need banks and homebuilders to shutter. And we need the darned walking dead like Charter to just be dead.

It never ends.

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

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Fed Could Reassure With One Swift Move

Originally published on March. 13 at 11:11 a.m. EDT

One in every 557 households is in some stage of default. Believe it or not, they can pull down Bear Stearns BSC, just like they pulled down Ambac ABK and MBIA MBI and are pulling down private mortgage insurers PMI PMI and MGIC MTG.

Everything in this system was predicated on house price appreciation. If we knew when we packaged the mortgages of these 1 in 557 that they would default, we would have been able to sell the packaged mortgages, but most institutions would not have had such a lust for them. They would have all been considered junk, and people would have stayed away from any combination of them -- from regular mortgage-backed securities to CDOs and CDO-squared packages -- that only made sense if you thought that the least-creditworthy folks would not default.

That's no longer the case.

Now, what's interesting is that a small number of defaulters -- 223,000 properties -- are big enough to wreck this financial system. One way to look at it though is that through leverage it is about 2,230,000 defaults -- 10 times. And that number is going up every month.

What is also interesting is that Fannie Mae FNM has packaged many mortgages, and the number of defaults there is, relatively, similar and small.

But Fannie Mae used huge leverage, too.

There are tons of institutions that have to sell mortgages of all sort because they don't have access to the loans they needed to buy these mortgages or because their businesses don't make sense anymore because of the lack of leverage they needed to juice returns.

So everyone who is in this business of borrowing money to buy mortgages is in the exact same situation: They need to sell.

Anyone who may need to buy them off clients doesn't have the money -- witness Bear Stearns.

So, off these 223,000, these 1 in 557 households, we are collapsing.

If you wanted to stop the collapse and to reassure, you would need to go buy mortgage paper, either agency or AAA. No institution can do it. The Fed tried to borrow these assets in its plan, but it is not BUYING them, so it doesn't change the actual NUMBER of mortgages in the system.

Oddly, if you multiplied the number of defaults by the amounts of the mortgages, with $300,000 being the rough average, you would see the absolute amount of defaulted loans is not big. When you consider that the properties have some worth, and you subtract that worth, you see the amount is even less.

So, if instead the Fed just simply BOUGHT Fannie Maes, simply by issuing coveted two-year paper and then taking that money and buying this stuff -- not borrowing it -- you would reduce the absolute amount and that would change things rather instantly.

But Bernanke is timid. It was a huge deal for him to do the incredibly-difficult-to-understand borrowing deal.

It is not difficult to understand this: "We will buy your agency bonds. We will take the chance."

Then the implicit guarantee of the paper seems like it is worth something, the institutions stuck with them would get cash, and we would find out how small this problem really is as a relative issue as opposed to an absolute issue.

But they won't do it. They don't want to intervene in the cycle. They don't think they can.

So we get this.

This incredible situation where 223,000 homeowners hold all of us hostage.

Amazingly wrong, isn't it?

Random musings: It sure doesn't help that Paulson doesn't seem to understand that he is becoming laughable for not acknowledging this problem in the way that is being done here.

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

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Be Wary of the Brokers

Originally published on March 14 at 9:58 a.m. EDT

Bear BSC is typical of what happens when the Fed is too clever by half. Bear couldn't borrow at a lowered discount window. Bear doesn't want to lend its junk -- it wants to sell its Fannies.

Now Bear will get a takeunder by someone, and I would have a real problem with the common here. I think the issue is the bonds, and whether the senior securities will get the company to sell it.

I would be very careful here. This is business that goes directly to Goldman GS -- the prime brokerage. I also think that Bear isn't alone. I wouldn't own this stuff, other than Goldman. I would not own Lehman LEH on the bounce.

You want to play? Buy Goldman. You want the system to work? Have the Fed buy agencies, not do this creative borrowing plan that obviously is not working.

But it does show that the Fed will bail out institutions, which is a good sign for the market in general.

Still, let me make it clear about how stupid this Fed is. In a crisis, they call JPMorgan JPM and say, "You can lend to buy portfolio stuff, we will backstop you." That's more reckless and more interventionist than I can believe and more favorable to one firm.

Gee, these guys are bad, inconsistent, over their heads and behind the curve again. New York Fed, will you please figure out how things work and help the system?

At the time of publication, Cramer was long Goldman Sachs.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting