Jim Cramer's Best Blogs

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The Winners and Losers of Raising Rates

Originally published on Thursday, June 26, at 9:39 a.m.

People keep calling for a raise in interest rates. They want to see the dollar go up and commodities go down.

I want to see Citi (C Quote) solvent. I want GM (GM Quote) not to go under. I want Wachovia (WB Quote) and Washington Mutual (WM Quote) and Bank of America (BAC Quote) not merged out of existence. I want to see Freddie Mac (FRE Quote) -- which has taken on a huge amount of risk -- and Fannie Mae (FNM Quote) get out of the woods. I want to see house price depreciation end and have it stabilize.

The people who jabber endlessly about the need for commodity stability and a strong dollar might as well be saying, "We need a recession, a severe one, a global one, to slow down the commodity demand worldwide." Do not be fooled. If they put their endless demands of the Fed in real stock terms, it would be something like "Washington Mutual and Merrill Lynch (MER Quote) should be wiped out as we know it, and there ought to be some sort of plan made to deal with Bank of America after it swallows the Trojan Horse of Countrywide (CFC Quote)," which, by the way, I increasingly believe would be shut by regulators, and its executives indicted for fraud, if BAC weren't buying it.

"Strong dollar, higher rates" is also code for "let's finish off GM and wipe out Cerberus in order to lower commodity costs because without Chrysler -- Cerberus -- and GM -- Cerberus through GMAC -- the demand for steel will plummet.

You want a strong dollar and higher rates? How about saying, "We want Wachovia to disappear because of its California loans and it is time to destroy Ford (F Quote) because they have the wrong models."

Now, let's really get at it. If commodity prices are really an issue, if you want to slow commodity prices and bring the dollar up, just throw a gigantic tariff on China's goods. Make it so we can't buy them, and then they can't sell them. That will slow China's growth dramatically. It would crush commodity pricing and it would not crush the U.S. other than the industries that rely on Chinese growth -- coal, rails, steel -- to make their numbers.