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:

• putting out the fire,
• rampant ignorance, and
• the simplicity of the Paulson plan.

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

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Whatever We Do, We Must Put Out the Fire

Originally published on Monday, Sept. 22, at 10:55 a.m. EDT

It's a fire. Not just a fire, it's a chemical fire. We have to throw everything at it. We need to throw a stimulus package at it to get people to spend, we need to fund the mortgage trust to buy mortgages -- more in a moment about the best ways to do it -- and we need rate cuts.

After the 1929 market crash, the government did everything wrong: rate increases, tripling of tax rates, money supply shrunk. We got bank closings galore and 30% unemployment. FDR came in and gave us the FDIC, Social Security, a big bank bailout through the Reconstruction Finance Corp. to buy stakes in banks.

It wasn't enough. The depression lingered. There are studies galore about whether the depression didn't end until the war. But the catastrophic employment/bank failures ended, and that kept us from facing a revolution or permanent depression or a Japan-style deflation that has wrecked their economy for years.

Now we are faced with the need to do everything. The FDIC plan to blanket money funds can keep that money flowing to the commercial paper market; that will stop the contagion from leaping to industry. The bailouts so far will keep the housing market from collapsing and will keep the nuclear option of derivatives gone haywire -- the ones insured by AIG (AIG Quote) -- from exploding. The people who are trying to wrest AIG from the government can only do it with the bridge loan from the government, so that should not be allowed to happen, as the company has always been undercapitalized and can't possibly pay for its obligations, so buying that security could be a big mistake.