Jim Cramer's Best Blogs

What people do not understand is that the number of firms that could have gone under last week pretty much included everything but the food and drug stocks.

The world revolves on credit and confidence. Both disappeared last week, and the reason behind that is simple: foreclosures.

Let's go over the nexus again. Banks can't lend and are fearful to lend. Why? So much money is tied up in failing mortgages throughout the system that the banks don't have the capital even if they want to lend.

I have said for two years now -- two years! -- that we need a market for this stuff, by ZIP code, by vintage, by loan-to-value, by geography. The SEC refused to insist on this, the bank examiner won't give it to us, so Treasury has to give it to us.

The presumption is that these mortgages are worthless. Chris Matthews said the same thing last night.

That's just not true. If you wrote even the worst mortgages down, if you were to value them at, say, 50%, think of it. You buy a house for 100% loan-to-value for $300,000, roughly the average price of a home in California in 2006. The average house price has fallen 25% from when that house was built. Let's say that it is 33%, factoring in the last month and the skyrocketing foreclosures. Now the house is worth $200,000. The mortgage is for $300,000. You bid 50% for that mortgage, $150,000, then you have a mortgage that's realistic.

You want to get that mortgage current, so you renegotiate the terms. I don't like principal adjustments, but I do like interest rate adjustments. Let's say for the next year, we say, "You are forgiven" for a year, maybe even two, and then you go low-interest for the next five years. That keeps the person in the house. That means that a foreclosure is averted, one less home on the market.