Cramer: Short-Seller's Paradise

Given that the two worst lenders, Washington Mutual and Wachovia (WB Quote), are out of here -- worst because they sold billions of dollars in no-money-down option ARMs, which are now going to start foreclosing at record rates -- we could be on the verge of something positive: stronger banks that own these that can sit on them until something is created to sell them to.

If nothing is created, then I want to short these banks, because the stuff can't be valued and therefore will be valued incredibly low, perhaps even lower than the incredibly low prices that Citigroup (C Quote) and JPMorgan (JPM Quote) valued them at.

However, with that organization, these banks could strengthen. So could Wells Fargo (WFC Quote) and U.S. Bancorp (USB Quote) and Bank of America (BAC Quote), which also have the same problem for their loans.

We don't want to go back to the black holes, of course, especially because they have almost all been filled. (Fannie (FNM Quote) and Freddie (FRE Quote) seized. WM, seized. Ford (F Quote) and GM (GM Quote) bailed out yesterday. AIG (AIG Quote) seized. Lehman shut. Citigroup saved for now by the FDIC's approval and therefore is too big to fail. You have to admit, that was an amazing list of ne'er-do-wells.)

So, that's what the plan is about and it is why it is important if you are long or you are short.

Now let's back up and out. This plan has nothing to do with the price of steel, so you can short all of those that you want. While the infrastructure stocks have become ridiculously cheap, they are owned by hedge funds and there is a worldwide slowdown, so one can pretty much shoot them to death on the short side. The bill won't help sagging mineral or oil prices, so those are good shorts, especially because they, like the steel stocks, are owned by hedge funds who sold a lot last week but will have to sell again when the performance figures come out, the money is pulled, the collateral can't be delivered to the brokers and the credit lines are pulled.