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Jim Cramer's Best Blogs

NEW YORK ( TheStreet) -- 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:
  • why the stock market will crash (but it won't be the Fed's fault);
  • Google's stumble; and
  • the reasons for Vikram Pandit's departure from Citigroup.

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

The SEC Will Be the Market's Undoing

Posted at 7:08 a.m. EDT on Friday, Oct. 19

Are higher stock prices bad if they partly occur because the Federal Reserve is wrecking the competition in the financial supermarket?

On the 25th anniversary of the 1987 crash, we are going to hear a lot of bubble talk. It's natural. We are reading not only about how it can happen again, but that it has to happen again. We are reading, moreover, that this may come about because the Fed is facilitating a stock market bubble with easy money.

First, I agree that another crash is inevitable. But I don't think it will be because of the Fed. I think will be because the stock trading system is too fragile, lacking in any serious regulation, and because the sacrifice of integrity for speed seems to have been blessed by the Securities and Exchange Commission. It is almost as if the SEC has decided that we have a need for speed, like the big video game I have at home in the basement, even as there is no definable benefit from speed to capitalism or capital formation and preservation. This speed altar, on which we sacrifice regular investors, is a vestige of a previous administration, which thought volumes would be endlessly growing and that speed could only make things more fair.

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Instead it has dramatically unleveled the playing field, and helped destroy the image and respect of an asset class.

What makes a crash is inevitable is the unwillingness of the SEC to even question the notion that financial innovation could be malevolent, especially as it applies to something that speeds up trading.

Everything happens too fast for humans to stop it, yet the benefits of the speed simply aren't there. Go ask anyone involved in Thursday's Google (GOOG - Get Report) release. Speed overwhelmed the system and the company, and neither was ready for it.

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Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

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