Jim Cramer: Thank You, Larry Summers
Editor's Note: This article was originally published at 7:11 a.m. on Real Money on Sept. 16. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.
NEW YORK (Real Money) -- Could people be more poorly positioned for this trade off Larry Summers' exit from the Fed chief race? You would had to have been long everything that had previously seemed like a logical short: regional banks, mortgage insurers, homebuilders, home suppliers and home-related retailers -- everything that was doing poorly and could have been expected to do even worse under Summers.
It's a nightmare for the hedge funds. It will require massive short-covering. In the meantime, everything that could have been expected to work for lack of anything to do with the housing market will become a source of funds when the futures gaffe the market with their power.
This one could not have been gamed. You didn't think that the Senate Democrats would break ranks with a tone-deaf president who seemed totally unaware of how divisive Summers' candidacy would be. Plus, did he not know that Sen. Elizabeth Warren (D., Mass.) was going to run a one-woman pillage of the former Harvard president who has been scorned by women of all levels, but particularly former faculty members like Warren? Did Obama not know how Summers was regarded as a deregulator who got us into this mess, or someone who favored financial engineering above all? Summers was also allied with the banking universe post-White House, which seems to be hated now more than ever.This candidacy -- which required Summers to bow out in order to save the president some political capital and avoid gut-wrenching hearings -- was so ill-thought-out by the president that one can only wonder how horrendous the battle will be with the Republicans in a few weeks. It revealed the president as being uniquely out of touch with what Congress and the people want out of a Federal Reserve chairman -- which is exactly what they currently have: Ben Bernanke and his progrowth policies. Summers stood for what the Tea Party wants without having the Tea Party's political bent. He would have been a lightning rod when what's needed is a peacemaker. I know that Janet Yellen is now the putative front-runner. However, any president that had favored Summers has to have great antipathy for Yellen, because she's from the Bernanke school of thought. How ironic is it that Bernanke is progrowth and pro-job creation, but the president, so desperate to have Summers as chief, clearly wanted to spurn that direction? It's almost as if he was courting political strife and base-burning when it came to this appointment.
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