Jim Cramer outlined his own version of an economic stimulus plan on
"Stop Trading!" segment Friday.
The plan put forth by Treasury Secretary Hank Paulson "doesn't make any sense," Cramer said. "It's obviously a good boost for
... Maybe a boost for
The real problem, Cramer said, is in the banks. "Every day you come in here, and your bank stocks are down." The source of all the trouble is the bond insurers, specifically
( PMI) and
, he added.
Cramer's plan, he said, declares the bond insurers bankrupt, then "gives the municipal bonds over to Warren Buffett. ... It takes all these loans ... $500 billion ... and guarantees these loans for 50 cents on the dollar. ... It would cost us far less than the stimulus plan, and it would rally the stock market."
Cramer acknowledged the plan had some negative elements. "There are actual people that work at these companies; I feel bad about them," he said. But he says that the insurers are the reason that America's large banks can't determine their exposure to bad paper.
If, as Cramer believes, those four bond insurers are insolvent, the government can take them over. That, combined with a fed funds rate cut of 100 basis points would result in a gain of 2,000 points for the stock market.
"Maybe buried within the guy who helped fire Gene Simmons last night ... is a plan," Cramer said. "You have $500 billion that they've insured. Let's say they pay out at 50 cents on the dollar ... $250 billion. ... I don't think you'd need that."
The insurers need decisive action, Cramer said. "Where would you go if you didn't have ... insurance? You would go into a cave.
"My plan is offering 2,000 on the downside if you don't take it, 2,000 to the upside if you do. It's a lot better than writing a check to Men's Wearhouse."
At the time of publication, Cramer had no positions in any of the stocks mentioned.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click
here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click
here to order his book, "Real Money: Sane Investing in an Insane World," click
here to get his second book, "You Got Screwed!" and click
here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by
TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.