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Jim Cramer's Stop Trading! Fear the Financials

Cramer says this sector will continue to get pounded.

Short-sellers are using the credit crunch to crush the financial stocks, Jim Cramer said Tuesday on

CNBC

's "Stop Trading!" segment.

Cramer said the action in mortgage lenders that don't own a deposit-taking bank shows that many of these companies won't be around to see the aftermath of the

Fed's

current stand against inflation. Cramer said that will affect bad companies as well as apparently good ones like

Thornburg Mortgage

(TMA)

, which was off 38% Tuesday following a series of downgrades.

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"The last thing I want to do right now is buy" a house, Cramer said, explaining that the seizing-up of the U.S. mortgage system is causing "tremendous stress." Cramer also wondered "who would want to lend to one of these companies," referring to the liquidity-starved mortgage issuers.

At the time of publication, Cramer had no positions in stocks mentioned.

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