This article was originally published Feb. 10
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Rather than blame Treasury Secretary Tim Geithner for Tuesday's 382-point selloff like everyone else, Jim Cramer told the viewers of his "Mad Money" TV show that he found some positives in his proposal.
Cramer, who's on record as being one of Geithner's biggest critics, said nothing Geithner could have said today would've lived up to the hype created by the media. But instead of saying "I told you so," Cramer instead focused on the positives of the plan. "I actually heard some new ideas that might yield terrific results," he said.
First, he liked the fact that Geithner acknowledged the need for a gigantic credit facility to allow the private sector to buy banks and bank assets. "We're finally going to see some good banks created," he said.
Cramer said he also liked the idea of a "stress test" for banks, and the idea of shutting down banks that don't meet it. He called the move "gutsy" and the right thing to do.
However beyond that, Cramer said he was left a little disappointed. He said what the banks really need is forbearance and time, two words lacking from Geithner's speech. He again advocated using the strategy from the savings and loan crisis 20 years ago to fix similar problems today.
But on the positive side, Cramer said the market used Geithner's comments to sell off everything today, leaving both the recession resistant stocks, and stocks that benefit from the coming boom in China, trading at discount prices. He said he'd be a buyer of those names.
Cramer: TARP to Buy Common?
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Off the Charts
In this segment, Cramer looked at deep water driller
to see what the charts, and the fundamentals, of the company are saying.
Cramer said according to the charts, Transocean's outlook is bullish. The stock bottomed on Dec. 24 and has posted gains of 40% since. Cramer said the chart also shows momentum, with higher highs and high lows building a base for the stock.
But the fundamentals tell another story, said Cramer. Transocean, he said, does not trade on the price of oil, but rather on the day rates it charges for its rigs. But with oil prices plummeting and many of its contracts expiring in 2010, the outlook for Transocean is grim, with rates expected to fall with demand.
That's why Cramer said he'd rather bank with
, which he said constantly reinvents itself and is control of its own destiny. Schlumberger, he said, is not dependent on any single area of the oil patch and with estimates already so low, the company will be hard pressed to disappoint.
How to Win Back Market Confidence
Cramer unveiled a plan that he believes SEC chairwoman Mary Shapiro needs to follow to restore market stability and confidence.
Cramer said first and foremost, Shapiro must reinstate the uptick rule, a regulation put in place after the Great Depression to prevent history from repeating itself. The rule required a buyer to step in and take a stock high before a short seller could pound the stock lower. This rule is crucial for stopping market manipulation said Cramer.
Cramer also said Shapiro must also stop naked short selling and investigate the bear raiders responsible for taking down Lehman Brothers and countless other financials.
He also again urged the ban of ultra-short ETFs, financial instruments that he says are only used to manipulate the market. He said these funds, which should've yielded a 97% profit in recent months, instead returned a loss of 30%.
Finally ,Cramer said Shapiro needs to get serious about enforcement and issue real subpoenas to restore market confidence.
Outrage of the Day
Cramer returned to a Nov. 13 call, when he placed four insurance companies, including
into the "sell block."
Cramer said after the call was made, only one of the four insurers, Principal, responded to defend itself. Principal told Cramer that just four days prior to the call, Moody's reaffirmed the company's financial strength and debt ratings. They went on further to say "not all insurers are created equal."
But Cramer defended his call, citing Principal's most recent earnings results as proof in the pudding. During the call, the company announced its book value has been nearly cut in half as it saw a huge increase in unrealized losses. Furthermore, Moody's is now putting Principal on a watch list for a possible ratings downgrade.
Cramer said his goal is to help investors avoid losses like the 36% decline Principal has taken since Nov. 13. He said Principal's lack of transparency makes it impossible to know just how bad things are at the company.
Cramer was bullish on
Cramer was bearish on
Procter & Gamble
First Niagara Financial
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At the time of publication, Cramer was long ConocoPhillips, Freeport-McMoRan, Procter & Gamble.
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