This post appeared earlier today on RealMoney. Click here for a free trial, and enjoy incisive commentary all day, every day.
Amazing. Just amazing. Bill Poole agrees with me:
are virtually kaput, they are insolvent. They don't have a
to be stocks.
I know that when I did my rant last year, it was really focused on Bill Poole, the
member who had been most opposed to my view that the Fed had to cut and cut hard. I called him a reckless man. Put aside that I called for his resignation, because he was calling for
resignation. Now he understands it.
Here's what I see happening: The people who own these stocks are going to lose everything. The man who understood this more than anyone in the country, Bob Steel, just jumped from the American frying pan to the
fire. But he was needed to figure out how to save Fannie Mae/Freddie Mac the
-- forget the common stock.
We need a quick recapitalization that allows these companies to be part of a new company, Housing Corp., which is
public and does
generate a return. We need to see the bonds of the companies and the bonds of mortgages put together by the companies explicitly guaranteed despite the cost of that, and we need to see all of these things happen within the next week or two in order to make it so we have taken this big issue off the table.
I have been saying these guys are insolvent in these pages, on our videos and in "Stop Trading" and "Mad Money" for months. Now the biggest laissez-faire, "don't worry about it; we are in an inflationary environment and Cramer is a loudmouth" panicker has spoken, and we are in agreement: The stocks of Fannie and Freddie are worthless, but the companies are too big to fail.
Recap now, or else here comes U.S. gridlock.
is a pittance compared to FNM and FRE. Period. End of story.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim Cramer writes about all the stock trades in his charitable trust for TheStreet.com in Action Alerts Plus. Recent stocks he's traded in this account include Schering-Plough (SGP) , El Paso (EP) and Procter & Gamble (PG) - Get Report.
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. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer),"
click here. Click
here to order "Mad Money: Watch TV, Get Rich," click
here to order "Real Money: Sane Investing in an Insane World," click
here to get "You Got Screwed!" and click
here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by
TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.