The mortgage crisis is spreading outside its industry and into retailers, Jim Cramer said on TheStreet.com TV's Wall St. Confidential Web video Friday.
Fed Chairman Ben Bernanke and company have a very strong view that the crisis is contained, which is why many of the Fed's presidents want to tighten rates, he said. However, it clearly is not contained in retail, "although no one really wants to admit it, expect for BJ's ( BJ)." The wholesaler recently commented that it's expanded heavily in Florida, but that since people can't sell their homes in the Northeast to move to the Sunshine State, "Florida doesn't have the growth anymore," Cramer said. Also, Brocade ( BRCD) mentioned that it seems financial services firms, big customers for the tech company, "are going to be rocked by this," he added. The Fed felt that it didn't matter that gasoline went from $1.50 to $3. "I'm not saying the Fed could be wrong," Cramer said. "I'm saying the idea that your house is declining in value is a far more worrisome thing than how much you paid at the pump." Cramer's biggest issue is that the way the Fed works, it might take eight to 12 months "by the time they get the rates to where it may actually stimulate us," Cramer said. "If that's the case, then you will already have far realized that it does hurt. I think it can be preventive, but there are just a lot of hawks on the Fed and they just don't think this is right." Further, domestic consumer spending is down, he said. "I think the Fed doesn't do a lot of homework," Cramer said. It is looking at companies that do a lot of business overseas and crediting America with that, which is "a very big mistake." "The Fed is looking at inflation that is being imported from overseas, chiefly China, and is worried about that," he continued. "We can't do much about that." It's also looking at food inflation, "which is mandated by the government's emphasis on ethanol," Cramer said. "CPI doesn't include home price. The data's just not any good because it's the home price that's bringing everything down. I would tell you that if your company is domestic, you have to rethink it."