"Interest rate cuts do matter," Jim Cramer told the viewers of his "Mad Money" TV show. He said that no matter what the nay-sayers may say, rates cuts are exactly what the markets need. Cramer said there are only two types of people who feel interest rate cuts are insignificant: the academics, who are grossly behind the curve, and those who short the market and profit handsomely from a panicky market. These people, he said, have no sense of history and don't remember 2003, when extremely low interest rates supercharged the U.S. economy out of a recession and crisis. The Federal Reserve is on board at last, said Cramer, although it came "a year too late." He said the Fed's statement that it's no longer worried about inflation should give the Chinese and European central banks the fuel they need to follow suit and further juice up the U.S. economy. Cramer said the rally in stocks will be sustainable if the rest of the world cuts rates. If they don't, all bets are off. Cramer noted today's rate cut means individuals and businesses will find it cheaper to borrow money because the federal funds rate is tied to the banks' prime rate. The lower rates also allow the banks to make more money on what they lend. And with savings and money markets earning less, more money will eventually flow back into stocks. Cramer said it would also be huge news for the housing market and the economy if the federal government were to buy 3 million residential mortgages. The move, part of his plan for fixing the economy, would finally allow the housing market to stabilize and stop the relentless home price depreciation spiral, he said.
Cramer: Retailers That Worry Me
Safe DividendsCramer's made it no secret that he's a fan of high-yielding dividend stocks with his recent recommendations of Nucor ( NUE), Verizon ( VZ), BB&T ( BBT) and Watsco ( WSO). But he warned that all dividends are not created equal. Cramer said there are several things investors must consider when evaluating the health of a company's dividend: the company's earnings, its cash flow and its balance sheet, and the consistency in which it pays its dividends over time. `