- how to get the economy going again; and
- why Kinder Morgan Energy Partners is such an exciting company.
We Can Escape This Jobless Recovery Posted at 1:56 p.m. EDT on Thursday, April 18 Lately, I've been hearing a lot about how housing can't save the economy, that it isn't big enough, that it can't do that much to move the needle. I hear the same thing about the oil and gas business, that no matter how much we find it doesn't put a lot of people to work and the trade off, the increased use of fossil fuels, makes it so it's not worth supporting. Let's see. How can I be diplomatic about these pessimistic judgments? How about this? They are all lies, lies that are keeping the federal government from helping the cause instead of hindering it. First, housing punches above its weight. We know from the retailers and the homebuilders and the bankers we talk to that one dollar toward the purchase of a house can produce an additional $6 in spending to fix it up, make it bigger or gussy it up inside. That's why it needs to be supported and encouraged, because it can produce so many jobs. Instead the government's made it very difficult to get a mortgage, which has kept housing from breaking out to levels anywhere near where it used to be.
But what did Richard Smith, CEO of Realogy ( RLGY), the largest realtor in the country, say about the government's role in promoting the ability of people to get mortgages? He said that "the only thing holding lending back is the extraordinarily difficult underwriting standards." That's because the feds have still not finalized the rules for banking under Dodd-Frank. The government has simply not spelled out the definition of who is qualified to get a residential mortgage. Without that definition banks are reluctant to give a mortgage to anyone except those who don't need one. Right now the FICO score for Realogy's book of business is extraordinarily and punitively high 760. I don't know anyone who can qualify at that level. That's wrong and it is truly stymieing the economy.
The problem here is that in order to get to energy independence within President Obama's time in office, the president will have to say "Look, I hate fossil fuels, but we are going to emphasize natural gas in this country as the surface vehicle, the way they do in other countries with bountiful natural gas." The president has the ability to order federal government automobiles to convert to natural gas, which would then foster a huge job-creating infrastructure to support those vehicles, which would then make the importation of oil for diesel fuel, one quarter of all that is imported, an irrelevance. But instead, the president, in order to not anger his environmental base, says that he favors all sorts of energy, which is the same as saying nothing. You need to say, "Natural gas is our fuel, and we are going to use it to make cleaner skies and be energy independent." Mind you I am not talking about giving this industry one red cent, unlike the handouts that the farmers got for ethanol or the bankrupt artists got for solar. The jobs that would come from giving banks certainty when it comes to lending and lending the government's support to natural gas, not just solar and ethanol, could get us out of this jobless recovery. But the feds have to stop hindering the cause and start helping it. There is a way. I just don't know if there is a will. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in stocks mentioned.
Maybe Ditch the Kinder Waiting Game Posted at 8:06 p.m. EDT on Thursday, April 18 Kinder Morgan Energy Partners ( KMP) is one of those stocks that you keep thinking, "When it comes in, I will buy it." But it never comes in. Not even when so many of these MLPs are doing secondaries does it sell off and you know they are total birds of a feather.