Cramer: Some Warnings Would Be Nice

Editor's Note: This article was originally published at 7:02 a.m. EDT on Real Money on June 26. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- Why can't someone in government just warn a guy? Why can't we see some leadership from someone just using the bully pulpit instead of insisting on legislation, or a quorum, or a level of opacity that does no one any good?

Right now the U.S. is gripped by a total lack of what I would call "authority." I'm talking about people in power using that power to get things done through suasion, and not just through meetings and votes and the straitjacket of regulations.

For example, take the Federal Reserve. It was kind enough to give us a head's-up about how it is going to let the yield curve revert to a more natural position. But Chairman Ben Bernanke, in one of his myriad speeches, could have simply said, "You know what? Those who are reaching for yield are going to get stung when we switch." How great would that have been? Just those simple words would have been a delicious shot across the bow that would have let managers know there's going to be a world of pain if they continue to do stupid things to get a little more juice to their returns.

Bernanke could have coupled that with a statement -- perhaps via go-to journalist Jon Hilsenrath of The Wall Street Journal -- to those using emerging-market money funds as a way to stretch yield. He could have simply told them that, when they switch, they will probably lose more than they would have realized -- perhaps intimating, "The door will be too small to places like Thailand or the Phillippines or anywhere else that's running an accounts deficit when we go less accommodative."

You put these managers on notice, and then the clients can act as a pressure point on them, reminding those managers that they don't want that kind of risk.

The Fed chief could have also issued a warning to those using ETFs in search of yield, letting them know they will be roughed up. While he was at it, he could have also said that bond funds might not be as safe as people think they are.

Why not do this? Why not explain the hazards of what people are doing? Before you say that Bernanke did do this, I know I haven't heard from a soul who feels they have been warned. I also know there are plenty of reckless managers out there who might have reined in their recklessness, thus making the pain more palatable.

Or how about the Securities and Exchange Commission? SEC head Mary Jo White could have said that, while the Commission itself may not be able to agree on the insurance of money funds, it's her intention -- when push comes to shove -- to make it so that nobody who reaches for yield will be protected. Why can't she tell us this? All she has to do is say that the lobbying efforts have made it hard to stop, but that she will not make life easy for those who do this.

Or how about Gary Gensler, the head of the Commodity Futures Trading Commission? He could have given a speech saying that those who buy newfangled collateralized debt obligations, if they creep back, are idiots who will get hurt if they do. Call them idiots. There's nothing wrong with that. There are a lot of idiots out there. Or why doesn't Gensler talk openly about how the industry wants opaque swaps because they can gaffe the clients more easily with higher fees? Savvy people know this. The more stupid clients don't.

In other words, why don't regulators give speeches warning both managers and clients about stupid things they do that hurt the system? That way, they can tamp down on their own bubbles in their own industries, and they can warn dumb clients that they are going to be crushed and that, therefore, they'd better be vigilant. You can't legislate out morons, but you can call them out and make people realize when they are doing something that could put the system at risk.

Instead, they stick with the process that tends to be captured by the industry itself -- and if there is one thing we know about the financial-services industry, it's that these firms will not do what's responsible. They'll what's most profitable. Therein lies the real problem.

Just spell things out, either publicly or behind the scenes with background interviews. In this way, the parties that could jeopardize the system can be held at bay. In this way, all of us will be better protected than we are now from the shenanigans and the foolishness that breed bubbles and cause pain and loss for all good guys who try to be prudent, but are upended by the greedy and the reckless.

More from Investing

What Bad Weather? Kohl's Shares Spike as Same-Store Sales Jump

What Bad Weather? Kohl's Shares Spike as Same-Store Sales Jump

China Gives Tesla, Ford, General Motors and Trump One Awesome Present

China Gives Tesla, Ford, General Motors and Trump One Awesome Present

The Great American Supermarket No Longer Reigns Supreme

The Great American Supermarket No Longer Reigns Supreme

Kroger CEO: Even in the Age of Amazon, Physical Stores Will Still Be Important

Kroger CEO: Even in the Age of Amazon, Physical Stores Will Still Be Important

China to Slash Automobile Tariffs and 4 Other Stories You Must Know Tuesday

China to Slash Automobile Tariffs and 4 Other Stories You Must Know Tuesday