Jim Cramer's Mad Money Review

Jim Cramer said Monday on CNBC's Stop Trading that it would be a tragedy if the government lets troubled AIG(AIG ) fail.
I would radically have to change my view of where the market goes if it fails, Cramer told Erin Burnett. This one needs to be stopped. I don't know how to stop it.
AIG will be allowed to use $20 billion in assets held by subsidiaries to help stay in business, New York Gov. David Paterson said in a news conference Monday. The insurer, which has already raised $20 billion in fresh capital in 2008, on Sunday turned down an offer from private equity firm J.C. Flowers & Co. that would have allowed the investor to acquire AIG for $8 billion under certain circumstances, The Wall Street Journal reported.
This is not Bear, or Lehman(LEH) where all they have is Neuberger.
The other, riskier group includes AIG, MBIA(MBI ), PMI(PMI ) and Ambac(ABK ).
AIG is so opaque; they never disclosed what they own, Cramer said.
If you could just call a timeout, AIG would be able to sell a lot of different things, Cramer said. If it's in free fall and beaten down by the shorts, and we don't change the uptick rule, AIG must not fail.
Published By TheStreet.com

Labels: ABK, AIG, American International Group, J.C. Flowers, Jim Cramer, LEH, Lehman Brothers, MBIA, PMI, Stop Trading

Jim Cramer outlined his own version of an economic stimulus plan on CNBC's "Stop Trading!" segment Friday.
The plan put forth by Treasury Secretary Hank Paulson "doesn't make any sense," Cramer said. "It's obviously a good boost for Apple (AAPL) ... Maybe a boost for Men's Wearhouse (MW)."
The real problem, Cramer said, is in the banks. "Every day you come in here, and your bank stocks are down." The source of all the trouble is the bond insurers, specifically MBIA (MBI), Ambac (ABK), PMI (PMI) and MGIC (MTG), he added.
Cramer's plan, he said, declares the bond insurers bankrupt, then "gives the municipal bonds over to Warren Buffett. ... It takes all these loans ... $500 billion ... and guarantees these loans for 50 cents on the dollar. ... It would cost us far less than the stimulus plan, and it would rally the stock market."
Cramer acknowledged the plan had some negative elements. "There are actual people that work at these companies; I feel bad about them," he said. But he says that the insurers are the reason that America's large banks can't determine their exposure to bad paper.
If, as Cramer believes, those four bond insurers are insolvent, the government can take them over. That, combined with a fed funds rate cut of 100 basis points would result in a gain of 2,000 points for the stock market.
Source: TheStreet.com

Labels: AAPL, Jim Cramer, MBI, MTG, MW, PMI, Stop Trading

Countrywide (CFC), Ambac (ABK), PMI (PMI), MBIA (MBI), Washington Mutual (WM), Bank of America (BAC), Wachovia (WB)
To those who dread a Fed rate cut due to inflation worries, Cramer says oil and grain prices will not be alleviated by a rise in interest rates. "The thing that would knock the market down huge is obviously they don't cut," said Cramer; " … all year people have been focused much more on inflation. It's deflation that I'm worried about."
While raising interest rates may strengthen the dollar's value, Cramer insists this is not so simple; "the dollar is highly correlated to economic growth, not to the price of money."
"I've seen whole economies raise interest rates to be able to defend their currency and fail repeatedly," he said. "Where people want to be is in a country that is controlling its own fate, tends not to have as big a trade deficit as we have and is growing, and our country is not growing, therefore you don't want the currency."
While he does not think CFC, ABK, PMI, MBI and WM can be rescued by the Fed, and those too took mortgages between 2005 and 2007 may be "wiped out" a rate cut may still save those who took mortgages in 2007.
If rates are not cut, "Armageddon is back on the agenda," added Cramer. While Countrywide is currently engaged in a battle for its survival, BAC and WB will report "quarter of quarter of losses," which will cause people to view the crisis "very differently."
Published by SeekingAlpha

Labels: ABK, BAC, CFC, Jim Cramer, MBI, PMI, Wall Street Confidential, WB, WM

Coach (COH): Cramer admitted he was wrong to recommend buying Coach at $40; " I know retail has gotten weaker … we've always felt that the high end was immune, so maybe you're right... It's not as high-end as it used to be."
PMI (PMI) and MGIC (MTG): Cramer would sell PMI and MTG off of the sector downgrade by Lehman Brothers. Both stocks were down 11% in heavy trading on Tuesday. "They sliced through book value," Cramer said.
Published by SeekingAlpha

Labels: COH, Jim Cramer, LEH, MTG, PMI, Stop Trading