I hate Jim Cramer. His stock picking mania on TV horribly misleads individual investors who think they can beat the market. Heck, even he admits that, yet that hasn’t changed his behavior on CNBC.
But I have to say that this clip of Cramer about one year ago saying, "Bernanke has no idea how bad it is out there" and predicting the demise of Wall Street firms and the nuttiness of the mortgage market is remarkably prescient. Of course, Cramer being Cramer, the emotional outburst behind such prediction proves highly entertaining:
Speaking of the Wall Street crises, here are a few links (American Scene, Freakanomics, Daily Dish) that are excellent brief summaries of what is going on.
Thanks Ben, great links.
I was wondering, what do you think this means for America? For the world?
Combined with Iraq, I think this is probably flagged the twightlight of the US being preeminant the world power – both economically and politically. It’s compromised it’s moral position engaging in Iraq, it’s underminded what was the best example of capitalist market in the world by ‘socialism’. The very idea of America -freedom and free market/capitalism- has been damaged.
Sure America was never going #1 forever, but these events sure have hastened it’s collapse.
What a legacy for GWB!
Gregory,
Bush administration (GWB+Hank Paulson+Ben Bernanke –*the gang*) may have committed serious follies, but the Wall Street meltdown is certainly not its handiwork. It just happened to be the flipside of the `leverage’ coin. So if the gang ignored the signals, it’s because they left Wall Street to fend for itself, which was the best thing to do.
The whole world bought into Wall Street paper not just because the yields were enticing, they trusted it for its resilience, track record and reliability (of US dollar as a reserve currency). The high leverage levels were never a secret; they were in fact glossed over and inferred as capital being put to best use. Financial institutions in no other country had the ingenuity to stretch the buck as far as Wall Street had managed. All those who now pronounce it as *excesses* too were busy enjoying the ride in one form or other – either by availing dirt cheap credit to buy luxurious real estate they can’t afford or the savvier of the lot – Hedge Funds and PE funds – availing it to carry out massive buyouts which they couldn’t have dreamt of earlier. The flip side was always there and everyone was aware what they were letting themselves in for. Since it was China and Singapore governments that were parking their surpluses in Wall Street, its I-Bankers couldn’t care less.
But now that the waters around the [Noah’s] Ark begin to swell, the critics notice the unicorns have not jumped on. As in the song, they see only the green alligators, long-necked geese, humpty-back camels…
If anything, blame GWB and gang for doing the second guessing – that made them approve selective bailouts. While Lehman was allowed to collapse, the FM twins, Merril Lynch and Bear Stearns were given a reprieve at tax payers cost. Perhaps Lehman demonstrated not enough genius to screw up, had lot less Chinese investments to qualify ;-).