I have long respected and enjoyed Jim Cramer, but jeez, could he have possibly been any more wrong than this?  Its one thing to be wrong about the future, but how about getting the present correct?

So Subprime Blows Up; So What, Says Cramer (Jim gives you the scoop on why the $500 billion market is no threat to
the market, even if it fully collapses. Added: July 16, 2007)

Geez, that makes 6,800 look good.

via ZackAttack (here)

Category: Credit, Derivatives, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

31 Responses to “SubPrime? So what?”

  1. spongetoddsquarepants says:

    Barry,

    The funny thing is 3 weeks later Cramer acted as if the whole world was coming to an end. Check this out.

    http://www.youtube.com/watch?v=SWksEJQEYVU

    In Cramer’s mind the subprime mess wasn’t a thing to worry about at all until the stock market declined a few % points.

    Cramer is a clown.

  2. Frank Mayo says:

    Barry,
    Jim Cramer stated many times that there wasn’t a housing bubble. So he’s missed the tech wreck, housing bubble and now the credit crackup and will it hurt him? Only if he takes his own advise.

  3. Eric says:

    spongetoddsquarepants,

    Wonderful. Here’s a longer version, a minute extra on each end. You get to hear the interviewer say Cramer is 62 years old.
    Surprising!

    Note the comparison of people “losing their homes” in Iraq with people “losing their homes” in America–consider that for a minute. I knew things were bad but I didn’t know they were THAT bad!

    Seriously, although Cramer looks and sounds unbalanced (maybe he is too), he may still have a point, if we are interested in maintaining stability. Major damage occurs when too much strain hits all at once–but if you spread the strain out, things may hold up. Or at least, let’s hope so… there is a fine line between providing support at critical moments and creating moral hazard…

  4. jmf says:

    Moin,

    here is another Cramer classic….. Watch especially the last quote!

    AUGUST 2006
    Panic Over Option ARMS Is Just Noise

    Everyone who uses a Option ARM is an idiot and will lose his house when rates go higher. There. There’s a constant theme in the drumbeat of the press that the housing market is the Achilles heel of the economy.

    What a joke. OK, so 12% of borrowers have taken out these unique loans that allow you to call your own shots, up from 8% a year ago. You get to have a teaser low rate that is much below what you would have without it.

    The implication of the media is that people are buying these homes to flip them, and when the value doesn’t go higher they will freak out and become casualties of the new higher rates and will have to default on their houses, leading to a continued glut of homes.

    Sorry, that’s just stupid. I am sure some of the borrowers are speculative, but you know what? Funny thing. The borrowers are not morons. They can read the papers, too. They recognize that homes aren’t selling.

    I would bet that most of these borrowers are simply younger people with new jobs who are correctly taking advantage of a low rate. People who have taken this rate have been very right. The long end hasn’t gone up. It seems like it won’t go up now. So while they build up some savings with the low rate, they get stronger down the road and then can take the higher rate.

    The media call it dangerous. I call it prudence !

  5. jmf says:

    Moin,

    here is another Cramer classic….. Watch especially the last quote!

    AUGUST 2006
    Panic Over Option ARMS Is Just Noise

    Everyone who uses a Option ARM is an idiot and will lose his house when rates go higher. There. There’s a constant theme in the drumbeat of the press that the housing market is the Achilles heel of the economy.

    What a joke. OK, so 12% of borrowers have taken out these unique loans that allow you to call your own shots, up from 8% a year ago. You get to have a teaser low rate that is much below what you would have without it.

    The implication of the media is that people are buying these homes to flip them, and when the value doesn’t go higher they will freak out and become casualties of the new higher rates and will have to default on their houses, leading to a continued glut of homes.

    Sorry, that’s just stupid. I am sure some of the borrowers are speculative, but you know what? Funny thing. The borrowers are not morons. They can read the papers, too. They recognize that homes aren’t selling.

    I would bet that most of these borrowers are simply younger people with new jobs who are correctly taking advantage of a low rate. People who have taken this rate have been very right. The long end hasn’t gone up. It seems like it won’t go up now. So while they build up some savings with the low rate, they get stronger down the road and then can take the higher rate.

    The media call it dangerous. I call it prudence !

  6. Mike G. says:

    Ironically, he was more right than wrong back then. His later rant “They know NOTHING!” was a panic empathy attack for his buds on WS that may lose their jobs.

    He is correct on the reason too, this stuff was packaged up and sold to suckers on a global basis. The risk is not the collateralized loans currently out there but the refusal of those entities buy more debt of any kind, hence the commercial paper problem. “Burn me once…”

  7. dukeb says:

    You can get whip-lash from how fast that moron changes his tune on his video bits…and he does it with such “passion” that if you didn’t see his previous videos, you’d think he had a brain. JC is nothing but a baseball announcer calling the game over the radio.

  8. Francois Theberge says:

    “He is correct on the reason too, this stuff was packaged up and sold to suckers on a global basis.”

    They were “suckers”, insofar as they didn’t realize that the credit rating agencies turned from fairly reliable institutions to pure “profit centers”. That is, mandatory quarterly growth in profits (or else!) trumps prudence, high ethic standards and a culture to lean on the conservative side of evaluation and business practices.

    It goes without saying that banks, lenders and Co. fell prey to the same phenomenon.

    The damage done is just starting to unravel. Witness the latest entry in Herb Greenberg’s blog

    http://tinyurl.com/2ota6e

    If only half of what’s related there come to roost, it’ll be unbelievably bad. So much so in fact that I can’t fathom one good reason why international investors would trust anything US-related for quite a long time.

    A rhetorical question: Does anyone here seriously think the USA can keep going on like now without large infusions of international investing capital?

    Imagine that spigot drying up. We could see a rare spectacle:
    1) Having to put Uncle Sam’s fiscal/budgetary house in order. (GASP!!)
    2) Washington being obliged to get real, doing some meaningful work (GASP!! [bis])
    3) No more spending now and billing the grandchildren (Horror!!)

  9. ZackAttack says:

    JJC’s drumbeat now is that this is like the US in 1990, during the S&L crisis. He thinks the big bank stocks are nearly done going down.

    My position is that this is 1994 Japan, and we’re maybe 20% of the way through it.

  10. michael schumacher says:

    Dartboards can’t yell at you and have a better predictive power.

    I love how people say, “i have respect for_______ but….”

    Call a spade a spade…..I’m sure people HAD respect for Paulson, Bernancke et al however you never see people falling over to stroke them while mentioning something negative about them.

    You’re a big boy Barry….call him out for the clown he really is…..probably makes more money selling shitty books them his “picks”

    Ciao
    MS

  11. bucky katt says:

    I’m sorry I wasted 4 minutes watching that bald idiot. He is a modern day charlatan that some people just can’t get enough of.

  12. SAM says:

    If Accredited Home Lenders is perhaps the worst lender around in Jimbo’s mind, then why was he relentlessly pumpming the stock one year ago at its 52-week high. Oh, wait I know….he’s clueless.

  13. Peter Davis says:

    I’m sorry, but Cramer is just a flat-out goon. It seems fitting that he would have a show on CNBC, given that almost all of its reporters seemingly know absolutely nothing about the markets (Anyone ever watch Erin Burnett or Maria? Just painful.)

    Cramer is the flavor-of-the day. His opinions seem to be guided by whatever news happens to break that day. This from a man who claims to be the champion of the retail long-term investor. While I personally pay no heed to him, I genuinely feel for all of the investors who will unwittingly take his advice. If we do go into a bear market, he’s going to get people killed, as he screams “cheap, cheap” all the way down.

  14. Ross says:

    Cramer? Anyone remember Joe Granville in the 70′s 80′s? Just entertainers folks.

  15. Eric Davis says:

    I get his blog streaming to my desktop, and that is hysterical, I’ve seen him pick more bottoms as tops and tops as bottoms…

    But who is the fool, the man who puts his opinion out there and is wrong, or the people who take his opinion as if its the voice of the “second coming”. He is just a man, and I have received plenty of good ideas from him (and dodged, plenty of bad ones), But I know to do thorough research on anything he says, and remember that there are a ton of lemmings following him.
    And I’d rather listen to him than any of the other “Traders” on CNBC. If you want to talk about being wrong, put him in perspective relative to those other jokers. I have no idea how most these guys make money, but certainly not by listening to their own advise(which they don’t, they just like the sound of their own voice, half the time).
    Sub prime, as a proportion of the mortgage market is nominal, unless you realize they are the canaries in the coal mine..

    The Dow is almost at 13800, I hate to say something I don’t mean… but that looks fairly contained to me.

    MBIA is having liquidity problems and the Dow is up 100..

    Giddiup, I love zumiez…Shake and bake.

    So, yes Cramer isn’t “Jesus”, and there is no santa claus.

  16. Mike G. says:

    Cramer is not 62. For some reason he likes to say he is (and then usually explain that he really isn’t). I’m not quite sure why he gets a kick out of that, but there’s a lot to him I don’t get.

    Having said that, the guy has a proven track record of very successful investing. Maybe he just had a bunch of really smart people working for him and took all the credit, but I doubt it. As with anything else, do your own homework.

    CNBC has plenty of faults, but it’s kind of funny that both Cramer and Fast Money are at least public in their mea culpas. I don’t know the true value of it because if you bought a stock on their recommendation and it went down you know damned well it went down. I guess it is the CNBC “We’re Sorry”? Still, it doesn’t hurt I guess.

  17. Terence Burns says:

    I used to have a lot of respect for Cramer, too. Back when he started writing for The Street.com he had a lot of good information in his columns. Since he became a media celebrity his opinions seem increasingly detached from reality. I know he still got “skin in the game” due to his personal portfolio, but I think he’s not nearly as sharp as when he ran his hedge fund. Maybe he’s not listening to “The Trading Goddess” so much anymore”?

  18. Greg Feirman says:

    I thought that 6800 call was a mis-print! Got to give you credit for moxie!

    As for Cramer, I think Cramer’s strength is that he knows the story for so many stocks. So you can get a lot of ideas from watching him and reading his stuff. But I don’t think macro is a real strength of his. So you take what you learn from him and fit it in with your own approach. And the guy does have a great mind for individual stocks.

  19. lewis says:

    Jim, Cosmo, whatever, they are both great entertainers, but I wouldn’t be taking investment advice from either.

    Without siding with Jimbo, I am quite entertained by a financial system that can take the loan papers backed by assets which have fallen, oh, about 5% in total value and make it into a mega disaster. That takes all-American ingenuity and financial know how.

    And now lone Ranger Kemosabe Bernake and his trusty sidekick Tonto Paulson are riding to the rescue, delivering just the right rescue plan for just the right disaster.

    Anybody think we are gonna wrap this episode up in thirty minutes and ride off into the sunset? If so, I have a subprime mortgage on a bridge you can invest in…..

    Wish I could switch channels…..

    Lewis

  20. michael schumacher says:

    >>And now lone Ranger Kemosabe Bernake and his trusty sidekick Tonto Paulson are riding to the rescue, delivering just the right rescue plan for just the right disaster.>>

    I actually see it the other way around…..

    Paulsen runs the economy while Bernancke is just around to print the money for it and accede to the needs of the bankers.

    Ciao
    MS

  21. Eric says:

    Speaking of Erin Burnett and pain, take a look at this one–

    http://www.youtube.com/watch?v=WfWjQZVNd4o

    I’ll be generous and suggest she wasn’t thinking when she said that…

  22. Bob A says:

    IF he was a savant, he’d be an idiot savant.

  23. Eric Davis says:

    Can’t we talk about what an Assmonkey Dennis Kneale is. That guy doesn’t even know what a stock is, and likes to give Retroactive stock advice. How that guy has a job, is beyond me.

  24. Innocent Bystander says:

    I understand Cramer went into cash before the tech crash. So did I, so we are even. However, Barons article about him a few weeks ago noted he makes a total of 7000 recommendations a year. So I suppose a few of those are right. But a lot of them are wrong too. I just like to watch him on down days, peddling jars of Cheez Whiz as a good investment, after his four horseman are creamed.

  25. ZackAttack says:

    Well, judging by Mr. Market’s reaction to the UBS writedown, the BA fund closing, the 13.5% vig MBI must pay for a frayed lifeline, Cramer may wind up being right.

    I save things like this (I also have in reserve a Cramer piece venerating the Tan Man, plus a Ben Stein piece about a week from the top where he advocates loading up on IYR) to assuage the pain of being bearish now.

    Right now, adding to my shorts, I feel like a Vast Bullish Conspiracy is arrayed against me.

  26. Mike G. says:

    Cramer even admits he went to cash based on his partner’s or someone else’s urging. So he only gets half credit for that.

    As for Kneale. Yes. He gets the 2007 Asshat of the Year award. I want to see him sh*t on Battapaglia when he’s within punching range for a change instead of via satellite :)

  27. Eric Davis says:

    He is on again, so I have to post about dennis…..

    One of these days his voice is going to change, and he will be a real boy.

  28. John says:

    Barry I suppose since they give you a few gigs it’s a requirement not to be rude to fellow media stars. But for Cramer couldn’t you make an exception. And while you’re at it add on that other boosting twit Kudlow. I suppose we have to understand if you don’t bite the hand that feeds you but this pair of beauties are something else. They even make that bozo Stein look good. I’m really down on these people because somewhere along the line some hayseed is going to think they are real and buy their line of chat. And before you know where you are you have thousands of inexperienced and gullible investors throwing away their life savings based on the rantings of twits like these. There really aught to be a govt health warning before they appear. Kudlow/Cramer can be dangerous to your financial health.

  29. Pat Gorup says:

    I’d like to see CNBC (Can Not Be Credible)reunite Cramer with Kudlow then there’d only be an hour of those two bozos on per day. No need to rebroadcast later!

  30. Amused Onlooker says:

    From what I can gather all his past success was from trading, not great stock picks.

    It’s a different market from the 90′s and his track record has been pretty average since.