Secondly, the Chinese could come in and take a major stake in one of these firms. This would immediately alleviate some of the problem and allow for bids in the credit markets, Cramer said. Right now, there are no bids, causing a lot of these hedge funds to be unable to raise capital at any price. Many of these bonds actually have some value in them, Cramer said, but no one is there to take advantage of it.
The third thing the private sector could do to turn things around has a name: Warren Buffett. The billionaire could set up a fund to buy some of these bonds and take advantage of the collapse of the market. He could take a stake in one of the major firms like he did with Salomon Brothers years ago, making it clear that there are billions of dollars in liquidity out there – you just need to know how to find it.
Fourth, the Middle Eastern interests that are taking trillions in profits from the run-up in oil could buy a major stake in a major bank. Or they could just buy the whole bank, Cramer said. This happened in 1990 to Citigroup and a major crisis was averted because of it.
Bottom Line: These are five resolutions that Cramer thinks the private sector could accomplish to avert an all-out economic crisis if the government doesn’t take action.
Jim's charitable trust owns Goldman Sachs and Citigroup.
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