Stop Trading!: Cramer's Stimulus Package

Friday, 18 Jan 2008 | 3:39 PM ET

President George W. Bush announced his intentions to pass a stimulus package to boost the U.S. economy, and the market responded with a yawn. So did Cramer.

Bush's plan calls for tax rebates for individuals and couples -- possibly $800 and $1,600, respectively -- and tax incentives for businesses, both of which could total $145 billion. While Americans might enjoy a little extra money, access to petty cash isn't the problem as far as Cramer's concerned.

"It's really just a good boost for Apple . People will buy iPods," he said. "Or maybe it's a bailout for Men's Warehouse."

According to Cramer, it's the collapse of the mortgage and mortgage-backed securities insurers -- like MBIA , Ambac Financial , PMI Group , MGIC -- that's hurting the financials so much and causing the paralysis in the market. "I think these are the companies that are the lynchpin of what's wrong," he said.

Stop Trading, Listen to Cramer!
Mad Money host Jim Cramer discusses his own plan to rescue the market, with CNBC's Melissa Lee.

Cramer offered a plan that called for a government handling of the pre-packaged bankruptcy of these companies and a guarantee of 50 cents on the dollar for all $500 billion in insured loans. Even if every loan defaults -- "which is way, way too negative," Cramer said -- it will take just $250 billion to get the economy moving again.

This and a 100 basis-point rate cut could rally the stock market 2,000 points immediately, he said. Wachovia and Bank of America would go up 15% -- Citigroup would double.

"So my plan's offereing 2,000 on the downside if you don't take it, and 2,000 on the upside if you do," Cramer said. "It's certainly a lot better than trying to write a check to Men's Warehouse."

Jim's charitable trust owns Citigroup.

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