Cramer’s outrage this week is directed at Senator Richard Shelby. Just hours after House and Senate leaders from both sides of the aisle said they’d agreed “in principle” to a bailout deal, Shelby was in front of reporters outside the White House saying no agreement had been reached. Apparently the Alabama Republican doesn’t realize just how important this is.
Here’s a quote from Shelby: “The market is overwhelmed…by greed, by mismanagement, by a lack of regulatory reform in the past and regulatory oversight, and the bottom line, as I see it, is that visiting the taxpayer with it – I think that’s shameful myself.”
Interesting, Cramer noted, because Shelby’s Republican party has always been a huge proponent of deregulations and non-regulation. And these are the very things that got us into this mess.
While Shelby and his party don’t seem to care that, if this plan doesn’t pass, it could lead to the collapse of the entire American financial system, Cramer said. The economy would follow, so too would 20% to 30% unemployment levels and market losses that could possibly bring the Dow down to as low as 8,000.
Cramer’s just as outraged by academics like Robert Lucas, a Nobel prize-winning economist, who told Bloomberg recently that there’s no rush to complete a deal. Oh no? Didn’t the largest bank failure history (Washington Mutual) happen just in the past 24 hours?
Lucas also said the problems we’re facing now are limited only to the financial sector, but that’s wrong, too. Companies can’t borrow money, businesses can’t complete transactions, student loans will become increasingly difficult to get and mortgages in the hardest-hit areas also will dry up. All this goes way beyond just the financial sector.
Here’s something to keep in mind when you consider comments such as these from the Ivory Tower: These guys have tenure. America does not. Most people have their jobs to worry about if this deal doesn’t go through.
All this talk about a Wall Street bailout, and these guys – Shelby, his party, the academics – are completely missing deals like JPMorgan Chase’s purchase of Washington Mutual’s deposits. It’s a big win for JPMorgan, sure. But if the deal had passed, and the government was able to seize the failed WaMu, taxpayers also would have been winners here. After all, Paulson’s plan includes a provision that allows the government to take a stake in any institution it bails out. That’s money in the pocket of taxpayers. But no, House Republicans, Shelby and Lucas-leaning economists are holding the deal up, so we make nothing.
Just in case you need proof, just look at how Bank of America, JPMorgan, US Bancorp and Wells Fargo did Friday. (Up 7%, 11%, 4% and 9%, respectively.) That’s because the FDIC is on the verge of seizing other failing banks, and these guys – who Cramer said could soon be the U.S.’s only superbanks – will most likely get the leftover deposits.
Have Shelby and the rest learned nothing from Fannie Mae and Freddie Mac? From Lehman Brothers ? What about AIG? Even the once-great Goldman Sachs needed Warren Buffett to prop up the former investment bank with $5 billion.
Apparently, Richard Shelby and his ilk would like to take the U.S. back into another Great Depression. Cramer’s outraged about that, and you should be, too.
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