Now matter which area of the market is hurting, Cramer said during Wednesday’s show at the University of Iowa, it all comes back to housing.
Cramer was in the Hawkeye State for his latest Back to School Tour stop at Iowa’s Henry B. Tippie College of Business. He opened the show talking about the “parade of horribles” we’ve seen lately:
- Best Buy said “seismic changes in consumer behavior have created the most difficult climate we have ever seen”
- Treasury Secretary Henry Paulson announced he won’t be using the $700 billion granted him for toxic mortgages, focusing instead on consumer debt
- AIG taking even more money from the federal government in order to stay alive
- GM, Ford and Chrysler on the verge of collapse
- Insurers like MetLife, Prudential and Principal Financial Group desperately needing to raise cash
The list goes on. But no matter what we’re talking about, Cramer thinks the epicenter of these problems is housing. Consumers who couldn’t afford a home took out a mortgage anyway – even GM got in on the action, lending money through its GMAC division. Banks and brokerages packed these subprime loans into bonds and sold them. AIG insured them. Then the housing market imploded and all these players took a hit.