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Think Recession, Not Great Depression

Monday, 15 Dec 2008 | 7:16 PM ET
Cramer on the Markets
Cramer shares his thoughts on the market.

Cramer’s been taking heat for switching his stance on just how serious and dire the market situation is. Critics don’t like that he’s gone from predicting another Great Depression to decrying those who say that’s a possibility. They’re calling him, a la John Kerry 2004, a flip-flopper.

But before the Federal Reserve and Treasury swung into action and banks we were on the verge of collapse, a sequel to the collapse of ’32 was very real. But now that Washington’s throwing trillions of dollars at the problem, which has largely stabilized the financials, we don’t have to worry about that anymore. Hence, Cramer’s change in position.

Sure, we’ll see more of this now-official recession – and it could get a lot worse. But look at the measures taken to address that potential Great Depression: the $700 billion TARP, Treasury Secretary Henry Paulson’s willingness to use some of that money to help Detroit’s automakers, a new president-elect who seems vigilant about America’s economic troubles, Fed Chairman Ben Bernanke’s intention to dump $800 million into propping up credit cards, student and auto loans and mortgages. In fact, by the time Washington is done, Cramer predicted that a total of $7 trillion in stimuli, guarantees and giveaways will most likely have been used to avoid said Depression – a figure equal to all the rescues we’ve had since World War I.

So while it took some time for the Bush administration to act, Cramer thinks we’ve managed to sidestep the worst of what could have been. And based upon those facts, he changed his mind. It’s this adaptability that makes him such a good investor. And if you don’t agree, just remember the words of John Maynard Keynes:

“When the facts change, I change my mind. What do you do, sir?”





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