Cramer's 10 Tips for Obama
Bush is out, Obama’s in. And with the new administration comes America’s high hopes for an economic turnaround. No doubt the president has his work cut out for him. Luckily, though, Cramer, who’s always willing to offer advice, created a 10-point plan to reinvigorate the economy and send the market higher.
1. Watch for 2009 to possibly reprise 1933. That year the Dow Jones Industrial Average rallied 67% after falling 23% and 52% in 1932 and 1931, respectively, simply because of new leadership. While the Dow plummeted 34% in 2008, Cramer thinks we could see a surge this year now that Barack Hussein Obama occupies the White House, especially considering that the economy’s fundamentals are far better these days than they were 76 years ago.
2. Listen to FDIC Chairperson Sheila Bair. Bair, like Cramer, wants to set up a trust, similar to the one used during the savings-and-loan crisis, to acquire toxic loans from struggling banks. Those loans could then be refinanced – including principal reductions, something Cramer said is imperative if housing is to stabilize. Once that key step is out of the way, we create a system of four or five strong banks willing to lend again. There will be no markets rally until these banking issues are solved.
3. Fix housing, and thus the banks, with a tax credit and some government intervention. Cramer thinks a one-time $25,000 tax credit for homebuyers will lure people back into the market. And if the government buys foreclosed mortgages, banks can unload the worst parts of their balance sheets. This could potentially stabilize the housing sector in time for Cramer’s predicted bottom of June 30. One key part of this arrangement, though: Don’t help the homebuilders. We don’t need more inventory on the market. In fact, we need much less.
4. Encourage China’s economic vitality. This country could be the engine driving the rest of the world. So the U.S. should cheer China on, as it tries to regain its recently lost strength.
5. State governments should raise gasoline taxes to close budget gaps and create jobs. Of course, this depends on lower gas prices. But if they stay down, such a move offers a great opportunity for states to get back on track.
6. Get that infrastructure stimulus right. Obama’s proposed plan would spur new orders to machinery companies, as they supply massive building projects. Watch for an order spike at Caterpillar for proof this is happening.
7. Take over an American auto company. Cramer thinks Chrysler should go to the French-German coalition and General Motors and Ford should merge. Suspend union benefits, he said – something a Democratic president like Obama could do that Bush could not – and then maybe the newly combined company could compete with Toyota and Honda.
8. Eliminate any derivatives that hurt healthy banks, and stop destroying their common stock. This point speaks to Cramer’s dislike of ultra-short exchange-traded funds, which indiscriminately hurt all bank stocks. That has to stop.
9. Put natural gas to widespread use. The U.S. has vast reserves of this commodity, and we need to take advantage of that. Cramer wants nat gas used as a bridge fuel while we search for better clean-energy technology, something that would create tons of much-needed jobs.
10. Call Cramer. Obama needs to seek the Mad Money host’s counsel. Cramer will tell the new president who gets fired or indicted, and who gets to keep their job. As he’s said before, we need some show trials to restore investor confidence – and that’s just what Cramer will give us.
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