The Depression Is Over
If the definition of a bull market is a 20% rally off the bottom, Cramer said Thursday, then we are definitely in a bull market right now. The Dow and S&P 500 are up 23% and 25%, respectively, from their recent lows. Add to this joyous trend President Obama’s endorsement of the markets, and you can see why Cramer thinks we are waking from our long(ish) national nightmare.
From the G20 meeting in London, the president called the markets “the most effective mechanism for creating wealth,” a noticeable shift for Obama. In the very recent past, he’d shrugged off the importance of stocks. But he now seems to realize how important they are to Americans’ 401(k)s, 529s, IRAs and retirement accounts. Wall Street liked what it heard, and that’s at least part of the reason why the Dow jumped 216 points today.
This follows a string of bold actions from Washington that is crucial to our emergence from a depression. Federal Reserve Chairman Ben Bernanke took interest rates to zero percent and lent money to investors willing to enter the asset-backed paper market. As a result, mortgages rates are down and housing and auto loans are picking up.
Treasury Secretary Geithner has played his part as well. He’s offering cheap money to any hedge fund willing to buy banks’ toxic assets. Well, Cramer said they are detoxed assets now, thanks to the secretary. The very collateralized debt obligations that so damaged the financial sector’s balance sheets are no longer a problem. Nor do we have to worry about bank nationalization anymore. The government is on board, willing to do whatever’s necessary to save both the markets and the economy.
The depression, which Cramer said started when Lehman Brothers was allowed to go under, is over. Of course, that doesn’t mean we’ve escaped the recession yet, though. There’s a good chance Friday’s unemployment number will look dismal. Still, the Mad Money host is positive. He thinks it’s time to start buying stocks. Just wait for a pullback, though. Investors shouldn’t pile in after such a big move in the market.
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