Cramer: No Rally Until Obama Steps Up
The markets will continue to push lower until leadership steps forward to inspire confidence that things will get better, Cramer said Tuesday. Until President Obama renews our faith in stocks, no rally will be sustainable.
“With the right push from the president of the United States, virtually all the negatives we're fretting about today could partially be fixed,” said Cramer. “The president has enough firepower to blast aside the obstacles standing in the way of higher stock prices ... and a stronger economy. We just don't know if he has the will or the inclination.”
Cramer said it’s hard to imagine Obama acknowledging the stock market, let alone embracing it. But the “Mad Money” host thinks the president, who campaigned on “change,” has the power to turn the markets around.
Take disappointing July existing-home sales, for example. What an impact Obama could have made if he had said he’d do everything in his power to increase the demand for housing and tried to convince the American people that, with lower home prices and interest rates, it’s a good idea to buy a house right now, Cramer said. Obama also could have told the country that Federal Reserve Chairman Ben Bernanke saw this coming and is keeping mortgage rates low to sop up the excess housing stock.
When it comes to capital markets, Obama could voice support for keeping taxes low. Because many people invested in the market are not in tax-advantaged vehicles like 401(k)s and individual retirement accounts.
“Think about how much good it would be if he pledged to grow the economy by working with business, not against it,” argued Cramer. “To collaborate with the fat-cats in order to figure out how to create jobs, including incentives like payroll-tax forgiveness.”
In an “ultimate sign that he truly cares about job growth,” Cramer said the president could compromise on fossil fuels and endorse natural gas to help spur hiring while making the US energy-independent.
It would be “simply breathtaking,” said Cramer, if Obama decided to clean out his economic team, with the exception of Treasury Secretary Timothy Geithner. In turn, the president could welcome new people with fresh ideas.
“Obama lacks imagination, to say nothing of vision, when it comes to growing the economy,” said Cramer. “That's critical, and it's sad.”
Any combination of these things would help jumpstart the economy, Cramer said. He hopes the president will try to get investors back into the stock market by talking about ways to prevent another “flash crash.” Cramer said he doesn’t want Obama to raise taxes, but if the Republicans take control of the House after the November elections, he worries that instead of tax increases and stimulus spending, there will be a lot of belt-tightening. Reducing the deficit is the only thing Obama and the Republicans seem to agree on, and the very opposite of what’s needed to be done right now.
Ultimately, Cramer said, Obama needs to announce that private industry is not the enemy. If jobs are to be created in the US, they are going to come through a partnership between big business and the government, not the government itself. The president should have a sit down meeting with the prominent heads of business, where he asks what they need to start hiring and gives it to them. Obama shouldn’t give corporate America every item on their wish list, of course, but most companies are brimming with cash and perfectly able to hire. So would it hurt to ask?
Housing isn't about building or selling houses, Cramer said. It's about building jobs and building business and growing the economy to put people to work permanently.
“All of these housing issues could begin to go away if we create jobs, and the president needs to be the point man on employment,” Cramer said. “If he makes a real effort to fight joblessness, then and only then can this market have a sustainable rally.”
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