And that’s why gold stocks like Yamana are selling off – because that’s what happens in a deflationary spiral.
“You can’t touch the gold stocks,” Cramer said.
Not every company with exposure to subprime is going under, though. Cramer said AIG has been buying back stock aggressively, it has a great balance sheet, and it has yet to be downgraded. The company even announced that, at maximum, the subprime problem is worth a few billion dollars, which is insignificant compared to any measure of AIG’s value.
Cramer is still emphatic in his belief that Fannie Mae could help clean up some of the subprime mess, despite some in the press saying it would be wrong.
“It’s obviously not in their charter,” he said, “but any charter can be changed.”
Jim’s charitable trust owns Fannie Mae and AIG.
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