Trading glitch or not, Cramer said Thursday, we can’t get a 1,000-point intraday decline unless something is truly wrong with the world. And he thinks that wrong is government.
Not just any government, either. Cramer means all governments. Greece and Spain want austerity. Britain has no clear majority ruling party. China wants a slowdown, as do Australia and Brazil. And who knows what the US wants? To break up the banks? Stall the recovery?
The problem is that no government ever worries about the stock market, Cramer said. They care about only three things: paying the bills, keeping people working and holding inflation in check. But right now these are conflicting goals all over the world. The areas that generate jobs for others, especially China and Brazil, are hitting the brakes. The areas that are desperate to pay the bills are doing so at the expense of jobs (see: Europe). And the US seems to be focused on punishing rich people who work at banks.
But “as long as governments around the world are committed to agendas that wreck stock market profits,” Cramer said, “my prediction is pain.”
And he doubts the pain will end until we get a definitive resolution, regardless of how much it hurts. That means a breakup of the euro. The reintroduction of the Greek drachma. A default. Not a near default, but a collapse. The European Union has to either kick out Portugal, Italy, Ireland, Greece and Spain or at least suspend them until they shape up.
In China, we need to hear them say the slowdown is complete. And here in the US, Cramer just wants Congress to go on vacation.
Until this happens, Cramer wants investors to fall back on the accidental high-yielders. These are the companies that wouldn’t normally offer high dividend yields, but now do because their stocks have dropped so much. And stay diversified. Cramer offered a recent caller’s stock basket as a good example: Abbott Labs , McDonald’s, Lowe’s , Plains All American Pipeline and Plum Creek Timber .
Investors should consider the food and drugs stocks, too, like Coca-Cola , General Mills and Merck. Or maybe high-yielding utilities like Con Ed or beaten-up techs like Apple. And, of course, gold works in times like these as well. Cramer recommended one of his favorites Eldorado.
Cramer’s charitable trust owns Abbott Laboratories, Apple and McDonald’s.
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