Cramer sees Pulp Fiction on Wall Street

News item: The Dow industrials fell 306 points today after Merrill Lynch reported a quarterly loss of nearly $10 billion.

Analysis: We turn again to the reliable and reliably entertaining Jim Cramer of CNBC (pictured), who today spoke the obvious disguised as the controversial: That these writedowns by financial institutions, as dire as they sound, are based in part on assumptions likely to prove optimistic. In particular, Cramer argues, they are based on the fiction that financial insurance policies will ever pay off. And that makes them... yes, fictitious:

"The great fiction continues," Cramer fumed, talking in general about financial earnings reports. "These are all novels. ... They've written down the bad parts. they don't realize, the good parts are bad too. There's just too much fiction involved here."

Ratcheting up the outrage, he observed -- again the obvious disguised as the controversial -- that the Justice Department and the SEC are, at this moment, asleep on the job: "Where the heck is the SEC? What are they doing? ... How can we have these levels of fiction in financials after Sarbanes Oxley?"

In one last burst of investor populism, Cramer noted the likelihood that the executives who made the bad decisions that resulted in today's headline fibs will walk away wealthy. "Late stage rapacious capitalism," he said. "Everybody gets 30 million dollars for screwing up."

Yes, I'm a Cramer fan. So sue me. Comments? Insights? E-mail story tips to peter.viles@latimes.com.
Hat tip: Better Village
Photo credit: AP

Comments

[Joseph... the Real Estate Guy]

I like Cramer when he is being interviewed and not being the "Obnoxious" on his show.

[Cal]

"Yes, I'm a Cramer fan. So sue me. "

Just don't listen to him for investment advice :).

Not because he might have good or bad picks but his trading style is a guaranteed loser over the longterm. He advocates relatively short term positions (1-2 years) and individual stocks. What is funny is he calls 2 years long term.

The taxes and trading fees alone would kill you, much less any losses if you happened to underperform the market. The math on this is subject is compelling. When investing you have to first admit that you can't beat the market before you can go on to anything else. Once you realize that you then strive to match the market and keep costs & taxes as low as possible, that is the only proven long term strategy.

[peteviles]

Cal writes of Cramer, "Just don't listen to him for investment advice."

Thanks, Cal. I should clarify: I like Cramer's take on the economy, the Fed, and the mortgage and credit mess. I couldn't care less about his stock picks. I would never listen to him for investment advice. I'm a terrible stock picker, I know that, I have no interest in trading stocks, picking stocks, or even talking stocks.

[Theorist]

Cramer is a secret agent dispatched by Goldman Sachs to create continuous instability in the markets, housing, mortgage or otherwise -- to further their end of complete control of the financial world.

He's less scary than Oprah, though. He doesn't have his own television network. Speaking of Oprah, how come we haven't blamed her for our economic meltdown? Just like the AAA rated securities and corporations, she seems too good to be true. Speaking of Angelo Mozilo, anyone read the report that he disinvited himself from a keynote speach down in San Diego after his appearance was protested by the locals? He might just have to flee to another country like Michael Jackson.

Enough Silliness. Here's some hard Los Angeles real estate data: A single home was sold in Palos Verdes today, driving the year over year sales price figures up 150%. (Just a poke at the Dataquick numbers -- some of their market slices have huge upticks and some have huge downticks, and these ones tend to have had very few homes sold over the year).

[G Spot1]

Welcome to the "party" Jim. If you'd be reading the blogs you'd have done this rant at least 4-5 months ago...

[TakeFive]

"The taxes and trading fees alone would kill you..."

Yes, they would kill YOU. Transaction fees are the sweet, sweet milk of traders. Also 6% commission fee Realtors and mortagage peddlers.

[Michael Snyder]

Did anyone catch Nancy Pelozi on CNBC yesterday? I did, and now I'm really worried. Setting aside her schoolgirl demeanor, it's patently obvious this woman has absolutely no clue about anything to do with the economy! All she could come up with was a promise to "work in a bipartisan fashion" to achieve a short term stimulus package.
Can we talk? With this kind of "leadership" it's small wonder the ship has run aground! Chairman Ben Bernanke still doesn't think we're in a "recession" and GBW thinks a tax rebate of $800 per family will stimulate the economy. Got some bad news for George; $800 is about what I spend in gasoline every month. If you want to "stimulate the economy" bring home our troops and stop the trillion dollar a month hemorrhage in Iraq. That will remove much of the "fear factor" from the price of oil and let it fall about 30% to a real market value. That will stimulate the economy. While you're (GBW) at it you might want some of your Wall St. buddies to start telling the truth to each other so some level of transparency and accountability can return to the financial sector allowing for the return of available credit.
Now, if I can just come up with this weeks winning lotto numbers...

[Rob]

Jim Cramer.... " YOUR FIRED !! "

[mike rip]

Wow, that was one of his greatest rants ever. Say what you want about Cramer, there's no argument that these latest financial meltdowns by the big banks/investment houses must be investigated and the crooks responsible held accountable.

I also loved this quote at the end:
"Who do we want to own the banks, the communists or the terrorists?"

[Ace]

Peter said 'Yes, I'm a Cramer fan. So sue me.'

Consider yourself served. I will see you in court.

[Bubblewatcher]

Isn't this the same Jim Cramer who accused Elliot Spitzer back in August of working to tank the housing market by investigating appraisal fraud at Wamu? Or is this the same Jim Cramer who interviewed Angelo Mozillo on his show about a year ago and lauded him as the only honest mortgage broker in America, a guy who didn't handle those crazy, bad loans?

Oh wait, it's both.

Something tellls me this is one rapacious capitalist who's responding not to the truth -- which he probably knew all along - but to the recent goring of his financial ox. Somebody needs to ask him when and if he sold his shares of CFC.

[Arti]

That's correct Bubblewatcher, this is the same Cramer who decried Sarbanes Oxley and lamented that it would kill entrepreneurship, even as he now cries for it to be used to its fullest extent with respect to assessing the financial disclosures of these companies. He's a hysteric who contradicts himself constantly.

[MyLessThanPrimeBeef]

Say what you want about Cramer, and I haven't watched him since before the Nasdaq bubble bursted, truth, even if it's uttered by Satan, a liar, a cheat, a felon, a used car salesman or a real estate agent, is still true.

And this is the truth, God's truth, the Big Bang truth : 'Creatio ex nihilo' can only be done in the Bible or by very smart physicists. For those of us who are Latin challenged, 'Creatio' is, I guess, creation. 'Ex", I suppose, like in my ex-girl friend, is out, outside or out of. 'Nihilo,' well, all you nihilists on this board should have an inkling what that is - nothingness. To get something out of nothing - well, let's be frank here, only God or your local friendly physicist can do that.

And like Bill Gross of PIMCO pointed out the other day, what they have now on Wall Street is based zero reserve lending. These geniuses, each thinking he or she was God, tried to get something out of nothing, with zero reserve, with the nothingness that is subprime lending or stated income. And for this blasphemous transgression, we must be punished. If only we can find ten good, honest people from among this Gonorrhea and Satan of bankers, lenders, borkers and government regulators, mabye, just maybe, we can be spared.

[Uncle Billy]

Erin Burnett of Cnbc was on Conan O'Brien last night talking about 2 things:

1) Cramer's previous meltdown. She was alone with him while he had a psychotic, screaming, on-air episode. She confirmed that he is in fact, "certifiable."

2) Her previous comments on how Bush was a monkey. Conan then showed a number of photos comparing Bush's various facial expressions to monkey facial expressions.