by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
“I demand that you refinance your home in three months and buy a bank stock“- Jim Cramer
Cheerleader Jim Cramer is now certifiably confident that housing will bottom in 2009 and the economy is saved because of the Fed’s recent action.
Cramer was, of course, ecstatic. This is exactly what he’s been calling for since his infamous “They know nothing!” rant on Aug. 3, 2007. The Fed’s move was so bold that he’s confident that his housing-bottom prediction for the third quarter of next year is virtually guaranteed. And the willingness with which the Bernanke seems ready to throw money at the problem – any amount of money necessary – has opened the door for the lending and borrowing that is so essential to a properly-functioning market and economy. Banks will open their coffers. Mortgage money will be available
Cramer finishes his monologue with the statement, “It’s raining Benjamins from the sky“. That’s not inflationary, is it?
PS: I”ve taken over 20 appplications, in the past three days, for refinance transactions; maybe 6-8 can fund. If the FHFA and Bernanke abolish appraisals for rate/term refinance transactions, which seems like the next step, Bernanke will truly be “one of us”.
I”m not saying nuttin’ other than “operators are standing by“
Joe Strummer says:
Insane. Free money. Get yours before inflation makes what you have worthless anyway.
December 17, 2008 — 6:03 pm
Geno Petro says:
Booyah indeed! Appraisal Abolishonists! How much fun is that! (?)
“6-8 might fund” (Actually, that sounds good.)
Member of the same club as Bernanke…now I gotta chew on that one a while
December 17, 2008 — 8:00 pm
Geno Petro says:
Booyah indeed! Appraisal Abolishonists! How much fun is that! (?)
“6-8 might fund” (Actually, that sounds good.)
Member of the same club as Bernanke…now I gotta chew on that one a while
December 17, 2008 — 8:00 pm
Sean Purcell says:
Just how much inflation can we stuff inside the closet? Thank God the government had got a handle on this or I’d be worried. Now… which line do I stand in for my loaf of bread?
December 17, 2008 — 10:04 pm
Mike Simonsen says:
there’s nothing that frightens me more than a Jim Cramer-predicted bottom. Well, except maybe a Paul Krugman-called bottom. Look out below.
December 18, 2008 — 9:00 am
J Boyer Morristown NJ says:
I watched that episode of the Cramer show. He is kind of a nut, a entertaining nut but a nut just the same. On his points concerning the feds latest actions, I think he is right, and I think the fed is finally doing what needs to be done. To hell with inflation, get the economy moving no matter what it takes. Print money until there is no more ink or paper to print with.
Interesting side note, Jim Cramer lives in Summit New Jersey, a town just 5 miles from me, and one I sell homes in.
December 18, 2008 — 10:05 pm
Jeff Brown says:
Wonder how history would’ve been different if, back in ’30 the Fed lowered rates, increased the money supply, etc.?
Cramer’s a nutbag alright. A nutbag who ran circles around much of his competition while active. We should all be as crazy as he is. 🙂
December 18, 2008 — 11:16 pm
Sean Purcell says:
To hell with inflation
I cannot comment on Cramer with the authority that others have… but I don’t mind admitting I am becoming more than a little scared. “To hell with inflation?”
The fed – sometime next year – is going to have a balance sheet of nearly 3 trillion dollars! They will have to eat that money at some point. The economy cannot survive that much money chasing a dwindling supply of goods. Anyone notice the manufacturing platform shutting down? Anyone notice the rapid decrease in means of production (read: unemployment)?
We keep stuffing inflation into a closet likes there’s no tomorrow. The problem is: there is a tomorrow. Inflation is and always will be the monster that the Fed has warned us about for over twenty years. We are in the midst of creating runaway inflation the likes of which we have never seen.
Talk about short sighted. Solving today’s short term -albeit painful – problems with years of an economy in distress is no answer. I said it before and I’ll say it again: get ready to ask which line you stand in for your loaf of bread.
December 18, 2008 — 11:44 pm
Brian Brady says:
I’m straddling a fence here. On the one hand, I agree with Jeff because I think Bernanke is the right man for the job because he follows Friedman’s criticism of the Fed in the 30s.
On the other hand, I can’t help but remembering Joe Strummer’s comment about the UK’s Depression recovery.
December 18, 2008 — 11:57 pm
John Sabia says:
If your address ends with an even number, line 1. Odd number line 2. No number? Line 3.
December 20, 2008 — 8:10 am
Sean Carr says:
Let us turn the mike over to Nobel Prize winner George Akerlof and Paul Romer. From the abstract of their 1993 Brookings paper:
Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society’s expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.
Bankruptcy for profit occurs most commonly when a government guarantees a firm’s debt obligations. The most obvious such guarantee is deposit insurance, but governments also implicitly or explicitly guarantee the policies of insurance companies, the pension obligations of private firms, virtually all the obligations of large or influential firms. These arrangements can create a web of companies that operate under soft budget constraints. To enforce discipline and to limit opportunism by shareholders, governments make continued access to the guarantees contingent on meeting specific targets for an accounting measure of net worth. However, because net worth is typically a small fraction of total assets for the insured institutions (this, after all, is why they demand and receive the government guarantees), bankruptcy for profit can easily become a more attractive strategy for the owners than maximizing true economic values…
Unfortunately, firms covered by government guarantees are not the only ones that face severely distorted incentives. Looting can spread symbiotically to other markets, bringing to life a whole economic underworld with perverse incentives. The looters in the sector covered by the government guarantees will make trades with unaffiliated firms outside this sector, causing them to produce in a way that helps maximize the looters’ current extractions with no regard for future losses….”
Re-read the key phrase: “pay themselves more than their firms are worth and then default on their debt obligations.” This has happened en masse in what formerly were investment banks who have now become wards of the state.
But no one is willing to call this activity for what it was, is, and will continue to be.
December 20, 2008 — 12:16 pm