Cramer Byrne Bernanke and the Bailouts 8/13

Well friends I have returned from my travels and after a whirlwind tour, which started in Utah Tuesday night, and included dinner with OSTK CEO Patrick Byrne and his trusted legal eagle Jonathan Johnson, I feel like short sellers should beware. If Patrick's management in the coming quarter is as good as the food at the best Italian spot I've been to out West, there is surely a short squeeze to come. Beware the man in the tin foil hat! But what fun we had discussing how great it was watching gentle Ben thumb his nose at Cramer's begging, and hold steady with the rates. Caving in to Cramer would mean bailing out the brokers and lenders, who were dumb enough to give mortgages to people who they clearly knew couldn't afford them. Think about it, we all know people who suddenly qualified for mortgages when they have little or no reportable income. One of my friends got a 50 year mortgage, (50 years???), and his total pre tax earnings do not exceed his monthly payment, (pre tax earnings). Why should the fed subsidize ridiculous egregiously greedy, and predatory, lending practices? The old adage has never applied so well, you play, you pay. These sub prime lenders and financiers wanted to play the risk reward game and ignore the credit risk of their targets, so they played now they should pay. NOT US, and NOT the FED. Why does the Fed need to clean up the messes? No one in this equation deserves a bail out. You accepted a credit liability with teaser rates, and poor stated income check due diligence and now they cant pay, that's your problem. You faked your financials and found a shaky Title company to jack up your stated income and your appraisal, now the ARM you signed up for has re rated and you cant afford it, again Not the Feds problem. Cramer says that Ben doesn't understand and he should offer relief, that's the worst idea I can think of. What signal would that send to the world if Ben lowers rates?? To me that would mean that after this extended period of sustained economic growth and steady and calculatingly strategic Fed governance, Ben would be signaling to the world that we have problems. To me this would be an alarming sign to the world, it would shake investor sentiment and scare off Foreign Capital Investment, which we rely on even more than foreign oil.

Cramer to me, usually claims to speak for the little people or at least to the people (or so he says), so if he truly is concerned with helping the little people understand the markets, he should explain to them that a Fed Rate cut would be a terrible negative indicator. Also let's see if the big brokers were lending shares to short sellers who then exacerbated the collapse. Wouldn't it be interesting if their funds were going long the sub prime paper while their PB division was lending the AHMs and NFI's to the hedge funds to short? Maybe that's why Cramer is calling this Armageddon. To be continued, hopefully and more than likely the Fed will hold steady, and let the Big Boys take their lumps. That's why they're the big boys, so they need to take their lumps. Bailouts are for criminals not the largest financial institutions in the world. Good Players play hurt, so its time for the Goldman's and the Bears of the world to Go BIG or Go Home. I ended my 4 day 3 city tour in Chi-town and wow what a town.

I am really starting to like this Blog stuff. Stay tuned.

JT