Panicked Jim Cramer Calls On Bernanke To Stem The Subprime Meltdown

Remember this date: August 3rd, 2007. This is the day Jim Cramer melted down right along with the subprime home mortgage market and Bear Stearns. I wrote an article about a month ago on the Bear Stearns implosion due to subprime home mortgage exposure, forecasting their demise, and here it is.

The video clip below shows the panic the fund managers are experiencing and even though Cramer is known for his theatrics this seems like genuine fear to me. He uses words like “Armageddon”, calls Bill Poole “shameful”, and calls on the Fed to “open the discount window”.

It takes him 60 seconds to boil over - wait for it! - or move the slider about a third into it!

Now the question is will the fund managers pressure the Fed to lower the Fed funds rate (which in turn lowers mortgage and home equity loan rates) flooding the market with liquidity weakening the dollar even further?

Probably…big business usually gets what it wants. “Bubbles Greenspan” would have already done it.

Should the Fed “open the discount window”…not on your life.

One bubble leads to another and another. Delaying the inevitable is not what we need right now.

If they do it, inflation takes off killing the buying power for all consumers. But given the track record of the Fed it’s clear they’d rather take care of their friends on Wall Street than the tax payers on Main Street.

And of course, that is exactly why Cramer is so animated…his friends are in trouble and he’s out there asking for another government bail out for his friends.

You can see it’s already happening since gold bounced $10 on Friday…well at least my long gold will start performing now!

Betting on the government to act in favor of corporate interests is becoming so predictable (and profitable), but sadly that’s the only silver lining in this enormous black cloud.

Good Luck

Author: Rob K. Blake
Published August 5, 2007