Battling the latest bear construct

Remember, this is 2010 -- any confidence will be undermined.

By Jim Cramer Feb 8, 2010 9:11AM

 Jim Cramer

By Jim Cramer, TheStreet


You saw it this weekend in the papers. The next saga. The next serpentine that we will hear about endlessly from the media, courtesy the hedge funds, is that all government stimulus from now on leads to government defaults. We will be stuck hearing quotes on sovereign credit all year. It will be the next big distraction, the next big bear construct meant to take the markets down.


So let's trace it out so you know what will face us.


First, the media always says there can't just be one. Can't just be one country. Can't even just be four countries, which the media will talk about just because it is in on the joke, the joke being "PIGS" like BRICs. (PIGS is Portugal, Ireland, Greece and Spain). We know, the media tells us, it can't be contained within these regions.

Contagion's a great story whether it be SARS, H1N1 or government debt.


Second, we know that the next country hit will cause another concussion to our equity markets. In fact, every time the rumors start our markets will get hurt.


The connection? It is a hilarious one: Because "they" are in trouble our dollar will be stronger, so our earnings estimates will come down. So what if it is just currency, we will be hammered, including the companies that don't export much at all because they are in the S&P 500 and the hedge funds who play this game -- shorting the foreign debt, shorting the euro, shorting gold, shorting oil and shorting equities via the S&P -- have big mouths and own the media.


Once again, some big hedge funds can bend the CDS spreads and cause the home-game panic. I will attempt to stop it. I say, "I", because, well, that's what I will do. I will fail, people will sell for no good reason and the shorts will make a lot of money before everyone realizes that it was much ado about nothing when it comes even to exporters like Procter & Gamble (PG) and McDonald's (MCD). That's where the big money will be made, by the way, as these stocks are driven down.


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The shorts are aided by a president who simply won't stop and won't listen. He is obviously a nice man who cares a great deal about health care. He reminds me of the doctor I went to see at the Mexican farm workers clinic in 1979 when I had hepatitis, mononucleosis and a jaundiced liver, all fallouts from living in my car.


The doctor was fabulous. He was determined to give people who fell through the safety net the same care that the rich got. I had blitzed through the net because the company I worked for had an HMO that was only good in Southern California and I was in Northern California on assignment and I could only afford the farm workers' clinic. He was earnest and well-meaning. Just like our president. The president's reluctance to be more than the doctor at the Yuba City clinic makes the bear case so easy.


The shorts are also aided by the charts, which are riotously horrible. And they are aided by an oil market that is so manipulated by leveraged hedge funds that the idea it is worth anything at all and represents anything at all is just one big joke -- on us.


Anyway, that's the set up. Get ready to battle it. Keep in mind that this is 2010 so every time things look good we will hear about the next big country, like Estonia or something. That's a good one. Maybe Luxembourg. Certainly the Netherlands. Maybe Sweden. Oops, no, they went through this once before and figured it out.


The whole chain will make it so any confidence will be undermined every minute. That's why I am emphasizing that you figure out which stocks are going to get hammered by the litany that won't be and strap yourself in.


You will make a lot of money. Because the big-money bears who plant these stories have so much money under management that they can't trifle with little stories like stocks.


You have been warned.


At the time of publication, Cramer was long Procter & Gamble.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


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