We can escape this jobless recovery

But the government has to stop hindering the cause and start helping it.

By Jim Cramer Apr 19, 2013 8:57AM

thestreet logoUnemployment line up © BananaStock SuperStockLately, I've been hearing a lot about how housing can't save the economy, that it isn't big enough, that it can't do that much to move the needle.


I hear the same thing about the oil and gas business, that no matter how much we find it doesn't put a lot of people to work, and the trade off -- the increased use of fossil fuels -- makes it so it's not worth supporting.


Let's see. How can I be diplomatic about these pessimistic judgments? How about this? They are all lies, lies that are keeping the federal government from helping the cause instead of hindering it.


First, housing punches above its weight. We know from the retailers and the homebuilders and the bankers we talk to that one dollar toward the purchase of a house can produce an additional $6 in spending to fix it up, make it bigger or gussy it up inside. That's why it needs to be supported and encouraged, because it can produce so many jobs. Instead, the government's made it very difficult to get a mortgage, which has kept housing from breaking out to levels anywhere near where it used to be.


But what did Richard Smith, CEO of Realogy, the largest realtor in the country, say about the government's role in promoting the ability of people to get mortgages?


He said that "the only thing holding lending back is the extraordinarily difficult underwriting standards." That's because the feds have still not finalize the rules for banking under Dodd-Frank. The government has simply not spelled out the definition of who is qualified to get a residential mortgage. Without that definition banks are reluctant to give a mortgage to anyone except those who don't need one. Right now, the FICO score for Realogy's book of business is extraordinarily and punitively high 760. I don't know anyone who can qualify at that level. That's wrong and it is truly stymieing the economy.

Oil and gas? If the president were simply to say "our goal is for us to be energy independent in this continent by the end of my administration," he actually may be able to pull it off. It could produce a million jobs if he did it, just in the oil and gas business. That's not even including the ancillary small businesses, as well as all the factory jobs that would be moved to where the energy from other countries. Yep, that's how cheap our energy has become.


The problem here is that in order to get to energy independence within President Obama's time in office, the president will have to say "look, I hate fossil fuels, but we are going to emphasize natural gas in this country as the surface vehicle, the way they do in other countries with bountiful natural gas."


The president has the ability to order federal government automobiles to convert to natural gas, which would then foster a huge job-creating infrastructure to support those vehicles, which would then make the importation of oil for diesel fuel, one quarter of all that is imported, an irrelevance.


But instead, the president, in order to not anger his environmental base, says that he favors all sorts of energy, which is the same as saying nothing. You need to say "natural gas is our fuel and we are going to use it to make cleaner skies and be energy independent."


Mind you, I am not talking about giving this industry one red cent, unlike the handouts that the farmers got for ethanol or the bankrupt artists got for solar.


The jobs that would come from giving banks certainty when it comes to lending and lending the government's support to natural gas, not just solar and ethanol, could get us out of this jobless recovery. But the feds have to stop hindering the cause and start helping it.


There is a way. I just don't know if there is a will.





Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.  



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Apr 19, 2013 9:37AM

How about this BOLD NEW CONCEPT....the banks decide who qualifies for a loan, provide the mortgage money, collect the payments, keep the profit and don't sell junk to some pension fund.


Get the government out of the mortgage business... period.

Apr 19, 2013 9:47AM
It really is pretty simple, STOP lending to deadbeats....

20-25% down payments.
3 years of provable income.
payments no more than 25% of after tax income.
720+ credit scores. (Showing you pay your debts).

Don't have these?  Save your down payment, get a job, buy something you can afford, and PAY YOUR BILLS...

Why is this so hard to understand?
Apr 19, 2013 9:19AM
The government has made it more difficult to get a mortgage, because they haven't spelled out exactly who is qualified?  How can anyone, with half a brain cell in their head, still think that more gov is the answer?

Some of us on this board have been talking for years about the millions of jobs that could be created by opening up our energy policy and allowing more drilling.  We should have done this years ago.  There's no way Obama will change his energy policy - he clearly doesn't want energy independence.  He's had 4+ years and he blocks it at every turn.  In fact, it's become quite clear, Obama much prefers dependence over independence in every single one of his initiatives and endeavors. 

Apr 19, 2013 10:50AM

Indisputable....At LEAST HALF of those Federal Departments need to be done away with..

ABOLISHED, and/or taken on smaller scales to States for control...


At the Federal Level they have accomplished NOTHING for years...

They are WORTHLESS to the American Public in general.

Apr 19, 2013 10:16AM

Absolutely Housing recovery, will improve the Jobs recovery....

But you "can't build them, and expect your buyers to just come" running...There has to be a balance.


And I forgot to mention the Energy cost have to come down...Yes oil seems to grease the World.


Many Banks did the right thing;  Allowing them to become Investment Institutions was a major problem; They are the ones that should not have been bailed...IMO

UNDERsight by  Government Regulators, failed the American Public..

The Financial Institutions got greedy, repacking, reselling, and distributing financial instruments like opium; Could have been a major factor...??

It wasn't ALL ABOUT deadbeats..And many were paying their bills UNTIL they all lost their JOBS.

Loans were written, money put out at a senseless rate, to people that might not have been able to afford, BECAUSE these "so-called" Banks knew they could make money in other ways.

The "major insurance companies" are doing the same thing today...Be wary.

Apr 19, 2013 9:39AM

We need more small business..... so we need more viable SBA applicants.


Discrimination is bad.

No discrimination is good.

Reverse discrimination is bad.


SBA loans to white men........ It just increases the pool of possible new small business who will hire people. Going back to risky home loans is NOT the solution Bobo.  


Gee Cramer you were doing do well yesterday and today you are talking trash.


Look the economy is simple and not hard to understand. If you want to have a growing economy and a rising standard of living you create jobs that pay people slightly more money than it takes to live on. It really does not matter what they do for a living as long as you make sure you have workers that cover the basic needs of the people. Enough workers to build houses and repair them, enough workers to build and repair cars, enough workers to make clothes and everything else.


Just like 200 years ago when you needed 90 percent of your workers on the farm in order to produce enough food to feed everybody and then modern machines replaced workers on the farms so that now we only need 2 to 5 percent of the population to farm. The same is getting true of making goods for people to live on. We probably only need about 10 percent of our population to build the things we need housing , houses, ovens, baseballs, toothbrushes etc. The number would probably be only 2 percent like farming but we have so many different things that need to be made.


So as long as you cover the farming and manufacturing needs of your people with 15 percent of the population the rest of the 85 percenters can basically do meaningless work and you economy will survive if you pay enough money to people to keep things in balance. Like playing monopoly where the most you can be charged for rent is like $200,000 for a turn around the board so if you give everyone $400,000 when they pass go things will work and you will build up tons of capital in the banks as people deposit their extra money.


This is a economic system that can go on forever. However there are about 5 percent of the population who are really greedy and in position of power that suck all the money out of the system and destroy it. They are the ones who see people getting paid $4 trillion a year and make sure those people have to borrow money by jacking up prices to $12 trillion a year more than the people make.


The whole system becomes unbalanced when you price goods and services at too high of a price. Take the a/c drain line for a friend of mine. It is so full of junk it will not drain anymore and needs to be replaced. It runs 18 ft from the a/c to the outside wall and then drops into the wall to hook up with the rest of the plumbing. At $2.15 for ten foot of pipe and three couplers at like $0.20 it will cost a whole $6 for materials. And as it in running in the attic about 2 hours to replace for someone who does not do this for a living. So the A/C repair people get paid about $35 a hour so at most the job should be $76 dollars plus give them a whopping 50 percent profit so about $114 plus tax so about $123.41 total. They want $350 to do the job what a rip off.


It is this disconnect with reality that is causing a lot of problems as companies have things priced as if $120,000 a year people were buying their goods and services. And yet companies have been mostly only hiring people at minimum wage about $15,000 a year.


This is a total recipe for economic collapse with out any other factors involved.

Apr 19, 2013 9:24AM

Here we go again....TGIF..


I thought Banks qualified or clarified loans to people, didn't know they had to let the Government do it.

Apr 19, 2013 10:44AM
Regulators are a waste of money.   They never figure out anything until it happens.   We had an entire army of regulators.  Did the discover Madoff?  Did the prevent the looting of Enron?  Did they stop a a single bank mortgage loan?  Is Jon Corzine in jail, after looting 2 billion in customer funds?

Answer:  Regulators are a waste of taxpayer money.  Invest in prosecutors instead.

Dodd/Frank will be just as big a failure as Sarbanes/Oxley.  Neither will do a damn thing besides create more bloated government.

End TBTF!  Get the government out of the Mortgage, Banking and Insurance business.  
Apr 19, 2013 10:50AM
Apr 19, 2013 10:46AM
Depending on any one Industry to support America is foolish.  You are always preaching diversification Jim so lets do all we can to enhance and support many different Industries so all citizens can participate in the American dream. I think small business should have a major role in citizens economic security and participation in that they employ the most workers.  The Internationals seem to or actually do have  much more influence over legislation because of their money at the expense of small business.  Many many different contributors make for a strong and successful economy.  Blaming everyone under the sun including China yesterday maybe isn't the best way to prove your point.  But Housing, Energy, Autos, Pharma, and Healthcare are probably all about as important contributors.  But the success of SMALL BUSINESS, now that is the real deal maker.  JMHO 
Apr 19, 2013 10:46AM

Ben Stein and cramer were amongst the biggest cheerleaders of the housing boom .....but hey ...I guess they were making money from someone to promote it ........
Apr 19, 2013 10:30AM

A week ago Cramer was lambasting everyone for being negative on the paper-inflated market.  Now he is blaming the President and the government because of a dip in his epic bull market.


It was housing and banks that led to the financial crisis.  And now he wants the government to step in again.  If only Barney and Frank and Dodd could help us out AGAIN.  LOL





Apr 19, 2013 9:44AM
Cramer is kind of right, improved housing would help with jobs, as would the oil and gas industry.  He left out improving the crumbling infrastructure and setting up of new advanced manufacturing plants.  He could have mentioned the need for free trade with the EU, Japan, Canada, Australia, New Zealand so they could all maximize their strengths since wages are more or less the same in those countries.  Instead he spoke about the areas he most likely has investments in.
Apr 19, 2013 12:09PM
Cramer, this is not a recovery.  We have economic movement without progress because of the absence of growth.  And, Cramer growth comes from freedom.
Apr 19, 2013 9:40AM

Lemmee see,.... Housing and the Financial Sector(Banks) brought us to our knees....




Housing improving, loans to individuals and businesses, and jobs will bring us back..

I also throughly believe that Government funded infrastructure projects will start the Process.


Apr 19, 2013 10:36AM

FROM WASHINGTON, D.C. where are the SOLUTIONS to the federal government programs currently in place?!!!!!!


Dept. of Energy

Dept. of Health and Human Resources

Dept. of Education

Dept. of Labor

Dept. of Housing

Dept.of Transportation

etc., etc,


Name one piece of major legislation (not imposed under emergency measures) that has advanced this Country to firmer footing and more prosperity for it's average citizen?!!!!!!  

Apr 19, 2013 12:12PM
There is no Escape Mr. Cramer !  90 MILLION Americans out of work ! Another 50 million on government aid or disability ! FIGURE IT OUT CRAMER ! There is a HARD RAIN COMING !
Apr 19, 2013 10:20AM

Whatever happened to legitimate discussions on moving the Country forward.............seems to me we are stuck in a morass of policies, new and old, which are actually hurting this nation.


Good example is Dodd-Frank; did not fix what it was designed to fix, the faulty mortgage lending practices!


Bottom line is there is no accountability in Congress or the Presidency (you pick the party stripes) in the past 20+ years for advancing the nation forward! 

Apr 19, 2013 11:32AM

Hmmmm......"Huge portfolios".....hmmmm.


Do I understand there might be a new name coming ??


Like "Nevada Warren" or "Out West Buffet" or "Down South Soros"

Sorry, I had to have a little fun here...!

I ate at a Buffet out West,once or twice..The food was at best fair, chalupas,tacos,rattlesnake,etc..

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