Rally had nothing to do with Bernanke
It wasn't ridiculously low mortgage rates. It was Spain avoiding a depression.
Updated at 11:45 a.m.
All day Wednesday I heard the same thing, that we were rallying because of Ben Bernanke. That's just wrong. We were rallying despite Bernanke, meaning despite his ability to do anything more than he has.
The people writing these stories either don't know what the Fed does or have never bought a mortgage or gone for a commercial loan, something that I do as a matter of course. Mortgage rates are now ridiculously low. They are not going to entice anyone else off the sidelines if they go lower. You have to be a total knucklehead if you haven’t refinanced already. Plus, the market's flight-to-safety trade has already done more to lower rates that Bernanke can do.
The stories are ridiculous. They made me angry because they presume Bernanke can do something.
The rally Wednesday was about a deal to save the Spanish banking system. While the Spanish government has steadfastly told us not to worry, it has to be worried, because it has a depression -- though not a Great Recession -- situation brewing with 25% unemployment and the total collapse of real estate.
I am hearing that there are 500 billion euros in bad loans and the Spanish bond market is on the verge of going to 7%. The issues are all Spain, especially because if Greece defaults and then gets kicked out, it will print drachmas and the hedge fund vigilantes will then operate on Spain, blasting out their bonds, betting that you are going to get a conversion into pesetas, which, frankly, would be the trade of a lifetime. You get a derivative that allows you to bet against the bonds that you sell in euros, and then you get to cover in pesetas. I am drooling to think about it.
But the Germans know this, too, and they know that once Spain goes, France and Italy are next, so they have to draw the line for their own self-interest. That means we have to believe there is a plan to preserve the depositors, even if it means cramming down the common stock and the preferreds and perhaps even the junior and senior debt of the banks.
It was the belief that there is a plan -- and not this Bernanke nonsense that everyone plied about -- that got this market rallying. The idea that it was Bernanke or a Journal story about Bernanke's next move is the most ethnocentric if not xenophobic commentary imaginable.
But it gets said because, well, it is something to say and it is a lot easier to say than that there might be a secret deal coming up to save Spanish banks. It's easier, but it's wrong.
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.
More from TheStreet.com
Just which housing bottom is this one Jimmy? You have called one every 6 months for the past 2 years now!
Plesse spare me the secret deal in Europe crap too.
The socialists in Europe will never give up until Germany tells them -Too Bad for you-Starve.
If you think for a minute that Germany really doesn't just want to be rid of the rest of their European parasite partners, you are crazy. In the long run they will be better of without having to support the rest of europe where they just refuse to face the reality that they are utter failures.
Speaking of utter failues.......Never mind they will ban me again!!!!
this morning he glibly chuckled about his hero mcclendon at chesapeake...........remember he
got his followers in at 35 .....now 18..............loathsome that he chuckles while his cramericans
go broke............he also alluded to alcoa which he picked as the best dow stock of 2011
at 18 ...now at 9........BEWARE THE KNOW NOTHING NEWSLETTER HUCKSTER
I just cannot believe the Germans are going to get out the check book and start writing.
"Bernanke nonsense." Couldn't have said it better myself!
What is also interesting is that all of the 30 replies are commenting on Cramer's ineptness and yet there are quite a few negative thumbs down being tallied? Why would there be negative thumbs down placed on each remark when nearly all of the 30 listed comments are saying the same thing? Interesting, that's all.
One would wonder if MSN or Crammer is marking them as negative???!!!
you can't refi without 20% equity..........most people with higher rates don't have 20%
equity so would increase their payment because they would be charged PMI
as usual the hack knows nothing except how to prey off the naive by selling his newsletter
Copyright © 2014 Microsoft. All rights reserved.
'We're not exactly in a uniformly strong market,' says the notably pessimistic newsletter publisher.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.