[Post Summary]My spikenard sends forth its fragrance.
—Song of Solomon
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Tonight's Mad Money opening segment was one of the most shameful demonstrations of sophistry I have ever seen. When the #1 financial issue we face is collapsed confidence in the viability of an arrangement bereft of rigorous standards for enforcing accountability — which circumstance has resulted in markets rife with fraud becoming frozen — how does Cramer see attempts to address this as being something other than positive for long-term prospects in the stock market?
Now, one might instinctively think a concerted attack on problematic links in a financial chain facilitating fraud should bode well for stocks. Yet one ought not overlook the extent to which leverage has been built into the current arrangement. Any attack on what have become easy money machines (like, for example, the health care insurance industry) stands to upset a fragile web of related operations supporting highly geared financial obligations. Still, there's so much at stake. Wealth, influence and power remain forces to be reckoned with. Those possessing these will defend their interests at all costs. And that is why Cramer's myopic political perspective leading to his recommendation that, investors move their money out of stocks and into bank CDs (certificates of deposit) is investment guidance bordering on insane.
First, let's get something straight. The days of creating and inflating easy money machines are over. All the crazy Monetarist Monkey schemes Cramer dreams up will never pass. There isn't an investor who will take confidence in any arrangement attempting to further stretch the divide between the haves and have nots. Yet everything he proposes ventures doing just that. The game is up! The sub-prime mortgage fraud committed on a once-great, productive nation like the United States of America is proof the game can go no further. There simply is no more widespread wealth left to rob. There are no more carrots of effortless riches just waiting to be picked up off the ground left to dangle in front of a once-trusting nation tired of seeing its livelihood — its opportunity for purposeful life — chipped away. So, restoring equitable conditions requires government change course, and in so doing exercise the prerogative of enforcing moral hazard. This is the rightful domain of [proposed] tax policy the likes of which Cramer contends is a mortal threat to the stock market. However, the real threat is only to the continued viability of a Monetarist Monkey's analytical methodology.
Now, the thought did occur to me that Cramer is doing what little he can to help banks recapitalize, advising people invest in CDs. Yet even if his "advice" were widely heeded would it result in the stock market being further decimated? Are well-capitalized vested interests going to stampede out of stocks in a race to bottom with the little guy? I think not. What possibly could be gained from such an endgame? Is not opportunity forming with change intending to repair the credibility of institutions critical to economic stability?
Just because swindlers embedded in the contemporary finance chain might find their means of extortion taxed under a new political arrangement — one committed to accountability — this does not mean prospects in the stock market are at greater risk of being eviscerated. Far from it. In fact, the more likely result is quite the opposite. First, attacks on swindlers are one sure way of restoring confidence in credit markets. And second, functioning credit markets raise prospects for businesses of all sorts. Thus, chances improve interest in stocks will rather increase.
This is not to suggest swindlers suddenly will change their ways, however. There will be challenges raised in counter-attack to the necessary reforms we are but beginning to see put in place. But to the effect of condemning the stock market to a prolonged bout of further selling taking major indexes significantly lower? Not very likely in my book.
—Tom Chechatka
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