My To-Do List (Jim Cramer on the financial crisis)

http://www.thestreet.com/story/10439690/1/my-international-to-do-list.html ^ | September 28, 2008 | Jim Cramer

[reaganaut1]

Let us in. I want a piece of the Troubled Asset Recovery Program. Let taxpayers individually benefit from this program by option. When you include the warrants and the mortgage refinancing, the program will be a winner. It certainly won't be a bailout.

[reaganaut1]

Lots of financial experts are saying the government will make money on the Paulson plan, because it will be able to buy mortgage-backed securities for less than their true value. Why not allow the Troubled Asset Relief Program to accept private investments? To encourage this, any profits could be taxed as long-term capital gains. The less of the $700 billion that taxpayers put up, the less they are risking.

[RKV]

Cramer was calling Citi a buy at $50. It’s below $20 now.

[Oldexpat]

They should set up a mechanizm..like eTF’s where individual investors could buy these mortgage packages asap. Investors would shortly sort out their worth in terms of cash flow and future expectations. Make a market for them with the public.

[sportutegrl]

We can only make money if the government can get the mortgees to make their payments. Does anyone think the government will be good at this? Remember all of the student loans that were never paid back?

[kinghorse]

Aint it the truth. I’ll take a cheap piece of property off their books. Put it on auction. But then that wouldn’t be the government. Remember they still use typewriters at my local tax office.

[umgud]

Lots of financial experts are saying the government will make money on the Paulson plan, because it will be able to buy mortgage-backed securities for less than their true value.

How do they define their true value? And exactly what will drive this value up or down? I'm still wrestling with the concept of how this plan will actually make money.

[Porterville]

“The U.S. will own the mortgages and can work to stretch out interest payments for those trying to stay in their homes. The worked-out mortgages can then go to the FHA for maintenance. This back end of the deal has two effects: a.) The foreclosure rate should go down very quickly; and b.) the mortgages which are collectively probably worth bidding no more than 65 cents on the dollar will, in two years, be worth more than that, much more, I believe. “

That all that needs to be done, right there. Readjust the mortgage schemes. Don’t decrease the loan, increase the number of payments and years of the loan.

[Andy from Chapel Hill]

Goldman said it was putting together a fund of $50 BILLION to play alongside/compete with the Paulson/Cantor plan.

They know the Treasury is going to make money on this.

I expect all of the other money managers to assemble similar funds. Maybe even raise a ETF.

BTW, I have been bugging my broker for over a year as to how to play in the .15/1.00 market.

[reaganaut1]

“BTW, I have been bugging my broker for over a year as to how to play in the .15/1.00 market.”

What do you mean by “.15/1.00 market”?

[nicola_tesla]

A winner ???? Securities that the private sector shuns will make money for the taxpayer ? You know of any government program that makes money or performs as advertised ?

Sold to you, pal.

[chuckles]

Let's just say, hypothetically, he's correct and we make a profit. The US Constitution doesn't say anywhere that it should be in "biddness". Why are we in the tree business? We own millions of acres of trees and watch them burn every year. We just had hurricane IKE here and no one is allowed to salvage any trees that have fallen in the natl. forest. Sometime in the future, these same trees will be sold to a political contributor for 10 cents on the dollar. We got in the car business in the 80's and in city management with NYC's bailout. The taxpayer never has signed on for this.

As far as paying off the debt, why not start to sell the 1/3 of America that the gubmint owns? How about some of that beach front property in San Diego that the Marines run tanks up and down for say $2000 a square foot.

If Ron Paul wasn't such a flake on foreign policy, I would be tempted to vote his way. A good re reading of the Constitution is in order for most Americans it appears. Most of the stuff talked about and voted on today is ILLEGAL!

I would say we should get a group together and sue the government and take it to the SCOTUS, but I fear it going to take the Second Amendment activity to get this stopped.

A good measure of how far down we have gone will be how many votes the bailout gets in Congress when about 60-70% voters don't want it. That just means "We can do what we want and don't care what you think because you will vote for me next time anyway." Is that a republic? When will 51% of voters say "enough"? Does anyone teach the Constitution in school anymore?

[nicola_tesla]

Don’t waste your time.

It won’t.

First off, the Treasury is going to buy the paper - not the underlying assets.

Secondly, think about it this way:
A 700k mortgage in CA is on a house that is now valued at 450k, with value likely going to be closer to 250k. Remember, a house needs continual maintenance to remain an “asset”.

How long do you hold the so-called “asset” before you make money ?

Now, do you still think the taxpayer is going to “make money” on any of this ?

[wastoute]

If it can make money use Social Security funds!

[Andy from Chapel Hill]

Sub-prime mortgages are selling for $0.15 for every $1.00 of face value.