Von der Leyen elogia proposta de Trump de dar garantias de segurança à Ucrânia

[Ulisses Pereira]

"The Nazz May Help in Forecasting Housing"

By Jim Cramer
RealMoney.com Columnist
2/25/2008 8:59 AM EST


"Are the California and Nevada and Florida and Arizona and Michigan and Indiana and Ohio housing markets the Nasdaq, and is the rest of the country the S&P 500 in 2000?

That's what it feels like. The "all real estate is local" nonsense that we endlessly hear from the real estate people is like saying that all stocks are local. Actually, real estate and stocks are regional in nature, and the region that is Nasdaq took a horrible beating in 2000-2002, while the region that was S&P 500 barely got hit.

That's how the housing market is shaking out. It seems like the housing markets in the terrible states won't settle until you have 50% declines in value at least, while the rest of the country seems poised for no more than 15-20% -- if that.

The problem is that the Nasdaq-range of houses were all like dot-coms and tech: They had little or no value, or they were like Intel (INTC - commentary - Cramer's Take - Rating) and Cisco (CSCO - commentary - Cramer's Take - Rating) and Microsoft (MSFT - commentary - Cramer's Take - Rating) and were going to take a beating.

The owners of the Nasdaq got crushed, margined out and lost billions of dollars. That's what is happening to homeowners in those homes bought during that time. The people who bought on margin are already gone. Those who are still living in their homes need to have help to keep them in the NASDAQ-HOUSING market or they need house price appreciation.


The history of the Nazz is really bad for appreciation. It didn't come back. The history of margin relief for those who bought on margin was pretty awful -- no relief. Those who bought for cash just took a beating and still aren't whole, but the S&P growth put the problem behind them.

I know that the big difference here is that the financiers of the houses have not been able to figure out a way to take the houses back en masse and dump them like the margin clerks did, mercilessly, in 2000-2001. If they could, they could repossess, cut price, and get to the bottom quickly. But this problem is too complex and the inventory isn't saleable.

Worse, the owners of the properties aren't even clear. We do know that there's a last-resort owner of a lot of junk, Fannie Mae (FNM - commentary - Cramer's Take - Rating) and Freddie Mac (FRE - commentary - Cramer's Take - Rating), and we know that they would be goners if it weren't for the Federal backup because they would never be able to sell that debt.

The other holders, the big holders, can get foreign capital, although Citigroup (C - commentary - Cramer's Take - Rating) and Merrill (MER - commentary - Cramer's Take - Rating) -- the two worst -- have already gotten a lot and it hasn't meant much because they need house price appreciation badly.

The other player that is struggling to stay afloat -- Washington Mutual (WM - commentary - Cramer's Take - Rating) (I am eliminating Bank of America (BAC - commentary - Cramer's Take - Rating) and Wachovia (WB - commentary - Cramer's Take - Rating) because they can limp along taking charges until the Fed bails them out with lower rates and higher interest rate margins) -- got hit today by a downgrade. They are "long" Nasdaq big-time with no way to get rid of it.


Oddly, we need Washington Mutual to flirt with disaster again, but that would mean revisiting the Jan. 9 level that a lot of others hit and would be really impossible to go below, because that would panic the Fed into another big cut (right now the Fed reacts in part to Europe for big cuts, which is completely counterintuitive and dumb, but nobody seems to criticize them because the Fed has some sort of positive reputation that I find unfathomable).

Follow this Nasdaq example when you try to figure out this home business. Anyone who owns that debt will own the homes in the end from these states, but they might not even know it. The ratings agencies that abetted this nonsense are like the analysts who backed the junk stocks to the hilt right until the end, more because of ignorance than corruption.

But it all feels very the same. We have seen the movie in smaller scale with stocks.

The regional stocks ended really badly, so will these regions. They are, if I had to measure it, at Nasdaq 3500, where they looked cheap versus Nasdaq 5000, but you lost a fortune anyway if you did any buying.

Random musings: The shorts in Take-Two (TTWO - commentary - Cramer's Take - Rating) will be right in the end, but so what? They were wrong in the only game that mattered. It's painful to watch Herb Greenberg, who simply REFUSES to admit he was wrong on Take-Two. Makes me angry. ... Goldman is saying to short FRE ahead of its earnings. Dangerous call short term, as it is a crowded short. But longer term, why the heck not, because the solution to FRE's problems is more equity.

At the time of publication, Cramer was long Citigroup. "

(in www.realmoney.com)