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[Ulisses Pereira]

"The Painful Healing Process Continues"

By Jim Cramer
RealMoney.com Columnist
9/15/2008 6:22 AM EDT

"However bad it is, where the heck would it be without Bank of America (BAC - commentary - Cramer's Take) buying Merrill (MER - commentary - Cramer's Take)? Pretty darned bad!

Now, with the average European bank down between 12% and 15% we can see that the damage initially will be pretty darned severe regardless of the strength of the financial institution. It's all ripple effect, or, more accurately, a belief that there has to be a ripple effect, and that everyone who has money involved with Lehman (LEH - commentary - Cramer's Take) is either out of money if they provided it or stiff if they lent it to them.

Merrill, on the other hand, is in many ways equally as frightening because John Thain must have seen that if Lehman's valued low, his company, even after its mammoth refinancing and selling of bad assets, was still in real trouble.

Again, though, Merrill and Lehman are simply owners of declining assets. The potential buyers of Lehman assets can pay a lot less today than they we could on Friday, so you can see why they held out. Everything gets written down in bankruptcy to a more realistic level and things can be bought as needed or wanted.

AIG (AIG - commentary - Cramer's Take)? If you read the stories, you think that AIG is simply being greedy: an institution in trouble with assets worth a lot that can be made whole again. I have hated this company more than any other because of its opaque disclosure and its endless intransigence about the real exposure here. That company needs to be forced to take the private equity money, seized and forced. That's how bad that is.

We got rid of two black holes this weekend, one I knew was a black hole -- Lehman -- and one I had thought wasn't but still was -- Merrill. Now AIG is known to all as a terrible situation, not just a few of us. That leaves Citigroup (C - commentary - Cramer's Take), which must outline some more assets sales now and Washington Mutual (WM - commentary - Cramer's Take), which is FDIC bound.

We are getting there. When we get there, things will be better.


Until then, Procter & Gamble (PG - commentary - Cramer's Take) and General Mills (GIS - commentary - Cramer's Take) and Celgene (CELG - commentary - Cramer's Take) and Pepsi (PEP - commentary - Cramer's Take) are going to make you a lot more money than the financials at the gambling table today.

Now, here's one undeniable fact: If there are only three major independent investment banks left, including Goldman Sachs (GS - commentary - Cramer's Take), and Morgan Stanley (MS - commentary - Cramer's Take), that will, at last, become a great business again. It may take a few quarters for people to figure that out, but it will be figured.

I don't expect Merrill to be as much of a factor anymore as I think Ken Lewis simply wants to be the nation's biggest banker and wealth depositor, something he will succeed in. He didn't like investment banking.

So when the smoke clears there, we will be seeing a new more positive world order.

But why even care about that?

Because somehow, when we move a year or two away from this era, we will recognize that much of this real estate that is behind these problems, if given a a year or two to breathe, will come back to life and the system will be MUCH healthier for it.

Random musings: Nobody's even paying attention, but China cut rates last night. We get a coordinated rate cut today and tomorrow will be a better day. "

(in www.realmoney.com)