Cramer on Cali.: Bankruptcy, bankrupcty, bankruptcy
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An emailer pointed this out last week, and it’s worth a look: Another Jim Cramer real estate rant on video, this one urging Fed officials to visit the Inland Empire to view the carnage first hand. Cramer tells of visiting the IE recently and going away convinced that bad loans in California are so massive they will lead to numerous bankruptcies by banks and homebuilders. A partial transcript:
‘I was struck -- seeing housing development after housing development after housing development with no customers. ... (loan) portfolios that have exposure to California are going to cost this economy billions of dollars. And until the Fed recognizes that -- goes to Indio, goes to San Bernardino, goes to Riverside -- I don’t think they recognize that the portfolios of big loans ... simply cannot be sustained. The level of defaults will be too large. ... When you have publicly traded companies that have 15%, 20%, 25% exposure to the California lending market? That market may not come back. ... Causing what I think will be bankruptcy after bankruptcy after bankruptcy by homebuilders and banks. ... It’s just miles and miles of unsold homes. Miles. And if you live in the Northeast, you just don’t get it.’
I’m anticipating a few of you will comment that Cramer is a buffoon, a know-nothing, a chowderhead, whatever. Here’s my take on Cramer and the real estate bubble: He’s one of the only talking heads or pundits who has been right for the last six months. Even after the sub-prime mess blew up in its face, the Fed failed to recognize this train wreck in slow motion; CEOs failed to see it; investors failed to see it; Cramer has consistently said that it’s worse than they know. He’s been right.
That said, your comments? Thoughts? Insights? Email story tips to peter.viles@latimes.com
Photo Credit: Amazon.com
Hat tip: Sorry, I deleted the email. I owe you one, whoever tipped me on this.
Hat tip, Tech support division: MattJ, thanks for fixing the link.