Cramer sees Pulp Fiction on Wall Street

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News item: The Dow industrials fell 306 points today after Merrill Lynch reported a quarterly loss of nearly $10 billion.

Analysis: We turn again to the reliable and reliably entertaining Jim Cramer of CNBC (pictured), who today spoke the obvious disguised as the controversial: That these writedowns by financial institutions, as dire as they sound, are based in part on assumptions likely to prove optimistic. In particular, Cramer argues, they are based on the fiction that financial insurance policies will ever pay off. And that makes them... yes, fictitious:

‘The great fiction continues,’ Cramer fumed, talking in general about financial earnings reports. ‘These are all novels. ... They’ve written down the bad parts. they don’t realize, the good parts are bad too. There’s just too much fiction involved here.’

Ratcheting up the outrage, he observed -- again the obvious disguised as the controversial -- that the Justice Department and the SEC are, at this moment, asleep on the job: ‘Where the heck is the SEC? What are they doing? ... How can we have these levels of fiction in financials after Sarbanes Oxley?’

In one last burst of investor populism, Cramer noted the likelihood that the executives who made the bad decisions that resulted in today’s headline fibs will walk away wealthy. ‘Late stage rapacious capitalism,’ he said. ‘Everybody gets 30 million dollars for screwing up.’

Yes, I’m a Cramer fan. So sue me. Comments? Insights? E-mail story tips to peter.viles@latimes.com.
Hat tip: Better Village
Photo credit: AP