Jim Cramer in Perspective

We are reminded that Jim Cramer, the 'screamer' of yesterday's Belling show, is entertainment, not wisdom:

On July 16th, as the Dow was setting new record highs, Cramer declared, "Subprime...is totally meaningless. I am now saying that if every loan in 2006 that was subprime blew up – $500 billion – if they all blew up, you would still not notice...It has no relevance whatsoever."

"The trancheing [sic] of this stuff is the reason why there's no impact," he continued, "because it's been divided and split among so many entities that no ONE entity is really being hurt, other than the dumb guy who ran Bear Stearns."

On July 16th, most of the investment world agreed with Cramer's benign assessment. But just 18 days later – and 900 Dow points lower – Cramer offered a dramatically different assessment.

"The Fed is asleep...We have Armageddon!" he screamed on the air. "In the fixed-income markets we have Armageddon!!" And so it seemed to the majority of investors on that day. The Dow tumbled nearly 300 points, while the price of protecting against falling share prices soared to multi-year highs.

I suppose that Armageddon can occur in less than 18 days, Jim.

How're the ratings?

(Source: The Rude Awakening Newsletter)