Filed under: Market matters, Centex Corp (CTX), Countrywide Financial (CFC), KB HOME (KBH), Housing, Federal ReserveToday's important stories from TheStreet.com: Jim Cramer's Portfolios of the Week,
Cramer's 'Mad Money' Recap: Spotting Tops and Bottoms.
Main Street and Wall Street have never been further apart than right now. I can imagine that if you live on Main Street and you don't have to buy or sell a house and you didn't buy one in the last three years, you might be thinking, what the heck? Inflation's going up, oil's going up, food's going up, the stock market's going up. Shouldn't the Fed be tightening? What's wrong with this picture?
To which I say, who cares? The Federal Reserve cuts when there is a credit problem or problems that could cause a dramatic slowdown in the economy. We have one. It's the implosion of securities backed by bogus mortgages. And it infects pretty much everything.
Now we can accept that Centex (NYSE: CTX) and Beazer Homes (NYSE: BZH) and Standard Pacific (NYSE: SPF) and KB Home (NYSE: KBH) may get run out of town on a rail. We don't have to think that Countrywide Financial (NYSE: CFC) matters, and we can have some smaller banks blow up.
But it is not palatable to have a major company not be able to meet payroll because of a problem with the commercial paper market. We can't have housing, autos and retail go down because we can't finance anything. Finance matters. That's Wall Street's job.
If Wall Street can't finance Main Street, then Main Street will eventually feel it, and how good would it be to have that forestalled if it is at all possible. Once Main Street feels it, it can be too late.
Of course if you are of the opinion that it is right and good that Main Street feels the sting that is supposed to be felt by speculators, I can't help you.
I had a discussion today with a staffer at CNBC about whether I could be Chicken Little. I said that all my homework says I won't be and that there is much trouble in the system, but if something "bad" doesn't happen soon in mortgage-land, I could look like I was just one of those doomsayers.
Right now, I look like the latter because of Main Street, but on Wall Street, I am just calling it as everyone sees it on the fixed-income side.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in any of the stocks mentioned.
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