Cramer Rips Federal Gov't for Congressman’s 1,000-2,000 Dow Drop Prediction: 'Washington Has Decided to Eviscerate Profits'
On CNBC's June 29 broadcast "Power Lunch," Rep. Paul Kajorski, D-Pa. made a pretty prediction about the Dow Jones Industrial Average (DJIA) should Congress be unable to pass financial regulation legislation. [Video Available Here]
"You know, I wish every one of them would ask the question and also the industry and media, what happens in this country if this bill fails?" Kanjorski said. "Do you think 236 points down on the Dow is surprising? Check 1,000 or 2,000 points if we fail to change the ways that caused this problem."
That caught the attention of CNBC's Erin Burnett, who played the clip for "Mad Money" host Jim Cramer. Cramer blasted Kanjorski and the entire institution of the federal government for being a drag on the markets for a myriad of reasons on his June 29 "Stop Trading" segment of CNBC's "Street Signs."
"You know, they are the problem," Cramer said. "And we all know it, right? It's like let's not even outthink it. I love our bureaucrat congressmen in Washington, but they're the problem. And I don't want to be just Mr. Rick Santelli here, but give me a break."
Cramer noted the timing - on the eve of a financial regulation bill vote and asked why he was waiting until now to tell us.
"I mean, really - so he's telling us about the 2,000 points? Now he's telling us?" Cramer continued. "I mean, like other than a couple of congressmen and senators."
But according to Cramer, things are much more dire than the Washington, D.C. political playbook. He explained there was a real problem with the mentality in the federal government - to demonize profits.
"What is the 10-year telling us?" Cramer continued. "We're done. It's 1934. I've been saying over and over on the show - the market's overvalued, the market's overvalued. Just try to buy a yield. It's because, you know - we've had it. Washington has decided to eviscerate profits. No one wants to say this because what happens when you say it, is you got a bullseye on your back and I don't even feel like saying it because I already have a ton of them. But you know it really is - I mean to like listen to Congress tell us about what causes a 2,000-point decline and then just accept it and say, ‘Yeah, that's interesting.' I'm not playing that game. I'm too old."
Cramer said the problem was very complicated with what he said was a deflationary phenomenon. He explained there were very few positives with the S&P 500 index to point at what he deemed "gloom-busters."
"We have radical deflation in this country," Cramer said. "I mean, that's what it is. People are maybe working, earning money off the books. I'm doing a series on the show. I'm trying to find companies that are gloom-busters. I gave combed most of the S&P 500, some of the S&P 600, you know the next level. I've got about four or five companies that say things are good. I mean, this is a remarkable time in the American economy. This market deserves to go down. Now I know a lot of people will say, ‘Wait a second, it just rallied from 270.' We've all played that game. We know what happens - the ultra-funds come in in the last half hour, they rebalance - you go down 500 in the last minute. Maybe it's our fault. It's our fault because of TARP or ... whatever."