Jim Cramer, the bailout’s biggest cheerleader, was on Hardball tonight and Chris Matthews asked him to explain Paulson’s Armageddon scenario. To which Cramer replied that we would see the failure of the nation’s biggest S & L (Washington Mutual) and many smaller banks. SFW! The depositors are all federally insured anyway. And their deposits aren’t close to $700 billion.
Goldman Sachs just got a $5 Billion investment from Warren Buffet. Bank Of America, J P Morgan Chase, Wells Fargo, Citibank are all in fairly good shape even if they do hold some of this toxic stuff. So is this whole $700 billion is to bail out WaMu, some foreign banks and a bunch of small banks that should not be in business? As I said earlier in the week, during the 1989-91 down cycle, 25% of the publicly traded financial companies “went away” either by merger, acquisition or bankruptcy. So far in this cycle that figure is only 8% .