Cramer: Stop Deporting Illegal Aliens to Solve Housing Woes

     Love him or hate, CNBC’s Jim Cramer brings an interesting perspective to the debate about the fragile U.S. economy.


     On Nov. 5 the host of CNBC’s “Mad Money” detailed for his audience how he would save the economy serving under Democratic President-elect Barack Obama – under the facetious assumption he could be SEC chairman, Federal Reserve chairman and Treasury secretary.


     Under Cramer’s plan, the government would bail out the big three U.S. automakers – General Motors (NYSE:GM), Chrysler (NYSE:DAI) and Ford (NYSE:F) – with a plan similar to the bailout of American International Group (NYSE:AIG), which was rescued earlier this year. Cramer would also give tax breaks to private enterprises that aid in the country’s transition from petroleum-based fuels to natural gas.


     But one specific part of Cramer’s plan could cause the biggest stir: halting immigrant deportation to increase demand for housing.


     “Obama must let it be known that there will be no more immigrant deportations,” Cramer said. “Like it or not – listen to me – so that immigrants, legal and illegal, will stop being afraid to buy homes.”


      Cramer referenced a study cited by CNBC “Street Signs” host Erin Burnett earlier in the day during the “Stop Trading” segment of her program. According to Burnett, the illegal immigrant mortgage payout is about 98 percent, versus a 92-94 percent range for mortgage payouts nationally.


     “The home areas that are, have been most decimated are exactly where the immigrants were buying,” Cramer said. “It’s a major not-talked-about issue. By the way, the immigrants default rate is almost nil as the wonderful and fabulous one [Burnett] said to me today at 2 o’clock. These are the banks – these are the people the banks want to lend to as they will take on fourth, fifth, sixth, seventh and eighth and ninth jobs to keep their mortgages current.”

     Cramer also proposed the government spend $400 billion on 1.3 million homes outright and “give the homes to people” with 5 percent loans and low down payments – or he proposed doing away with the home outright – by burning them, similar to the FDR-era agricultural policies that stemmed oversupply in commodities markets.