GM Bailout Only Way to Stave Off Great Depression II, Says Cramer


     Cramer, in his Nov. 11 “Stop Trading” segment on CNBC’s “Street Signs,” told host Erin Burnett if General Motors (NYSE:GM) wasn’t bailed out, the U.S. economy would face a “meltdown.”


     “Well you know we would have closed GM and have 10 percent unemployment – then really have some fun,” Cramer said. “We’ve got to keep people in their homes. We go keep people hav[ing] jobs. Look, we’re going to have another meltdown if we don’t do both of these.”


     For Cramer and many other proponents of a GM bailout, the federal government’s rescue of American International Group, Inc. (NYSE:AIG) is justification. Otherwise, it’s economic disaster.


     “I don’t care – for the same reason that AIG was in the business of a criminal conspiracy – big deal,” Cramer said. “It’s like look – we got to bail them out. We have to. We have to keep the Great Depression off the table.”


     The “Mad Money” host said he didn’t care how much government intervention it took – that the United States has to prevent any threat of a Depression. “I don’t care how we keep it off. I don’t care if we have to give every man, woman and child $5,000,” he said. “We do not want another Great Depression. That’s the whole point of everything we’re doing – no Great Depression. We know from the history books that was bad.  I still haven’t read the history book that says that was a good thing, ‘It was cleansing.’”


     Burnett questioned Cramer’s unwillingness to consider other propositions, such as letting GM – a company operating with an unsuccessful business model – to fail. She proposed what some on Capitol Hill are considering – a massive stimulus program that would be used to improve infrastructure, including roads and bridges. Cramer insisted that wouldn’t work because people wouldn’t have to adapt.


     “Because we never do that,” Cramer said. “We don’t know jack about how to make people who make cars to make roads. We always have these things. Let’s have people go drill oil off the coast in New Orleans. People don’t know how to do anything. They went to school, they learned a task. That was fabulous. Let them keep doing the task. Let’s find a way to gradually to reduce this. But, you know, we don’t want mass unemployment. Mass unemployment – every assumption fails, every assumption that we’re using fails.”

     But the idea that the government can rescue GM is greeted with skepticism by some experts. Bill Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said GM shouldn’t take government money because under its current form, business is unsustainable.

     “It has been hamstrung for years because it has too much debt and it has contracts that are uneconomic,'' Ackman said during the taping of the Charlie Rose show on Nov. 10 according to Bloomberg. “The way to solve that problem is not to lend more money. They should do prepackaged bankruptcy.”