Kramer Back When He Was Good...

Discussion in 'Trading' started by stonedinvestor, Mar 29, 2007.

  1. Cramer on Enron
    Email details
    Jeff Dasovich
    Laird Dyer
    25/10/2001 at 22:15
    Email metadata
    Limited Partnership , Enron Online
    The message
    You see this? What the hell is with Cramer?

    Date October 25, 2001
    Time 07:00 AM - 08:00 AM
    Station CNBC
    Location Network
    Program The Squawk Box

    Mark Haines, co-anchor:

    Joe Kernen, what's going on?

    Joe Kernen, co-anchor:

    We've got to shift gears into this Enron situation which
    has just been--you've been talking about it quite a bit,
    David--how could you not talk about it? Seventy-six
    million shares yesterday, down fifty percent in the last
    two weeks. This is a company with--what?--a hundred
    million in revenues.

    James Cramer, guest market commentator:


    Kernen: Yeah, right. Anyone who does any trading in
    energy apparently, you know, uses Enron Online, so anything
    that destabilizes Enron to a great extent could destabilize
    the whole energy trading arena and...

    Cramer: Go ahead, say it! Say what you're thinking! No
    one has said it yet. We know the truth. We believe that
    Enron caused a national short squeeze. They knew every
    single number in this gas situation. They wrecked the
    California utility system and profited from it. That's my
    bet. My bet that this--they had--look, they were the
    market maker. Imagine if Instinet knew what you were going
    to be buying and took it ahead of you. I think they
    cornered the market for electricity for about four months,
    made a huge fortune and now the company is unraveling and
    when someone--when the Justice Department gets in there
    we're going to discover this.

    Kernen: Let's see what happened...

    Haines: Now, wait a second...

    David Faber, co-anchor:

    Whoa, whoa, whoa! The Justice Department, Jim? Now, is
    that new? Is that something--

    Cramer: No, that would be, if I were a prosecutor,

    Faber: OK, so they are not being investigated?

    Cramer: Well, no, I'm actually being a little forward

    Kernen: The SEC wants documents about the limited
    partnership transactions of Mr.--

    Faber: Which is very different from what Jim is talking

    Cramer: No, I'm saying that this is what, if I were an
    enterprising prosecutor, I would say, Did we have a
    nationwide short squeeze in electricity caused by one
    company that had access to all the screens and knew exactly
    what was happening with the electricity market which then
    wrecked the California utility system, cost the consumer
    billions of dollars, and is now being hushed up?

    Kernen: Well, let's talk about the actual news. Here's
    yesterday's trading--

    Haines: Wait a minute.

    Kernen: Well, I just want to say that the guy is gone now.
    That's the new news here. Did you read--did you know that
    Fastow, after four--

    Faber: Late yesterday.

    Kernen: Yeah, after four o'clock, Fastow is gone. What's

    Faber: He's the CFO--

    Kernen: But he's a new CFO.

    Faber: --who benefitted personally from some of these
    off balance sheet partnerships.

    Cramer: Mark, you know, I'm not on thin ice here, I'm not
    on thin ice.

    Haines: I just want to make sure we understand that this
    is your theory.

    Cramer: This is my theory.

    Haines: OK.

    Cramer: It is just a theory. It is my opinion. But I
    think we've got to find out more about that short squeeze
    that occurred.

    Haines: OK.

    Cramer: We need to find out whether it was orchestrated.

    Kernen: The new CFO might help regain some credibility for
    the company because he was the old treasurer who left that
    position a year or so ago because of some disagreements
    with how Mr. Fastow was doing business apparently. So now
    he's back as CFO and we'll whether that calms the market

    Faber: Well, what they need to do-- Joe, they need to come
    clean. I mean, that is what all the investors in Enron and
    those who've left the company as investors over this last
    week have wanted. Let's see everything; be as transparent
    as you possibly can be; tell us exactly what we need to
    know. And as much as they need to come clean with their
    investors, they need to come clean with their trading
    counterparties because that is really what people are
    concerned about.

    Kernen: Why is the credit worthiness issue such a big
    deal? Anyone who does trading with them, if their credit
    worthiness were to go--if their credit rating were to go
    down, how would that affect energy trading?

    Faber: Well, you want to know that they're going to be
    there on the other side and make good on the trades.

    Kernen: I guess you would, wouldn't you?

    Faber: Right. Not that they aren't, but why would you--if
    you can trade with seven other guys--seven other companies,
    maybe you cut back a little bit on your exposure there.

    Kernen: Now, why would--

    Faber: And that would hurt their core business.

    Kernen: Why are people expecting some type of action from
    the credit agencies, not because of the stock price, right?
    Because of something that could unravel--

    Faber: Because of something related to these liabilities
    they may have--

    Kernen: That they don't know about at this point.

    Faber: --that they may have with regard to funding some of
    these off balance sheet partnerships that they backstopped
    in terms of borrowing that went on at the project level at
    the off balance sheet partnership. Will it be a liability?
    They don't know. But that's one of the reasons--

    Kernen: We're talking hundreds of millions or billions?

    Faber: They don't know.

    Kernen: But there were billions of dollars in limited

    Faber: Yes. About three billion in financing, I think is
    what some analysts estimated.

    Kernen: This is a pretty big number.

    Faber: Yeah, they can get to most of that with the assets
    that they have in the partnerships themselves.

    Kernen: I use a six month chart to show what's happened
    over the last two weeks. You got to look at here. But if
    we went back a year, you'd see eighty as far as the high
    for Enron. Now we're at sixteen.

    Faber: Everybody else took a hit yesterday. Dynegy got

    Kernen: Well, I got Dynegy next. Don't-- Here we go.

    Faber: I'm sorry. I'm getting a little excited.

    Kernen: You are.

    Faber: Enthusiastic about your charts.

    Kernen: There's a weekly chart of Dynegy, and you know
    what's coming next, don't you? Now I'm worried about the
    utility average. I've worried about the transportation
    average a lot in my career. Mark, now the utilities have
    replaced my worries. I'm angst-ridden. Did you see this
    chart? We're breaking below the--

    Cramer: That's a positive, not a negative, Joe.

    Kernen: What's wrong with Cramer today? What happened?

    Cramer: I'm all fired up!

    Faber: He really is. My, God, he's got the DOJ getting
    all crazy, the FBI, the CIA. You going down to En--you
    going down to Houston yourself?

    Cramer: I may just have to. I may have to clean up that
    whole city.

    Kernen: Jim, why would the--that's the--now getting down
    to the lows, I mean, the other averages have come back
    quite a bit from the post-attack lows, the utilities are
    retesting those. That's not something to worry about?

    Cramer: No, because I think there's a lot of money going
    into more cyclical issues. I think the economy is showing
    signs of getting better. The consumer is certainly much
    stronger than we thought. The base book didn't say the
    corporate was strong, but the consumer is strong. Much
    stronger than before.

    Kernen: All right. In the past people have worried about
    the utility averages being a leading indicator, though. I
    don't--we're talking about four hundred to two-ninety at
    this point. That's a long way.

    Cramer: This average has got a lot of problems to it, but
    I still think that--

    Kernen: It's no longer the--

    Cramer: --you sell this as safety. We don't want safety
    as much as we want a little bit more reciprocality.

    # # #