Cramer: Escaping a jobless recovery
Jim Cramer | firstname.lastname@example.org
I hear the same thing about the oil and gas business, that no matter how much we discover it doesn't put a lot of people to work while the trade off--increased use of fossil fuels--makes it not worrth supporting.
Let's see. How can I be diplomatic about these pessimistic judgments? How about this: They are all lies, lies that are keeping the federal government from helping the cause instead of hindering it.
First, housing punches above its weight. We know from the retailers and the homebuilders and the bankers we talk to that $1 toward the purchase of a house can produce an additional $6 in spending to fix it up, make it bigger, or gussy it up inside. That's why it needs to be supported and encouraged, because it can produce so many jobs. Instead, the government's made it very difficult to get a mortgage, which has kept housing from breaking out to levels anywhere near where it used to be.
But what did Richard Smith, CEO of Realogy, the largest realtor in the country, say about the government's role in promoting the ability of people to get mortgages? He said that "the only thing holding lending back is the extraordinarily difficult underwriting standards." That's because the feds have still not finalized the rules for banking under Dodd-Frank. The government has simply not spelled out the definition of who is qualified to get a residential mortgage.
Without that definition, banks are reluctant to give a mortgage to anyone except those who don't need one. Right now the FICO score for Realogy's book of business is extraordinarily and punitively high 760. I don't know anyone who can qualify at that level. That's wrong, and it is truly stunting the economy.
Oil and gas? If the president were simply to say that "our goal is for us to be energy independent in this continent by the end of my administration," he actually might be able to pull it off. It could produce a million jobs if he did it, just in oil and gas. That's not even including the ancillary small businesses, as well as all the factory jobs that would be moved to where the energy from other countries. Yep, that's how cheap our energy has become.
The problem here is that, to get to energy independence within President Obama's time in office, he will have to say, "Look, I hate fossil fuels, but we are going to emphasize natural gas in this country as the surface vehicle, the way they do in other countries with bountiful natural gas."
The president has the ability to order federal government automobiles to convert to natural gas, which would then foster a huge job-creating infrastructure to support those vehicles, which would then make the importation of oil for diesel fuel, one quarter of all that is imported, an irrelevance.
But to avoid angering his environmental base, he instead says that he favors all sorts of energy--which is the same as saying nothing. He needs to say, "Natural gas is our fuel, and we are going to use it to make cleaner skies and be energy independent."
Mind you I am not talking about giving this industry one red cent, unlike the handouts that the farmers got for ethanol or the bankrupt artists got for solar.
The jobs that would come from giving banks certainty when it comes to lending, as well as the government's support to natural gas, could get us out of this jobless recovery. But the feds have to stop hindering the cause and start helping it.
There is a way. I just don't know if there is a will.