Friday, March 28, 2008

Jim Cramer, Sane Leftie in an Insane Party

Jim Cramer catches a lot of media flak, but I like him. So it is from a respectful position that I must take issue with Cramer's assessment of the Democratic Party and some of his investment advice that flows from this political assessment.

Cramer jokes about being a Trotskyite, and about his passing physical resemblance to Lenin, but aside from his Socialist leanings he supports utilization of natural resources like coal and natural gas, particularly because they can be found in abundance in the United States. He wouldn't want to strip mine all of Pennsylvania, but some of those folks in the western part of the state could use some jobs, couldn't they? And he's completely against raising dividend taxes (unlike Obama), which is a rare thing to hear from a Democrat.

So basically, my political assessment of Jim Cramer is that he's a fairly moderate Democrat, open to argument and debate. He's not a shrieking moonbat, though he does occasionally shriek apolitically.

Sadly, he's projected this moderate left position onto the rest of his party. He's been recommending investment in stocks related to the defense and natural gas industries as plays on a future Democratic administration. I think he's wrong in both instances.

Cramer cites David Gregory for planting the notion in his head that a Democrat President would spend just as much (or more) on defense if only to allay the fears that Democrats aren't good on defense issues. Obama's website does mention increasing our troop levels by about 92,000 and providing new equipment, but he has also mentioned the potential price tag of the war:

"A trillion dollars. That's money not spent on homeland security and counter-terrorism; on providing health care to all Americans and a world-class education to every child; on investments in energy to save ourselves and our planet from an addiction to oil. That is a cost of this war."
Money not spent on other things. The only explanation is that Obama would reduce overall defense spending, and particularly on things like bullets, which make up 35% of the revenue of recent Cramer pick Alliant Technologies. You can't just pull out from Iraq and expect defense spending to remain steady.

I have similar fears over the natural gas call. Cramer is right to point out that NatGas is the cleanest burning hydrocarbon fuel, certainly preferable to coal, which the Democrats want "stopped". But without batting an eye Cramer goes on to say that "the enemy of natural gas is ethanol".

Ethanol, that "boondoggle", using too much water and energy, and that can't even be transported efficiently because it's too corrosive. Add to that the higher cost of food, and, contra William Jennings Bryan, "mankind is being crucified upon a cross of ethanol." (Video)

What makes Jim Cramer think the Dems will have a sudden outbreak of common sense? Ditch ethanol? Not on your life. Allow natural gas drilling? Are you nuts?!

That's not to say that NatGas is or isn't a good investment, but a Democratic sweep is not a catalyst for any investment in an industry that requires drilling in the pristine wilderness. Such things are just not allowed.

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