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 On Aug. 3, Cramer blew a gasket.
On July 16, James Cramer dismissed the unfolding subprime mortgage crisis as "meaningless." Then just a few weeks later, he’s literally screaming that there’s "Armageddon" in the income markets. Check it out:
Cramer, pounding his fist, wants Bernanke to “stop acting like an academic and do something!” He wants the Fed to cut rates and bail out the traders and fund managers who were buying up these subprime loans as if they were income instruments. What he wants, essentially, is a return to the Greenspan days. For more on Cramer’s flip-flopping commentary, see Eric Fry’s comments in this morning’s Rude.
 On the other hand, we have an interview with Jim Rogers, almost equally upset at his interviewer for suggesting the Fed come to the rescue. Check it out.
Dramatic times. Rogers, as we told you yesterday, predicted this would happen in the foreword to Financial Reckoning Day back in 2001. It's a short read -- we recommend you go back and take a look.
 This week, Ben Bernanke earns his bacon. The FOMC meets starts today. If he sticks to his guns, a lot of people who invested in these bogus funds are going to get crushed, and the market with them. If he cuts rates, the currency markets are going to take it out on the dollar. They'll say the Fed has no resolve. Inflation in the commodities and metals market will run rampant.
Wow. High drama.
  “The problems we are facing now are a direct result of too loose a monetary policy at the Fed,” says Mike "Mish" Shedlock of The Survival Report. “Slashing interest rates to 1% cannot be the cure if slashing interest rates to 1% was the problem.”
One casualty of the tightening credit cycle will likely be the “buyback effect” – rising stock prices caused by companies taking on debt to buy back their own shares.
With the fallout from the subprime debacle, you can “expect far fewer stock buybacks on borrowed money,” Mish comments, “far fewer leveraged buyouts and tighter lending conditions all across the board regardless of what the Fed does or does not do.” The Survival Report >>
 “No matter what happens with the Fed,” comments Chris Gaffney of EverBank, “the ECB has already signaled the markets that another rate increase will occur next month.”
The dollar posted slight gains against the euro and pound yesterday. Both the 16-nation currency and the sterling lost a penny to the dollar, but Chris suggests that the greenback’s gains are probably temporary: “Europe's economy is doing much better than the U.S.’, and the ECB will have to hike rates to keep prices stable. Technical analysts say the daily and weekly charts show the euro is poised to rise to $1.39 in the next few days.”
 Investors in the broader securities markets, tired of getting their arses handed to them on the trading floor, bought back with a fury yesterday. The Dow soared 286 points (2.1%), its largest single-day gain since October 2002. The S&P 500 and Nasdaq followed suit, up 2.4% and 1.4%, respectively.
 Oil slid off its all-time high this week. The black goo currently trades
at $73.
“Oil is getting a healthy correction,” comments our Maniac Trader Kevin Kerr, “as is to be expected whenever we reach a new record high. It’s really not a very tradable market right now. After all, nobody wants to be the one to buy a new all-time record high. At the same time, shorting such a strong market can be suicide.
“So while at $78 my bias was more short-term bearish than bullish -- down here at around $72, it’s neutral. At $68, I am a buyer (if we get there), and at $80, I’m a seller if no storms in the Gulf ramp up soon.” See: The Trader’s Code
 Gold responded predictably to yesterday’s bullish stock market action. The precious metal dropped a few bucks and is now laying low at $668. Read: The Once and Future Money >>
 Amid the clamor over Bear Stearns and tightening credit markets, here’s an interesting note. At the current pace, speculative money will be pumped into startups this year at a rate unheard of since 2001… $7.1 billion financed 977 U.S. startup deals in the second quarter… the most since Q3 of 2001, when venture capitalists everywhere were throwing money at flailing dot-coms.
This time around, biotech, alt energy, and software corporations are pulling in the lion’s share of venture capital.
 The Shanghai index climbed yet again yesterday… with a 0.5% gain (23 points), the major Chinese index set its third straight record close. Despite this market’s volatility and the Chinese government’s numerous attempts to cool off the economy, the index is up 60% this year already.
 “You see all these trajectories of China's growth,” responds Dan Denning, formerly of Strategic Investment, now heading up a new effort for Agora in Melbourne, Australia, “but it assumes the energy will magically appear to make that happen. ‘Cheap energy’ must be the limit on growth…you'd think so anyway.
“That's why China is racing ahead with all sorts of energy projects. But even those may not be enough…in which case, I'd guess China's breakneck growth will accelerate the depletion of resources and lead to higher energy prices faster. Sort of a positive feedback loop that ends with a contraction in global growth…a massive energy shock lasting many years.”
“The wild card is how quickly other sources of transportation fuel or base load for the electric grid can come online and be scaled up. Biofuels, renewables, nuclear…this whole portfolio of alternatives needs to get moving. But it IS moving…we just don't know if it's fast enough or robust enough to support a massively urbanized population.”
Will China grow quickly enough to fully industrialize before energy becomes so expensive that the phenomenon of rising energy prices itself will short-circuit industrialization? For more on the debate, check out the Desidooru Saloon >>
 This couldn't be what Thomas Friedman meant when he said the World Is Flat, could it? There are over 430 Hooters restaurants in the U.S.… and 23 other countries worldwide, including China, Australia, Switzerland and Brazil. In the next two years, the chain will bring its “hot wings and fun atmosphere” to Columbia, Guam, New Zealand, and India.
Word came yesterday the company is going ahead with plans to open three of its restaurants in Dubai. Kuwaiti businessman Jamal al-Shaheen reportedly paid a franchise fee of $75,000 per location. The initial investment to get the restaurant off the ground is somewhere between $800,000-$1.5 million.
 And as of yesterday, Wal-Mart will officially open stores in India…
sort of.
In 2005, we predicted India would open its arms and embrace the West’s big box stores. While this hasn’t happened exactly, Wal-Mart and India's Bharti Enterprises have reached an agreement. “The deal may help the U.S. company eventually gain a foothold in India's booming, but much protected, retail business,” reports the IHT, “which is currently dominated by an estimated 12 million mom and pop shops.”
Perhaps you’d like to join Chris Mayer, Karim Rahemtulla and yours truely as we investigate firsthand what effect globalization and the liberalization of retail trade is having on the Indian market. There are only a few spots left… if nothing else, check out our itinerary -- it’s going to be the trip of a lifetime. There’s a Dubai stopover on the way back, too, if you’re inclined to join us there too.
 “You are way off base regarding your comment that Bob Nardelli,” declared one reader, “‘wrote himself a $210 million check.’ That compensation was the result of the entire board of directors, not Nardelli, and much was baked in as part of the hiring agreement. His financial results (excluding stock price) while at Home Depot were excellent. Admittedly, he was not very good at shareholder relations, but he did what he was hired to do, namely, improve the operations of the company.”
The 5 Responds: Seriously, you’re a Bob Nardelli fan?
 “My 2 cents worth on water witching,” wrote another reader, “having lived rurally for over 20 years and our only drinking water source is from wells. Most people out here wouldn't think of drilling a well without witching the area first. Truth is, almost anyone can do it. You can use willow twigs or even coat hangers bent into the right shape. It really does increase the likelihood of finding water.
“I've even seen some plumbers using the technique to find an underground water or sewer pipe. I wouldn't call it black magic. It's just another one of those areas that because we don't have a scientific explanation, we think it's superstitious, or worse. I'm sure there is a scientific explanation and when it is discovered, it'll be a more ‘mainstream’ concept.”
The 5 Responds: Amen. When we were young, we saw our father attempt to find a well on the site of a new home we were building. He used bent coat hangers. To this day, we suspect he was just putting us on.
Regards,
Addison Wiggin,
The 5 Min. Forecast
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August. 2, 2007:
Recent guerilla attacks in western Mexico have authorities on both sides of the Mexican border scrambling to protect billions worth natural gas pipelines. Companies such as Hershey’s, Honda, and Kellogg’s are losing up to $7 million a day as local rebels bomb energy sites left and right. Meanwhile, several little known organizations are well positioned to profit from a sudden energy grab... or… worse yet, a full blown U.S. / Mexico Border War. 
