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Video: Wall St. suffers worst selloff since 2008

  1. Transcript of: Wall St. suffers worst selloff since 2008

    MATT LAUER, co-host: But let us begin on this Friday morning with Wall Street 's worst sell-off since the financial meltdown back in 2008 . We are joined, as I mentioned, by CNBC 's Maria Bartiromo and Jim Cramer . Guys , good morning to both of you.

    MARIA BARTIROMO reporting: Good morning, Matt.

    LAUER: Is this a classic correction?

    BARTIROMO: It feels that way. I mean, I think it's based on real fundamentals and that is that an economy is softening. And that's really the worry here.

    LAUER: The definition, Jim , of a nanosecond is the time between a market plunging and the blame game starting. So where does the blame belong in this situation?

    JIM CRAMER reporting: Right. This one is squarely not our fault. I think this is very much based on Europe and the profligacy of actual governments in Europe , not banks in the United States . And arguably that's why it's so difficult for people to understand.

    LAUER: We're hearing a lot of the term "correction." We're also hearing another term, "double-dip recession." You talked about this on our show just the other day.

    CRAMER: Yes.

    LAUER: The White House says they don't think that's what we're seeing right now. And let me read you what Paul Krugman writes in this morning New York Times . "It's not just that the threat of a double-dip recession has become very real. It's now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery." I'd like your reaction to that.

    CRAMER: Well, first I would say, I read that piece and I've got to tell you that's about as gloomy as you get. That usually signifies...

    LAUER: Too gloomy?

    CRAMER: I thought too gloomy, as well as when we have a lot of people down here. It's usually closer to a bottom than a top. I will say, look, things are not good. It's just that I do believe that the possibility of a recession has increased. I do think it could even happen. But the idea that everything is falling apart a la 2008 is just wrong. Got to be take that off the table.

    LAUER: And one of the main differences between now and 2008 , back in 2008 the banks were misbehaving, companies were doing badly. Here in 2011 the banks are doing pretty well, companies are doing pretty well, although they're not hiring. Banks are sitting on a mountain of money.

    BARTIROMO: Yes, they are. Two and a half trillion dollars of cash on balance sheets of corporations. And the banks in particular has been able to raise an enormous amount of capital. But the -- but the issue, I think, is that it doesn't really matter what you call it, recession, depression, double-dip...

    CRAMER: Right.

    BARTIROMO: ...triple-dip, it doesn't matter, the bottom line is we all feel it and we're nervous and there's nervousness and fear out there. And so it doesn't really matter what you label it. At the end of the day we're still in a very fragile situation. Unemployment the big issue.

    LAUER: And when you say -- when you say there's nervousness, consumers are scared.

    CRAMER: Right.

    LAUER: And when you remember that the consumers drive 70 percent of the US economy , that's a very bad thing.

    BARTIROMO: It is. And that's why retail is one of the areas that people are selling right now. I think you have to watch for more data points to find out really where we are in this recovery. But there's no doubt about it , the unemployment situation, the retail situation is very fragile, very weak right now.

    CRAMER: Right. But the retail market is very much hinging on two things: consumer confidence but also gasoline prices. Look, I'm no Pollyanna , and you know that...

    LAUER: Right.

    CRAMER: ...but I do see oil plummeting. That is going to be a relief of a tax on every American consumer.

    LAUER: All right, you are no Pollyanna . I want to remind you what you said on our show back in 2008 as the markets were plunging back then. You said if you need your money, and you said this to the consumer and the investor out there, if you need your money near term get out of the markets.

    CRAMER: Right.

    LAUER: You don't feel we're there again?

    CRAMER: Fire was raging in a theater. Sometimes you want to save as many people as you can. This time the fire's not raging. I think things are better than people realize, I do believe the market can go down more. But this is a different time. We have the first national bank of corporations. Our corporations are just in the best shape they've been. Our banks are better than any other banks in the country -- world, other than China .

    LAUER: Yeah, but there's another...

    BARTIROMO: Is is true. But longer term that's definitely the case that's very much in place.

    CRAMER: Right.

    BARTIROMO: That doesn't mean short term we won't see more volatility and further losses for the stock market .

    LAUER: But there's another big difference. Back in 2008 the government jumped in with a huge stimulus plan. We know that's not going to happen right now. There's no money for that.

    BARTIROMO: There's no money for that, but the Federal Reserve will be there, whether it is low interest rates, guidance in terms of their language. So the Fed will be there. At this point, the stock market is very important because that's making people feel poorer or richer. So it does feed on itself in some ways.

    CRAMER: But, look, I would have no qualms about telling people to get out again if I felt it was going to plummet. We dropped 33 percent after I made that call. I don't see that happening. I think we can certainly go down, but I don't see that kind of systemic risk in this country like I do in Europe.

    LAUER: Just really quickly, we're about an hour away from some jobs numbers coming out for the month of July. How are they going to impact the market? What are you expecting?

    BARTIROMO: People are expecting about 85,000 new jobs created for the month of July. Anything that's much weaker than that I think will be problematic for this market.

    CRAMER: Right, right.

    BARTIROMO: The good news is that we already have low standards here. The bar has been lowered. So we're expecting a tough month.

    CRAMER: Stronger than 2008 in this country. Weaker over there. Please keep in mind, stronger, which means doom and gloom not correct right now.

    LAUER: Jim Cramer , Maria Bartiromo . Folks , nice to have you here. Thanks very much. And it is now time to go back to Studio 1A and Ann.

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