Remember when the DOW dropped 500 points last Thursday? Remember when “people” were saying “Hey, there, kid! It’s a tremendous buying opportunity! Oversold!! Buy the dip!!”

Well, I really hope you didn’t listen. Because falling knives are really sharp. Since the United States got downgraded Friday by S&P from AAA to AA+, things have taken a turn for the worse. The DOW closed down 634 points today, a 5.5% decline. If you think that’s bad, the Nasdaq suffered a 6.9% drop and the S&P 500 was down 6.66%. That’s three sixes, which obviously means Satan is involved.

Or maybe it’s not Satan but that damn S&P that just has it in for us, or maybe it’s our political system, as Obama told us early this afternoon. The president said “No matter what some agency may say, we’ve always been and always will be a AAA country.”

And after that short speech, the markets dropped further.

As Zero Hedge stated, this was the 6th largest drop in Dow Jones history. That’s awesome that records are being made!

And we hope you really stayed away from Bank of America, which dropped 20% today. But maybe Cramer still likes it. Buy the dip!

Off the road. On the booze.

Some more funny items I saw today:

• The Onion: Drunken Ben Bernanke tells everyone at bar how screwed economy really is…
• Michael Moore wants Obama to arrest the CEO of Standard & Poors!
• The president quoted Warren Buffett as saying the United States is a “AAAA” country. The S&P, of course, marked the outlook for Berkshire Hathaway from stable to “negative.”
• Tim Geithner says that the S&P has “shown a stunning lack of knowledge about basic US fiscal budget math.” LOL.
• BofA says they don’t need to raise capital. (Right.) On a related note, I have heard rumors that people are raiding ATMs to get their money out of BofA as fast as possible. Can anybody confirm?
• Final LOL: Cramer still has a job.

-Bill

By now, you’ve probably heard all about the “Let Wall Street Pay for the Restoration of Main Street Act of 2009,” a trading tax of 0.25% on all trades you make in a given year, with the first $100K exempt (and as most of us know, to hit that level, you don’t have to be a fatcat, just a middle class investor or day trader – e.g., you could buy/sell $10K worth of stock 10 times). It’s not likely to go anywhere, so we mostly just ignored it until Jim Cramer got some panties in bunches by coming out as, well, at least not vehemently against it:

“Look, I take an unpopular stance, but you know I think the deficit’s bad and someone has to do something,” the 54-year-old former hedge fund manager told CNBC host Erin Burnett on Tuesday. “If it comes down on us we probably. . . deserve it.”

This, of course, inspired a full round of “I didn’t do it” as individual traders threw fits at the idea of being lumped by Cramer into a ‘royal we’ of sorts:

The cable TV star’s support for the so-called “trader tax” outraged Wall Street and Cramer followers, who argued that they weren’t responsible for the financial meltdown.

“I don’t see why if banks made bad loans and created all these problems why I have to pay for this rescue,” one trader told The Post.

“I don’t know exactly who ‘we’ might be but individual traders who make a living in the market sure did nothing to deserve it,” wrote one Florida-based investment manager and contributor to Cramer’s Web site, The-Street.com.

Cramer did respond, pretty much saying he’d back any tax that would help create jobs, a nice idea in theory, but one that requires you to believe giving the government more money to spend is actually going to create jobs, and I think a lot of people are having problems with that piece of logic right now:

I repeat, I am not so stupid as to want taxes to cut into profits.

However, for those who are not willing to sacrifice in order to create employment in this country, I say to you that you do not recognize what goes wrong if we don’t get employment going in this country.

For those of you who say that I stabbed you in the back by saying that I could live with this tax, let me remind you of something: I can live with any tax IF it helps create jobs.

Traders are of course more likely to say it’s going to erode small profit margins than it is to generate any kind of real economic growth. And, as we said, the general wisdom is that it isn’t going to go anywhere in Congress. But it got some press because it fits into that “Hit Wall Street to help Main Street” paradigm, and then Cramer opened his mouth, so I figured might as well write about it.

And besides, it gives me an excuse to use this picture of a cute kid on the floor of the NYSE, yanked from today’s WSJ/photos of the week. She’s probably charting support/resistance levels for $XOM or something too, we just know it.

Some months ago, CNBC talking head and known psychopath Jim Cramer appeared on the little-known news & comedy variety show The Daily Show where he was brutally beaten and inappropriately touched by that bully Jon Stewart, who savagely attacked Cramer and his network using facts and video clips, for lulz.  You may have heard about it.  Cramer was, of course, shocked that his show (where he encourages individuals who know so little about investing that they call a TV show to ask questions to enter a market where even seasoned professionals – such as the type Cramer used to be before donning the big red clown nose – feared to tread), was being called into question and held up for public mockery. So shocked that he could do nothing but sit there and humbly agree with everything that was said to him, even offering that he and his network would do more in the future to be “journalists” instead of “lemmings not only following Wall Street but actively cheering on everything it did, remarking on its fine form and pointed toes as it marched off the cliff”.

Now of course that never happened, and was never going to, because CNBC was never staffed with journalists.  CNBC is more akin to ESPN, where every personality is the most ridiculous fanboy in the world and you’re kind of embarrassed for them for acting the way they do in front of their idols. But Cramer has now taken it one step further than reneging on an empty promise: he has now called out Jon Stewart.

Now when I say he called him out, I don’t mean actually called him out, because come on.  What happened instead is the first recorded offline manifestation of “Internet Tough Guy Syndrome” where now Cramer is acting all bad, like he wanted to go all Geraldo on Stewart and hit him in the face with a chair but only his inner Bruce Banner kept that in check.

“I tried not to take it personally, but it was so vicious,” Cramer tells Time magazine, out tomorrow. “The ultimate takeaway from the evening was, Jim, why didn’t you defend yourself? And the answer is, I was trying to defend our network and take a high road and I didn’t want to hit him with a chair or break his face or something like that. But he was very vicious. One day he’ll answer for it.”

You hear that, Jon?  Maybe not today, maybe not tomorrow, and probably not at any time after that either, but you’re going to answer for doing the job that literally no other person in media was willing and able to do.  Jim has rolled up his sleeves and he is prepared to carry on this bitchfight for as long as it takes for him to claim some minor victory that he will not shut up about until the heat death of the universe. Jim’s got his beady eyes on you.

CNBC had Dan Solin, the author of The Smartest 401k Book You’ll Ever Read on as a guest today. After the host asked him what people could do better to save for retirement, Solin answered:

“One of the things that you could do is to give us more ‘In Bogle we Trust’ and much less ‘In Cramer we Trust’.”

Moments later, Cramer barged on to the set to respond.

“The S&P is flat literally for ten years. That’s Jon Bogle’s world. If you were to sell at 11,000 like I told you in September, 10,000 like I told you in December, and then get back in at 6,500, who wins? Is that so bad? Is that worth not trusting in? I’ve had it with the people who tell me about the index fund. For ten years they’ve done nothing! For ten years! When do they get called on the carpet? When are they ever wrong? Do we have to wait another ten years? Enough of this! I’ve said my piece. Happy 20th!”

The vid:

BG asks me – why didn’t Cramer come out swinging like this on Jon Stewart’s show? Good question.

Unrelated, but here’s some special “Because It’s Friday” additional linkage – check out this picture Dealbreaker dug up of Lynn Tilton. I bet the eighties were fun.

Tim Geithner’s new bailout plan, TARP 2: Financial Boogaloo, has received the most scathing response possible: Jim Cramer says it is a good idea.

And you know what’s ironic? I think that with this plan, [Geithner]’s actually got it right. The press, the pols, the Wall Streeters—they are all dumping their golden boy just when he’s figured out how to solve the most intractable set of financial woes since the ones that landed on FDR’s desk 76 years ago.

This plan is going to fail harder than a New Orleans levee.  Thanks a lot, Jim.