I admire Jim Cramer – I think he’s a very talented macroeconomist. However, I think Jim’s been drinking too much Kool-Aide. Either that or he’s stressed out from all of the recent market volatility.  Last week, he predicted that by 2011 there would be a housing shortage.

That’s right, a shortage.

While the economic indicators suggest that we will see some sort of housing rebound over the next 2 years, it is absurd to suggest that we go from abundance to scarcity in 18 months. Here’s why Cramer is wrong. First, two things need to happen in the US economy in order to realize a housing shortage – financial market stability, and full employment.

Note that economists consider full employment to be approximately 5% unemployment rate. This means that in the next 18 months, the US economy will have to add approximately 440,000 jobs per month, every month. (Current labor force in the US is approximately 160 million).

Let’s assume that this extremely robust number is attainable (which I really doubt), and that we do reach full employment by December 2011. In other words, by December 2011 (exactly one year before the world will come to a screeching and horrific end according to Mayan prophecies) the US economy will add 7,920,000 jobs. We then have to ask (or that is, Cramer should have asked) – what will people do once they actually get a job?

Given that millions of people have been unemployed for 99 weeks or more, and therefore are behind on their debt, it’s doubtful that they will rush out and buy a new home once they land a new job. Moreover, credit scoring is tougher these days, and many of those who were unemployed will no longer qualify for a mortgage until they get back on their feet, pay down their debt, and improve their FICO.

Then there are those who did not lose their jobs during the Great Recession. Are we to believe that they will jump back into the housing markets so robustly that it will create a housing shortage? After all, many of these folks already own a home, and after seeing so any people lose their home during this recession, it’s doubtful that enough of them will begin hunting for a new house to create a shortage.

The problem with Cramer’s analysis (if you can call it that) is as follows: it lacks logic, and, it fails to address the importance of behavioral finance. From a purely psychological perspective, people are scared, and rightfully so. What really drives our markets is the psychology of the consumer – when people feel good they tend to party – when they feel bad, they tend to ponder.

Considering that we are now just emerging from the worst economic crisis since the Great Depression, it is likely that folks will do a lot more pondering, and a little less partying, even after they secure a new job.