Cramer: We're in 1987 Mode

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It's time to talk turkey about the prices on your screen and recall another time when things felt like this -- the crash of 1987. In 1987, we believed that all the major firms in the brokerage industry were going to go belly-up. Many of them were not in compliance with paperwork, others were simply not even picking up the phone. It felt like the end of the world. It wasn't. But it was eerie.

We are in that mode again. I don't think anyone looking at Morgan Stanley (MS) or Goldman Sachs (GS) today would dispute that. These companies are clearly reflecting that they are in severe straits, much worse than I think they are. In many ways, this time it is worse than 1987 because AIG (AIG) and Fannie (FNM) and Freddie (FRE) and Lehman (LEH) still haven't been sorted through. We have too many aftershocks that we must worry about, and there is too much damage in the system. Plus, there is now a sense that the U.S. government has become a cartoon government with a cartoon currency and a cartoon Fed. No rate cut? Oh my! How wrong!!

I think the Fed is in shock that we are not doing better today, but what they failed to recognize is that the erosion in confidence from their worrying about inflation is staggering. I think also, right now, they should be on the phone to the big repositories of capital in the Middle East and Asia and urge them to take advantage of these prices.

I want to make it clear: In many ways this period right now is worse than 1987. AIG, Lehman, FNM, FRE, Bear, and who the heck knows what else? Right now we are experiencing a true meltdown in financials. There is very little hope at this moment that we can turn it around ourselves.

I think that unless we get some outside help from the Middle East or China, it won't end. Our government has made so many mistakes, our Fed has made so many mistakes, that I can understand why people would panic.

I simply have to believe, though, that there is outside capital that wants in. I believe that money does exist that can come in and stabilize things. But I also want to point out that without it, we are most likely not done going down.