Cramer's 'Mad Money' Recap: Oct. 6

Lastly, Cramer said the government should buy the collateralized debt obligations (CDO's), but only after it has exhausted the individual loan options. For these CDO's, Cramer suggested they be grouped by geography and vintage, so the government can hold them until their values increase, then sell them in an orderly manner.

Cramer said if the government follows this plan, only then can it avoid a repeat of the Great Depression. Until then, however, Cramer said it doesn't hurt to have a little cash socked away in savings.

Cash Is King

Cramer returned to the old adage "it's better to be safe than sorry" when reiterating to viewers that they should sell at least 20% of their portfolios and move that money into safe, FDIC insured savings accounts.

Cramer again reminded viewers that they can't buy even defensive stocks without first taking profits and selling stocks to build a strong cash position. He again advised investors to have enough cash on hand for things like buying a home, paying for college, buying a car or helping parents retire.

Cramer said investors should have cash on hand and not rely on the markets to be there for them.

Until the chance of another Great Depression is off the table, Cramer said the only prudent thing to do is horde some cash. He said he doesn't take the term "depression" lightly, but he feels the market could retest the lows of October 2003, when the Dow traded at just 7,700.

Are we better off today than in 2003? Cramer said, "No." With the huge financial crisis, the risk of a worldwide slowdown, and continued energy problems still looming, the possibility of further declines in the markets are very real.