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Cramer's 'Mad Money' Recap: Market Terror (Final)

Stocks in this article: CHKEXELBPLPPLGSKPLAB

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NEW YORK ( TheStreet) -- "This market is all about terror," Jim Cramer told his "Mad Money" TV show viewers Friday.

He said the short sellers are worried about getting a deal in Washington, while everyone else is worried about not getting one.

Cramer said Congress in a best-case scenario eeks out meaningful reform, the kind that will shave trillions of dollars from the federal budget and save our beloved triple-A rating. This would be a nightmare for the short-sellers, he said, as the market is a coiled spring and would pop to the upside and wipe out their gains.

In a second scenario, a deal is reached, but it includes only token reforms that will not be big enough to save the nation's credit rating. Cramer said in this case, the Treasury would have to pay higher interest rates on its bond, which in turn sends up everyone else's rates and helps re-stall the economy.

Finally, there's the ugly scenario, the one where no deal is reached and the government not only loses its credit rating, but also defaults on its obligations. Cramer said there are other options, such as invoking the 14th amendment or selling off assets, but the real fear is that the damage done will make restarting the economy impossible.

Cramer said he's not sure which scenario will develop over the weekend, but the terror will continue until an outcome materializes.

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