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Bad. Real bad. Sell. Get out now.

There, I gave the bears what they wanted. It's so easy. It's what people want me to say. And it would be comforting. I have a big retail audience. I could easily panic them out of everything. Why not? Subprime could spread to prime.




Merrill Lynch


bought subprime at the high. Mortgages are resetting higher like mad. Has to crimp consumer spending. The rot is deep, affecting everyone from


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There. I feel better. Or do I?

Why not be overwhelmingly gloomy? Why not just blow it all out here?

Cause I did it once, on this site. I looked at the world in October of 1998 and I couldn't believe how complacent everyone was, including the


. Didn't they know what I know, that the amount of money controlled by Long Term Capital was, at that moment, larger than any brokerage house's capital and could take down everyone?

What was the Fed thinking, being so complacent? The market was falling fast after being down all summer. Bankers were starting to flood the market with bogus dot-com paper. Bankers like Merrill Lynch and



were telling us not to worry as their balance sheets were being taken apart. The contagion of Long Term Capital couldn't be contained. Everyone was using their playbook because they were supposed to be so smart.

So I gave the bears what they wanted and gave into my fears and I pulled the plug on this site, a little site then. What hope was there? Greenspan had just said the other day that the economy was chugging along. He left room for a rate hike. He was clearly out to chow.

How great it felt to finally go bearish, to get everyone out before it was too late. I was going to save all of our readers.

And two hours later the Fed reversed course, stepped in to make sure there was plenty of capital for the brokers and the rest was history. In fact, we never looked back.

Now I am faced with a similar moment. I am bearish on subprime. In fact, post the destruction of


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, which, unlike

New Century


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a joke, could mean a contagion much larger than anyone thinks because Accredited did conservative modeling and still blew-up. Accredited's management was seasoned -- they even operated in this game during the S&L crisis, a true test of the system, one where the bears were confident that Citigroup, Manny Hanny, Chemical, Bank of America, Chase, Bank of Boston and and Security Pacific were all going under, and from their low to mid single digit stocks it was hard to refute. Accredited's the shocker and it reminds us that the whole industry probably will go under (later this morning I will publish the bear hit list for the group so stay tuned).

In short, Accredited is a very mini Long Term Capital and it is a great reason to cut and run. I am bearish on prime; I see the delinquencies picking up quickly in other parts of residential because of the reset of all of the loans taken in the last five years because of the 17 hikes by the Fed.

Most of all I see the same clueless Fed, looking at employment and thinking things are fine. Just like October 1998. The Fed thinks, like those at Accredited did, that as long as employment stays strong, we will have no problem.

That's completely and utterly wrong.

Plus I am as defensive as I can be, over and over recommending 4% yielders on my show -- admittedly nice protection given the 10-year. I say I like everything in the supermarket including the supermarkets but not much else. I hate tech, I don't like most financials, and I believe that consumer discretionary spending is on the decrease. I like





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. I would like them if a nuclear warhead detonated in Valencia, Calif., killing 12,000 people in an instant, a la the TV show 24.

But I am


going to panic or panic people. I suggest gradual pullouts and build ups of cash. I suggest overseas buying. I suggest owning a gold stock. These are all new defensive postures for me.

But I am not going to panic or panic people.

The Fed could wake up from its slumber/stupor. Subprime could be contained by several quick rate cuts that make the repricing easier. The subprime culprits could all be blown out and a Buffett come in.

The cash on the balance sheets at most major firms is huge and the buybacks continue.

So I am cautious. I am worried. But I am not scared and I am not panicking and I am not going to recreate 1998. I have a responsibility not to and I have the history not to.

Get defensive if you aren't. Play D.

But blow it all up because of something that the Fed can fix? Been there. Done that.

Not doing it again.

At the time of publication, Cramer had no positions in stocks mentioned.

Jim Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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