Editor's Note: This article was originally published on Real Money at 6:45 p.m. EST on Aug. 23.

NEW YORK (Real Money) -- Don't laugh at this analysis. But I question whether we actually needed to be down nearly as much as we were on Friday.

In fact, I could have made a case that we should have been able to recover somewhat into the close, if not rally back to down 2%, rather than the 3.5% decline in the S&P and 3% decline in the Dow.


First, because our markets had already been down harder the day before than the rest of the globe. We had already been clobbered and came in down 4% from the highs of the year. OK, that's the definition of a dip -- and the dip wasn't bought. In fact, that's what really spooked the markets because many could argue it should have been able to at least hold going into the bell.

Second, sure, while China reported a terrible factory order number that sent their markets down 4%, the number in itself was hardly a shocker. It came in a 47.1 vs. an estimate of 47.7. It was a drop of 0.7 percentage point vs. the previous month. And it was at a six-year low. But how can that be stunning to people? Was there really anyone who thought it was going to be higher? What has China done to stimulate of late? Almost all available cash has been used to prop up the Chinese stock markets.

Yes, we all know that the Chinese government's propping up of its market has become a big joke. That, in turn, has called into question all of the numbers. I am sure some could argue that China's actually not growing at all judging by the retail sales of reporting American companies and the stock market itself.

Third, the dollar was very strong Friday, breaking out of its slump and climbing to a two month high. You can monitor this by looking at the CurrencyShares Euro ETF(FXE) - Get Report, which started the day at $110.77 and closed at $111.50, a monumental move.

That close broke a powerful downtrend that had caused so many companies to cut their earnings estimates. If the dollar can keep this trajectory then it is possible that oil might not take as precipitous a header as I am thinking it will, given how our country is still pumping -- although production peaked a few months ago -- and Iran is vowing an all-out price war to maintain share. That euro run-up is very significant because many companies, when they reported, lowered their euro rate to the equivalent of FXE $110. The new direction of the dollar could give a very meaningful lift to 2016 estimates, even if it the euro goes slightly higher than where it is now.

Don't forget, as the dollar stays here or goes lower, the comparisons will get easier a little more than four months from now at the beginning of 2016.

Fourth, the corporate earnings backdrop going into Friday's session was pretty decent. I know initially Hewlett-Packard's(HPQ) - Get Report numbers didn't look so strong. But when Carl Quintanilla and I broke them down with Meg Whitman on Friday, people realized that the enterprise storage business was actually pretty strong and the company could be very undervalued on a some of the parts basis. The stock climbed after the interview was over.

Salesforce.com(CRM) - Get Report had reported the night before and it was a most impressive quarter. I was stunned when The Wall Street Journal wrote the next day that it was not a strong quarter and the software-as-a-service accounting model is very much under attack. It's the opposite. This was an amazing quarter with phenomenal growth -- the highest for a $7 billion in sales company, with very strong cash flow and more than $9.2 billion in cash, which is what deferred on- and off-book billings amount to. 

Sure, Ross Stores(ROST) - Get Report was a disappointment. I was stunned at how negative the company was about its prospects vs. TJX(TJX) - Get Report. Ross had run from $53 to $56 because its retail analogue had blown away the number. But a lot of the TJ upside came from Homegoods, and that's not something Ross sells. So, the promotional lingo spooked people.

I was mystified by Foot Locker's(FL) - Get Report decline. I went over the quarter and the conference call this weekend with a fine-toothed comb and found nothing I didn't like. There was a small reference to competition, but it was a throwaway on an otherwise total blowout quarter. I think the tape just got so ugly it called everything into question.

Same thing withDeere(DE) - Get Report. Here's a company that's been very gloomy for a whole year and yet the stock's gone from $78 to $98 during that period. I recently covered AGCO's(AGCO) - Get Report quarter and compared the two side-by-side and Deere was slightly better than AGCO. More importantly, did anyone really think that business would be that much stronger for Deere than it was from AGCO? I would love to say that it was a complete overreaction, except the stock should never have been where it was in the first place.

In aggregate I would say that these earnings reports were pretty good on average and the big negative surprises had to do with the stocks being up so much and not anything else. Research for the day? Mundane, nothing noteworthy that I could find.

All in all I could have argued right then that we would have had a weak open off of overseas, but we had discounted a lot of it and I could have seen us holding at about down 1.5%.

And James Bullard, the St. Louis Federal Reserve president, gave an interview to Sirius radio at a little after 1 p.m. Now, the night before I had called out the Federal Reserve presidents and governors for not reining it in given the sensitive times. I long for the Ben Bernanke Fed where Bernanke made it very clear that he was not crazy about Fed officials stridently coming out against current policy.

Far be it from me to believe that Bullard would actually be so spiteful as to do exactly what I was hoping Fed officials wouldn't do -- that would be way too small minded -- but he came out swinging and said that he was much more sanguine than others about the U.S. economy and wasn't all that concerned about China.

Wasn't all that concerned?

That's as close to knowing nothing as you are going to get from this Fed. Now others than Bullard will not be castigated. You aren't "allowed" to criticize these people and when you do they laugh at you as they did at me in 2007 when I said they better wake up.

But if you look at the intraday chart on Friday you can see where the market was trying to rally and then Bullard came out with his incredibly insensitive comments. Now I am not saying that it's the Fed's job to keep stock prices up. But I do think that the Fed has to be sensitive to its own words and Fed presidents and governors shouldn't be triggering this kind of decline. It's obvious to even the most obtuse of observers that these silly comments would cause a huge selloff.

That's why I think, all in all, it didn't need to be such a horrendous day. It left people stunned. I know that it felt to me like the Friday before the crash of 1987 when everyone knew that the market was so damaged, yet people still hoped for a better market because that week had already been so horrendous.

They didn't get it.

Ultimately the machine selling like the kind we experienced in 1987 or in the Flash Crash or in numerous declined in 2007 to 2009 was way too powerful. Anyone who tried to buy was mowed down by Friday selling and there were many varsity players already at the beach.

No matter. It happened and instead of us sitting here thinking, OK, this is a dip, I want to buy, we went home thinking it is the end of the world.

It didn't have to happen. If Bullard hadn't decided to actually cause a decline with his sanguine comments and instead would have just gone fishing I think the outcome and the patter would be quite different.

The fact is, though, that Bullard and the Chinese have caused us to lose faith in the Fed and the Communist Party to do the right thing. We were spoiled by Bernanke and we've been duped by the communists.

And those two reasons, rather than actual economic news in our country, were the true proximate causes of the decline that now has many convinced that down 10% is a given, if not a weigh station, on the way to an even deeper pulverizing.

At the time of publication, Jim Cramer's charitable trust Action Alerts PLUS held no positions in stocks mentioned.