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"If ever there was an institution that's too big to fail, it's AIG," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

He said if the U.S. government allows


(AIG) - Get American International Group, Inc. Report

to fail, there could be a catastrophic deflation of assets around the world.

Cramer said the Dow could fall 1,000 points if AIG is not fixed correctly. He said the number of individuals and businesses that depend on the company is staggering and the effects of a failure would be felt worldwide.

Cramer cited AIG's Dec. 6 conference call, when the company said it had $500 million of exposure to risky loans in Europe. With bailout estimates for AIG now approaching $100 billion, Cramer argued the amount of European exposure would have to be substantially higher.

(Editor's note: Several media outlets late Tuesday were reporting that the

Federal Reserve

is considering an $85 billion rescue bridge loan for AIG.)

Cramer said a failure of AIG would easily cause European bank failures and possibly failures elsewhere in the world.

Cramer said Fed Chairman Ben Bernanke "let us down" with his decision to leave the federal funds rate unchanged earlier today. He said the move "could really screw up the U.S. economy," adding the easiest way for banks to rebuild their assets is through a lower fed funds rate.

Cramer: Tech Opportunities I See

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Cramer reminded viewers of the situation in 2003, when then Fed chairman Alan Greenspan took rates to just 1% in to spark growth at a time when the economy wasn't suffering from sky high energy prices or a housing crisis. "Today's move was not bold," he said.

A Befuddling Lack of Action

"No man has done more to sabotage the confidence of this market than SEC chairman Christopher Cox," Cramer told viewers in his "Outrage of the Day" segment.

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He said the SEC's laissez faire attitude towards the market has done more damage to the financial stocks than any CEO ever possibly could.

Cramer said the SEC's removal of the "uptick" rule and failure to enforce other rules designed to prevent naked shorting played a key role in the destruction of the financial sector. "If you break a financial company's stock, you break the company," he said.

Financial companies use their stock to raise capital, he explained, and in the case of AIG, the shorts have destroyed the stock, making it impossible for the company to save itself. AIG's stock price would not be trading at just a dollar a share if the rules were being enforced, he said.

Cramer said the company's current share price doesn't reflect the value of the assets. Instead, "it reflects where the shorts want it to be," he said.

Cramer theorized that with adequate protection against naked shorts, AIG may have been able to execute a plan to sell its assets.

He cited the SEC's implementation of "emergency measures" on July 15 as proof that the rules work. After the financial stocks were protected from shorting, they rallied 40%.

Toughing It Out

Cramer talked with Clarence Otis, chairman and CEO of

Darden Restaurants

(DRI) - Get Darden Restaurants, Inc. Report

, about his recent quarter and the company's overall outlook.

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Cramer last recommended Darden on Sept. 9 as part of his "happier-days-are- here-again" thesis. Since then, the company reported an inline quarter, at 58 cents a share, and purchased 2.1 million dollars of its own stock.

Otis called the company's forecasts conservative but also said there are still challenges in the marketplace. He said the company's buying power allows it to take advantage of its scale and should help it emerge from this downturn stronger.

TheStreet Recommends

Otis said he still sees opportunities with the company's acquisition of Longhorn Steakhouse. He said Longhorn should both add to the top line and the bottom line of the company's earnings as the promised synergies come to fruition.

Cramer called Darden an excellent long-term growth opportunity and reiterated his buy recommendation.

Lightning Round

Cramer was bullish on

Research In Motion

( RIMM),

Energy Conversion Devices

( ENER)and

First Solar

(FSLR) - Get First Solar, Inc. Report


He was bearish on

Sterling Financial

(STSA) - Get Satsuma Pharmaceuticals, Inc. Report


Titanium Metals




(MELI) - Get MercadoLibre, Inc. (MELI) Report


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At the time of publication, Cramer was not long on any stock.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.