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"The Paulson plan is awful, it stinks and it's nasty... but it's also far better than anything else," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Cramer strongly defended the plan, which he said, needs to pass to avoid another Great Depression.

Cramer said the bailout plan proposed by Treasury Secretary Henry Paulson focuses on one thing and one thing only, curtailing mortgage foreclosures.

But he said Congress just doesn't get it. The plan aims to stop the now 10,000 foreclosures a day that happen in this country, he said. Without the plan, he warned, the banking and financials stocks will continue to collapse.

Cramer dispelled what he called the top five "lies" about the Paulson plan.

Critics argue the plan doesn't address the real problem of people losing their homes. Cramer said people are losing their homes because of declining values and foreclosures. Taking out the bad loans, he said, will stop the foreclosures.

Critics complain the plan costs too much. Cramer said the plan will not cost a lot of money and could even make money. "Paulson will make money for us," he argued.

Critics say executives of the failing firms will make too much money from the bailout. Cramer argued that there are ways to deal with this issue, such as creating an executive compensation board, or requiring executives to waive their salaries in order to take advantage of the plan.

Cramer: Paulson's Plan Is Our Best Plan

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The government's pricing of failed loans will force banks to take huge write-downs. Calling this argument ridiculous, Cramer said that the responsible banks have already written down the value of their loans, and the irresponsible ones could easily be given forbearance.

Critics argue that there's no need to rush towards a solution to the crisis. Cramer responded, saying "Rome is burning," and citing

Washington Mutual


(WM) - Get Waste Management, Inc. Report

last debt writedown that occurred Monday night. "We need this deal if only to save Washington Mutual," he said.

Staying on Track

Cramer talked with Michael Ward, president, chairman and CEO of


(CSX) - Get CSX Corporation Report

, which Cramer recommended on Aug. 21 at $61.96 a share. CSX recently reported a solid quarter, raising guidance from between $3.40 to $3.60 a share to between $3.65 to $3.75 a share.

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Ward said CSX is still growing, with demand for coal, fertilizer, ethanol and metals still strong. He said while auto and housing related shipments such as lumber, paper, rocks and gravel are sluggish, the rail industry is still taking marketshare from trucking as concerns over congestion and high fuel prices continue.

Ward said the modest moves in the dollar have had little impact on the company's export businesses because 85% to 90% of the company's business is domestic. He said CSX continues to innovate and focus on productivity and cost savings.

Regarding CSX's recent battle with hedge funds, Ward said he continues to welcome the new board members and is doing his best to educate them and bring them into the company.

Cramer said rails are still the place to be, as he gave the nod to both CSX and competitor

Union Pacific

(UNP) - Get Union Pacific Corporation Report


Early-Cycle Play

Cramer reiterated his long-held prediction that the bottom to the housing market is just 281 days away. He said the way to play this coming bottom is invest in companies in the early phase of the cycle.

In particular, he citied


(MAS) - Get Masco Corporation (MAS) Report

, which makes kitchen cabinets and owns the Behr paint brand.

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Cramer called Masco a best of breed play for the coming bottom in housing. With 37% of the company's earnings from new homes, 40% from remodeling, and the remaining 20% coming from outside the country, Cramer called Masco the best early-cycle play out there.

At just $17.43 a share, the stock has already priced in the lower housing starts, leaving only upside potential, he said. Moreover he said the company boasts a 4.9% dividend yield which pays investors to wait for the housing turn to come into fruition. Masco recently boosted its dividend for the 50th straight year in a row.

Cramer said he also likes the company's huge cash flow, which comes in at three times earnings. The company also has 33 million shares left in its stock repurchase program and trades at just 22.8 times its growth rate.

TheStreet Recommends

After being battered by downgrades and the recent market action, Cramer said Masco is exactly the kind of company investors should be looking for.

Mad Mail

In this segment, Cramer told a viewer that gold is a better metal play than silver and other metals, since gold is more in demand around the world. He reiterated support for

Barrick Gold



Agnico-Eagle Mines

(AEM) - Get Agnico Eagle Mines Limited Report


Lightning Round

Cramer was bullish on

Ultra Petroleum




(AMTD) - Get TD Ameritrade Holding Corporation Report


Cramer was bearish on

(CRM) - Get, inc. Report


Exxon Mobil

(XOM) - Get Exxon Mobil Corporation Report





Warren Resources



Discovery Holdings

(DISCA) - Get Discovery, Inc. Class A Report


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At the time of publication, Cramer was long Discovery Holding.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

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.