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"The markets need radical changes, not a silly stimulus package," Jim Cramer told viewers of his "Mad Money" TV show Friday.

The market's problems, he said, hinge on mortgage insurers such as MBIA ( MBI), Ambac ( ABK), PMI Group ( PMI) and MGIC ( MTG).

Cramer said those companies are in dire straits because they don't have the money to cover $500 billion worth of bank loans mired in the subprime mess.

These companies, Cramer warned, could go "belly up" in weeks, if not days. If that happens, he predicts, the banks could quickly run out of capital, and the Dow could plunge as much as 2,000 points.

Cramer said the crisis could be avoided if the federal government steps in and purchases the four failing insurers and then pays out 50 cents on the dollar to the banks for the failed loans.

Under the current scenario, he points out, the banks get nothing and the whole economy suffers if the insurers fail.

With Cramer's plan, a single $250 billion injection could cure the entire problem and establish a bottom for the financial stocks. If this step is taken, he predicts, the Dow could rally as much as 2,000 points instead of losing 2,000 points.

The Best Tech Stock for the Bear Market

Cramer gave the nod to Microsoft ( MSFT) during the last installment of his weeklong series on beaten-down technology companies that harbor hidden value.

Microsoft, he points out, is the second largest global brand behind Coca-Cola ( KO), which makes it harder to knock down in a turbulent market.

Cramer likes Microsoft for many reasons, including its "beautiful" balance sheet, which boasts $21.57 billion in cash reserves. He also cites the company's stock repurchase program and the recent upgrade it received from Goldman Sachs.

In addition, Cramer says Microsoft will benefit from the launch of Windows Server 2008 and Windows Vista Service Pack 1 later this year. He recommends getting into the stock before it reports earnings next Thursday, adding that "Microsoft is the best tech stock for this bear market."

Gene Simmons

Cramer talked with Gene Simmons, lead singer of the rock band Kiss. Both Cramer and Simmons appeared on this week's episode of The Celebrity Apprentice on NBC.

While Simmons would not comment on all of his motives or tactics in "the board room," Cramer said that he admired the entrepreneurial spirit and marketing ability the singer displayed on the show and in business.

Simmons has been credited with single-handedly reviving the Indy car racing series and successfully marketing the Kiss brand around the world for the past three decades.

Mutual Fund Tips

In his most recent book, Stay Mad For Life, Cramer highlights several mutual fund investors should consider for their 401K and retirement funds.

One of them is the FBR Focus Fund ( FBRVX), managed by Chuck Akre. Cramer invited Akre to the show to learn more about his investment strategy.

Akre said his fund has an optimistic view on the market and has a lot of cash on hand to take advantage of opportunities as they arise. One stock Akre likes is Toll Brothers ( TOL), which currently trades at just 80% of book value and has a strong balance sheet.

Akre also likes CarMax ( KMX) for its visibility, transparency and attractive growth rate.

Cramer said he stands behind Akre and the FBR Focus Fund, noting its five-year average return of 20.7% and its 32.6% return in 2001, when the markets were down considerably.

Lightning Round

In the Lightning Round, Cramer was bullish on Mercadolibre ( MELI), United Parcel Service ( UPS), Cypress Semiconductor ( CY), Omniture ( OMTR), Inverness Medical ( IMA) and Transocean ( RIG)

Cramer was bearish on Applied Materials ( AMAT), Tyco ( TYC), Amgen ( AMGN), Limelight Networks ( LLNW) and NYMEX ( NMX)

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

For more of Cramer's insights during the Lightning Round, click here .
At the time of publication, Cramer was long Transocean.

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.

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