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While Congress is busy playing "Deal or No Deal" on Capitol Hill, Jim Cramer told the viewers of his "Mad Money" TV show Friday that there is a new problem looming on the horizon.

Cramer explained that as fears lingers in the markets, large corporations and institutions are pulling their money out of bank money market funds, in favor of government backed Treasury bills.

This move is slowly robbing banks of the capital reserves they so desperately need. Cramer called it "an invisible run on the banks," one that has no lines in the lobby but pushes banks to the breaking point nonetheless.

Cramer called for the Federal Deposit Insurance Corporation (FDIC) to raise its account protection limit from $100,000 to as much as $2.5 million per account to rescue the banking system.

"We are truly in dire straits here people," Cramer told viewers. He said the failure of Congress to pass the bailout plan is causing the banking system to fall deeper into trouble. The markets, he said, are completely out of control.

Cramer said it's a national embarrassment that no senator or congressman is paying attention to what is happening. Only by stepping up FDIC deposit insurance limits, said Cramer, can confidence be partially restored and the exodus of capital slowed.

Cramer: 5 Steps to Financial Survival

Cramer told investors that without a bailout plan and higher FDIC limits, they should continue to sell into strength and prepare for the worst. After closely examining the stocks in the Dow, Cramer predicted the bellwether index could lose as much as 2,768 points, slipping to just 8,378, if Congress doesn't enact a plan soon.

Taking on Shelby

Cramer directed his "Outrage of the Day" segment at Sen. Richard Shelby (R., Ala.) and his supporters. Cramer said Shelby's opposition to the government bailout plan could do more to destroy the economy that any other person in history.

Stockpickr

Cramer took issue with Shelby's recent comments that it would be shameful to bail out Wall Street, a system that the senator said is littered with greed and outdated regulations. Cramer called the comments ludicrous, arguing that it would be shameful to destroy the country's financial system and economy by not passing the bailout.

Cramer reminded viewers that without the plan, the unemployment rate could rise from 6% to 7% to as much as 20%, and the Dow Jones Industrial Average could plummet almost 3,000 points. He said the problem does not just lie with Wall Street, and will quickly spread to every sector of the economy if immediate action is not taken.

"The academics just don't understand the problem," said Cramer, who ridiculed those who do not have first-hand experience of how Wall Street works or the severity of the crisis.

Cramer said just about everyone he knows is silently pulling money out of banks and putting it into Treasuries. He predicted we could see another five to six more bank failures next week if a bailout plan does not get passed.

A Lesson in Speculating

Cramer set the record straight when it comes to speculating on stocks. He said that people who speculate on bank stocks, hoping for a quick spike or takeover, are just dead wrong.

BankingMyWay

When it comes to bank stocks, Cramer said it's the debt that matters, not the stock. "The common stock is just a tease," he said.

In a normal takeover, Cramer explained, it's the bond holders, or bond bullies, that often come out ahead of the shareholders. However in a bank failure, it's the government who wins and the debt holders are often wiped out.

Cramer told investors to speculate the smart way by following the rules he's outlined in his book "Real Money." Speculating on stocks with single-digit stock prices can cause huge losses, he said. And never speculate on takeovers where the fundamentals are not sound.

"How much can you lose?" Cramer asked. "100% of your money."

Riding Out the Business Cycle

Cramer talked with Dr. T.J. Rodgers, president and CEO of Cypress Semiconductor ( CY - Get Report), to find out how the spinoff of solar company Sunpower ( SPWR will affect the stock going forward.

Rodgers said Cypress still trades as a combined company today, but he looks forward to spinning off the $3 billion solar subsidiary to once again focus exclusively on semiconductors. He said that investors fall in and out of love with solar stocks on a weekly basis and he'll be glad to see the volatility ease.

Regarding Cypress' remaining business, Rodgers said that he is seeing the market slowing down for semiconductors, and acknowledged times are tight at Cypress.

However, he said that he's seen 23 such downturns and this one is not the worst of them. Semiconductors, he said, are still a part of just about everything and he can't wait to get started on "the next big thing."

Cramer told viewers to stick with Rodgers and reiterated a buy on Cypress.

Lightning Round

Cramer was bullish on Sysco ( SYY - Get Report)and Lowes ( LOW - Get Report).

Cramer was bearish on FirstMerit ( FMER, Suntech Power ( STP, Johnson Controls ( JCI - Get Report), Colonial Bancgroup ( CNB - Get Report)and Google ( GOOG - Get Report).

Correction

In a correction to last night's episode, Cramer said his sell recommendation of Rockwell Automation ( ROK was intended for Rockwell Collins ( COL.

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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 TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com 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 TheStreet.com, 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 TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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