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"If we ever want to see a sustainable rally again, we need dramatic action," Jim Cramer told viewers of his "Mad Money" TV show Thursday.

He said that the systemic risks to the market have once again put the possibility of another Great Depression back on the table. "We are not done going down," he said.

Cramer unveiled his "tough love" plan for taking the risk out of the markets and restoring confidence in the U.S. economy. He called on President-elect Barack Obama not to wait until January to take action. "We need to act now," he said.

Here's his eight-point plan. First, Obama needs to hold a press conference and announce that the federal government will not allow any more big financial institutions to fail.

Second, we need to ensure the the safety of all life insurance and annuities. It may take another bailout or consolidation, but another AIG ( AIG) scare cannot happen.

Third, the government must stem house price depreciation by issuing tax credits for home purchases and by reinstalling the TARP plan with changes that don't penalize the banks for taking aid.

Fourth, the government must insure the bonds of both Fannie Mae ( FNM) and Freddie Mac ( FRE) to allow those institutions to continue their work.

Fifth, the government must step in to buy up and stabilize some of the collateralized debt obligations, or CDOs, to stabilize that market.

Sixth, the government must providing financing for any auto company that files for bankruptcy and provide no relief for those that don't. Some must be saved, but possibly not all three.

Cramer: Yahoo! a Play for Iron Stomachs

Seventh, a trillion-dollar infrastructure program in the U.S. is needed to rebuild the country from the ground up and create thousands of new jobs.

Lastly, the U.S. must get China and Europe to cut interest rates to 2% to head off a worldwide slowdown.

An Evolving Story

Cramer welcomed Andrew Littlefair, president and CEO of Clean Energy Fuels ( CLNE), to discuss the state of natural gas as an alternative fuel in a world with $50-a-barrel oil.

Stockpickr

Cramer last recommended Clean Energy on August 1 at $13.19 a share, and again on Sept. 10 at $18.07 a share. Since then the stock has tumbled as the price of oil plummeted.

Littlefair said the process of changing transportation habits is evolving. He said that even right now, at places where diesel fuel is $2.71 a gallon, Clean Energy can provide clean, natural gas for the equivalent of just $2.15 a gallon. Littlefair said the natural gas model works long term and said oil will be heading higher again.

When asked why ethanol seems to favored more than natural gas in Congress, Littlefair said that's because Obama maintains energy security as one of his top priorities as do many in Congress.

Finally, when asked about the company's dwindling cash reserves, Littlefair told Cramer that the company does not burn any cash for operations, and only uses its reserves for capital expenditures associated with building new fueling stations.

Cramer said he's still a backer of Clean Energy and that when oil starts to rise again, the company should well positioned to prosper.

Sell Block

In this segment, Cramer told viewers that not all master limited partnerships (MLPs) are created equal. He said that while he's a fan of high yielding, energy-oriented MLPs, he sees declines in many of them as opportunities and warned of pitfalls to watch out for.

BankingMyWay

Cramer said there are two classes of energy MLPs: ones that make money from gathering and processing of oil and those that make money transporting oil. The latter, he said, are safe, while the former raise red flags.

Cramer singled out Williams Pipeline ( WMZ), Atlas Pipeline ( APL) and DCP Midstream ( DPM) as three MLPs at risk as oil prices plummet.

These three, he noted, need oil around $75 a barrel to make money. With oil at $49 a barrel, he fears the companies' dividends are at risk. Cramer cited Crosstex Energy ( XTEX) as an example of what can happen when an MLP cuts its dividend.

Cramer said he made a mistake recommending Atlas Energy Resources ( ATN), but stands behind his other favorite energy play, Kinder Morgan ( KMP).

Switching gears, Cramer defended his call to sell life insurance companies on the heels of scathing report from Goldman Sachs.

While admitting that perhaps he should not have treated all insurers equally in his sell recommendation, Cramer said the call helped save people from double-digit declines in all of the life insurance stocks since last week.

Lightning Round

Cramer was bullish on Teva Pharmaceutical ( TEVA), Alcoa ( AA), Flowers Foods ( FLO) and Family Dollar Stores ( FDO).

Cramer was bearish on Fastenal ( FAST), FMC Corp ( FMC), Freeport-McMoRan ( FCX) and Activision ( ATVI).

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At the time of publication, Cramer was long Freeport-McMoRan.

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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