With no end to banking bailouts in sight, the Dow Jones Industrial Average plunged Monday to its lowest level since 1997.

The Dow fell 299.64, or 4.24%, to 6,763.29, while the S&P 500 dropped 34.27, or 4.66%, to 700.82. The Nasdaq lost 54.99, or 3.99% to 1,322.85.pp

Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, said the narrative returned to the beginning of the financial crisis with yet another bailout of American International Group ( AIG).

He said the bailout was reprehensible, given the fact the insurer indicated today that it insured $500 billion worth of credit without keeping anything in collateral.

Joe Terranova said the deepening market pessimism could lead to a bear market rally.

Zachary Karabell found some positive signs in the uptick in consumer spending and income numbers in January and a bottoming in the purchasing managers' index of the Institute for Supply Management in February. Perhaps, he said, the "real" world will lead the recovery this time instead of the markets.

Jeff Macke said he would "shorten his swing" and "have a lot of cash" in this frightful market.

Tim Seymour said his firm is operating on a small book now, with "a couple of longs we like" and some high beta names on the short side.

Ratigan asked the panel how much further they thought S&P earnings will slide. Macke said it could easily drop 20% to 30%.

Ratigan then asked the panel what strategy they would pursue: do nothing, pick off cheap stocks or go short. Macke said there are no cheap stocks because of the erosion factor and no leadership from Washington. Seymour said he would stay mostly in cash, while Terranova held out for a possible bear market rally.

Ratigan shifted the conversation to oil, which fell 10% today. Terranova said oil fell along with every other asset class. He said he still he believes the oil trade is a play you would not want to be on the short side.

With the market so irrational, Karabell said a better guide for investors that a change is in the offing might be the U.S. consumer balance sheet and a personal savings rate of 5% and an improving Chinese economy.

Ratigan noted that the dollar stands at a 3-year high. Seymour said he continues to go long on the dollar because of major economic problems in Europe and Asia. Macke said the strong dollar is bad news for companies like HP ( HPQ) and McDonald's ( MCD), which benefit from a weak dollar.

Ratigan brought on former FDIC chairman William Seidman to talk about the AIG bailout. Seidman said the market is in bad shape because the government hasn't fixed the problems at AIG. "It's clear the market doesn't believe the financial system is fixed," he said.

"Being too big to fail doesn't mean the government can't take over the institution," he said. "They just won't take the tough step and take over the institutions. They won't force the bankruptcies."

Jon Najarian continued to believe in the gold trade despite the fact that gold was down for the sixth day. He said he still likes his trade of buying miners and selling SPDR Gold Shares ( GLD). One of his favorite mining stocks is Ivanhoe Mines ( IVN), which is up 60% year to date.

He also sees a short squeeze opportunity in Wells Fargo ( WFC), which has dropped from $30 to $10 in the past month, triggering a dramatic increase in short interest. "Fourteen million more shorts have joined the party and they are going to be ones chasing this one up," he said.

He said another stock in a similar short-squeeze position is Vale do Rio Doce ( RIO) where there has been a 35% increase in short interest in the past month.

Ratigan brought on Louise Yamada, of Louise Yamada Technical Research Advisers, for her forecast of the market. She said she sees the markets heading lower, the first target being 6,000 for the Dow and 600 for the S&P, and the second being 4,000 for the Dow and 400 for the S&P.

She reflected back to the Great Depression when the 1929 crash support levels gave way in 1930 and wiped out wealth for the next several years.

She said the best survival strategy would be to hold cash. "If you take a position, do so with a trailing stop loss, whether it's up or down. You're going to have contra rallies and interim short coverings periodically," she said.

Unfortunately, she said, her firm's technical indicators show selling pressures. "Until that is alleviated, we will not venture into the waters. It would be like catching a falling sword," she said.

Ratigan asked Mike Huckman, CNBC's pharmaceuticals reporter, to talk about the impact of Obama's ambitious health plans on big pharma and biotech.

Huckman said the impact has been negative. For pharma, Obama's proposal to provide greater rebates on popular drugs in the Medicaid program will bring down profit margins for big pharma. As for biotech, Obama's efforts to create a road map for generic versions for biotech drugs will lead to lower profits.

Huckman said the shares of Genentech ( DNA) could get a $20 bump next month if it gets positive results on its colon cancer drug. If that were the case, it could put Genentech out of the price range for Roche.

"Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.

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