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NEW YORK ( TheStreet) -- Investors need a game plan to deal with worst-case scenarios, Jim Cramer warned "Mad Money" viewers Monday. But what exactly is the worst case? Cramer laid it all on the line in plain English. Cramer said there are two worst-case scenarios being floated by the bears. One is the markets will return to 2011 lows, with a 10% decline in the Dow Jones Industrial Average. The other assumes a return to the 2009 lows that saw the Dow touch 6,500, a full 50% decline from current levels. So could the markets return to the lows of last year? Cramer said they could indeed. The situation in Europe is worse now than in 2011 while China has cooled and the economies in India and Brazil have decelerated. Couple that with the return of gridlock in the U.S. political picture and falling employment, and a 10% decline in the markets seems par for the course, said Cramer. On the plus side, however, Cramer noted that unlike 2011, the U.S. housing market has stabilized, auto sales are better and corporate profits and balance sheets remain strong. Thus he only sees a 50/50 chance of the markets taking another 10% plunge. But what of a 2009-style market collapse? Cramer said this scenario assumes a total collapse in Italy and Spain, events that would send all of Europe, and with it the U.S. and the rest of the world, into a severe recession. According to the bears, our Federal Reserve is out of ammo to prevent such a catastrophe. But Cramer said that 2009 is totally "off the table" as the markets are in far better shape now than they were then. Credit is far easier to come by, he said, and many companies have been raising their dividends as their balance sheets have been improving. That makes stocks the only game in town when compared to Treasuries and other bonds. Given these strong profits and high yields, Cramer said there is no way stocks can lose 50% of their value from here.
