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Cramer: Dealing With Greek Debt

Tuesday, 9 Feb 2010 | 3:34 PM ET

Cramer during Tuesday’s Stop Trading! once again tried to put Europe’s debt problems into perspective for viewers. Similar situations arose in Latin America in the 1980s and Asia in the ‘90s, he said, but still the markets pushed forward and stocks were bought and sold.

The Mad Money host admitted that the credit troubles affecting Greece and some other European nations are “bad for the stock market until they’re sorted through,” but countries, unlike businesses, never file Chapter 11. Instead they default, which brings in the International Monetary Fund to restructure the debt.

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“But in the meantime,” Cramer said, “you just trade on it.”

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The market had suffered losses recently as investors feared Greece, Portugal and Spain might buckle under the weight of their debt. Only on Tuesday, when speculation surfaced that the European Union might step in to help Greece, did stocks rebound, registering triple-digit gains.

An even big problem over the last couple of weeks, Cramer continued, was caused by hedge funds. These funds held positions in that European debt and other trades-gone-wrong and were forced to scramble when bad news hit the wires. As a result, a massive sell-off brought down the indexes.

“What we have to do is assess what gets knocked down for no reason,” though, Cramer said, adding that he thinks “our companies are fundamentally strong.”

Cramer said this earnings season has been largely positive. That’s why he recommended using any dip in share prices, such as those recently seen in Coca-Cola and Hasbro, to buy some of these healthy stocks.

“If you want to sell General Mills because of a situation involving Greek debt, be my guest,” Cramer said. “I’ll buy it from you nine days out of 10.”

Warren Buffett interviewed Henry Paulson in Omaha on Tuesday. Watch the video to find out what Cramer would have asked the former Treasury secretary.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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