The S&P 500's loss from its July high reached 10% on Thursday making this decline an official "correction". We thought there was no better time than now to send the bulls and bears to their respective corners and have an old-fashioned debate. Where to next?

Jon Najarian, aka "The Monster" represented the bulls. Doug Kass, founder and president of Seabreeze Partners Management represented the bears. Here are excerpts from what was said.

Kass begins the conversation with an inflammatory remark. He says, “The strike by The Fed will be as ineffective as treating a cancer patient with antibiotics. Once the injection wears off, the cancer will be back!”

Kass adds “The problem is …. the non-bank financials have taken a much greater role in the economy and have bypassed (important) requirements and raised leverage to levels we’ve never seen before!”

Jon Najarian shoots back “The Fed did exactly what they had to do to make it a fair fight.  Doug is 100% right there’s worry about leverage.. but the bulls know it and they pulled back their bids.. Now we are finally going to see a fair fight.”

Kass asks “You don’t think after 5-10 years of leveraging the financial system that a 50 basis point cut in the interest rate is a fix?

“Well I think the Fed finally made a move and they haven’t for a long time – so it shows they’re paying attention,” answers Najarian.

Karen Finerman asks Kass, “When has taking the other side of a big Fed move been the right thing to do?

“Our system is much different today...it’s tightly wound,” replies Kass “And how much of the prosperity of the past 5 years has been a function of unusual debt and leverage. A heck of a lot! You couldn’t have said that in 1998.”

On a related note, Kass says "I haven't the foggiest idea if this rally extends another minute or week and anyone who says they know is guessing. I know the financial system is imperiled. And that's why The Fed took action. The financial companies estimates are way above. We haven't seen reductions in estimates. The only thing the bulls have going is The Fed!"

Karen Finerman adds, "Nobody thinks the financials are going to make estimates. That's priced into the stocks!"

Dylan Ratigan asks "What’s the trade?"

Doug Kass recommends shorting the private mortgage insurers. He adds “the stock market is not ready for Radiant (RADS) or The PMI Group (PMI) to fail and one of them will fail,” at least according to Kass.

Jon Najarian recommends buying big banks. He says there will be fewer of them at the end of this mess.