Europe's debt crisis continues to weigh on the market, , adding that if the Continent doesn't soon get it's financial house in order, it may have to dissolve the euro.
European countries, including Ireland, Spain, Portugal, Greece and Italy, have issued far too many government bonds than they can afford to pay the interest on, Cramer said. Everyone who owns these bonds, including many European banks, is about to lose a huge amount of money as these countries "keel over."
"The only hope, and it is a short term hope, is that someone comes to the rescue not of these countries, they are beyond redemption at this point frankly, but the bond holders, where the real systemic risk is because the banks own way too much of them," Cramer said, adding that these countries' bonds are similar to the subprime loans and bonds that U.S. banks owned in 2008, which sunk everybody.
Unless someone buys the bonds from these countries at a decent price, Cramer said Europe will have its 2008 moment that the U.S. went through.
"At the same time the sick countries will either have to have all their finances backstopped by the strong countries or the euro will have to be dissolved," he said.
Discord among European Union policymakers over how to stop a disastrous spread of the sovereign debt crisis to Italy and Spain, the euro zone's third and fourth biggest economies, has caused increasing frustration among investors.
The European Central Bank disappointed markets by buying Irish and Portuguese bonds but not government paper in Italy and Spain where bond yields have blown out this week on fears that they may need bailing out. Italian Prime Minister Silvio Berlusconi later announced his country plans to speed up its fiscal consolidation timetable and introduce a balanced-budget amendment in its constitution.
—Reuters contributed to this report
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