Mad Money

Cramer: Trading the Euro Zone Debt Crisis

Mad Money, August 16, 2011

The fact that Europe’s problems trump any good news out of the US is the “new reality” investors have to face, Cramer said Monday. But he said there are still ways to make money in this volatile market.

Stocks ended lower Tuesday as traders worried about euro zone debt crisis, despite good American industrial numbers and terrific earnings from Wal-Mart and Home Depot .

That’s because the only way out of Europe’s sovereign dept crisis is for the rich countries to bail out the poor ones, the “Mad Money” host said. But after the weak German GDP figure Tuesday morning, Germany doesn’t seem so rich, he added. And that’s on top of last Friday’s poor GDP number for France.

What’s more, France’s big bank, Societe General, has been alluded to as Lehman because “it makes a market in anything and is renowned among traders in this country for having very poor risk controls.”

“So, not only do we now have to worry about hideous German GDP numbers, but we also have to fret that there’s no safety net over there because the German and French leaders don’t seem to be in a bailout mood for either countries or banks,” Cramer said. “Given the globalization of finance … it means no matter what our financial institutions might be saying you know you’re going to get hammered if things go awry over there.”

But there’s some good news, Cramer said.

Since our stock market often trades in lockstep because of the power of the ETFsand S&P futures baskets, it tends to obscure the fact that there are real companies within the baskets. Perrigo, for example, opened down 8 points after reporting conservative future earnings, but then rallied 9 points. And Home Depot and Wal-Mart both climbed higher after reporting their good quarters.

So what’s the bottom line?

“Find stocks you like, no matter what, that get brought down by this new hegemony, but shouldn’t be because their managements have more control over their destiny over time than two foreigners named Sarkozy and Merkel ever will,” Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?