Cramer reflects on Italy panic: 'A little context could've gone a long way'

  • "Mad Money" host Jim Cramer wishes investors would've approached last week's market turmoil in Italy differently.
  • Cramer expresses his dismay at how the country's political crisis was framed by the media.

A week ago, CNBC's Jim Cramer was trying to placate investors' fears about a political crisis in Italy, which sent global markets reeling and resulted in the appointment of a new prime minister.

A spike in Italian bond yields sparked the concerns. But now, one week later, they've recovered to their pre-crisis levels, making Cramer wonder why investors were so spooked in the first place.

"Some investors hate anything that threatens the status quo, even in a place like Italy where the status quo is objectively kind of terrible," the "Mad Money" host explained on Monday.

Others, he said, are so skittish that they balk at any and all uncertainty, even if it doesn't apply to the United States, "because they are trained to react to any new input with fear."

Still, what concerned Cramer most about the Italy debacle was not how investors reacted to the news, but the lack of context with which it was reported.

"It's very easy to gin up fear-inducing headlines when two supposedly extremist parties form a coalition to take power, but, man, it's hard to see how they could do a worse job than the guys they were replacing," he said. "Why doesn't anybody say that?"

He offered some perspective: Italy has very little growth, 11 percent unemployment and a budget that is unraveling due to pressures from a growing refugee population.

Moreover, Cramer argued that many of Europe's recent, seemingly chaotic movements have actually created investment opportunities because of how short-lived they've been.

"Now, obviously the press can't [avoid] a story like this," he said. "But you can give people some context, and when it comes to Italy, a little context could've gone a long way."

This idea brought Cramer back to one of his biggest long-term concerns: that market experts frequently fuel investors' fears without facing the consequences of being wrong.

"That is the way this business works: bulls are always punished more harshly for being wrong than the bears are," he said. "But you can expect it and you can exploit it the next time we get some huge sell-off on a story that has nothing to do with the United States, just like this Italian job."

WATCH: Cramer reflects on market's Italy panic

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