The GM Gameplan

Another week of volatility is over: major declines Monday through Thursday morning, followed by a huge rally Thursday afternoon, ending with a failed rally today. What's ahead next week? Cramer thinks the downside may not be over and poses a major question: if you knew there was another Lehman Brothers ahead -- the collapse of LB being the instigator for most of the financial crisis that started early this Fall -- would you buy or sell?

If you said "buy," then according to Cramer, you're one of those "rosy people, totally beyond help, who do the bull dance everyday on air." Cramer isn't that kind of dancer. He firmly believes that avoiding a Lehman-sized disaster is the only way to stay in the game, lose less money, and "live to play another day."

And Cramer says there IS another Lehman lurking: General Motors. "GM could be Lehman's twin brother, more fraternal than identical."

GM is on a hyper borrowing spree and there's no way it can pay any of that money back -- in fact it's losing money at that incredible pace. One look at its terrible retail sales numbers this morning proves that things are getting worse, not better, for the troubled automaker.

Unfortunately, unlike Lehman, GM also is a "jobs machine." The auto industry employs MILLIONS of people. It's too late to debate whether that's good or bad -- the fact is, a GM bankruptcy would simply crush U.S. employment.

Everybody has an opinion about what to do. Some want to let GM die, others want it reformed and yet others want to make sure the workers are safeguarded. Cramer's job isn't to offer an opinion on that -- his job is to tell you what could happen if GM DOES go bankrupt, and what to do if it happens. Cramer's not asking, "Is GM worth saving." He's asking, "Is your 401(k) is worth protecting?"

Simply put: if you own stocks, then you need this bailout. Cramer reflects that if Lehman was saved in time, the Dow still would be at 10,000 -- if not above.

So what if GM fails? Cramer advises selling "a ton" of the stock in that situation, and says if HE still managed a hedge fund, he likely would short them hand over fist. The one thing he wouldn't do? Buy. But... if the government DOES save GM, and Europe and China cuts key rates, there could be a substantial rally. "The autos are the fulcrum of the current market."

Unfortunately, Cramer isn't willing to bet on the government saving GM -- not with Tim Geithner, the New York Fed president and "alleged genius" who spearheaded the decision to let Lehman Brothers die (now seen as "the single worst decision the government made among a host of horrible decisions"), may be appointed Treasury Secretary by President-elect Obama. If that happens, Cramer doesn't see a government lifeline for GM. "Lehman's death crushed the market. So will the death of General Motors."

What's your game plan then? Two choices: sit out and wait for better prices, or sell if you think GM will be "euthanized." In neither scenario should you buy, Cramer says adamantly -- UNLESS there is a bailout of GM. So if you think GM is going to be "put down like a sick dog," then head for the hills, because 'Lehman 2: The Sequel' WILL happen.

If the government DOES save GM (and possibly Ford and Chrysler) and we also see sizeable Chinese and European rate cuts, then Cramer says we've likely seen the lows for the year. Saving the autos is "one of the most bullish things that could happen." Without a bailout and overseas rate cuts, "things will be brutal."

Bottom Line: "If you haven't taken anything off the table despite my multiple calls to sell, you have another chance to lighten up courtesy of yesterday's short squeeze, and today's huge rally from the lows. Take this chance -- or sell the next time we rally -- in case GM gets the Lehman treatment. You'll need the cash to deal with the consequences as it's a lot easier to create money, what the Fed and Treasury have done to date, than it is to create jobs, which is what we'll have to do in order to stave off the 'Great Depression 2' scenario if GM fails."

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