Cramer: Great Recession in Europe ‘Almost a Sure Thing’

The euro hit an 11 month low against the dollar Tuesday, going below the crucial $1.30 level. And that means we are now at “DEFCON two,” Cramer said.

“We can now expect to see some nationalizations of European banks pretty imminently” he said.

He also expects a series of big downgrades of sovereign nations from the ratings agencies that will force bond yields to go up considerably for troubled countries like Italy and Spain.

“That means a great recession like we had here in 2008 is almost a sure thing for Europe in 2012.”

So what does this mean for investors?

Cramer thinks its time to raise cash right now because when the nationalizations and the sovereign state downgrades occur, the U.S. market could drop quickly. That means holding onto high yielders like utilities and master limited partnerships, as well as drugs and telcos with good dividends and domestic real estate investment trusts.

Cramer also likes food stocks with three percent or more yields. He thinks traders can take some risk in domestic retailers that get hammered, like a Ross Stores or Dollar General , and in restaurant chains like Domino’s Pizza , McDonald’s and Yum! Brands , although they are due for a pullback. He also favors oil and oil related stocks, but he cautions homegamers to be aware that these names will also get hammered on the European news.

But if you follow Cramer’s diversified menu, he’s confident you’ll snap back quickly since that has been the case after each of the “European flame outs.”

The bottom line—“You now need to expect the worst over there,” Cramer said. "Hope for the best. Raise some cash. And be prepared for a meaningful decline in the non-protected stocks unless we get something substantive from Europe in the next 48 hours.”

Call Cramer: 1-800-743-CNBC

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