DEFCON 3: Two Stages Away From a Collapse So Huge It’s Hard to Get Your Mind Around It

Animated financial analyst Jim Cramer discusses Europe, the US, credit, markets, the economy and how we may very well be on the verge of a collapse.

We’re in a dangerous moment right now. You can’t see it unless you understand something that is hidden, and that’s credit. Because credit is currently and almost always the single most important aspect of business. And in Europe credit is getting so tight and so expensive that you have to wonder how we’ll get through this period.

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This time the businesses are so big their borrowing needs have overwhelmed everyone who took their IOU’s. So what happens now without credit? Well, you get the credit crisis that you read about every day. These banks are stuck with the credit risk in the form of bonds the countries owe and the countries can’t afford to pay them back.

Their credit obligations are so big that it’s like if every small business like my dad’s suddenly can’t pay all at once, no paper mill, no bank can survive that hit.

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I’m calling this DEFCON 3, two stages away from a  financial collapse that is so huge it’s hard to get your mind around it.