Jim Cramer holds the SEC largely responsible for the current market mess.

"Christopher Cox and his crowd of academics and theoreticians did more to destroy the confidence of this market with their adherence to free-market destruction of stocks than any of the managements of the companies themselves," Cramer writes.

The rules against naked shorting and shorting without upticks were designed to create firebreaks in the system, Cramer says, but firebreaks don't always work.

Using AIG as an example, Cramer says that neither the company nor the SEC recognized that AIG stock is different and worse than the AIG company.

"The stock could not be insulated with a firebreak from short-sellers who knew that if you broke the stock's back, you broke the company's back," Cramer asserts, because short-sellers could not be forced to wait for buyers to come in and pay up.

"With no ability to demand that short-sellers or their brokers borrow stock first to short directly or to sell puts to the customers, shorts were able to take AIG down from the $20s to $4 in a week's time," Cramer says.

While acknowledging the company's many problems, Cramer says the SEC had no clue how easy it was for hedge funds to take AIG down through endless selling.

"The academics at the SEC had no idea how important their rules were when they put in the bottom on July 15, and they had no idea how catastrophic it would be when they pulled them," Cramer says.

"It was child's play, and the SEC didn't even know that."

"I just wish for once that the government would have real people be called in, real people like me, to explain to them how it works."