Bob Litan was quoted by WaPo's Joel Achenbach in a good story about how the "real economy" is getting hit by the credit crisis.
"Basically, the blood in the person is money -- it's money and credit. You need money and credit to flow, otherwise the patient dies," Litan said.
The clotting of credit hasn't been uniform across the economy from one industry to another, or even among different auto companies and the different makes and models they're trying to sell. It's still quite possible to get a car loan, even with less-than-perfect credit. But ....
Achenbach goes on to describe how new car sales are down from last year by 30 percent. People are buying, but the cars being sold are no-frills. A sadder side of the story is the repo work being done in even the best of neighborhoods. "'People living beyond their means.'"
Just keep Bob Litan's macro blood flow analogy in mind. That's the difference between the Great Depression and what will happen in 2009. Back then, the Federal Reserve decided that the remedy for low economic blood pressure was higher quality blood, i.e. less blood. Instead of fainting in 1930, the U.S. and the world had a heart attack. Fed Chairman Ben Bernanke won't make that mistake. There will be plenty of liquidity this time around, but Corpus Economicus is going to be anemic for a while.
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