A blogger over at Daily Kos with a background in economics gives the best explanation I’ve read so far of the financial crisis, in a post aptly titled “I’ll speak very slowly.” Here’s the short of it:
The body = U.S. economy
Arms and legs = different non-essential sectors (i.e. IT, energy, etc.)
The heart = financial services
Blood = money/credit
Basically, the body will die without the heart pumping blood through it. Similarly, the economy will collapse without the financial sector pumping money– usually in the form of credit– to businesses and individuals. Got it? If not, click the link and start reading. You’ll have it down in five minutes.
As for how this affects individuals in practical terms, the post also contains a few good examples. Here’s one:
Your car blows up. You don’t live in an area where public transportation is readily available. You have a good job and a good credit history. You need a loan to get a new car so you can keep going t work and keep working. Only you can’t get that loan. It has nothing to do with your personal credit-worthiness – it has to do with the fact that money simply isn’t available to lend to you for buying a car.
No credit means no cars, no houses, no college educations. Government intervention in this crisis is not optional, whether it comes in one $700 billion chunk or failed business by failed business.
Turning back to politics, I think it would have benefitted either John McCain or Barack Obama tremendously if one of them would have spent 60 seconds explaining the financial crisis in layman’s terms like the above post. For every ten lightbulbs that clicked on at home (“Oh, yeah, I get it now!”), you probably turn seven or eight of those people into votes.
That actually might be a good opportunity for Sarah Palin to turn her fortunes around a bit. If she could present herself in Thursday night’s debate as “the person who helped Joe and Jane Sixpack understand the complex financial crisis,” perhaps she could start building a reputation as someone who really does understand what’s going on and could explain it to you at your kitchen table, but has trouble forming an answer that passes the snobby standards of the media elite. Then again, if she were to mangle the human body analogy the way she’s mangled most of her other answers, she could instantly greenlight a Tina Fey made-for-TV movie.