KEY POINTS:
Credit is like The Force. It flows through everything. Or, as Yoda would say: flows through everything, it does.
Credit has been a powerful force for good in the universe. Through the last 100 years or so it has enabled farmers to expand far beyond what their incomes
would otherwise have allowed. Food has become cheap and plentiful throughout the Western world.
It has allowed scientists and inventors to become manufacturers. It has sped the commercialisation of technology to change the way we live. We live longer, healthier and more comfortably than ever before.
And it has allowed the landless working class masses to own a home or even a business. It has played an integral role in the creation of the middle class.
That's the good side of The Force.
As we've seen in the past few weeks it has a dark side. When used recklessly it can do enormous damage.
The credit on which the world's economies now run is no longer backed by gold. Its real value exists only in the expectation that the debt plus interest will be repaid. When that expectation falters then the value of the credit disappears.
This crisis is all about credit. The equity markets will rise and fall.
But that won't do anything like the economic damage that the failure of credit markets can and will do.
Reserve Bank Governor Alan Bollard - seeking to reassure New Zealanders today - told RNZ that "we really haven't seen this degree of international financial turbulence - ever".
Given that the good governor can count the heads of the world's central banks among his regular drinking buddies one can assume he is reflecting a global view from the top.
"Ever" is fairly unequivocal. That's worse than 1929 folks. Not even "worst since".
As Jon Stewart put it on The Daily Show this week: "1929 was for pussies".
It's a struggle for most of us to believe that things can really be that bad because when commentators say "1929" we tend to extrapolate directly from bankers leaping out of tall building to the Grapes of Wrath and starving Okies queuing in soup kitchens.
There's no starving Okies. And no train loads of unemployed workers in this country being shunted off to plant pine forests or build roads.
That's because both here and around the world unemployment is relatively low and most of our big companies have maintained sensible debt levels throughout this period - when many investment banks clearly did not.
But the crisis will start to take its toll.
It is not just about dramatic large scale job cuts that we see in the headlines.
There are the many companies that are holding on to good staff but have put hiring freezes in place.
Imagine an alternative universe where the credit crisis never happened.... in a galaxy far, far away perhaps.
A small manufacturer buys a new widget presser and takes on two school leavers as junior staff.
It is a small insignificant story in the economic scheme of things. But it is the stuff the New Zealand economy is built on.
Back in our universe it looks like those jobs will never exist.
Even if the case for expanding remains strong - demand for widgets is still there - the local bank will see it as more risky. It will either refuse to lend or say it can only lend at a much higher rate.
The business owner will be forced to play it safe and put expansion on hold. Two school leavers have to find work elsewhere.
As this scenario is played out again and again through the economy unemployment pressure will build.
It will take time to turn this relatively robust economy really bad. So there is still a very good chance that the worst of the credit crisis can be brought under control before that happens.
Bollard's wider message is that he believes that will happen. He's not talking about The Great Depression.
He is however talking about a great disturbance in The Force.
