The stocks of US manufacturing firms are not plunging because German banks are exposed to Greek debt—they are plunging because markets fear falling AD will lead to falling orders for manufactured goods. Sure, you can always tell a disintermediation story as Bernanke did for the Great Depression, but I just don’t see how it’s plausible in this case. We don’t have 9.9% unemployment because firms can’t get financing to meet orders, we have 9.9% unemployment because their order books are half empty. We need more NGDP, banking will then take care of itself.
TheMoneyIllusion - A slightly off-center perspective on monetary problems. (via)