Why the credit crunch is about more than Wall Street

I'm going to try to briefly accomplish in a few paragraphs what it seems to me our government has completely failed to do in this financial crisis.

No, I don't have $700 billion of my own to shell out. But to me, Congress' failure came not today on the House floor, but over the past week as both elected officials and members of the administration failed to translate the crisis into terms that have meaning for everyday Americans.

I've heard the phrases "Main Street" and "Wall Street" a lot, but what I haven't heard is plain explanations of what credit really means and how essential it is to our system of doing business.

Here goes.

If the credit markets should freeze up--which many say is happening and will continue without massive intervention--everyone that borrows money will face a cash crunch. That means companies that take advantage of short-term loans to get by won't be able to buy raw materials or make payroll. Even businesses that don't need short-term capital may defer purchases to preserve capital.

If even banks are having a hard time getting money, what does that say for the small and midsize business? The Wall Street Journal had a story on Monday on how companies like McDonald's may face a squeeze as their franchisees are unable to get loans to purchase or upgrade stores. I suspect that is just one visible example of a growing issue for businesses across the country.

We are stuck trying to move forward with new loans--essentially to keep the economy moving--while dealing with clearly bad ones of the past. While much of the attention has focused on concern over home loans, there are also construction loans and business loans that are at risk of default, risks that grow as those businesses find themselves essentially shut off from getting any new capital, extending the vicious circle.

You don't have to take it from me.

Here's C.H. Low, CEO of social-networking software start-up Orbius and a serial entrepreneur.

"When financial markets don't function well, the ramification is broad," he said in an e-mail interview on Monday. He said he is disappointed that the bailout is so misunderstood. Even the term bailout, he said, is a misnomer.

"This is an asset purchase, not a 100 percent bailout expense to taxpayer," he said. "There is risk but also possibility of making a profit. Government's main function is to do things that private sector cannot handle. This Market Stabilization Bill...is as necessary as having an Armed Forces to defend the country."

Low noted that the main beneficiary is not Wall Street.

Playing Iron Man for a day

On Tuesday, the DVD version of the mega-hit film Iron Man will be released, and to celebrate, the visual effects superstars at Industrial Light & Magic decided to show off just a little bit more magic behind the movie.

Back in April, ILM invited me and a couple of my colleagues to their fantastic facilities here for a look at the technology behind the famous suit used in Iron Man. Recently, they invited us back to see how the seamless animation in some of the film's scenes--such as one famous shot involving the throwing of an Audi--was produced.

In particular, they wanted to give us the inside scoop on the motion-capture technology used to create a number of the film's scenes, a technology that is increasingly being used today that allows directors to see, in real time, while the actors are acting, what animated sequences will look like.

That's why we--myself, CNET reporter Kara Tsuboi, and a cameraman--spent several hours on an ILM image capture stage last week: So that Tsuboi could don a motion-capture suit and we could all see how footage of her would translate instantly into an animated Iron Man scene.

The idea is that George Lucas--who owns the effects studio--wants to give filmmakers advanced technological tools that provide them with flexibility and efficiency. And so he staffs ILM with the kinds of people who can make that happen.

"We understand the entire process," said ILM digital supervisor Michael Sanders, "from writing code to animating creatures to even shooting live elements. So we know each layer in the process. We understand the vision of the key creatives and understand" what the actors are going to do.

The technology used at ILM--and elsewhere, as well--allows directors to mix real filmmaking and virtual spaces, but with full camera control, depth of field, tracking, and panning. The upshot? A filmmaker can have an entire digital set created, then have an actor perform on the image capture stage wearing the motion-capture suit, and see, as the filming is happening, how the actor's character looks superimposed on the digital background.

And that means that a director--using a special wireless device that lets him or her see the entire mixed-media image in real time--can move around on the stage, looking for the angles he or she wants and creating new compositional choices on the fly.