Naked Capitalism's Yves Smith spots a concrete example of how the credit freeze is bringing the real economy grinding to a halt. Shipments of grain are piling up in U.S. and South American ports, unable to move because sellers no longer trust that international buyers have the wherewithal to make good on their debts.

The issue is credit. International trade is greased by "letters of credit" -- essentially, a bank statement to the effect that the buyer will pay what is owed once the shipment of goods arrive.

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy.

There's been much scoffing from both the right and left about the "scare tactics" allegedly employed by the Bush administration to get the bailout package passed. But this kind of economic paralysis is exactly what Paulson and Bernanke were referring to when they told Congress four weeks ago that immediate action needed to be taken or the economy could "stop."

And it's why Paul Krugman is not alone when he demands in his column today that the finance ministers representing the world's economically advanced nations who are meeting in Washington this weekend quickly come up with a coordinated rescue plan.

...the time to act is now. You may think that things can't get any worse -- but they can, and if nothing is done in the next few days, they will.