Absolutely correct assessment. Thank you.
I would add that, here in the real world, the sky is NOT falling. My business has secured a $300,000 loan (actually TWO different banks approved it, I was scared by all the media) secured by commercial property. Quite frankly I thought credit was difficult, I assure you it is not if you have a good business plan. Gas prices will begin their retail plummet next week. I think the detrimental effect that 3% of mortgages being bad is at least equaled by the positive effect that a $60 drop in crude prices will have.
The US economy is in recession, but relative to the rest of the world we're in good shape. This of course is why the dollar is rising, and I think that is more responsible for the drop in crude than lessening world demand. If world demand is plummeting so, why did the last report of US crude stocks go down?
No, there's what's really happening out here, and there's what the media would have everyone believe. Sanity will return to wallstreet.
Outstanding follow-up, thank you too. Cheap energy drives our world-class productivity and this downward trend will have a big impact on most sectors.
On another note, Mrs. L_L works as a business loan underwriter for a large regional bank with operations in the Midwest, CA, TX, and FL. She is still approving loans for those businesses that can afford them. Her bank is well-capitalized, and their commercial portfolio is in the billions with a less-than-average default rate. Their business credit division has never played the sub-prime game and their home mortgage division has fought it at every turn.
Nevertheless, the federal regulators forced them to support a number of bad risks in the name of "fairness" and "diversity". As a result they don't expect their write-downs on the mortgage side to be complete until second quarter next year. That hurt, a little. Since January of this year, though, they have gone back to the pre-1995 lending standards with little interference from regulators so that's good news for the future (I hope).
But like you said, they're still lending to worthy businesses...the world is not ending!