They estimate a 2-3% default, and wind up with a 7-10% default, trust me they won’t survive. It boils down to whether their ‘estimates’ are anywhere near reality, and as we saw.. these so called smarted folks in finance grossly misestimated the residential real estate troubles, there is absolutely no reason to believe they will be more accurate with their commercial estimates.
We are not even close to through with the residential losses, yet. What few people realize is that the bailouts so far accounted for investment and derivative write downs. With 12% of RE mortgages delinquent or in foreclosure, this will be Round 2 and then be followed closely by the Commercial defaults.