The fear is a replay of the dot-com bust. That really wasn't about dot-com companies with Harvard business school presentations and MBAs listed in the prospectus. It was about banks, and bankers, and tightening of credit to businesses.
I still remember 2000 and 2001 as a period of feeling the money tap had been turned off. Businesses couldn't get loans, just because some fast-talking Harvard grads with a lot of jargon had duped some investors unwilling to do their homework. And bankers shut down - everywhere. It didn't last long. But that was the actual dot-com bust. It affected every business, in every sector.
And I think investors are looking at, or fearing, the same. There's always a large segment that invest based on fear. They see a similar across the board 'tightening' of loan activity because even 'good risks', supposedly, have gone bad, not even always in bad regions, and bad neighborhoods, as Chant's recent story pointed out.
The flip side is the opportunity that provides for people who legitimately can make payments buying foreclosure properties at discount, who perhaps instead of 'turning' them, hold on to them as residences, and purchase the same carpeting, appliances, windows, insurances, and all the rest that any new homeowner does. So, we'll see.