The financial sector is not the economy

We all know banks are in a terrible bind. In fact, 2,747 banks and savings and loans failed. Oh, sorry, that was during the economic boom 0f 1983-1994.

As Forbes points out (via MSNBC), "The key thing to remember here is that the emphasis belongs on the word financial. The economy is not the problem..."

Here's a succinct explanation (that you won't see among the screaming "meltdown" headlines):

The good news is that this financial hurricane is unlikely to change the economic climate. The bad loans made earlier this decade did not create a widespread economic boom, and the realization of how bad some of these loans are will not create an economic bust.

The non-housing economy, which is roughly 95 percent of total U.S. economic activity, has been remarkably stable. In fact, non-housing real GDP growth has accelerated, growing 3.2 percent at an annual rate in the past three years, versus a 2.7 percent annualized growth rate in the three years since March 2005.

Is it the point of the mainstream media to make things look worse than they are? In a way, yes. That's what we ask the media to do. Think of it this way. If there's a house fire in St. Louis, they cover the fire, making it look as catastrophic as possible. They don't, however, cover the tens of thousands of peaceful, blaze-free homes.

The financial crisis is where the current fire is. The rest of the economy is doing pretty well.