Here’s a little heresy: the bad international business news is really good news.

Yes, the sub-prime mortgage scandal/crisis is still kicking along, spreading its tentacles and taking new victims every day; and the cheap and easy money fuelling the private equiteers is drying up; and the US housing industry is still going down with implications for retail sales; and even little Aussie hedge funds are running into trouble as Absolute Capital joins Basis Capital in a spot of bother.

And let’s not forget the looming interest rate rise at the Reserve Bank’s next meeting. That will have the real estate industry bleating harder than ever, helped along by those pushing the “housing affordability crisis” line. (Ross Gittins yesterday nicely skewered the political beat up aspect – and the campaign his own paper is running.)

Yet Adam Smith is in his heaven and all is right with the world.

For the individual victims caught up in the various shake-outs, never mind a few over-paid hedgies and equiteers whose bonuses won’t be as fat, the pain is very real and they will take no comfort from the fact that the rest of us benefit from their suffering.

Given the pace of international growth and the resultant demand pressures, it’s not a bad thing for the US economy to be going slow. Slipping into recession would not be good, but the subdued growth that the US looks like maintaining is about all the world can really handle just now.

Besides which, for all the scary headlines, the markets are just doing what they’re supposed to do.

The US enjoyed a mighty housing bubble, so now there’s a bust. They’ve had worse. Lower prices and population growth will eventually clear the surplus stock.

RBA deputy governor Ric Battellino summed up the credit market kerfuffle for the Senate inquiry yesterday and found nothing much to worry about. The odd hedge fund going broke is merely par for the course.

The corporate memory of American bankers seems a rather faulty facility. They need a kick in the head every few years to remind them about risk/reward ratios.

And as for private equity LBOs drying up, it only takes a bit of heat out of stock markets that have been getting rather warm. A few less multi-billion dollar takeovers will help the great bull market of the 00s last a little longer.