Fear and lack of trust are fueling the credit squeeze that has whipsawed Wall Street and threatens to ripple down to home buyers, business owners and college students, according to business educators.

“Fear has gripped the market,” said Richard Casavant, dean of the college of business administration at the University of Tennessee at Chattanooga.

Bruce Hutchinson, a UTC economics professor, said assets such as real estate, underlying the balance sheets of banks and other financial businesses, have lost significant value in the market.

“The solvency of these businesses is called into question,” he said. “What you basically have are businesses on the verge of bankruptcy.”

Dr. Casavant, who also is a Hamilton County commissioner, said financial institutions need to borrow in the short term and they’re not able to do that.

“No one knows who the people are that are credit-worthy and who aren’t,” he said.

James Linck, a University of Georgia professor of finance, said banks need to start making more loans to inject liquidity into the financial system.

“That’s certainly the idea,” he said. “It’s a good theory, but no one knows for sure.”

On Main Street, mortgages still are available, but people need to be extremely credit worthy to get them, Dr. Casavant said. For people working to pay their college tuition, their jobs could dry up, he said.

People planning retirement might have to work longer, but it’s too early to say the nation will be gripped by a recession, Dr. Casavant said.

Dr. Hutchinson said there needs to be less finger-pointing and more actions to bring about stability — not just for today but to create a scenario of confidence going forward.

He said the $700 billion bailout plan floated this week “has a pretty good prospect of reasonably succeeding.”

Dr. Casavant said confidence needs to be infused in the financial system to get markets flowing again.

“The credit markets are frozen,” he said.