This confidence fall comes as NO surprise.
By Daniel at 27 October, 2009, 3:33 pm
The only benchmark giving the illusion of recovery is the stock market and that is overvalued (S&P at 19.31 x earnings).
1) Banks are unwilling and presumably incapable of meeting their role in lending. Bankers are rightly worried about pressures on their capital and uncertainty of our economy.
2) Regardless of the positive spin, housing is still going through a correction. Foreclosures continue rising. Unemployment and ARM resets will increase foreclosures and hold valuations down. Per RealtyTrac 32% of residences are underwater today, and projected to rise to 48% in 2011. In many households home equity is a consumers greatest asset!!
3) Consumers are scared, overleveraged, feeling poor and vulnerable.
4) The media is laced with tons of negative news, ie surging national deficits, a dysfunctional Congress, healthcare worries, financially stressed States and municipalities, increased unemployment (1 in 6 unemployed or underemployed), failing banks, closing businesses, etc.
Confidence is all about attitude and expectations. Our leadership has spent its credibility. Consumers are doubtful and not encouraged anyone is doing anything to turn things around (Obama, Congress, State legislatures, etc)
Written by Gorm
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