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Putting the con back into consumer confidence

U.S. consumer confidence got a boost this month with the Conference Board’s index rising six points, to 52.5 from 46.4 in February — which just goes to prove once again consumers are dopes. Me, I can’t help but notice that: Mortgage delinquencies are hitting record levels. As reported in Tuesday’s New York Times, American states ...

By David Rothkopf

March 30, 2010, 8:56 PM

U.S. consumer confidence got a boost this month with the Conference Board's index rising six points, to 52.5 from 46.4 in February -- which just goes to prove once again consumers are dopes.

U.S. consumer confidence got a boost this month with the Conference Board’s index rising six points, to 52.5 from 46.4 in February — which just goes to prove once again consumers are dopes.

Me, I can’t help but notice that:

Mortgage delinquencies are hitting record levels.
As reported in Tuesday’s New York Times, American states are sinking under so much debt that at the moment James Cameron is simply trying to decide whether to make his sequel to Titanic about Rhode Island or California.
When the Times wrote about how bad things were in Rhode Island they compared it to Greece, now known more fiscal mismanagement than for Aristotle, Ouzo, or the really awesomely bad singing Pierce Brosnan did croaking out his songs in Mamma Mia! But along with American states tottering at the fiscal abyss we have a batch of countries led by Greece and most of the southern tier of Europe — so much for the Mediterranean diet. Olive oil may be a great source of omega fatty acids but apparently it also dulls that part of the brain with which we add and subtract.
As if all that weren’t bad enough we’ve got something like 900 to 1,000 regional banks flirting with insolvency and a Treasury Department that is crossing its fingers and hoping for a "soft-landing like the S&L crisis" as a best case scenario.
And then there are all those under-funded public pension funds and liquidity challenged endowments across America. Public funds aren’t insured by the Pension Benefits Guarantee Corporation, but like the states and the cities and the banks and the big universities you can bet that when they start to circle the drain Uncle Sam is going to feel compelled to fish them out — using your wallet as a net.
On top of this, the bright red locomotive that everyone is expecting the Chinese economy to be is depending on exports to a staggering United States, built on a foundation of real estate and share price bubbles, held together by a fragile scaffolding of banks whose assets and liabilities are very hard to calculate and has an economy linked to a currency that is presenting them with a choice between inflation or less competitive goods and services.

And so, as we say on Passover, "What makes this recovery different from all other recoveries?"

Could it be that it is not really a recovery at all but just a respite between economic calamities? (My theory is that those free-spending Republican National Committee fund-raisers were in that S&M strip club for an economic briefing.)

I don’t know about you but I’m going down into my basement until those consumers come to grips with reality. (Why do we even measure consumer confidence anyway? Isn’t it the irrational exuberance of consumers that usually gets in trouble in the first place?) Maybe I’ll watch an old Marx Brothers movie. As Groucho once said (no doubt referring to a consumer),"He may look like an idiot and talk like an idiot but don’t let that fool you. He really is an idiot."

Or maybe I’ll just read a book (like Michael Lewis’ great The Big Short which will have all of you understanding the on-going nature of the financial con-game and joining me in my basement in no time.) Because as Groucho also said, "Outside of a dog, a book is man’s best friend. Inside of a dog, it’s too dark to read."

David Rothkopf is visiting professor at Columbia University's School of International and Public Affairs and visiting scholar at the Carnegie Endowment for International Peace. His latest book is The Great Questions of Tomorrow. He has been a longtime contributor to Foreign Policy and was CEO and editor of the FP Group from 2012 to May 2017. Twitter: @djrothkopf