Steve Doyle’s Blog

Today, Fed Chairman Bernanke signaled to the markets another round of interest rate cuts were “certainly feasible”. While I appreciate the sentiment of cooperation and the effort to promote growth through rate cuts, I believe we are missing a prime ingredient to get this economy started again … CONFIDENCE!

http://online.wsj.com/article/SB122815304785769411.html?mod=article-outset-box

The lack of consumer confidence, investor confidence, Wall Street confidence, confidence in government action, lender confidence, and borrower confidence has created a CRISIS IN CONFIDENCE! Couple that fear with media hype focused on hyperbole and rhetoric, you are guaranteed a “do nothing economy”. The majority of people will choose to “do nothing” when they are facing fear and uncertainty. And, that is exactly what is happening, nothing.

The Fed has lowered their rates to 1%. What difference is there in a rate of 1% or 0.5% to the average consumer? How about to the average bank? Banks have lost confidence in their ability to conduct business because they have no confidence the borrower will repay their loans. Borrowers have lost confidence in their banks, because the banks won’t loan money. Banks have responded with lending criteria that would likely keep even Bill Gates from getting a loan. Borrowers have responded by “doing nothing.”

Wall Street flaunts the fact they have stopped paying outrageous bonuses to executives. After years of eight and nine-digit bonuses that were larger than the GDP’s of many countries, Wall Street says “no more”. Well, John and Jane Citizen, who used to send their 401k and IRA money to Wall Street, have said, “no more, we have lost our confidence in you”. Investment advisers, guiding billions of dollars from union pension and endowment funds have seen the value of their funds evaporate overnight. Investment advisers have told Wall Street “we have no confidence in you”.

Government has jumped in with “bailouts” and “rescue packages” to stave off fiscal disasters. The results have been minimal, at best. First it was the banks, then the “financial institutions”, now it’s the auto makers. The list of groups with their hands out is growing longer and longer. The public is saying “we’ve lost our confidence in you.” Wall Street is saying to the government “we’ve lost our confidence in you”. Lenders and borrowers are saying “we’ve lost our confidence in you.”

The evidence should be sufficient to convince our government, our banks, and Wall Street, that the issue is one of confidence and not of interest rates, loan qualifications and foregoing a bonus or two. The American people want to wake up and read a confidence boosting headline. American business wants to hear a confidence boosting encouragement from the financial markets. Wall Street wants to see a confidence boosting action by the government. And, all of us want to see and hear confidence building reports from our media.

I admit, I don’t have the silver bullet that will end all this confidence bashing. But, I would like to see more media coverage on confidence building news and less on the gloom and doom. When I read some of the articles in my local and national papers, I see confidence building information. It is buried on page 26, behind the ad for hemorrhoid cream, but it is never shown in the headlines, or discussed on page one of the paper. When I listen to media reports on the radio or television, the situation is similar. The teaser line is gloom and doom, the story is balanced, but the bad news comes first and the “good news” is lost as I change channels or stations looking for something to build my confidence.

Time to stand up America. Time to demand confidence building from our government, Wall Street, financial institutions and most importantly, our media. Otherwise, we are doomed to be lost in this vacuum of confidence and as all good citizens will … we will “do nothing”.