It takes a certain quantity of chutzpah to be a blogger. You need to know your subject well and be able to bat away your critics with good arguments. You can’t be afraid to stick your head out. In sum you might say you need a fair dollop of confidence. Especially if you’re going to invest hard earned savings into making it into a business.
But that’s not the kind of confidence that’s being bandied about by an increasing number of banks just now. Wesptac CEO, Gail Kelly, told us on the weekend in no uncertain terms that because, as a group, we’re not borrowing as much as we used to because we lack confidence:
Well, I think people will deploy whatever additional cash that they’ve got, either to save or indeed to repay further debt. So I think that’s what’s going to happen, rather than go and spend more. Because ultimately obviously what we need for the economy to grow is for people and businesses is to regain confidence and to decide now’s the time to spend more and indeed to invest more. But I think we’re a little bit off from that at this point.
Today, David Turner, Chairman of CBA, agrees:
While the resources sector is performing well, other parts of the economy are subject to headwinds. These include fragile consumer and corporate confidence, political uncertainty, a strong currency and natural disasters. Ongoing offshore instability continues to impact the domestic economy, and this has the potential to place further upward pressure on wholesale funding costs for domestic banks. While the 2011 financial year has been characterised by subdued system credit growth and intense competition, there is nothing to suggest that the 2012 financial year will be much different. Fundamentally, it comes down to confidence, and its confidence that will encourage both individuals and corporations to invest for growth.
Although both bankers refer to investment, what they really mean, I think, is borrow. And given both banks are glorified building societies these days, what they really mean is ‘get a mortgage’.
Conveniently, a more direct message of just this is available at the CUA:
Forgive me for being a stick in the mud but, to me, deciding to save and repay back your mortgage, which is what much of the nation has elected to do, is a preeminent act of confidence. Turning away from yesterday’s housing casino driven growth and towards business investment driven growth takes confidence. Save and invest, you bet. A collective act that will, ironically, rebuild confidence in the very banks that are telling you you lack it.