Is the near all-time high in consumer confidence signalling we have reached a Minsky Moment?
On Oct. 31 the newest survey on consumer confidence was published and the results were the highest level of euphoria since the peak of the Dot Com stock bubble.¬† And with the markets continuing to grow to new all-time highs without even as much as a 5% correction in the past 12 months, is this high level of confidence signalling that we are on the cusp of a new Minsky Moment like the one that occurred in 1999?
For those who do not know what the term Minsky Moment means, here is the definition:¬† A¬†Minsky moment¬†is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such¬†moments¬†occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money.
‚ÄúConsumer confidence increased to its highest level in almost 17 years (Dec. 2000, 128.6) in October after remaining relatively flat in September,‚ÄĚ¬†said Lynn Franco, Director of Economic Indicators at The Conference Board.
‚ÄúConsumers‚Äô assessment of current conditions improved, boosted by the job market which had not received such favorable ratings since the summer of 2001. Consumers were also considerably more upbeat about the short-term outlook, with the prospect of improving business conditions as the primary driver.
Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.‚ÄĚ –¬†Zerohedge
So keep on fiddling America, even as the markets soar to unimaginable heights and debt levels accumulate more dollars than grains of sand on a beach.¬† And realize that in the end confidence is a tricky thing, as it took nearly 20 years to get back to its current level, and will be gone in a flash when the next collapse or crisis hits.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.