RECOVERING WITH CONFIDENCE

The word “confidence,” as in “lack of,” has been the watchword most commonly attributed to the increasingly turbulent housing, credit and financial crisis now infecting markets throughout the world. Confidence in our housing market, in our banking institutions, in our government and its ability to protect us from corporate greed and mismanagement has waned to such an extent that progress in shoring up our embattled economy has pretty much ground to a halt. You never realize how negative a force fear is and how powerful an opposing force confidence is until there’s too much of the former and precious little of the latter.

From the moment he became President on March 4, 1933—in markedly worse economic times than these—Franklin Roosevelt knew instinctively that his New Deal would most certainly wither on the vine unless government could conquer irrational fear while injecting new confidence into the American way of thinking. Students of history and anyone of a certain age easily recall the most famous line from that day’s inaugural address: “Let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

But in other remarks from the same speech—that ring eerily prophetic of today’s overreaction to fear—Roosevelt calmly championed the proper perspective: “Our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we still have much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence; have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.”

Just over a week later, in his first Fireside Chat on March 12, 1933, Roosevelt spoke to that era’s banking calamity and the crisis in confidence that ensued. Again his words ring eerily prophetic of today’s financial climate. “We have had a bad banking situation,” he said. “Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used the money entrusted to them in speculations and unwise loans. This was, of course, not true in the vast majority of our banks, but it was true in enough of them to shock the people of the United States, for a time, into a sense of insecurity and to put them into a frame of mind where they did not differentiate, but seemed to assume that the acts of a comparative few had tainted them all. And so it became the government’s job to straighten out the situation and do it as quickly as possible. And that job is being performed.”

Finally, in seeking to expel fear and restore confidence, FDR ended his first Fireside Chat with a powerful call to courage and confidence. “After all,” he said. “There is an element in the readjustment of our financial system more important than currency, more important than gold; and that is the confidence of the people themselves. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system, and it is up to you to support and make it work.”

Confidence trumps fear whenever a worker invests new savings in a 401-K plan; it trumps fear whenever someone thoughtfully sizes up the market then buys a few good stocks (at bargain prices, no less); it trumps fear whenever an educated home buyer says yes to the best values in home prices in many years. While others yield to fear, Warren Buffet, America’s most admired investor, refuses to waste time cowering when he could be shopping for bargain blue-chip investments. He’s confidently pumping billions of his own fortune into companies and stocks that will not only help shore-up these wounded financial institutions but also set a high-profile example of how confidence put to wise and practical use will yield nothing but positive results.

According to a new survey conducted by the Online real estate giant, trulia.com , more than half of all non-homeowning Americans believe that in spite of all the woes in the housing sector, owning a home is still the quintessential cornerstone of the American Dream. In the end will the age-old quest to secure the Dream be what ultimately causes the housing market to recover? When confidence turns into action and action into prudent long-term investments, such as the family home, can recovery from our present-day fiscal and psychological morass be far behind?