Confidence trick
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Confidence Trick By Alison R. G. van Diggelen October 2002 I’m a confident kinda gal. But just lately, someone did a confidence trick on me. Since I moved to the U.S. in 1992, it’s been boom times. But today, my confidence has all but evaporated and I’m beginning to believe the double dip theorists, who say that our economy may dip into another recession due to investors’ pessimism creating a self-fulfilling prophecy. My confidence withstood the rapid shrinking of our family nest egg; the exposure of Ken Lay’s dirty tricks, and the ensuing spate of financial scandals. Even Martha Stewart’s “faux pas” didn’t rattle me…I always knew a woman with such an iron grip in the kitchen could bake her cake and eat it. But towards the end of the summer a strange thing happened. In the scrunched space of a hug, something snapped inside me. A girlfriend, whom I’ve known since our kids were crawling around in diapers, left town. We hugged goodbye in the park as our respective broods tugged at the bags of sand toys slung round our shoulders, eager to get going. My friend, a rare Silicon Valley native, has been forced to leave California. This is not the decision to pursue the road less traveled, to escape the frenzy of Silicon Valley for gentler, greener pastures. Her well-qualified, well-experienced husband has been unemployed, job-hunting here in vain since March. They hope to return someday, but in this economy, they simply couldn’t afford to stay indefinitely and keep looking. Another friend with two children has been keeping a cheery face through the downturn. Her husband has been out of work for over a year now and they have been living off their savings and optimism that the job market will improve. Two other close friends face the prospect of layoffs in the next quarter; dramatic pay cuts are so common, no one can complain for fear of losing their job. Even friends who are “technically retired” in their 40’s, only recently awash with cash, have had to return to work. I tell myself, this can’t be happening; this is Silicon Valley, for goodness sakes, once considered the center of the universe, the Mecca for techies around the world. Silicon Valley, where being connected 24/7 became hip years ago, is now learning about being poor 24/7. It’s not a pretty sight. A neighbor just lost his CFO job and has his million-dollar home on the market. (It’s in the next subdivision, where the big houses are). Bargain hunters perch on white picket fences. Where does a silicon mom turn? There’s no one to believe anymore. Enron, Worldcom, Global Crossing. They were lead by masters of false profits. As for stockbrokers, analysts and financial advisors. They were the false prophets. They sold us prophecies of riches, promises of early retirement. Instead they put the real profits in their own pockets. Our gallant hero, President Bush signed the business reform law, promising that these evildoers will serve hard time. But I have a hard time keeping faith in this plan. Bush tells us the economy’s fundamentals are sound. He’s not convinced me. Nor did his Waco conference with its hand picked guests. Statements should come with a Government Warning: “Too many false prophets can damage your confidence.” Meanwhile, the battle drums build to an ominous pitch; this is a war we simply cannot afford. Economists say there’s a link between stock market and consumer spending. For every $1 change in stock market wealth there’s an adjustment in spending of 3 to 6c. That sounds a gross underestimate. Since watching our savings shrink and seeing families hurting in my own neighborhood, my spending on extras has all but dried up. We’re battening down the hatches for many rainy days ahead. The spike in home repossessions is ominous, as is the horde of fliers that fill up my mailbox. They scream in bold scarlet letters, “Credit Problems? Get a loan today! Yes you can! Find out how flexible we can be for YOU!” Double dipping is frowned upon at any party I’ve been to. For now, the party in Silicon Valley is history, but from the vantage point of my back yard, a recession with a double dip seems as likely as snow in the Sierras this winter. Please tell me I’m wrong. Alison van Diggelen is founder and editor of siliconmom.com. She has a Masters Degree in Land Economics from Cambridge University, England. © siliconmom 2002
