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Stephen Vines

The Italians are really very annoying; they are supposed to be in dire economic straits, yet there they are eating and drinking with impressive gusto and seem to be enjoying themselves when they should be looking glum.
Last month, Italy's statistical bureau, Istat, confirmed that Italians were behaving in ways that their northern neighbours simply do not expect. 
The official consumer confidence index actually rose last month from October.
Meanwhile, across the Atlantic in the United States, where the economic situation is also dire, shoppers went on a buying spree on so-called Black Friday, spending 6.6 per cent more than they did during the post-Thanksgiving shopping spree last year.
And there's more puzzling news sprouting up all over the place. The credit and debt card company Visa recently reported that foreign spending on its cards in the Mediterranean region of Europe rose sharply between May and August  compared with the same period  last year. It was up 14.8 per cent in Italy and 13.2 per cent in Portugal.
Meanwhile in Spain, shaken by record levels of unemployment, terrible debt problems and an economic slowdown, consumer spending shot up in the middle of the year, slumped and rose again in September before falling back.
None of this seems to make any sense unless you are a believer in the feckless character of southern European and American consumers. But this is a lazy way of approaching the subject, because there are perfectly good reasons that all this is happening.
First, unpalatable as it may sound, recessions are rather good news for those in work and for many businesses. People in employment or even retirees on reasonable fixed incomes do well because prices either come down or stop going up. 
As the economy worsens,  a variety of asset buying opportunities also open up to those with cash.
Secondly, at both ends of the spectrum, businesses benefit. At the lower end of the market, companies focusing on cheap products benefit from consumers trading down. 
Wal-Mart - America's biggest retailer, which focuses on discounted items - reported an 8 per cent sales increase for the third quarter, albeit with profit slipping by 2.9 per cent.  
At the upper end of the market, often thought invulnerable to recession, there has been good news. Revenue  at luxury goods retailer Burberry  rose by 30 per cent in the first half of the year. In the US, spending on luxury goods rose almost 12 per cent in July, the biggest monthly gain in more than a year. This topped 10 consecutive months of spending increases.
But let's get back to the Italians. They have just had a change of government and installed a non-party administration led by Mario Monti,  who faces a formidable  task putting the economy back on track. 
This will involve considerable hardship, but it will not be equally shared - cafes and restaurants will still be full of customers, and the shopping arcades will hum with activity, because consumer spending is heavily weighed towards the higher-income groups, who can be counted on to spend and spend.
Mock Italians at your peril, because while they have a tradition of spending what they earn, they also work longer hours than others in industrialised countries.
Here in Hong Kong, there is no doubt that people work like crazy and are very thrifty. Unlike the Italians' consumption patterns, however,  Hongkongers are heavily influenced by market movements.  
Many more ordinary people here invest in equity markets and hold a proliferation of other investments. When markets head down, gloom descends with remarkable rapidity, and consumption plummets. 
People agonise about losses they have not made as they see the value of their investments diminish, even though they have realised neither losses nor gains.
Instead of being disparaging about the Italians, we should worry less and learn from their in-the-moment attitude. After all, in the long run, markets should turn around, but in any event we'll certainly be dead (to paraphrase Keynes). So, you might as well live it up a little today.



Like there's no tomorrow