It is a form of self-delusion. They can fool themselves into believing that their teams are not that bad. We are indeed shit too, but, as you say, let's not pretend that this league is anything other than utter shit. A half decent team would walk this league.
The biggest obstacle to us winning the league is not the other teams, it is our clueless manager. I would be fairly happy with where we are sitting in the table right now if the team at least looked like they were going to click, but it's turgid shit most weeks.
If Ray does see the season out, there is no way he should get a new contract next year.