Rick Santelli Rant Roundup

As a fiscal conservative, I have to say Rick Santelli’s rant on CNBC was one of the more entertaining rants I have seen in a while.  Of course, he will be demonized, made fun of, and otherwise marginalized in the national media for days.  Some may question his methods, or disagree with his message, but you have to admire the guy for speaking his mind – something not enough people do these days.

There are a number of posts floating around on the stimulus package – I mean the latest one.  Sad that we have to now identify which billion-dollar stimulus package we are referring to.  Are you referring to the $700 billion bank bailout?  No.  Was it the $787 billion “stimulus” bill rammed through Congress?  No, not that one either.  Oh, you mean the latest $85 billion mortgage bailout?  Geez.  This is getting ridiculous.  OK, enough of that.  Any more and this will turn into a rant, too!  Here are a few “stimulating” articles to check out.

  • Economic Stimulus Plan: How Will It Help Your Personal Finances? “Most people will start to see around $13 a week in their paychecks as part of the new tax credit.”  Yes!  That extra $52 a month will definitely solve everyone’s debt and mortgage problems.  Too bad my kids and grandkids will be paying it back the rest of their lives. (@Yielding Wealth)
  • How Much Is A Trillion? Ron breaks down a few examples to try to help us wrap our brains around the idea of a trillion dollars.  It is such a large number that it is hard for most of us humans to truly grasp just how large it is. (@The Wisdom Journal)

Comments

  1. It takes a special type of disconnection with what’s really going on to point to a floor of brokers and say “this is America”. Mr. Santelli should spend a few dollars and buy a clue!

  2. Great post FrugalDad!

    Personally, I’m all for giving to charity, but government mandated charity? Now that’s just crazy! Call me un-American, but I don’t want to pay my neighbor’s mortgage for him.

    When my wife and I got married, we went through the pre-approval process, we were approved for a $175K mortgage. We remember thinking, “How is this possible? This is way more then we can afford.” We didn’t take it. Now, four years later, we’re still renting. But, given the alternative, we couldn’t be happier! Although, maybe we should have bought a house and had the guy next door pay for it. Hmmmm……….

  3. I loved what Santelli had to say. Again, he wasn’t criticizing charity–or those who wish to help others with their mortgage payments. He was criticizing the governments role in MANDATING that behavior. Government picking winners and losers is un-American and not free-market. That is socialism bordering on communism.

    Also, how is that our prescription to solving a problem brought on by individuals taking on too much debt, is for the government to start taking on massive amounts of debt? There’s your irony.

  4. @Freddy: Yeah, the whole “this is a cross-section of America” thing was a bit much. I think it is a cross-section of American capitalists, and most of those probably agree with his sentiments.

  5. @Rob: I did not agree with all of his rant, particularly the “losers” comment. There are some genuinely hard-word working people out there who have fallen on hard times. There are also a lot of people out there clamoring for a handout. I think it is the latter category Santelli was referring to, but I can’t speak for him.

    And as for people speaking their mind…I was referring to those with a contrarian opinion to what is “in” these days, which is the government bailing us out of every problem imaginable. Outside of a few talking heads on talk radio, not many people have been critical of this initiative to spend ourselves into unprecedented levels of debt. Now people are finally starting to question it.

  6. People plan for the best best, get into a mortgage that they can pay if all goes well (we keep our job, my income goes up, the value of the house goes up, etc) then when it doesn’t, they expect to be bailed out. All money comes from someone, so who is bailing them out? The answer is those who planned for the worst, got much less house than their agent/broker/friend told them they could afford.

    Now, when all doesn’t go as well as they planned they keep their house. That’s good, but they’re expected to pony up and pay for others who got more house than they could afford.

    Yeah, losers is the right word, but the losers are the ones who played by the rules, who lived more modestly, who didn’t overextend.

  7. “The government is promoting bad behavior… do we really want to subsidize the losers’ mortgages… This is America! How many of you people want to pay for your neighbor’s mortgage? President Obama are you listening? How about we all stop paying our mortgage! It’s a moral hazard’…”

    Rick Santelli

    Does this make sense to anyone?

    Didn’t guys like Rick take those losers mortgages and repackage them into crap pieces of paper that made them 10 times as bad with them ultimatly ending up as AAA rated investemt time bombs in everyones retirement portfolios?

  8. I have sympathies with both sides. I generally prefer free market solutions to government-mandated solutions. But I think it is undeniable that the free market failed us re this time.

    The stock market was at the top of the bubble valued at three times fair value. That means that the typical middle-class worker had little hope of receiving a good long-term return on his savings. We were all “free” to flush our retirement money down the toilet!

    And the same basic problem applied in the housing market. The “free” market was telling people that they could afford homes that they could not afford in the real world (loose mortgage policies were a consequence of the bull-market mentality that leads us to believe that prices only travel in one direction). Again, how “free” is that sort of market really?

    I believe that for a free market to function we must provide people with the information needed for them to make responsible decisions. That means providing widespread access to information about the long-term effect of valuations. Until we do that, I see no realistic alternatives to government bailouts (as damaging and unfair as they are). The blame for these bad decisions should be put on all who contributed to the problem (that’s all of us), not just on those who signed contracts under the mistaken impression that they were obtaining a reasonable value for their money.

    We need to clean up the stock market and the housing market before we can begin holding people fully responsible for their financial decisions again. It’s just not right to hold people entirely responsible for decisions made at a time when it was all but impossible to obtain realistic assessments of the value of the things being purchased.

    I can see why many are concerned about the bailouts. But I can also see why many see a need for them. I think we need to get more serious about adopting long-term solutions to the very real and very deep problems in our financial system that caused our economic crisis.

    I don’t see this as a Democratic problem or a Republican problem, I see blame (and credit) on both sides of the political spectrum. It’s not an option to do nothing.

    Rob

  9. First of all the bank bailout has been WAAAAAAY bigger than $700 billion, remember all the new fed liquidity programs from last year as well as all the guarantees for the banks like Bear, Citi, Merrill, AIG, Fannie and Freddie. In total commitments are SEVERAL TRILLION.

    I work on Wall Street for a hedge fund and me and most people I know find it hilarious how trillions of dollars can come to the banks, just a small handful of them who took hundreds of billions can pay out $20 billion of it it bonuses, and yet people latch on to the outrage of Rick Santelli, a pit trader surrounded by pit traders who all benefit from the trillions handed down but now get pissed because $85 billion is going out to the rest of the country.

    Personally I rent, I’m single and live in NYC and will buy a place when I’m married so I would love for home prices to continue to crater. I would love for them to fall to uber-depression levels. But if you own a home, regardless of whether you can easily afford it or not, why on earth would you not support a program that will help stabilize the part of the housing market that is dragging your home value down day by day? It’s absurd. And Santelli should read the program, it only goes to help people who are current on their mortgage and their mortgage values are 105% or less of their home’s value and the lender can bring down the payment to 31% of their monthly pay. The lender has the choice, if they rework the mortgage they will get up to a $1000 credit.

    There’s a reason the middle class in this country is in such bad shape and it has to do with the fact that most of them can’t understand what’s good for them. They’d rather protect guys like me who have made more by my age of 30 than they’ll make in multiple lifetimes because they think of me as a “capitalist” while I view them as idiots who would be dumb enough to give me anything.

  10. Foreclosure is not the end of the world, especially in the most bubbilicous markets.

    For those in California struggling to make the payments on their $500,000 starter home, letting it go and renting for $1,500/month instead greatly increases their monthly free cash flow.

  11. I think we are all frustrated with the excess in this spending package. So many of us who visit this site have a great handle on our family budgets and financial goals. That said, scaled down to my level I would never spend my money the way the government plans to with all this money and I am sure no one else word. $20 mill for the honeybees? $30 mill to discover the benefits of massage, etc. This bill is pork and payback. I think the govenment needs to extend unemployment benefits… but this extra crap is just too much. I pay my mortgage, but don’t need to pay my neighbor’s. I make sacrafices to live this way, work overtime, avoid excessive spending, and now so many are rewarded for their poor money management and choices. So mnay neighbors buy or lease sports cars and simply blow money. Now they need a bailout because that mortgage is too tough to make!? All I ask is that government is as careful with our money as I am with mine.

  12. I read an interesting analysis on MSNBC on this subject. The plan works out such that roughly each homeowner subsidizes the struggling persons by $1,000 which keeps their own home values from dropping by $20,000 (on average- of course I’m sure this is different in different geographical areas). From that perspective, it’s a pittance if it stops the decline in home values, thereby stabilizing the economy at large. No one likes these policies, but ultimately all who own a home or stock should benefit.

  13. To a certain degree I agree with Santelli. I didn’t over buy when I got my house, I put equity into it so I have a reason to stay.

    On the other hand I live next to an abondoned house and have nightmares everyday what that does to my home’s value and everyone else on the block. Something has to be done to fix this problem and it’s not going to be pretty no matter what we do.

    If you let all the houses forclose, don’t readjust the mortgage backed securities then banks stop lending and house prices continue to plumit.

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