Rick Santelli’s Ridiculous, Childish And Uninformed Rant

If you haven’t already heard or seen Rick Santelli’s rant on CNBC, check out the video below. If you have, then you probably have already made up your mind about whether he’s right or not. I hope to challenge you if you’re on his side.

Background: Santelli is a CNBC reporter (and a former derivatives trader). Last week, he went on an unintelligible rant on Chicago’s trading-floor about the $75 billion stimulus package. Among other things, he said that “the government is promoting bad behavior” by bailing out “the losers” who took out irresponsible mortgages. He went on to ask “how many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bill, raise their hands.” Cheers were shouted by floor traders.

I will not address here whether or not the stimulus package is good for our long term prosperity. That topic is irrelevant. Instead, I want to address Santelli’s idea that bailing out “the losers” who took out irresponsible mortgages promotes bad behavior.

We live in America. It’s the land that has most famously coined the phrase “government of the people, by the people, for the people” by a famous Republican at Gettysburg. In other words, the government is instituted to protect the people of this country – not the corporations, not the banks. The operative word here is the people. 

Yes, many “losers” bought houses they could not afford. Many “losers” lied about their income on their mortgage applications. Many “losers” did not consider the inevitable consequences of signing up for unaffordable and incomprehensible mortgages. Those “losers” deserve to lose their homes. Those “losers” are partially to blame.

But then you should also consider that those “losers” would not have qualified for mortgages if the banks and mortgage companies had not made it possible. In fact, by many accounts, they down-right encouraged the practice of lending money to those who had no hope of repayment. Mr. Santelli didn’t mention anything about promoting bad behavior by bailing out those banks and mortgage companies, did he? Not once did Mr. Santelli condemn the banks for fraudulent practices, did he? Where’s your outrage, Mr. Santelli, about keeping zombie banks such as Bank of America alive? Aren’t failed banks “losers” too? Oh, I see! The banks are too big to fail, but the people are dispensable. 

I strongly believe in a free market economy. But the concept of free market does not imply screwing the people for the benefit of corporations. The government’s focus should be to protect the people (rather than corporations) with reasonable regulations.

Please don’t tell me, my conservative friends, that you are for less government. I consider myself more conservative than liberal. But what does less government mean? It does not (and should not) mean lack of protection for the people. Do you truly believe that less regulation is always necessarily better? Do you? Do you believe that toy companies, in absence of meaningful and reasonable regulation, would have alerted you that your child is licking Chinese toys painted with lead? Free market competition would not have helped in this case if there was no mandated testing of toys. No one, including the competition, would have known about the lead paint. 

I can cite many other examples, but this is not the post for it. Most conservatives I know seem to think free market implies less government regulation, but no one I speak with seems to be able to quantify what that means or how that would affect their families and daily lives.

So, Mr. Santelli, how about some respect for the people. If you rant about “losers” who purchased houses they cannot afford, then you should go on an even bigger rant about corporations that made it all possible and encouraged the practice. If it’s OK to bail out the banks, then we should bail out the people. In my opinion, neither the people nor the banks should have been bailed out. 

Rant of the year? I’m calling BS on this one. Your rant was down right irresponsible. You wouldn’t have a day job, Mr. Santelli, would you?

It’s NOT The Economy Stupid, It’s The Stupid Economy

By now, we all know that Congress failed to pass the $700 billion bail-out package on Monday. I’m glad. It does not imply that I don’t care about pain and suffering of the average American. I have learned that opposing any plan that President Bush says is absolutely urgent with dire consequences requires much needed time out and contemplation.

I reject Republicans’ whining that Nancy Pelosi’s speech, just prior to the vote, condemning Bush’s policies is the culprit for the failed bail-out. Karl Rove, on O’Reilly’s show on Monday night, said that the Republicans had no choice. Many in Pelosi’s leadership team voted against the bill, which prompted minority Republicans to also vote it down. Oh, please stop insulting my intelligence by presenting Republican lawmakers as a bunch of weak pansy pushovers that blindly follow Democrats’ commands to sit and stay. I’m not buying this ‘Pelosi Republicans’ non-sense. Subsequent to Pelosi’s speech, 60% of Democrats voted for the bill and 60% of Republicans voted against it. How could Pelosi’s speech have had such a spellbinding power over Republican lawmakers. Did she hypnotize them? Did she slip a Mickey in their drinks? If Pelosi can exert so much power over Republicans, Democrats better seize the opportunity and bottle this intoxicatingly potent and yet masterfully cloaked power. Gosh, I sure hope Democrats use it for good and not evil!

This is a bad bill by conservative standards. In what way is it acceptable to believe in conservative values which rely on self-regulating forces of free market, but expect to step in when things go south? If it’s OK for oil companies to make unprecedented profits despite the chocking effect on the American economy and consumers, it should also be acceptable to let market forces choke the banking system. If conservatism thrives on less-to-no regulation, then government involvement should not be an option for Republicans to pursue. Benefit and risk are the Yin and Yang of free market forces. Corporations should be free to benefit from fruitful risk-taking decisions. At the same time, they should swallow hard and suffer consequences of failure.

This is a bad bill by liberal standards. For a group with an ideology that epitomizes big bad corporations as red-hooded wolves who feast on poor old weak grandmas, this is a heck of a departure toward capitalism. Why would you want to force tax-payers to pay for mistakes of corporations? Where’s your compassion for people?

The economy and market forces are always partially at the mercy of natural harmonics. Everything is susceptible to movements of up and down, left and right, right and wrong, feast and famine, war and peace. You get the picture. Prosperity and recession are not immune from this natural experience. We’ve had prosperity for a while, and now it’s time for recession (maybe).

Alternative solutions from both Republicans and Democrats are ill-advised. Republicans introduced the idea of completely eliminating capital gains tax into the bail-out plan. That’s just stupid. The solution to a failed policy of reduced regulation is not to pile on more of the same. And this is not the right time for it. Democrats introduced more regulation such as a stock-transaction charge. This is equally as ridiculous.

Let the markets’ natural forces take their course. Quick, unprecedented and expensive fixes may temporarily sway the economy in a desired direction, but its effect will be short lived. The full force of its bounce back as a result of our feeble and misdirected impulse will be disastrously more painful and prolonged. We have a choice. We can mess with natural market forces, enjoy a short-lived period of prosperity, and soon suffer its consequences. Or we can face the music now, suffer a short-lived painful period of stagnation, but enjoy a quicker recovery out of this miserable mess.

I predict we will take the first approach. We are Americans. We want less pain, more prosperity, quick fixes, and we don’t want to pay for any of it. Well, guess what? That attitude has now caught up with us. Are we sufficiently intelligent to recognize it?