CNBC’s Rick Santelli is angry that those loser homeowners are going to get bailed out.
Published in Economy, Work, & Welfare | Video by frog on Thu, March 19th, 2009
Tags: bailout, CNBC, daily show, finance, humour, john stewart, politics, rick santelli
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Daily show, excellent as mostly.
Theres an underlying truth to all this though. If the “dumbass looser homeowners” had been bailed out when they first starting getting into the mucky stuff then we wouldn’t have the global financial mess we are in today.
But…. that would have been impossible. If the question is “should your neighbour get his mortgage paid off and we all live happily ever after or would you like to see him suffer, and the whole economy go down the pan” as the latter option is “fairer”, most folks would vote for that.
We are where we are ‘cos its the will of the people.
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Except that the people with mortgages are not getting bailed out, the lenders are. The people only willed this result in the most abstract of ways by voting for others who removed the regulations that allowed lenders to take such risks in the first place.
Y’all should check out Peter Schiff.
“I’m going to keep this real short.
I’ve just finished watching [this] 1 hr 16 min YouTube video of Peter Schiff…
If you have any interest in fully understanding why this meltdown has happened, why government ‘remedies’ will fail, and what will be the consequences, then I suggest you turn off CNN, Fox, CBC, BBC – or whatever TV channel you normally watch – and devote 1 hour 16 minutes to being exposed to some hard truths and realities.
Peter Schiff blows up popular perceptions of what is happening and why, and focuses his razor-sharp mind on the real causes and issues.
Common sense with brilliance and clarity – that’s how I’d sum it up.”
Source: PC Blogspot
Good clip, very informative and I like that he skewers the Reps and the Dems alike. Some comments:
Schiff says the govt creates a moral hazard by guaranteeing bank deposits, as no one then cares what the bank does with their money. If there was no deposit insurance, banks would have to compete on the safeness of their investments, not just interest rates. Others would create services to rank banks for their reliability so people could choose.
I accept this is true, but is not the only way to manage the banks of course. The model that insures deposits requires the govt to regulate effectively. There have been consistent efforts in the States to keep it from doing so for years without the other changes needed to make it unnecessary. This has added to the current problem.
I also agree that deficit spending needs to be for investment, as occurred in the past, and which provides the means to pay back the loans. The last thing we need is to buy more stuff for the sake of it, particularly foreign produced stuff, but that’s not a message you hear very often. Western society has become geared to buying ever more stuff and the worst offender is the US. Schiff’s is an argument for developing self sufficiency of the type Buy American or Buy Kiwi Made promote.
Schiff makes a related point that the services industry is non productive and should be smaller. We need to produce real stuff ourselves.
Finally, he says Freddie and Fannie should be regulated because they use public money. OK, but I don’t see why those who use private money should escape all regulation for that reason alone. Schiff hates the bailouts and points out that at the end of the day it’s the threat of failure that is the main tool to keep organizations in line. I agree with this, but there’s an element of truth to the concern that some institutions are “too big to fail” due to the flow on effects of a huge company suddenly going under being so great. In the case of a large finance co, there’s not only the job loses, but also the destabilisation that is possible from the company defaulting, leading possibly to other failures, maybe including sound companies too.
If we’re going to be happy to let big companies fail, and I do think we should when they are so obviously corrupt, we need at least to decrease as much as possible the likelihood that they will take certain kinds of undue risk, parhaps those relating to obvious moral hazard at least. This can be fraught, I know, but surely an example is the securitisation of mortgages that was allowed during the last ten years. Schiff sees this as very bad too, because it created a moral hazard in that the people arranging bad mortgages had every incentive to do so given that they would be able to hide the risk in the security. This is one of the main regulatory failures people point to in the current crisis. It wasn’t the only factor, but it was a big one and was noted by some commentators when it all began as exactly the sort of thing likely to lead to the problems we have now.
“So the oil companies are once again boasting record profits and yet the auto makers are asking for some government cheese. Does anyone else see the irony here? So I’ve got a little trickle down theory of my own. As long as Detroit continues to make cars for the Gas-Capades let the oil companies bail them out. It’s a “robbing Peter to pay Paul” kind of thing except in this case Peter and Paul seem to be riding the short bus… and it’s not to save on gas.”
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