Nice rant

by Russ Roberts on February 19, 2009

in Cuba, Politics

Here's a nice rant from Rick Santelli on CNBC (HT: Drudge). I wonder if and when the moral issue is going to start to bite. When you bail out the states and the car makers and the home owners and the bankers and the Fannie Mae investors, eventually, the rest of us start to feel a little annoyed at how the system works. Santelli's leap to Cuba is the high point for me and how he uses it to slam Detroit.

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{ 41 comments }

Methinks February 19, 2009 at 1:38 pm

Rick Santelli is and has always been the best thing about CNBC! I love how the traders behind him are ready to riot. There's really nothing in the world like a trading floor (except a fish market, I guess).

Mesa Econguy used to work on that floor, I think. He must be taking special pleasure. Thanks for posting that here.

Eidolways February 19, 2009 at 2:39 pm

That was amusing and refreshing, both. It's also telling that the individuals around him agreed. Now if only we could get the politicians in DC to agree… But then again, Obama campaigned so heavily on "you must sacrifice for the greater good (as defined by us)" that that's highly unlikely, unfortunately.

It amuses and amazes me that the talk of "Change" spread about by the campaign like so much fertilizer was ever actually taken seriously. It should have been obvious from the start that it would only ever be politics as usual for one simple reason: Obama is still just a man.

Hey, there we go! We just need to stop putting humans in office! I for one welcome our new alien overlords. *nods*

Though let me state unequivocally that I wouldn't have expected too terribly much better from the Republicans. They've proven themselves to be merely a different cut of the same cloth.

Joe February 19, 2009 at 2:42 pm

I especially like when the trader chimed in – "How about we all stop paying our mortgages? It's a moral hazard!"

Couldn't have said it better myself

Jason Cohen February 19, 2009 at 2:42 pm

Mr. Santelli's rant restored my faith in humanity for nearly 4 minutes and 58 seconds. (Which may be a new record.)

Kudos to him.

Methinks February 19, 2009 at 3:17 pm

It should have been obvious from the start that it would only ever be politics as usual for one simple reason: Obama is still just a man.

I would have said it is because he is just a politician.

The republicans aren't better when they're in control, but they are both better when neither party has control of both branches of government.

Econophile February 19, 2009 at 3:36 pm

I love it:

"If the multiplier that all these Washington economists are selling us is over 1, then we never have to worry about the economy again: The government should spend $1 trillion an hour 'cause we'll get $1.5 trillion in return."

Thank you, Rick, and thank you, Russ.

DAVE February 19, 2009 at 3:38 pm

METHINKS

THEY MAY NOT BE VERY GOOD ALL AROUND BUT THIS IS EASY TO BEAT

DAVE February 19, 2009 at 3:38 pm

WAS TALKING ABOUT REPUBLICANS

The Timid Scholar February 19, 2009 at 4:16 pm

I hope someone organizes this Chicago Tea Party! I wonder what we could throw in the Lake…maybe mock up houses and mortgage contracts…effigies of Freddie and Fannie….

Seriously.

Kevin February 19, 2009 at 4:20 pm

they are both better when neither party has control of both branches of government.

I agree. The optimism I have for the future of the average Joe is really a hope that enough folks will see this huge bet on one party as a bad trade and reverse it in 2010. If I were a republican strategist, this would be my party line, starting now.

Mesa Econoguy February 19, 2009 at 7:06 pm

I was at the CME, while Santelli was over at the CBOT in the bond pits, before they merged.

Santelli used to get so worked up he’d tangle himself up in the turret phones and couldn’t flash quote to the pit.

We traders don’t think too much of Mr. Obamarama’s “leadership”…

Sam Grove February 19, 2009 at 7:09 pm

Now if only we could get the politicians in DC to agree..

There's a reason they are politicians.

Methinks February 19, 2009 at 7:51 pm

We traders don’t think too much of Mr. Obamarama’s “leadership”…

How DARE you speak ill of the Obamessiah. Don't let it happen again – even if you're not referring to him directly – lest Al Sharpton organize a riot outside your home. Just remember that anything you say against him and his disciples is racist.

http://news.yahoo.com/s/nm/20090219/us_nm/us_chimp_attack_cartoon

muirgeo February 20, 2009 at 2:15 am

Guess what I am going to say…. Pathetic!!!!

Here is Mr. Santelli talking during the TARP/a> bailout period. He admits that his traders are split on the idea. So it's questionable when we are talking about an $800,000,000,000 dollars bailout for his rich asshat trader buddies who took these poor loans and made them 10 times more deadly. But when the question is for helping out main-street Americans with $80 billion dollars this JO calls for an overthrow of the government?

I challenge one of you to actually come up with an argument that finds logic in his two positions. Or at least the positions of those traders dopes he surrounds himself with.

This Dickhead points to his trader buddies as the silent majority of Americans and calls main-street America the losers??? In the end it will be pitch forks and torches going up his and his trader buddies keasters by main-street America if he doesn't watch himself.

"Thanks, Rick and CNBC, for making the case for a surcharge on transactions, greater securities regulations, and an increase in the top marginal tax rates."

Borrowed from Firedoglake blog.

muirgeo February 20, 2009 at 11:40 am

Oh, and thanks for destroying the comment section for the Rick Santelli thread, half-wit. Since you never closed the tag in your idiotic drivel, nobody else can post.

Moron.

Posted by: Methinks

muirgeo February 20, 2009 at 11:51 am

llll

Methinks February 20, 2009 at 12:38 pm

Thank you for coming back and cleaning up your mess. Every I hit any key in an attempt to close your tag, it activated the video.

Martin Brock February 20, 2009 at 1:35 pm

While I agree with Santelli's rant, common people in the U.S., without substantial holdings in FNMA bonds and other assets bailed out by the trillions of dollars for the last year and more, are less in tune with Santelli than he imagines. From their perspective, playing the political game is a matter of survival, because it's the only game in town.

"Capitalism" ruled the day until the Bear Sterns bailout? Ha! Corporatism (as in Italy in the 20s) has ruled for decades, and few people (hopefully) are fooled by the transparent pretense that we've lived in some sort of "free market" utopia since the Reagan era. We obviously haven't.

"Capitalism" is not a Rothbardian fairy tale. Real "Capitalism" is what real Capitalists do. It's the system that actually existed in the U.S. in the 20th century, and bailing out "investors", from bank depositors on up, or simply selling them entitlement to tax revenue and calling it "investment", is the name of the real game. The last year is not a new tune at all. It's only a crescendo.

So the real question is: where was the ranting six months ago when only the bondholders were being bailed out? Sure, we ranted a lot here in this forum, but did Rick Santelli? I don't watch television, except clips online, so I don't know, but I'd like to see it.

MnM February 20, 2009 at 2:39 pm

*Very* well said, Martin. I'm with you 100%.

Mezzanine February 20, 2009 at 4:35 pm

Martin – since we all agree that we never had true free market capitalism, what is the correct system?

Mezzanine February 20, 2009 at 4:39 pm

I have to agree, Rick Santelli is a flaming hypocrite for not ranting about the TARP program back in October. Apparently he's ok with the middle class bailing out Wall St, but doesn't want to pay for middle class people who are in trouble with their mortgages. Asshole.

Methinks February 20, 2009 at 4:40 pm

Martin,

I second MnM. Excellent post.

I keep the TV on mute and I don't always unmute when Santelli is speaking. They cut to him on the floor in Chicago throughout the day every day. From the clips that I've seen over time, he's always been either uneasy or against government intervention and he's very uneasy about the moral hazard. Although, as he TARP morphed from a "bazooka" in Paulson's pocket to distressed debt hedge fund to a general government slush fund, to God only knows what, it's been difficult to speak out about the particulars as the particulars always change. Santelli has gotten into a few scuffles with the CNBC resident economist (who is a great believer in Government as God) and he has been uneasy about Moral Hazard. But, they cut to him many times throughout the day and I think he would have gotten fired if he spent all his time screeching like that idiot Jim Cramer. This mortgage plan had specific things to rail against and I think Santelli just finally lost his composure.

maximus February 20, 2009 at 6:03 pm

Methinks-

Some friendly advice…leave the sound on. CNBC makes a great sleep aid. I often turn it on at 3AM (I live on the west coast) nights I can't sleep and I'm out within 10 minutes.

Now on to the above comments:

Santelli and the rest are in the ratings game. The motivation is to get people to watch (I heard he made the rounds on the morning talk shows this AM). The motivation of their guests is to get you to invest with them. It's not suprising that he would appear inconsistent because of that reason. My guess is ol' Ricker has his irons in another fire down the road and his time is close to up at the network. People in the financial biz don't normally express idle opinions unless they want to have their statements come back to haunt them.

That should answer muir"dickhead"geo's (as we used to say in 3rd grade it takes one to know one) statement above. My other guess is he's been shown the door with his pants down around his ankles by more than one "advisor". Arrogant blowhards are easy sales.

Marty S February 20, 2009 at 6:21 pm

Muir,

you dishonest nincompoop. All you had to do was to search "Rick Santelli" on youtube, before you make baseless allegations, you jerk.

you tube search results.

to your dissappoinment, yesterday's rant got close to 300,000 views already on youtube, you lying fathead.

Methinks February 20, 2009 at 6:22 pm

Max,

I can't keep the sound on and I can't fall asleep on the trading floor. Their daily drivel is a threat to my blood pressure. I've switched to Fox Business. That channel is just ever so slightly less annoying and they have a couple of anchors who are pretty tough defenders of free markets and I no longer have to listen to Maria Bartiromo ask about the "EnVARMINT" or listen to Erin Burnett say "Now, let me ASSH you a QUESSION" or be subjected to the other guy who says "it's West Coast wakey wakey". I keep the TV on mute most days and switch to CNBC only during the "safe" time

maximus February 20, 2009 at 6:31 pm

LOL..I guess being asleep has the same effect as a mute button. The problem I have with Fox Biz is the Foxbabes hyperventilating while reporting the latest news release. If I coulda got my women breathing that hard during lovemaking I wouldn't be married and be a huge porn star!!!

Mesa Econoguy February 20, 2009 at 7:28 pm

Santelli has been a very consistent anti-intervention free-marketeer, for as long as I’ve been watching him.

We keep the sound mostly off as well, because (as Methinks accurately observes) CNBC is mostly useless. It has degenerated into a dysfunctional “financial crossfire” with multiple guests encouraged to yell at each other.

Most of the guests deserve to be yelled at.

maximus February 20, 2009 at 7:36 pm

I remember when i was being an advisor, clients used to come in my office and be miffed I didn't have a TV with CNBC on so they could watch it. When they asked why I didn't I told them "because I want to make money".

maximus February 20, 2009 at 7:42 pm

sorry that should read "I want you to make money"..

Methinks February 20, 2009 at 9:53 pm

We generally only turn on the sound when CEOs are dragged before congress so that Barney Frank can demand to know why Johnny Mack needs a bonus. In Barney's words "a bribe to do your job"…a couple of days before Barney votes to pass a bill which bribes people to pay their mortgage.

We also turn it on when the Obamessiah starts his daily press conference where he proceeds to affect a Southern accent and impersonate Oprah. We usually keep the sound on during those occasions right up until everyone on the trading floor starts to feel a little homicidal and everyone is tired of mocking him and screaming "AMEN" at every pause as befits a congregation tuning in closely to their spiritual leader at his pulpit. In fairness, the same thing happened when Bush spoke in his garbled, fake folksy way, complete with "heh, heh" every other sentence. We were all over that "heh, heh".

I've now taken the thread way off topic.

BTW, here's an actual tea party planned in Chicago as a result of Santelli's rant, I think.

Mezzanine February 21, 2009 at 5:45 am

BTW, the left has decided Santelli must be destroyed, so he shall be. I predict he's fired within 2 weeks.

True_Liberal February 21, 2009 at 11:01 am

While I understand (I think) the term "Moral hazard", to me "perverse incentive" makes more sense.

muirgeo February 21, 2009 at 3:06 pm

"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?

vidyohs February 21, 2009 at 6:29 pm

Santelli has a good rant to be sure, but what intelligent person can miss the understanding that it is time to turn the money tap off on the pipeline to D.C., hell it was time long before I glommed onto the fact and began my own personal rebellion.

Government corruption is so wide spread, so perverse, so insidious, so self replicating, that the average person first exposed to it simply can't comprehend the massive scope.

That neighbor of yours that works as a clerk in the government local assistance office where people come to apply for food stamps and other assistance. Ever wonder how a clerk with a $30,000 a year salary drives a top of the line Mercedes, wears designer clothes, eats nothing but the finest, goes out to dinner and clubbing 3 or 4 times a week, and has furniture that makes your mind boggle? How does that happen?

Now multiply that by the total number of people in each individual government department, agency, region, state, county, and local office and just give the other number the average of $12,000 a year per person, and you begin to have some idea of the scope of the corruption crime.

Yes that's right, you got it. Massive, eh? And, it goes on year after year no matter how frequent the people change in those offices.

The lady in this video has it right:
http://www.brasschecktv.com/page/564.html
Her major point comes at the very end.

Martin Brock February 22, 2009 at 8:43 am

Martin – since we all agree that we never had true free market capitalism, what is the correct system?

I don't pretend to know what's "correct" in any absolute sense, but I'll defend particular reforms and see where the evidence leads.

Like most of us, I'd stop all the bailouts. Bankrupt banks fail. Bank employees, particular executive officers, lose their jobs. Maybe some of their personal assets, reflecting recent compensation, like bonuses, are subject to recovery in bankruptcy.

Investors, including bondholders and depositors, also lose money. Other banks, including new banks forming continuously, absorb sound assets. I wouldn't ban organizations like FNMA or derivatives like CDOs and CDFs, but I wouldn't bail any of them out either, regardless of any Congressional encouragement. Their investors lose money.

I wouldn't bail out mortgagors' either, but I would limit losses to the mortgaged asset in many cases. A "mortgage" by definition is not a loan but a pledge of security to repay a loan. In the case of a home mortgage, the home itself secures the loan, so if the mortgagor cannot pay, he loses the home, but the mortgagee may not have recourse to his other assets to recover the loan.

I favor this non-recourse approach, because it encourages due diligence and discourages creditors from simply tossing cash out there regardless of the value of collateral and betting that enough other value can be seized to recover it. Since creditors are monetary authorities in our system, entitled to create money to extend credit, this reckless lending against homes is obviously inflationary as well as exploitative. This exploitation is what Jefferson meant by his famous warning.

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

A non-recourse mortgage is not a "bailout" of the mortgagor. If a mortgagor defaults after a housing bubble bursts, the mortgagor loses the house and any down payment he made as well as any "equity" he thought he had accumulated before the burst, but the mortgagee takes the rest of the loss. I might even forbid banks to disclose information on foreclosures in this scenario, to protect the mortgagor's credit history. Exceptions could exist if a mortgagor wrecks a property or fails to carry insurance covering natural disaster.

Homes are not like other debts. They're the largest and the longest term debts, by far, that common people incur, and given the nature of our monetary system, they're typically the leading edge of monetary inflation.

I can't agree with the "do nothing" approach. Some authority or authorities must create money, but this authority must be checked. The best way to check it, in my way of thinking, is to hold creditors themselves accountable for the consequences of reckless lending, and creditors with bank deposits or holding bonds in 401ks and pension funds are not exceptional.

States protect Capitalists, particularly the monetary authorities, first and foremost. In reality, "Capitalism" is this system of state protection, not any free market organizing productive means. Unless the authority of Capitalists is checked, other measures seem feckless, but "Capitalist" does not simply describe businessmen in the nominally "private sector", not at all. It describes statesmen of all sorts.

Sam Grove February 23, 2009 at 11:49 am

Some authority or authorities must create money,

Why?

More specifically, why "some" authority?

What do you mean by "authority"?

Methinks February 23, 2009 at 5:01 pm

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?

No, you embicile, he did not and neither did any of the traders on that floor behind him. That's not what traders do. That's why you should have at least a glimmer of a clue before you open you giant trap and let your stupidity spew forth.

muirgeo February 24, 2009 at 3:45 am

Oh Ok because I thought a trader was some one who buys and sells stocks, bonds, derivatives and other financial instruments. But I guess that is not the case. Yep you are right and I am wrong. I guess I am the stupid one after all.

Methinks February 24, 2009 at 8:24 am

Thanks for another moronic display, Muirdiot. Just in case anyone thought I was too hard on you.

muirgeo February 24, 2009 at 10:32 am

methinks,

If you think you are being honest and can prove to me that traders are in no way part of the chain that passed along these repackaged mortgages products, bought or sold them, or profited in any way then you win. But if not you've proved to be a person comfortable with outright lying to try to make your case.

You've argued in the past that derivatives had little to do with the crisis and now you're arguing that traders don't trade things. Leaving your groupies out of this all that matters to me is that between you and me its clear to BOTH of us that you need to lie to support your position. You need to lie in such an outright fashion that I am quite sure, along with your inability to debate serious issues without resorting to 5th grade… wait 4th grade debate tactics (ie name calling), it is quite clear to me you have psychologic pathologic condition.

Methinks February 24, 2009 at 1:15 pm

Morongeo,

Do you honestly think that I'm stupid enough to believe that your single-digit IQ allows you to comprehend a single thing I explain to you? You might be able to consistently rope Sam Grove into endlessly repeating himself to you, but after the first 100 tries, I became disabused of the idea that you even have the capacity to comprehend how to tie your shoes. If your tiny mind perceives cold, hard reality as "5th grade debate tactics", then that's your problem. Hell, the only reason I'm even writing this post is because I'm procrastinating right now.

You're not worth the time it would take to explain anything of any value. You're just not worth it.

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