Yesterday I got an email from a friend while I was out with the kids. "Did you see Santelli on CNBC?" he asked. When I inquired what he meant he told me to watch it ASAP.
After I watched it, it got posted to YouTube and wow, what a reaction. As I write this is has been less than 12 hours since the video went up and already over 105,000 people have viewed it and the less than 5 minute video has received over 1,300 comments. For those who missed it, here it is:
A less than scientific look through the comments says that they are trending 10 to 1 for the sentiment expressed by Mr. Santelli. If we put aside the discussion of whether he is right or wrong, one cannot deny that he clearly touched a nerve with a ton of angry people.
If we watch the nightly news on any network we see story after story of people about to lose their homes essentially through no fault of their own. The clear implication is that were it not for extraneous factors, everything would be OK. I am sure that there is a certain segment of the population for whom that is true, of that there is no doubt. BUT, it is impossible to have a collapse in any market like we have had in housing unless there was extreme excess from all parties, banks and buyers. The larger the fall, the more froth and irresponsibility involved in the bubble phase. There are very few "innocent victims" here. While I am sure we can all dig to find one, I am just as sure with very little effort we can find 50 who aren't.
Back in October of 2007 I wrote about the following story:
Wilbur Ross, a self made billionaire and his son were playing golf a few weeks ago. As they finished up, their caddy approached them and wondered if he could ask them a personal finance question.
"Sure," Ross replied.
"I bought 5 condos in Scottsdale, Arizona," said the caddy "I was able to flip the first 3 but I am stuck with the last two. Should I keep making the payments on them or just walk away?"
Ross thought about it for a minute and asked "Well, where are they? Is the area nice? What else is around the complex that may be of eventual value?"
"I do not know," the caddy replied, "I've never been to Arizona."
That, is a nice neat summation of what a "bubble" in a market looks like. When your caddy thinks he is Donald Trump, it is time to take a close look at what is going on.
Where are the heart-breaking interviews on the nightly news with folks like Wilbur's caddy? Where are the "lesson learned" pieces about gamblers who rolled the dice on housing? See, we know they are out there. We also know they are the majority, not the minority in this scenario. This explains the frustration on people's part when it comes to the hundreds of billions of dollars being thrown at the "problem".
The common argument for doing it is "we have to stem the tide and save people". Well, the FDIC did that already with its first mortgage modification plan and after six months over 50% of those loans were again delinquent.
Of course the criticism of Santelli is coming. The Columbia Journalism Review was the first that I saw. It is the typical stuff, focusing on the tone and anger of Santelli's rant, (and yes, that is what it was), ripping a few sentences and extrapolating much more from it than what was there.
The author of the piece denigrates his knowledge of Santelli and the network with this one sentence. "Of course, he didn’t get himself into nearly this much of a lather over the trillions of dollars we’ve given to Wall Street welfare cases and the busted banks." Now, anyone who has seen Santelli or watched even just a few days of CNBC over the past two years has seen an almost daily diatribe from Rick opposing EVERY bailout that has come down the road.
To make it simple, go to Youtube and watch any video of Rick at random, the thought process is the same, government needs to stop the bailouts, all of them.
He then says "this bailout isn't even designed to bailout homeowners but the banks". Umm... somebody might want to tell President Obama that because he has told us "this is designed to save 9 million people from losing their homes". Ooops.
Since the author of the Columbia piece clearly does not even begin to know his subject (Santelli or the bailout plan), further discussion of the "every homeowner was screwed by the banks" piece bears little more mention.
I am sure there will be others, but that is all I have now near midnight.
What is far more important than an erroneous criticism is the emotion Santelli has unleashed. Read the 1,300 plus comments on Youtube, read the page after page of Twitter commentary on it (here is the RSS feed for the topic and see how the blogosphere lit up with the "Chicago Tea Party" Santelli suggested.
Now, personally I do not watch much CNBC (too much yelling at each other all day, gives me a headache). But what we do enables events like this to spread like wild fire. What gets me about this one is the total one-sidedness of the response from people. Those who would object to Santelli are outnumbered by a gargantuan number by those who are practically throwing their arms in the air yelling "finally" as if Rick expressed everything they have been feeling but not seeing in the MSM.
Politicians may want to look at this before they do something else, people are not happy out there and it isn't just because we are in a recession. It is because we feel the most aid and help is going to those people and institutions who got us in this very mess. That is infuriating for people who have behaved responsibly.
It should be noted that isn't because of what they aren't doing in Washington, but what they are and that is a huge difference.