Sign Me Up, Santelli!

On Thursday, CNBC's Rick Santelli delivered what many have called "the rant of the year," railing on the government's new plan to help keep troubled borrowers in their homes. Some said he was crazy; others said he was sparking the revolution of the responsible American citizen. Well, you know what, Rick? I'm on board.

Why am I joining Rick's crusaders? It's not because I'm sitting pretty with my house. In fact, my Las Vegas residence is so far underwater, I have to wear a scuba tank inside. But I was a responsible borrower, putting hard-earned money down and taking out a 30-year fixed-rate loan that I could afford, and which I fully intend to pay back.

I've taken a big hit, yet I'm still paying the loan I agreed to. To listen to what my less responsible fellow citizens are clamoring for, you'd think I was an idiot for living up to my word. And maybe I am -- particularly now that I'll be paying not only my own mortgage, but seemingly everybody else's as well.

The problem with the plan
As I see it, the problem with the $275 billion plan to save the housing market is twofold.

First of all, there's supposedly some inherent good in "keeping people in their homes." While I certainly support efforts to keep Americans from being homeless, there are plenty of rental properties that non-homeowners can occupy. Owning a home should be a privilege, and a reward for saving money and being responsible. But it should not be considered an inalienable right of all Americans.

Second, throwing money at the housing market will not solve the real problem. Quite simply, housing prices got way out of whack, and they need to find equilibrium again. If you allow supply and demand to fall back into step, home prices will stabilize. Throw money to irresponsible borrowers, though, and you are artificially floating a market that needs to sink.

How to value a home
If you listen to much of the media, you'd think that there's no way to accurately value a house. Supposedly, because you can only price a home based on "comparable sales," a falling market will inevitably feed on itself, sending housing prices into a death spiral.

If you believe that, please reconsider, because I'm about to share exactly how to value without using comps. Ready? You take the rent that you could collect by renting the place out, deduct interest and other ownership costs, add up the totals over the next 30 years of expected rents, and discount the sum back to today. Sound familiar? It's a discounted cash flow, and it can be used on houses just as easily as it applies to factories, companies, or a Bluth-style frozen banana stand.

Comps can be a good quick analysis tool, but in many cases, they're hogwash. Comps justified many investors' decision to pay ludicrous multiples for stocks like JDS Uniphase (Nasdaq: JDSU  ) back in the Internet bubble years -- and it allowed homebuyers and speculators to pay crazy prices for homes just a few years ago.

Allow home prices to fall far enough, and you'll start to see savvy investors who know how to accurately value an asset start to pile into the market for the right reason: Because they know that they can make a good return. Throw funny-money at the issue, and you'll just end up with a confused market.

And suffer they will ...
Sure, this type of approach would be painful for a lot of companies. Homebuilders like Centex (NYSE: CTX  ) , Toll Brothers (NYSE: TOL  ) , and KB Home (NYSE: KBH  ) will continue to weep as demand stays slack. They'll keep having to fess up that they paid too much for the land they speculated on. Meanwhile, banks from Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) to the smaller local and regional outfits will feel the pain of more mortgage defaults. We're also likely to see insurers like AIG (NYSE: AIG  ) , which binged on risk during the boom, take some gut shots.

But that's simply a necessary dose of pain. We saw the Nasdaq tank in 2001 and 2002, driving plenty of Internet "companies" (really, they were more like Internet ideas) to go bust. Similarly, we need to see housing prices come down, and we need banks to deal with their loans realistically.

But I won't go all the way, Rick
Mr. Santelli and I don’t completely see eye to eye, though. He tends to prefer that the government keep its hands off the economy as much as possible. Me, not so much.

I'm not happy about the circumstances we're in nor the way we got here, but I do think that many of the government's actions have been on point. Although it's clear that many folks think the banking bailout was a terrible idea, I think that it's not only needed, but also that it doesn't go far enough. I think the Fed also has the right idea of keeping rates low to stimulate the economy from a monetary angle. And while the stimulus plan ended up getting way too politicized, I do agree with the need to jolt the economy with a fiscal infusion.

I'll be the first to admit that making policy decisions during a time like this is no easy matter, and despite having studied economics, I'm a long way from an expert on the matter. But as I watched Jared Bernstein -- Vice President Joe Biden's chief economist -- struggle this morning to come up with any semblance of an argument that defends the idea of throwing taxpayer money at irresponsible borrowers, I was convinced that this is a clear example of the government swinging and missing, big time.

Further Financial Foolishness:

Fool contributor Matt Koppenheffer owns shares of Bank of America (ouch!) but does not own shares of any of the other companies mentioned. The Fool’s disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants …


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  • Report this Comment On February 20, 2009, at 4:53 PM, JGBFool wrote:

    While I agree with the general gist of Santelli's rant, I wonder why these same people weren't making news railing against the bailout last fall, or for that matter, Bush's (completely unfunded) push for Medicare part D several years back.

    Could it be... (gasp)... a PARTISAN rant? Nah.

  • Report this Comment On February 20, 2009, at 5:08 PM, DrGuo wrote:

    I missed Rich Santelli’s talk on CNBC. But I do believe helping responsible owners is the right strategy. If government helps everyone in trouble to pay their mortgage, the mess is going to continue. This will encourage more people jump in to buy house, which they can not afford to pay and wait for the government to help them in the future. This will have a spiral effect and will never end, because no one wants to miss the opportunity to get government’s free money. We have to be realistic. Not to mention fairness to the people struggle to pay their mortgage on time, I believe this is only way to go. The Obama’s government made a right and wise decision.

  • Report this Comment On February 20, 2009, at 5:42 PM, willcain wrote:

    My concern is how do you separate the responsible ones from the irresponsible ones. What about people who can afford their mortgage but are complaining loudly that their home isn't "worth enough" right now? Who says it's not worth enough? (Your home value formula is helpful for investors, but only the market sets actual prices.) Why should I care about those people? They made a poor investment choice. At first blush, it seems like they're little better than those who get foreclosed...

    How do you know who's who? The trouble is, no one's really innocent. Sure, there are varying degrees of guilt, but we're all in this together.

    I feel like I'm "responsible" because I don't have a mortgage. I'm not that "gullible." I don't like debt. And I save the vast majority of my income every year. Most of my spending is "self capital" spending -- good food, health, relaxation, education, occasional productivity tools -- and not junk like junk food, poison like alcohol and nicotine, and loads of crap that I would have to store. But then again, I could get into trouble if hyperinflation hits and I don't own a large value of real assets. But would hyperinflation be my fault?

    The economy is complex.

    Investments are risky.

    There's **no such thing** as a "sure thing" (not stocks, not bonds, not cash, not gold, not oil, nothing...)

    We're all in this together.

    (Ask any economist.)

    There are no simple answers.

  • Report this Comment On February 20, 2009, at 6:45 PM, TMFKopp wrote:

    "We're all in this together."

    I 100% agree. The issue is whether this plan helps the whole or not. I don't think it does. We need housing prices to reach an equilibrium, not be propped up. If there are people that are about to default, they need to default and start renting -- not be paid thousands of dollars to live up to the terms of their loan.

    If we let people lose their homes and they hit the rental market, rental rates will rise and it will incent investors to buy properties to rent out. Market forces at work and it doesn't cost taxpayers a dime.

    I've lost a lot of money on my own house, but I still don't want to see an artificial bottom in the housing market. I'd rather see us take care of this bubble.

  • Report this Comment On February 20, 2009, at 8:18 PM, lehmschlog wrote:

    I am a person that has been paying for my house for over ten years. I had a descent down payment, and bought what I could afford. Never missed a payment! Now it seems I am going to have to help pay off folks mortgages that were inadvisable in the first place. Not poor people that haven't any other option, but those who will choose to stop paying off their dead horse. Why should I (a taxpayer)have to be stuck with their self-inflicted wound? The present government is so far off base that we may never get back!

  • Report this Comment On February 20, 2009, at 8:32 PM, zeppelin1704 wrote:

    For anyone who missed the Santelli episode, you can watch it on the CNBC web site.

    http://www.cnbc.com/id/29283701

  • Report this Comment On February 20, 2009, at 8:43 PM, Varchild2008 wrote:

    Nobody supported President Bush's Medicare Part D or last year's Welfare check. Rush Limbaugh and Sean Hannity and countless others Ranted Daily against this.

    How can anyone with any honesty sit there and claim a double standard? This is about Capitalism and Conservatism and Free Market Principles here. There's no double standard for anyone who supports pure, 100%, unpolluted, American Style Economics. If a business goes bust... We don't need a Stinking Government to step in and bail it out and basically choose Winners and Losers.

    Same goes with Housing.. Same goes with unemployment. Same goes with Medicare. You'll never catch any Conservative supporting WELFARE for the LOSERS no matter which political party is pushing it.

  • Report this Comment On February 20, 2009, at 9:01 PM, D2009 wrote:

    "You'll never catch any Conservative supporting WELFARE for the LOSERS no matter which political party is pushing it."

    I believe more than 80 Republican congressmen voted for the 2007 bailout -- you know, when they thought that was the politically motivated thing to do. Now that their political motivations revolve around shutting down Obama no matter what, the bailout philosophy is no longer en vogue with right-wing nutjobs.

    Remember too, "Capitalism and Conservatism and Free Market Principles" are EXACTLY what created this financial apocalypse. A system driven by pure, unadulterated self-interest will always eventually result in this kind of situation.

    Pure capitalism does not work in the context of an ongoing society. It cannot sustain itself without external forces preventing its implosion.

  • Report this Comment On February 20, 2009, at 9:19 PM, D2009 wrote:

    And I hope Santelli enjoys his 15 minutes.

    Personally I'm a bit sick of several of CNBC's so-called reporters injecting their political views into what's supposed to be financial news. Fire Santelli, Kudlow, Caruso, and Haines, and let them work at Fox News where they belong, so I can get actual reporting from Ratigan and Bartiromo.

    And if they really need someone who's negative about everything but is still informative, then give Jeff Macke his own show.

  • Report this Comment On February 21, 2009, at 8:26 AM, LABDJB wrote:

    Say what you want about Rick but the market itself has spoken....the market itself is not partisan and it doesn't care who the President is but it wants to hear policies that it interprets as being positive for economic growth and so far the market is not convinced in anything the President has done.

    Rick is not the market but the market has the same concerns as Rick because if we save people who got approved for loans that had credit rating scores of 500

    (sub-prime) they will still most likely default on their new loans and this doesn't fix anything.

    The President wants to try and save people in the sub-prime class and this class no matter how you restructure their loans still have a very high risk of defaulting......we will not hit a bottom in this market until we let the irresponsible fail and unfortunately a lot of people who should have never qualified for loans got them anyway and it is time to let them go.

    So again i say that Rick is just one man trying to convey a view to people why the market goes down every time the President issues new policy

    The devil is in the details and the market is waiting until the President reveals the details of his plan (next week).

    always remember that nothing will turn around unless the market turns around and there is a saying among traders in the market and that is " The Market is always Right" ........Rick is not always Right the President is not always Right.....you and i are not always Right..but the market is Always Right.

    Let us hope that America gets thru this mess with as few casualties as possible but we have to drink the bitter medicine in order to heal.

  • Report this Comment On February 21, 2009, at 11:00 AM, NORESCUE wrote:

    Socialism does not care about the stock market. Wake up folks. Santelli's rant was spot on. I am surprised that CNBC has chastised him for speaking out for attention from their poster child.

  • Report this Comment On February 21, 2009, at 11:20 AM, teach1000 wrote:

    My solution is GIVE EVERYONE MONEY. Why help some and not everyone. The total amount of money that will be spent once everything is done will be about 3 Trillion. Close to 1 Trillion for TARP. Another Trillion for the stimulus plan and then another trillion for the bad bank concept. Since there are about 300 million AMericans, why didnt we give every American $10,000. If you are close to foreclosure, you can use that to pay. Those who want to invest can do so. Those who want to save can do so and those who want to buy things can do so. That would boost the stock market (investments), create bank liquidity (Savings), keep businesses in business (purchases)thus minimizing layoffs. There will no longer be the arguement that some people are being helped while others are not.

  • Report this Comment On February 21, 2009, at 5:05 PM, johnh2009 wrote:

    everyone here is talking about rick or what rick talked about. how about the article itself? can we write about it?

    what i want to know is: 1) why is the author claiming he'll continue to pay his mortgage eventhough his Las Vegas home is "under water"? to me that is insane. he's just throwing good money after bad. 2) his discounted cash flow example is more of a negative cash flow example to me. if i understand it correctly it means i rent my $250,000 house for $1500, but am responsible in about $2500 in interest and ownership costs. how is that discounted cash flow?

    does this article make sense to anyone? is it just a place for users to give their opinions. i trust you people so im interested in your take on #1 and #2 above.

    john h

  • Report this Comment On February 21, 2009, at 5:33 PM, Constructor103 wrote:

    I've only been a commercial developer for 21 years so I'm not the smartest person by any stretch but a DCF method for valuing your home? Doesn't that run counter to the fact that you shouldn't treat your "home" as an "investment" - I seem to remember this all starting with that very bad idea in the first place. A DCF for your home would be over-reaching to the downside...now if you are talking about income properties that would make sense...the const costs (no land or soft costs) to build apartments are $75 per sq ft (in our area) and home const costs start at $130 per sq ft...you cant even begin to make a comparison between the two with a starting cost difference like that..I'm open to hear more on this one but I warn you I know it cold...

  • Report this Comment On February 21, 2009, at 5:35 PM, TMFKopp wrote:

    Hey John, thanks for the comment.

    1) I signed an agreement to borrow a certain amount of money to purchase a house. The fact that the market has changed drastically doesn't seem ample justification to me to say "whoops! I made a mistake, I don't want a do-over." Don't get me wrong, I sometimes feel jealous of the folks that find it easy to go back on their word/agreement, but unfortunately for my net worth, I wasn't raised like that.

    2) Your problem is exactly why housing prices got out of control. Nobody was looking at home prices from a logical perspective like this. The fact that you can rent your house for only $1,500 when your mortgage and ownership costs are $2,500 suggests that the price you paid was likely out of whack. If the market starts looking at houses from such a framework we can get to a point where home prices reach a justifiable level.

    Hopefully that helps your understanding of the article.

    Matt

  • Report this Comment On February 21, 2009, at 5:57 PM, brwn8484 wrote:

    I am suprised by the number of statists that come to this web site. As far as I am concerned, Rick Santelli needs to run for president. We might get some common sense and real reform out of Gov't.

    Make no mistake, our country has changed, and the people in power are NOT doing whats in our best interest. Both parties have taken the power that was granted them, and both parties have abused that power.

    We are no longer living in a free and people led govt. Most decisions are made by politicians who allow the lobbyists with the most money or power control their voting. As far as I am concerned, it is time for a second Tea Party.

  • Report this Comment On February 22, 2009, at 8:27 AM, ChrisHastings131 wrote:

    Obama said he was for change. However it seems the only change he is for is what he told Joe the plumber.

    Spreading the wealth around.

    So we are all poor.

    Obama does not own stocks and hate the stock market.

    Just another politican.another politican. Maybe worse than Bush when all is said and done.

  • Report this Comment On February 23, 2009, at 8:54 AM, Sridhartoronto wrote:

    The problem with this logic is that by not helping the supposedly "irresponsible" homebuyer we are actually helping the scumbag who offloaded his dump at sky high prices.

    The "irresponsible" homeowner will just walk away. The scumbag will buy back hs property at 25% of what he sold it for. Who foots the bill? Mr. Average Joe.

    The point that I'am making is that the damage has already been done. There is 14 trillion dollars ready and waiting for the next foreclosure sale. Whether we like it or not we lose!

  • Report this Comment On February 23, 2009, at 9:11 AM, brwn8484 wrote:

    I'll tell you where I was. I was concerned about the lack of responsibility in our leadership... Both the republicans and the Democrats. I was critical of the bailout when Bush was in office and I am still critical of the bailout after the Messiah took office.

    Regardless of who you support, the current plan is being shoved down our throats. I did not support it then and I dont support it now. There is one simple reason... We are being lied to when any politician or banker tells us they are trying to help us...

    Robert Kiyosaki wrote so eloquently

    "If you want to know why the towers of American capitalism are crumbling, I recommend reading "The Creature from Jekyll Island" by G. Edward Griffin. It's not an easy book to find, but once you start reading it's to put down. In fact, in many ways it's a murder mystery about the financial "murder" of the middle class.

    A very important lesson in the book is how political leaders use financial spin to deceive the public. The very, very rich use the system to legally steal from the rest of us by appealing to our sense of patriotism. When our leaders say, "We're bailing out Fannie Mae and Freddie Mac because we want to protect the American people," they really mean "We're saving our rich friends."

    All the bankers and politicians have to do is wave the red, white, and blue, play a few bars of "Yankee Doodle," and the masses get teary-eyed and pledge greater allegiance to legalized robbery. Yes, it's true that ignorance is bliss -- but ignorance is also expensive, and it cost us our freedom.

    Freedom at Peril

    A bailout can be different things. First, printing more money is a kind of bailout that leads to higher inflation. Rather than protecting people, it makes life for the poor and middle class more expensive. The other kind of bailout is protection for our rich and incompetent friends. If you or I fail at business, we fail. If we cheat and fail, we go to jail. But if you're rich and politically connected, your incompetence may be protected by a government bailout.

    As a former Marine and a Vietnam War veteran, it saddens me to see some of the freedoms I thought I went to war to protect being stolen from us by bankers and politicians. Unfortunately, few Americans know the difference between the words "nationalize" and "socialize." Socialize means we turn more of our personal powers over to Big Brother, not free enterprise. It means we as a people grow weaker and need a higher power -- the same power that got us into this mess -- to protect us.

    In short, when the towers of Fannie, Freddie, Merrill, Lehman, and AIG came crashing down, more came down than just money. What we're losing is the very freedom this country was founded on, and what most of the world yearns for."

    Regardless of your political persuasion, we have been lied to about the first Ponzi/Tarp and we are still being lied to about bailouts and bank socialization. None of this is in our best interest. Fear drives us to give up our Freedom and then we are left with little more than a corrupt and abusive govt that works for the rich and politically well connected. Even the Democrats currently in power admit publically that they are using this crisis for their own gain and political power grab.

    All the socialist/democrats and all the republican/conservatives in the world crying foul will not change the Truth that we (middle and lower class) are being lied to and cheated out of our hard earned money. The sad truth is that many Americans have bought into the lie that on or the other party is all at fault. Meanwhile the party in power is quietly continuing to remove our freedoms and manipulate the liberal and clueless media into spreading their chosen religions of socialism and agnosticism.

  • Report this Comment On February 23, 2009, at 10:38 AM, botfeeder wrote:

    The housing bailout is a perversion of the concept of a welfare state.

    The general philosophy of the governments of the western world is to allow people to retain a substantial portion of the fruits of their labor, but also to tax a substantial portion, with one of the key uses of those taxes being to assist those at the bottom of the economic ladder.

    The housing bailout, however, taxes lower middle income renters to subsidize upper middle class homeowners.

    It is similarly perverse to the auto bailout where lower middle income taxpayers who don't have any health care are paying for the health care of upper middle class retirees.

    I sincerely doubt the public will tolerate such perverse policies, which are in opposition to the very principles that the Democratic Party supposedly stands for.

    A revolution is coming in this country. I don't endorse it or advocate it, but it is coming. I have no illusions that the government that comes out of it will necessarily be a benign one. But those in power have no ones but themselves to blame when they find themselves ousted in the near future.

  • Report this Comment On February 23, 2009, at 10:43 AM, botfeeder wrote:

    truthisntstupid:

    You make a great point about Palin. A tiny group of conservatives pointed out that she actually pursued "Hugo Chavez" style oil policies in Alaska.

    The phony conservatives of the media, the Limbaughs and Hannities and the like, of course ignored any such inconvenient truths and hailed her as the right wing messiah.

    Personally, I believe Bobby Jindal is the best hope in 2012 to reverse the Bush/Obama policies that prevailed the last 8 years and will presumably continue for four more.

  • Report this Comment On February 23, 2009, at 10:46 AM, botfeeder wrote:

    varchild:

    Dream on that "conservatives" didn't roll over for Bush's anti-conservative agenda.

    Runaway government spending, a war to nowhere, and an immigration agenda designed to obliterate the very existence of the United States as a sovereign nation.

    All these were at the core of Bush's administration, all were anti-conservative policies, and all were, to a considerable degree, condoned by the dimwitted "conservatives" of the media.

  • Report this Comment On February 23, 2009, at 10:53 AM, botfeeder wrote:

    brwn8484 said:

    "In short, when the towers of Fannie, Freddie, Merrill, Lehman, and AIG came crashing down, more came down than just money. What we're losing is the very freedom this country was founded on, and what most of the world yearns for."

    brwn, I agree with much of your post, but also keep in mind that the real problem was not that they came crashing down, the real problem is that these institutions had become financial toxic waste dumps in the first place, a process that occurred over many years.

    One of the things about the economic mess that I don't think is adequately discussed is the fact that the economic growth of the last 10-20 years was not prosperity, it was an economic tumor, sustained by the ever-increasing pileup of greater amounts of debt of all types.

  • Report this Comment On February 23, 2009, at 7:17 PM, SnapDave wrote:

    Brwn8484,

    I would google Robert Kiyosaki with keywords like ‘scam’ and ‘fabrication’. He is a serial liar and his advice on the whole is useless. There is no evidence (and people have looked) that he has made any substantial amounts of money from anything except his books. He certainly didn’t make the fortune he claims in real estate. While he apparently has some talent for writing books that some people find engaging on some level, he should by no means be taken seriously for financial advice. He needs to be exposed, disgraced and forgotten about as soon as possible.

  • Report this Comment On February 23, 2009, at 8:43 PM, brwn8484 wrote:

    Snap Dave:

    Barak Obama promised not to add pork barrel projects to bailouts... he lied.

    Barak Obama promised to change politics and not allow criminal activity... then he appointed Geithner - he lied.

    Barak Obama promised to increase jobs by 3.5 million. As far as I am concerned he has not come anywhere near to 3.5 Milliion jobs. He lied.

    So is Barak obama is a serial liar. I think Barak would like us to believe that he can fix all the problems in our country, but I beleive he is a Statist and also very dangerous. He knows that most people will buy into his stories and most will soon forget that he lied to them.

    You may nor trust Kiyosake, but what he says is still valid with regard to our political leaders. They lie to us to get what they want. Beleive what you will, but your criticism has nothing to do with the point of my post. Sorry, but your criticism only enhances my points points more fully. That politicians use manipulation to convince the naive that they should give up their freedoms for perceived security.

    Statism and big govt will never answer any problem. Read your history book and you will find out why.

    The book that Kiyosake mentions is still a good read and is very enlightening. Even if you dont agree with author, you should read it to be able to understand the content. Otherwise who is the naive and ignorant one that need to be exposed and forgotten.

  • Report this Comment On February 24, 2009, at 4:12 PM, OleDrippy wrote:

    Should've let the banks fall, should let the "homeowners" get foreclosed upon.. The world would NOT have ended and all the "toxic" assets, "toxic" executives, "toxic" boards of directors, and "toxic" homeowners would have been expeditiously purged from our system and those who made the right decisions would be fine.... I don't understand this place anymore.

  • Report this Comment On February 24, 2009, at 6:41 PM, stan8331 wrote:

    Depressions are extremely bad things. When a market collapses, it can radically overshoot to the downside and in the worst cases can require decades to recover. In the interim, there is untold human misery.

    In terms of taking responsibility for one's actions, I wish all my gunslinging, bunker-building laissez faire friends could experience the Depression they're advocating first-hand. But we live in the real world - if they get to experience it, that means <i>I will also</i>. We live in an interdependent society, whether or not one's ideology permits acknowledgment of that reality.

    I strongly believe in personal responsibility, but I'm not willing to stubbornly insist on it if doing so threatens my own survival. If I'm a responsible citizen and most of my neighbors aren't, refusing to do anything to cushion the downward spiral that can ensue is insane. I too wish the irresponsible folks could receive their just desserts, but that will be very cold comfort when we're all unemployed and the economy is in tatters. We should do everything possible to limit how much the irresponsible folks can benefit from government aid, but the primary objective has to be preventing economic collapse.

    Of course housing prices saw a huge bubble and of course they need to come down and stay down, roughly mirroring the rate of inflation rather than tripling it. But the <i>way</i> in which that decline happens is of critical importance if we're all going to avoid spending a decade in soup lines. There's bound to be some inefficiency and graft in any package of this size, but debating the fine details while Rome burns isn't a viable option.

  • Report this Comment On February 24, 2009, at 6:48 PM, mustbefriday wrote:

    "Rick the derivatives trader" meet "Joe the plumber". Lot's a fireworks signifying nothing. Fame's running out!

  • Report this Comment On February 25, 2009, at 9:31 PM, brwn8484 wrote:

    I love this line... "Theres bound to be some graft in any package this size" Isnt this what Barack told us was not going to be tolerated in his administration? And how do you define "some graft". Are we going to allow all "the good old boys" to get by... Like geithner and his "oops but I forgot my taxes buddies".

    And isnt this what got us into this mess to begin with... I mean what would it hurt to give out some Mortages to a few people with no credit.... Ooops... Or what about some tip top CDO's from all those creditless borrowers. Or how about buying that investment grade "subprime" debt. What.... you mean that its OK when the upstanding democrats do it ... but if anyone else does lets kill the &^&*)).

    I say you usually get what you ask for and if its a politically corrupt socialist power thing you want... Then lets call it what it is.... a corrupt monstrosity... DEFINITELY NOT A LITLLE GRAFT.

    Wake up America.... Please. If I hear this lame excuse about a few problems with this corrupt bill any more I am going to .... start talking about socialism and communism and a few other 'isms' creeping into our formerly free and christian nation.

  • Report this Comment On February 25, 2009, at 10:26 PM, SnapDave wrote:

    Brwn8484,

    I deliberately did not comment on the substance of your post because I felt any perceived negative view towards it might detract from my urging that people take a better look at Kiyosaki. That he may write things which resonate is not surprising. It explains why he sells books. Obama also makes speeches which resonate with many people. You and I can agree that Obama’s rhetoric don’t nearly make up for his many negatives. Kiyosaki in his own way is no different. He needs to go away.

  • Report this Comment On February 25, 2009, at 11:02 PM, brwn8484 wrote:

    SnapDave:

    I guess that you dont like Robert Kiyosake. I get it. But I dont care about your feelings for Kiyosake. My concern are the lies and criminal activity at the top.

    Your feelings about this crisis may be of some concern to alll of us but If you review what has been done so far with regard to the financial crisis, only the criminal behavior of the politically and economically well connected has been protected.

    Until we change the behavior at the top, noone is safe from this crisis. And we will continue to lose our valuable freedoms at the expense of social and economic experimentation being controlled by criminal politicians and statists.

  • Report this Comment On February 26, 2009, at 11:03 AM, RimmerCommaAce wrote:

    Interesting idea. I never thought to try to apply DCF to home valuation. But I have to disagree on one point though. DCF analysis would not apply to a "Bluth-style frozen banana stand" because after all, there's money in the banana stand!

  • Report this Comment On February 26, 2009, at 12:46 PM, RaceToTheBottom wrote:

    The problem I have with this Santelli person is that he was all for bailouts of banks. All the CNBC guys were. Now he is going to have to pay for it and he gets all riled.

    If he wanted to talk about moral hazard and take the high road he should have done it earlier.

  • Report this Comment On February 26, 2009, at 3:20 PM, mcdiv wrote:

    It's funny how people on the left want to blame this all on Capitalism. The free market didn't provide the cheap money that fueled this now crashing bubble. The Government did. The Government also pushed Fannie and Freddie on the system. The lack of any regulation of the mortgage, securitization and credit default swap markets was ridiculous. Wall Street, Government and idiotic people purchasing things they couldn't afford are at fault. In short, the public and private sectors are at fault. So why do we want to hand over more power to Government when they were complicit in this disaster?

    Going forward we should enact the minimal regulation required to prevent this problem from occurring in the future. We should not throw out the most successful economic system in the history of the world. This new course of collectivization we are on will only turn us into France where they get excited when employment dips below 10%.

  • Report this Comment On February 26, 2009, at 3:23 PM, mcdiv wrote:

    It's funny how people on the left want to blame this all on Capitalism. The free market didn't provide the cheap money that fueled this now crashing bubble. The Government did. The Government also pushed Fannie and Freddie on the system. The lack of any regulation of the mortgage, securitization and credit default swap markets was ridiculous. Wall Street, Government and idiotic people purchasing things they couldn't afford are at fault. In short, the public and private sectors are at fault. So why do we want to hand over more power to Government when they were complicit in this disaster?

    Going forward we should enact the minimal regulation required to prevent this problem from occurring in the future. We should not throw out the most successful economic system in the history of the world. This new course of collectivization we are on will only turn us into France where they get excited when unemployment dips below 10%.

  • Report this Comment On February 26, 2009, at 3:53 PM, wuff3t wrote:

    brwn8484,

    "We are no longer living in a free and people led govt. Most decisions are made by politicians who allow the lobbyists with the most money or power control their voting."

    I tend to agree, but when do you really think this was otherwise? Only in the very early years of a country do sincere principles and the thirst for a just society rule the show. Kiyosaki (I have to admit I'm dubious about the guy from what I've read of his work, however that's only a few articles here and there and I do agree with him on this point) is right that governments lie to us in order to engineer societal and financial systems that benefit them and their rich friends, however once a system like that is in place the only way to overthrow it is full-scale revolution - anything less won't work as the rich already have things sewn up. Governments may or may not be created principally to protect the interests of the rich, as Chomsky claimed, but they always end up being used to do so.

    People may sneer at the French, but at least they had the good sense and guts to overthrow their rich elite when social inequalities became unbearable for them.

  • Report this Comment On February 26, 2009, at 4:29 PM, horse2see wrote:

    Thanks to a lot of foolish folks on wall street...bank loans that should never have been offered to very risky people...we are in a fix. Obama team has a real doozy to fix. We need a miracle. Unfortunately we can't wait around for that. So government haters will just have to shut up (for once) and swallow something distasteful. Matt, you may not mind having your home in Las Vegas lose value while you courageously pay back your loan with admirable loyalty to your bank...but I would like to see my home's value recover in my lifetime, at least somewhat, to its value when I purchased it. Since the fix WE AMERICANS got ourselves into has very complicated fingers throughout the real estate market, I'm afraid Government intervention is called for. We're all in the same boat whether you are a responsible home buyer or not. Santelli, I'd like to stuff a sock in that arrogant mouth of yours...no way, don't sign me up...the last thing we need right now are big cry babies.

  • Report this Comment On February 26, 2009, at 4:48 PM, mcdiv wrote:

    Some of the sentiments expressed here are so envious and hateful. Has action based on these emotions ever led to anything useful? Movements born of envy and hate led to regimes like Mao, Hitler, Pot. By the way, the average citizen did not benefit.

  • Report this Comment On February 26, 2009, at 6:43 PM, brwn8484 wrote:

    wuff3t \:

    While most politicians are corrupt, what displeases me about your response is the way that you accept the corruption as if it is expected. Here is a quote from our new President

    "Think about it. In the past several months, we've seen the head of the White House procurement office arrested. We've seen some of our most powerful leaders of both the House and the Senate under federal investigation. We've seen the indictment of Jack Abramoff and his cronies. And of course, last week, we saw a member of Congress sentenced to eight years in prison for bribery.

    Now, some have dismissed these scandals by saying that "everybody does it." Well, not everybody does it. And people shouldn't lump together those of us who have to raise funds to run campaigns but do so in a legal and ethical way with those who invite lobbyists in to write bad legislation. Those aren't equivalent, and we're not being partisan by pointing that out.

    The fact is, since our federal government has been controlled by one political party, this kind of scandal has become the regular order of business in this town.

    For years now, some on the other side of the aisle have openly bragged about stocking K Street lobbying firms with former staffers to increase their power in Washington, a practice that should stop today and never happen again.

    But what's truly offensive to the American people about all of this goes far beyond people like Jack Abramoff. It's bigger than how much time he'll spend in jail or how many members of Congress he'll turn in. Bigger than the K Street project and golf junkets to Scotland and lavish gifts for lawmakers."

    Whats truly offensive to me is the idea that Barak Obama would chide his colleagues for criminal behavior and then appoint a man that stole from us by refusing to pay his taxes. What truly offensive to me is the idea that one party will accuse the other of underhanded, immoral and criminal behavior and then turn around and commit the same or very nearly the same offenses. Yes it's true that corruption has allways been with us....... but we allow this corruption to continue by voting for these people again and again. And we support these idiots by ignoring the evil that they inflict on us.

    "The price good men pay for indifference to public affairs is to be ruled by evil men." -Plato

  • Report this Comment On February 27, 2009, at 9:53 AM, OldEnglish wrote:

    "While I agree with the general gist of Santelli's rant, I wonder why these same people weren't making news railing against the bailout last fall, or for that matter, Bush's (completely unfunded) push for Medicare part D several years back."

    "We" were. Unfortunately, the "We" represents the microscopic group of libertarians that live in this country. A much cheaper way of ending the depreciation of home values would be for a reduction in supply. This could be achieved with government issued molotov cocktails that include instructions that said cocktail be tossed through the living room windows of people who speculated with nothing down and are now extorting their neighbors for money.

  • Report this Comment On February 27, 2009, at 1:29 PM, wuff3t wrote:

    brwn8484,

    While my comments may have displeased you, I suspect our positions are closer than you think. I confess I'm torn between feeling sincerely angry about the situation you describe (both parties accusing each other of lying, cheating etc - whilst committing exactly the same offences themselves), and not knowing quite what to do about it.

    The problem with accepting that we, the voters, are to blame is that we don't actually have much choice, do we? We have a two-party system, which means that if both sides are corrupt there's no way of giving them both the rewards they so richly deserve by voting them out of existence (by not voting for them, if you see what I mean).

    I know there are decent and well-meaning politicians out there, and even more decent and honest people backing them up by raising funds and supporting campaigns etc. I feel for those people, respect them enormously for trying to stand against the tide, and wish they had more power than they currently do. I feel even more for ordinary citizens who have to endure what politicians do to them "in their name". And I'm aware that allowing my cynicism to get the better of me is in a way a betrayal of everyone who wants a change for the better. I just wish I knew how to change things.

    All the best,

    Phil

  • Report this Comment On February 27, 2009, at 3:28 PM, texasgal3 wrote:

    Remember too, "Capitalism and Conservatism and Free Market Principles" are EXACTLY what created this financial apocalypse. A system driven by pure, unadulterated self-interest will always eventually result in this kind of situation.

    Pure capitalism does not work in the context of an ongoing society. It cannot sustain

    D2009, is right-on.

  • Report this Comment On February 27, 2009, at 4:43 PM, menefer wrote:

    Santelli is a cry baby. Author for some reason thinks rents aren't falling. As more units sit empty and compete for available renters the asked for rents are falling quickly. I know they are down about 25% in my area and we are a relatively strong market. No action would be a disaster. I'm behind Obama 100% and believe they are taking the right actions. Of course some will complain, they are the ones who got us here.

  • Report this Comment On February 27, 2009, at 4:44 PM, mkriley wrote:

    After nearly 10 years of exile, I finally feel its time to dust off the shingle of "Political Economist" once again!

    Having made the rounds of dozens of foreclosure meetings, rallys and symposia, I found this article to be rather refreshing and realistic. With one caveat. Shelter is a fundamental right. As the author suggests but doesn't come out and say as much. But the real culprit here is homelessness. As I have argued before consumer groups such as ACORN, trying to "undo" 200 years of contract law is foolish and counterproductive. The problem here isn't losing one's home to foreclosure, but the ramifications of that loss that lead to total collapse....homelessness.

    Until we recognize that shelter is a fundamental right, nothing of substance will be done. Currently, conventional "wisdom" seems to have pushed this unrealized fact upon bankruptcy judges. That is so irresponsible. In essence, by default we are letting judges legislate.

    If you don't feel shelter is a fundamental right, trying living in on the streets. Getting a job is now foolish. And if you are lucky enough to have a job, try keeping it while being homeless. No way!

    Although many people have been victimized by unscrupulous lenders, it does nothing to address the immediate impact of these alleged crimes. Like it or not, health care, shelter, food and education are fundamental rights. How to provide for them is the question. The political and social costs of ignoring these fundamental rights lead to catastrophic consequences. That is why there is much urgency now. It may be a bit too much to chew at the moment but sooner or later society will have to deal with equality and these fundamental rights.

    If you think socialism is bad, try anti-socialism. That's short for social darwinism. And that leads to barbarism. Think long here.

  • Report this Comment On February 27, 2009, at 5:01 PM, DKCausey wrote:

    Funny how we've been spending 10 billion a week in Iraq for years now without so much as a peep from anyone from CNBC... But suggest a little assistance for Americans in trouble and every conservative goon comes crawling out of the woodwork... All those in favor of spending 10 billion in America per week instead of Iraq--send Mr. Santelli a nickle, when he gets enough nickles to afford a ticket to Mosul we ought to send him there... If our money is good enough to fritter away on people bent on our destruction then it da-gone-well ought to be worth spending on my neighbor or yours...

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