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Tuesday, November 29, 2022

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CNBC Editor: The People Are Revolting!

By Ryan Chittum – Reprinted from the Columbia Journalism Review:

In the annals of CNBC cluelessness, this morning’s outburst by the channel’s Rick Santelli is up there with the worst.

This is an example of what’s wrong with a certain kind of financial journalism, the kind where people of like backgrounds spend all day staring at tickers and interviewing each other.

The segment couldn’t more clearly illustrate the disconnect between the financial-services sector, certain financial journalists, and, you know, “reality.”

This was CNBC’s worst performance in an entire week—since Michelle Caruso-Cabrera, Dennis Kneale, Roben Farzad & Co. made horses’ rear-ends of themselves trying to squeeze investment tips out of two of the leading thinkers on the global financial crisis, Nouriel Roubini and Nassim Nicholas Taleb.

What sent Santelli, CNBC’s hot-air, oops, “On-Air Editor,” over the edge? The homeowner bailout. 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. Oh no. He’s mad that non-financial-service-professionals, otherwise known as homeowners, or, according to Santelli “losers,” are up now for help—to the tune of $275 billion, much of which would go to the banks anyway (emphasis mine):

Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the loser’s mortgages or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?

Which reminds me of the French Revolution scene from Mel Brooks’s History of the World: Part I:

Count de Monet: “The People Are Revolting!
Louis XVI: “You said it—they stink on ice!

Look, we have no problem with robust commentary. And the hothead thing is part of Santelli’s schtick. The man has to make a living, we suppose. He’s gone off on bailouts before (he actually walked out on a segment a few months ago after a heated discussion).

He’s also been wrong. The segment he walked out on was in the midst of the mid-September meltdown when he was calling for a delay in a bailout of the crippled financial system, which nearly everyone now agrees kept us from a catastrophic meltdown and depression. But even then, he didn’t question the need for something to be done to bail the financiers out.

And he’s not been afraid to take on the powerful, like his own network’s carnival barker, Jim Cramer (see this entertaining YouTube mash-up), over Cramer forgetting his own bullishness at the top of the market.

But watching CNBC lately is like stumbling onto Easter Island just after the natives chopped down their last tree. It’s like a lost world over there. Somebody send up a chopper.

But then, this may be a sympton of a wider disease.

We at The Audit have written repeatedly about the blame-the-homeowners meme that’s been so popular in misdirecting people away from the real culprits in the crisis: the financial-services boiler rooms that created all those junk mortgages and bundled them into crap securities for sale to all-too-trusting rubes (aka “clients”) around the world.

I understand there’s a powerful undercurrent of outrage from some people who are paying their mortgages (or renting) who disdain those who aren’t or can’t.

But let’s understand what’s going on here. This homeowner bailout isn’t really even aimed at easing people’s suffering. It’s aimed at the banks, whose downward spiral will not stop until the housing market stabilizes.

The question is do we step in and try to engineer the softest landing we can—or do we let it feed on itself until we all go down?

But what I’m really interested in isn’t the pros or cons about the homeowner bailout. Reasonable people can and do disagree about that. What’s really fascinating is the peek it offers into how CNBC—or at least part of it—thinks.

At this point, the financial network is channeling the culture it covers. The barrier between reporter and subject has nearly dissolved.

First, for a journalist to go off with “Tea Party” rhetoric while maligning millions of down-on-their-luck folks out there is just wrong.

The idea of calling some family in Lehigh Acres, Florida, “losers” because they happen to be caught in the maelstrom of a crippled local economy? Or the 90-year-old retired widow Addie Polk who, facing foreclosure on a probably predatory Countrywide second mortgage, shot herself when the sheriff showed up to evict her. Those people are not “losers.”

This crisis is far beyond the point where only the guilty, like speculators in Florida or condo developers in Vegas, are getting punished. I’ve written before that I have no sympathy for them. But regular, hard-working folks are getting swept up in a tide that keeps rising and has gone all tsunami on many places. Lots of cities around the country are already in depression, so we’re going to demonize the people who are unlucky enough to live there? Go back eighty years and Santelli would be calling the Okies and the men in the breadlines losers, as well.

Second, there’s this startling bit from his rant from the trading floor:

SANTELLI: These guys are pretty straightforward and my guess is a pretty good statistical cross-section of America—the silent majority.

If you think the makeup of the trading floor is representative of America, you’re just delusional. But a country of financial-services professionals does fit CNBC’s worldview.

Third, the CNBC anchors ate this rant up, as did their producers apparently, who kept egging Santelli on with his only-half-joking “Let’s start a revolution, we’re going commie like Cuba” rhetoric.

SANTELLI: They’re not like putty in our hands. This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their mortgage?

CROWD: Booo!

 

RANDOM TRADER: (leaning over to the mic) How ‘bout we all stop paying our mortgage? It’s a moral hazard!

ANCHOR: This is like mob rule. I’m getting scared.

SANTELLI: Don’t get scared. Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys, Maybe one of the last good cars to come out of Detroit

We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing it.

ANCHOR: Mayor Daley is marshaling the police right now.

 

Hey, I’m sure it makes for good ratings. Lots of luck with that. But I’ve got an idea for some even better shtick:

Have Santelli report live from the South Side for a couple of weeks. Or better yet: Merced, California, or Fort Myers, Florida.

Interview someone who isn’t a trader.

 

4 COMMENTS

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 Phil, I agree with most of your argument.  But we hear nothing from the administration.  What’s Tim G. been up to?  Has he figured out his parking spot and security badge yet?  The silence from the administration lets voices like Santelli’s take center stage.   Are they just planning on watching us drop another 1000 points by Mar expiry?  The academics in the Cabinet may not care about the DOW, but as we keep dropping, more companies will shed jobs.  Where’s the Hope message?

God bless people like Santelli, I’ve been calling for a revolution for years – as the corruption in both speculation and DC spread like cancer.
When I bought my house in 2005, I would not pay the inflated prices being offered, so I moved outside the metro area and bought from a respectable builder for a nicer home on 1 acre for a $100k less.
A speculator bought the new home next door from the same builder for about the same price and flipped it to a young couple for a nice $60k gain….the house is now in foreclosure as he was way above his means.
So who’s at fault, I believe the mortgage companies for lending to people who could not afford to make the payments in the first place.
So should we (the 92% who are paying our bills) bail out the 8% who won’t – no, let the markets work and get it over with quickly – it’s called pruning and better and richer fruit will result from it.
Obama has just signed America’s death warrant – and for you liberals who love Europe and socialism, welcome to hell.

Seriously, these rabid pundits are creating chaos, its worse if you listen to Fox network. If some grown ups don’t recognize the dangers and saner voices (yourself) don’t prevail,  how can we not expect riots and distrust in banks, etc.

I see nothing wrong with what Santelli had to say about the mortgage bailout plan;  he’s right in many ways; and often is.  One of the best people on CNBC.
 
I don’t agree w/ him on the need to let everything fail; let the chips fall where they may.  The consequences are too broad and serious.
 
t4barbara; I don’t understand your point.  You don’t seem to have a tolerance for views different than yours.  The pundits have a right to speak and they are not necessarily wrong (or right) – and neither are you.
 
That’s a democracy.
 
W

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