Santelli states his case

Rick Santelli told his side of the story today on the CNBC website today. It looks like there wasn't much to his rant other than frustration with the current administration. Here is the link to CNBC.

http://www.cnbc.com/id/29471026

Santelli misses mark with rant

CNBC reporter Rick Santelli had a small meltdown the other day on live television after the Obama administration released their plan to help struggling homeowners. I think he was way off base and looked a little foolish. The big picture blog talked about today about an article in playboy that said the entire rant and subsequent opening of the Chicago tea party website may have all been staged. I don't know if it was but it definitely seemed out of character for Santelli. He ususally has a lot of very insightful things to say.

I was very surprised by Santelli's remarks even though it never surprises me when someone says something that seems so purposefully antagonistic. The other thing that blows me away is how simple minded some of these “bright” people seem to be regarding the economy or the state of housing. The plan Obama put out was a complete PR Stunt and if saving a few dollars a month will be the deciding factor for a family to stay in a home that is 150,000 under water so be it. The reality is that we have people that are now in trouble with their mortgages because of job loss or other significant factors that may or may not include being a loser. This was never a subprime crisis regardless of how dizzy cnbc was from spinning so hard last year. It was an issue deeply rooted in the financial paper and credit default swap markets. There is no way a minute number of foreclosures could bring down the entire world financial system if these derivative products were not involved. I am sick and tired of hearing anyone try, including santelli, to blame this crisis on a few homeowners who tried to scam the system. It will happen again and people will try to flip homes and get short term mortgages etc etc in order to get ahead but it could never take down the world economy without the crafting of Wall Street. By blanketing the entire group of people who may be having trouble keeping their homes as losers santelli is being foolish to say the least. He would be more accurate to call the Wall Street bankers and financial “geniuses” losers. They are the ones that have been leeching and sucking off the government now for two years as if they have the right to claim tax payer money as their own. It is idiotic to think this PR stunt by the government will really help anyone without significant principal write downs. By the time someone jumps through all the guidelines and hoops required they could be another 20 or 30 k in the hole. I am all for free markets and personal responsibility and think there are people that have tried to game the system. However, the vast majority of homeowners are not losers. Mortgages are still being paid on time by well over 90% of the people in the country. The individual homeowner has been used as a whipping post in order to let the banks and brokers milk the system for 2 more years while try to keep people from realizing they have to make a very important financial decision with their real estate. When values were down 15% the case could be made that is it much more valuable to keep the home and your credit in tact rather than walk away. However, the story is not the same when people are 35-45% or more underwater. The home can become an albatross around someone’s neck and the financially prudent thing to do would be to walk away if something drastic isn’t done with the principal. I would imagine there are many bright, successful, hardworking winners out there that may have to make just such a decision if we continue to see falling prices. (Which is not out of the question if we keep letting the big banks yank the chain of government whenever they need capital)? Can any financial adviser actually look a homeowner straight in the eye and say although your home is 50% underwater, you will be paying mostly interest over the next 10 years with little principal reduction, your 20% down payment is wiped out, and the economy is crap, and the government seems set on bailing out big banks while housing prices tank, but all that being said, you should go right no paying your mortgage and hope your home goes up 150% in the next 10 years in order to get you back to even? I highly doubt anyone with integrity could tell their clients that this sounds like a good idea. Santelli says some great things on air but this wasn’t one of them.