Rick Santelli rages on CNBC
Rick Santelli, CNBC’s Chicago Mercantile Exchange Correspondent, gained new found fame today when he exploded in rage on live television. (Watch it here) His point was this: the US Government Bailout was rewarding bad behaviour. Too many, he felt, purchased beyond their means and failed to properly account for the risk. Now, instead of facing the consequences of their actions, the government is rushing to save people from the problems they themselves created.
He’s right. Absolutely. Positively. 100% correct-a-mundo! But, that misses the point.
During his tirade, he asked surrounding traders, “How many of you people want to pay for your neighbour’s mortgage that has an extra bathroom and can’t pay their bills?”
Here’s my response…
Even in the most capitalist economy, no one exists as island onto themselves. We are all made interconnected, and more importantly, interdependent through the marketplace. If my neighbour’s bankruptcy makes him unable to purchase my goods, who is affected? If an over abundance of defaults causes my bank to go belly up, who is affected? If a lack of confidence results in credit being frozen, who is affected?
The fact is this: my neighbour’s bad decisions always affect my life. Now in most cases, so long as it is just my neighbour and a few of his deadbeat friends, I don’t notice. However, when my neighbour’s problems turn into my neighbourhood’s problem, then I feel the affects more sharply. In today’s economy, we are facing our nation’s problems. As a result, indifference is not an option. We have to step forward and provide immediate relief or we risk getting taken down too.
Our best response, after bailing out our neighbour, is to ensure it never happens again. That means regulation. Too many will suggest that regulation is the slippery slope to socialism. As this experience has shown, the lack of regulation has brought us closer to socialism than we have been since the Great Depression. A free market has shown itself too susceptible to greed to properly regulate itself. It has also shown itself unable (unwilling?) to self-correct until it is already stepping off the precipice.
So I ask Rick Santelli and his trading floor friends this question: “Are you willing to let the government stop a company from lending money to your potential neighbours when they obviously can’t afford the house next to you?” If they had said yes to regulation earlier, there wouldn’t be the need for a bailout now.
My reaction was, “What a jackass.” Really, the downturn is bringing the worst out. As if resentment against the bankers wasn’t enough, now we’ve got our “lazy and irresponsible” neighbors to hate too. Glad to see you inject a little humility and compassion.