Saturday, February 21, 2009

Obama's Press Secretary Robert Gibbs Addresses Rick Santelli's Rant.



Robert Gibbs addresses Santelli's rant.

"I'm not entirely sure where Mr. Santelli lives or in what house he lives in. But the American people are struggling every day to meet their mortgage, stay in their jobs, pay their bills to send their kids to school, and to hope that they don't get sick or somebody they care for gets sick that sends them into bankruptcy.

I think we left a few months ago the adage that if it was good for a derivatives trader, that it was good for Main Street. I think the verdict is in on that.
"I would be more than happy to have him come here and read it.

I'd be happy to buy him a cup of coffee....decaf."

UPDATE:



Santelli responds and his main objection is that people are being helped at all. He appears to think that this help should be limited to unemployment benefit at the most.

He then admits that he voted for John McCain. Well, there's a surprise. Why did Matthews even bother asking the question?

UPDATE II:


Ezra Klein:
To expand on Gibbs's argument a bit, Santelli's rant was predicated on the idea that this is the homeowner's fault. In his narrative, greedy homeowners bought too much home and are now facing -- and should be left to face -- the consequences. If you touch a hot stove, you should burn your finger. That's how it works.

But that's often not how it worked. In many case, home values dropped. It's not that those buyers couldn't afford what they purchased but what they ended up with (you could argue that they should have expected housing prices to drop, and I guess we can go back into CNBC's 2005 tapes and see if they were sufficiently warned). Folks with a $300,000 mortgage on a $350,000 house can refinance to a lower rate and ride the turmoil out. But if their house dropped to $300,000 -- or worse, $270,000 -- they can't. Their loan-to-equity ratio changed, and not through any action they took.


Similarly, a homebuyer who purchased a new house in 2002 and got laid off from her job at Caterpillar in 2008 can no longer pay her mortgage. But it's not really because she purchased too much house. It's because the economy tanked -- thanks, traders! -- and demand dried up and credit weakened and Caterpillar stopped employing her. She's not a greedy homeowner: She was laid off due to macroeconomic conditions.


Meanwhile, it's a bad thing for homes to go empty. Nearby home values drop by about nine percent. Which means those folks can't refinance and lose control of their mortgages. Which means they default, causing more homes to drop in value. And so the cycle continues.
The entire argument really does come down to whether we do something or do nothing. I am on the side of doing something and, from all opinion polls that I have seen, so are the majority of Americans.

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2 comments:

Steel Phoenix said...

I'm glad you posted this. I've been seeing the rant posted on Republican blogs all over the net and cheered on. People saying they will be there in Chicago for the tea party, etc. In each case I've asked what it is all about. what are they trying to do in Chicago? Are they going to go to Chicago and not pay their mortgage? I get the feeling a few thousand people are going to show up and say, “wait, what are we doing again?”

I haven't heard anything useful out of an of these people. The current system has only one solution to this problem, they just aren't willing to admit it. They need to relax lending restrictions. I know this is what caused it, but it is all that they can do to come out of the death spiral. Then they can try to slowly reregulate. The question no one is asking right now is what is a house worth, really? If it is worth 150k, then why do we want it to go back up to 250k? this is why meddling destroys the system. When you fight a free market, it wins by simple entropy.

Socialism could just take over all of the housing and distribute it as equally as possible.

The free market would let the foreclosures happen, let the banks fail, let houses go empty and the prices drop until the lack of housing makes rent go up, which makes buying a worthwhile investment, which stabilizes the system.

Either of the latter two solutions would be very rocky, which is no fault of their own since they didn't cause us to be out of balance in the first place. I think the system is screwed enough and people are resistant enough, that we will have to fix thins through lending. The feds have to know all of this, which means they are waiting for something.

Kel said...

I'm glad you posted this. I've been seeing the rant posted on Republican blogs all over the net and cheered on. People saying they will be there in Chicago for the tea party, etc. In each case I've asked what it is all about. what are they trying to do in Chicago? Are they going to go to Chicago and not pay their mortgage? I get the feeling a few thousand people are going to show up and say, “wait, what are we doing again?”

As I've said since this entire nightmare began, none of us want to be where we are now, but it's where we are.

We can either do something or do nothing, I - and most western governments - appear to be for doing something.

The Republicans are trying to sound principled but they actually sound insane.