There is that one famous show where he tore Chris Matthews’ throat out and took a shit down the hole. Never gave poor Chris a chance.
One of my all time favorite TV moments.
I cant not respond:
Comparing Santelli to Cramer is pretty unfair and a little ignorant. Santelli has actually been one of the more intelligent “analysts” in this entire fiasco. Cramer is blowhole.
Bailing out homeowners (in many cases those loans shouldn’t have been given in the first place) will turn out perpetuating the asset deflation spiral the govt / world is actually trying to stem. Which in turn will lead to more bank write downs, more recaps for the banks and insurance companies and in turn there will be less lending to the economy and so the negative feedback loop continues. Santelli actually gets it (as did the floor traders around him).
Well done for selling WAMU but if you were such a market and economic genius I guess you’ve been short bank stocks since then, long the front end of the curve and long CDS spreads for over a year?
Your commentary (my impression based entirely on this thread I will admit) highlights how little you get about the complicated issues the global economy is facing and the impact that poor policy may have going forward. The view must look really good from the cheap seats!
The Stewart clip was very funny though.
Santelli clearly has an agenda and he’s not afraid to let facts and reality get in his way. Stewart skewered him and showed him to be the Wall Street shill and fraud that he really is.
What agenda is that, Matt? He doesn’t work on Wall Street
Santelli reports on the bond markets. He is not a trader, and he doesn’t advocate for bail outs. He has been saying the market should sort itself out from the very start.
Santeli’s hypicricy for railing against home owner bailouts while being okie dokie with bailouts that make his stocks go up
I challenge you to find a clip or quote of Santelli praising any bailout. Santelli has not been hypocritical at all.
Bailing out homeowners (in many cases those loans shouldn’t have been given in the first place) will turn out perpetuating the asset deflation spiral the govt / world is actually trying to stem.
How do you figure that?
“The Stewart clip was very funny though.”
Yes it was, but it also shows you that the so called financial experts don’t know what the fuck they’re talking about.
Economists (and so called financial experts) are like meteorologists…they predict yesterday’s weather 80% of the time.
I don’t know who the hell Santelli is other than the video, but I appreciated the skewering of Cramer.
I used to read Cramer a bit, and he was all over dumping Netflix about the time I invested in them. I think this was around $16/share, Cramer kept bashing the stock. There was some idea that Blockbuster was going to put them out of business. Well…does Cramer USE Netflix? Probably not. If he did, he’d know everyone loves it. And…everyone I know HATES blockbuster. The result was predictable – Netflix went over $40, I get a nice return on my investment, and Cramer, to his credit, ate a Netflix hat on his show. I think Blockbuster went bankrupt. I WISH I’d held onto Netflix, as it sits at $38 today, just $2 below its 52 week high. If only my other stocks had done so well during the downturn!
Two reasons.
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Because the banks will have to write down the value of the loan. If a bank has a asset (loan) that is worth 100000 dollars and the asset value is changed (by law) to bail out a potential home foreclosure then the banks capital base is adversely impacted.If the bank in question has been nationalized then thats is OK as the government will in real effect take the write down (of course I’m not going to delve in to the impact of what this will mean to budgets, fiscal policy or indeed sovereign ratings) but despite quazi nationalization (citi etc) this has not yet happened.
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Lets use the analogy of “Joe Sixpack”, and I’m simplifying hugely in this example but I’m sure you will make an allowance for the purposes of illustration.
Joe’s buddy Jim is going lose his home, but the new cram down policy gives the court the powers to allow him to reduce his payments and revalue the loan amount - after all it wasn’t Jim’s fault, it was those “pesky bankers” that forced him to borrow $800k to buy a new house even though he only earned $50K a year as a teacher - So Jim is bailed out of the hole “the pesky bankers” put him in. by the good grace of the courts and the special powers the government gave them.
Jim’s buddy Joe bought his home a few years earlier, at a price of $400000. He doesn’t need to foreclose as he can afford the payments. But human nature and behavior is a strange thing, Joe sees that Jim was able to carry on living in his $800k house and his monthly repayments are now the same as Joe’s. So Joe says to his bank - "either you reduce the loan amount / payments or I’ll send you the keys to the house (security on the loan). Joe thinks “I might aswell live in a big a$$ home like my buddy Jim and pay the same amount as I do in my current more modest environment”. So the bank agrees to Joe’s demand, the asset value is written down. The bank now has slightly less capital to extend loans to those that really need them (and can afford them).
Latest figures suggest that 1 in 10 homes are being foreclosed on (frightening) so lets multiply by half that amount for Joe’s behavior and we get a very very conservative idea of the “potential” unintended consequence of the “cram down” proposal.
Of course this is just my own thesis and I’ve made certain assumptions. You can point them out and I’ll agree to most - maybe there are a few that i’ve not thought of that blow my analogy right out the water.
Assumptions aside, I may be wrong, and Joe’s everywhere will just say " Jim needed to get bailed out, I don’t need or want that big house and I will just continue paying my loan back to my bank at the rate I agreed 2 years ago. Of course those extra taxes I’m paying to reign in that fiscal and budget deficit are hurting but It’s for the good of the country as a whole that guys like me keep doing the right thing".
Somehow I doubt it but I hope I’m wrong.
If you want to call Jim Cramer and the rest of the CNBC “talking heads” financial experts, be my guest. Your point about “experts” is well made and finance as an industry has done a miserable job.
Generally I try make my own decisions after input from people that I trust but at the end of the day I hold myself accountable. No one forced me to act in a certain way and certainly not some lunatic like Jim Cramer.
There were many people who predicted this, many who traded the fall out and a few who made any money. Sadly the implications of this crises will be felt for a long time. If you have protected yourself in this meltdown, well done. Dont let your guard down, it’s far from over.
That’s a decent reply.
But the math depends on 1) what percentage of homeowners who participate in the program would have foreclosed without the program, and 2) how much the write-down value is compared to what the write-down would be if the home foreclosed and the bank had to sell REO in a deflating market. The program has pretty good incentives for the bank. I’m not sure anyone knows what those numbers will be.
As for your #2, based on recent history, it seems very unlikely that banks will change the terms of a loan without being forced to, or given incentives to do so from the government. The government has been trying to get banks to do just that “on their own” for years now, which that didn’t work out so well.
And the potential positive is a stabilizing influence on both home prices and the valuation of bank assets.
Who knows. I don’t. I kind of suspect that the program won’t have much of an effect either way.
Santeli’s hypicricy for railing against home owner bailouts while being okie dokie with bailouts that make his stocks go up
I challenge you to find a clip or quote of Santelli praising any bailout. Santelli has not been hypocritical at all.
It is true that Santelli never praised any of the bailouts. However, he never referred to the Wall Street bankers as “losers” nor did he rant on national TV about the $700B TARP for the banks, as he did for the $75B for homeowners (which was announced at the time).
Yes, many of the homeowners should have known better than to sign for a mortgage they couldn’t afford, let alone understand. But the bankers, brokers and investors who pushed for more and more of these mortgages and then speculated and earned millions on their collective “value” should get called out too.
But, he is a Wall Street guy after all. He’s just doing his job and looking out for his own.
As I said I have made many assumptions. The maths is but one.
The basis of “cram down” is that banks will be forced by law (if passed) to revalue which by implication goes also goes down a route of questioning contractual obligation, again another discussion for another time. The banks did push back on it you’re right, but BOA broke ranks a few weeks back and agreed that it should be looked at - of course at the time they were looking for yet another slug of government money to improve their capital positions. They would have agreed to pretty much anything.
As I said, I don’t think it works until the the banks get totally nationalized, then you can force them to do what needs to be done without fear of bankruptcy but for some reason the administration doesn’t want to go down this route and wants to protect shareholder equity which has been all but wiped out anyway. The bad bank idea is the only other way they get out of this mess aside from just letting time do it’s thing.
The potential positive of stabilizing home prices is the exact point Im making. I don’t think it will work and will prove to be a policy mistake when they look back on it for the simple reason I gave in the crude Joe/Jim analogy - of course assets should find a clearing price eventually but Japan is still trying to find theirs and they weren’t nearly as geared as the West when their bubble popped. In the meanwhile you may just have provided a temporary pause in asset deflation while your budget gets blown to pieces, taxes go through the roof and your currency loses its value (not sure I could pick a better one than the $ or gold).
For all my negativity, at least the U.S is doing something, Europe is going to be in a world of trouble.
Anyway, gone waay off topic from the O/P.
I seem to remember Santelli calling Cramer out in a pretty heated way.
He might not have called the wall street guys “losers”, but he has been pretty scathing on his commentary. He wouldnt have ranted about the 700B Tarp money as its not so much a bank bailout as an economic one. Do you have any idea what would happen if they didnt put the banks on life support until they worked out what to do.
We already have good business going belly up because they cant access working capital. What do you think the landscape would have looked like without Tarp / Talf / bank bailouts etc?
PS. My name isn’t Rick Santelli
I seem to remember Santelli calling Cramer out in a pretty heated way.
He might not have called the wall street guys “losers”, but he has been pretty scathing on his commentary. He wouldnt have ranted about the 700B Tarp money as its not so much a bank bailout as an economic one. Do you have any idea what would happen if they didnt put the banks on life support until they worked out what to do.
We already have good business going belly up because they cant access working capital. What do you think the landscape would have looked like without Tarp / Talf / bank bailouts etc?
IOW, a bank bail out helps himself. A home owner bailout does not.
He’s no different than most Americans. Do you know what the difference is between a union democrat and a republican joe the plumber? One is selfish and works in the union. The other is selfish and does not work in a union.
IOW, a bank bail out helps himself. A home owner bailout does not.
Thats one way of looking at it or perhaps looking at it from another perspective - a bank (economic) bailout helps everyone but homeowner bailout only helps a few.
There are only gonna be so many “lifejackets”
Try not lose sight of the bigger picture 
At the end of this video, the guy mentions that Cramer is scheduled to appear on the Daily Show this Thursday. We’ll see if he shows…
I watched the clip in its entirety and don’t see how Santelli had anything handed to him…CNBC? yes, deservedly so. but, I must have blinked when he supposedly handed Santelli his ass - because all Stewart did was rip Santelli down by ripping his associates down. With that premise, should we then value Stewart’s opinion at the same level as his co-workers at Comedy Channel?
again, I’m willing to admit I missed something - but I fail to see how he handed Santelli his arse.
Update. This is a story from CNN on Cramer vs. Stewart.
http://www.cnn.com/video/#/video/business/2009/03/10/moos.stewart.rips.cnbc.cnn
I liked the clip but the Santelli thing really annoyed me. I have no problem skewing CNBC but Santelli’s stance has been badly misrepresented. A bit unfortunate considerring he’s one of the few people on CNBC speaking out about how immoral ALL the bailouts are and how they are a misuse of taxpayer’s money.
For those who don’t know, the clip was representative of what Santelli has said about ALL bailouts, not just the mortgage one. Santelli has *always *maintained that failing companies should be allowed to fail and that bailouts reward bad behaviour, punish good behaviour and will make the problems worse. He has consistently pushed his view that bailouts are a massive unnconscionable waste of taxpayers money.
It’s ironic that he got lumped in with all the other grinning morons that are normally ridculing him for this view.