It seems I’ve touched a nerve.
The comments queue for my musing yesterday titled “Why I’ll Sit Out the Chicago Tea Party” was filled with people heaping invective on me because I said CNBC’s Rick Santelli failed to take a vigorous stand against bank bailouts, even as he gained fame for opposing homeowner bailouts.
Au contraire, I was reprimanded. “You’re just plain wrong,” said one of the gentler comments. “You might want to check on Rick Santelli a bit more carefully,” said another.
And so I have. I’ve double-checked my homework. I have searched long and hard for the sort of full-throated condemnation of the $9.7 trillion of bailouts, guarantees, backstops, etc. for irresponsible financiers that Santelli gave of the $275 billion bailout for irresponsible homeowners.
And I’m just not finding it. A lot of his defenders in the online universe (and one of the commenters) point to this video from late September, in the thick of the debate over the first bailout bill.
Yes, Santelli acknowledges the big banks are insolvent, which is more than a lot of pundits were willing to acknowledge at the time. But right there at 6:17, he says, “I do agree, something needs to be done,” i.e. government needs to do something to intervene. He was merely offended by the pressure Hank Paulson was exerting on Congress to pass a taxpayer shakedown quickly without deliberating the precise terms of said shakedown.
I’ll repeat what I said Monday: “Where are the YouTubes of him calling for a taxpayer revolt when the banks were getting bailed out?”
Defenders of Santelli would then no doubt point to the interview he did with Kudlow yesterday, in which he said “I think the government should stay out” of the banking system. But then he says, “There should be some type of special bankruptcy organization that the government set up so if the banks go down, they do their best to organize it – make it so that it’s not going to make the system collapse, guarantee, get the FDIC.”
OK, I don’t know how I can make this any clearer: The mere existence of deposit insurance and the FDIC is the antithesis of the free market. For a guy who likes to talk about moral hazard, Santelli seems oblivious to the suggestion that if Big Daddy Government will step in to make depositors whole, it only encourages the banks to take risks with depositors’ money they otherwise wouldn’t take.
Yes, Santelli recognized the emperor had no clothes. Bully for him. But rather than overthrow the emperor, he wants to stitch new garments.
It’s painful to watch so many smart people adopt this partisan hack as the new patron saint of laissez-faire.
If Rick Santelli wants a real Tea Party worthy of the memory of Samuel Adams, he should demand an end to fiat currency and the Federal Reserve. As it is, he can’t even bring himself to say the free market should be allowed to do its work with the banks so as to flush the rot from the system and start fresh. And this is the guy who’s going to lead a popular revolt against the powers-that-be? Give me a break.
February 26, 2009
