Rick Santelli and the bond market sure is:
I heard this rant live on satellite radio in the car this morning. Kudos to Karl Denninger for finding this on You Tube. Folks, I couldn't have said it any better than Rick Santelli did. Obama's speech was a huge disappointment. We are essentially attempting to socialize the losses in the banking system at the expense of the taxpayer.
This is crazy!
Why on earth should anyone that lived within their means be forced to pay for someone who took on excessive risk and failed? Does Obama really think he is going to get away with this? I think the financial system will collapse if he tries to force the good money to eat the losses.
Dropping the cost of housing down to to 31% of a home owner's income is what needs to be done and makes a lot of sense. HOWEVER, the way in which you get there makes all the difference in the world as to whether or not you succeed in selling it to the American public.
Here are the three options that allow us to get to this magic number of 31%:
1. Do nothing and allow housing to revert to the mean.
Americans would be willing to tolerate the pain of this option even if the economy moderately blew up in the process. We have survived the crashing of every other bubble in our history, and we would survive this one as well.
2. Destroy all of the fraudsters who created this mess and use their riches to absorb the losses. Taxpayer dollars would only be used to secondarilyclean up whats left.
We would buy this as long as the people who created this mess were wiped out as a result.
3. Socialized taxdollar bailout.
Sigh. Sadly this looks to be the way we are headed. This option gets a big fat F in my grade book. The problem with Obama's plan is it forces the good money to bailout the bad money. I don't see this working because we won't buy it!
IMO, this is not an option from this country's point of view because its socially/morally unacceptable to the average American.
This country was built on capitalism. The American economic philosophy has always been simple: If you take some risk and fail, you accept your losses and move on. If you succeed after taking risk, you get to enjoy the fruits of your labor and live the good life. Its worked this way since day one here folks. Hundreds of millions of foreigners have moved here from around the world for one reason: They want a shot at the American dream.
The problem that we have here today folks is EVERYONE NOW EXPECTS to live the American dream. They no longer feel that they need to earn it. They are entitled to it dammit! What they are about to learn is this isn't how it works. There is no "free lunch" in this world. Cheap money fueled by a 25 year credit bubble created the illusion that there was such a thing. Post crash, the world is realizing this was nothing but a mirage.
I think that the good hard working Americans have had enough of this idiotic self absorbed mentality. The taxpayers are furious and ready to put a stop to this insanity. If Obama continues to head down the "socialism path" I think we are in deep trouble.
I mean think about it:
If we fail as a nation to recognize the difference between good and evil then why should anyone one be good? Why continue to pay on your mortgage if your neighbor doesn't have to anymore because he can't afford it? Why should you pay taxes when you know all of the money is going to be used to bailout a bunch of greedy bankers and speculators?
I think the taxpayer will eventually just say "screw it" and pack it in. They will pick up their toys and go home. They will walk away from there mortgages. They may even decide to take their money out of the bank. I must say: Can you blame them?
I believe this country will fail as a society if we attempt to socialize our losses. If there is no right from wrong than why play by the rules? This is the exact message that our government will be sending us. I suspect that social chaos is right around the corner if this all goes down.
Things are spiralling out of control folks. You ain't seen nothing yet if you think its bad now. We are headed in the wrong direction and our economic and social problems are growing by the minute.
I haven't done much this week because I haven't been home. I am hedged short. I own some SDS(S&P short) calls that are hedged with some SPY calls. I see no reason to be bullish. The banks are teetering on destruction. Confidence is rapidly dwindling and the news continues to get worse.
The direction should be south from here until we retest the 741 lows. There is a good chance that we blow right through it and head off onto the abyss.
Be careful trading. Raising cash should be your main focus. You are going to need it.