“When you act like Europe, you get growth rates like Europe,” Santelli said. “Our discussions with economists sound like we’re in Europe. They’re always doing the right thing. They’re always thinking they know better, and this the kind of growth.”
“We have become Europe,” Santelli declared. “We are now Europe.”
The stock market, already falling before Obama spoke, saw selling accelerate as Obama made it clear he had no new ideas to offer. And he certainly gave no hint that he’s ready to adopt Republican ideas such as cutting business taxes or slashing regulation. Instead of a pivot, Obama stayed firmly planted in the anti-growth policies of the past two-and-a-half years. He’s even keeping Tim Geithner as Treasury secretary, practically begging the poor guy to stay. (Indeed, it was almost exactly a year ago that Geithner penned his “Welcome to the Recovery” op-ed.)
This may have been Santelli’s most important economic point: “You know, they’re pretty much of the notion that you can’t buy your way into prosperity, and if the multiplier that all of these Washington economists are selling us is over… that we never have to worry about the economy again. The government should spend a trillion dollars an hour because we’ll get 1.5 trillion back.” Of course, all this government spending doesn’t create prosperity. It merely transfers/steals prosperity from the future and brings it to the present to cushion the current downturn. Remember, here is what the Congressional Budget Office had to say about the stimulus spendathon:
In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy. … Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.
This is a ruinous “one leg of a multi-legged stool” as the CNN reporter called it.
Again, no matter what’s done now, if the Community Reinvestment Act stays in the books, we’re still in for more of the same.
Property ownership is a foundational principle of America. John Adams called property “as surely a right as liberty.” The recently passed stimulus bill, I believe, throws the concept of this right out of balance–to own property means being able to afford property. For example, we have the right to bear arms…does that mean the government should buy us all handguns? And what if it bought certain people guns, but not others? Moreover, what if it taxed you more to pay for that other person’s new-found property?
Cicero faced a similar scenario in Ancient Rome of politicians destroying the equilibrium, and therefore, the justice, of property ownership. Here are a few things he had to say about it:
“When politicians, enthusiastic to pose as the people’s friends, bring forward bills providing for the distribution of property, they intend that the existing owners shall be driven from their homes. Or they propose to excuse borrowers from paying back their debts.
“Men with those views undermine the very foundations on which our commonwealth depends. In the first place, they are shattering the harmony between one element in the State and another, a relationship which cannot possibly survive if debtors are excused from paying their creditor back the sums of money he is entitled to. Furthermore, all politicians who harbour such intentions are aiming a fatal blow at the whole principle of justice; for once rights of property are infringed, this principle is totally undermined.”
But how do we keep this from happening when families are losing their homes and their jobs?
It’s a shame we didn’t listen to Cicero 30 years ago:
“The real answer to the problem is that we must make absolutely certain that private debts do not ever reach proportions which will constitute a national peril. There are various ways of ensuring this. But just to take the money away from the rich creditors and give the debtors something that does not belong to them is no solution at all. For the firmest possible guarantee of a country’s security is sound credit…
So the men in charge of our national interests will do well to steer clear of the kind of liberality which involves robbing one man to give to another.”
It is important to note that Cicero was a wholehearted advocate of generosity; moreover, generosity to the genuinely poor, not those to whom the giver will gain popularity and status by donating. However, he also believed the state is not a charity, and especially so if it is “distributing property” forcibly.
That’s what Cicero was saying nearly 2,100 years ago.
This is very simple. White House press secretary Robert Gibbs went out of his way today to blast CNBC’s Rick Santelli for his “rant” yesterday against Obama’s mortgage assistance plan. The early press reaction asks why the White House would give Santelli free publicity and elevate him to Official status? Easy: they’d rather the opposition be identified with Santelli and stock brokers than with, say, a Joe the Plumber type (but who actually is a plumber and who has serious real reservations about the mortgage plan). Let opponents of the plan get into a tizzy, and let them have Santelli — whose regular guy creds have to be established — as their spoxman. Because, as it stands, ordinary folks don’t much trust Wall Street these days….
“I’m not entirely sure where Mr. Santelli lives or in what house he lives,” said White House press secretary Robert Gibbs during a press briefing. “But the American people are struggling every day to meet their mortgage, stay in their job, pay their bills, to send their kids to school, and to hope that they don’t get sick or that somebody they care for gets sick and sends them into bankruptcy. I think we left a few months ago the — 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.”
“Mr Santelli doesn’t know what he’s. talking about.”
Santelli, who has been a member of both the Chicago Mercantile Exchange and the Chicago Board of Trade, lashed out at the Obama administration yesterday for “promoting bad behavior.”
“We certainly don’t want to put stimulus forth and give people a whopping $8 or $10 in their check and think they ought to save it,” effused Santelli on CNBC from the floor of the Exchange. “And in terms of modifications, I tell you what, I have an idea. The new administration is big on computers and technology – how about this, President and new administration? Why don’t you put up a Web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages, or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road and reward people that could carry the water instead of drink the water.”
There were some cheers from those surrounding Santelli on the floor.
“This is America. How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise their hand.”
There were boos.
“President Obama are you listening?” Santelli asked.
The administration completely emphasizes fear and crisis: