By MICHAEL GRAY
CNBC’s Rick Santelli’s rant on the mortgage-rescue plan had many insiders labeling it just a populist’s screed. His informal poll of floor traders, which could be the last bastion of capitalism –– gave voice to the first peels of insurrection.
Why bailout the neighbor who has lived on the cheap for the last eight years while you just got grief from your wife because you paid the mortgage on time and did not go on three family vacations a year, by taking advantage of cheap refinancing?
In fact later in the day and certainly the following day, Santelli had to back off his sentiment of winners and losers and bailing out the losers so everyone can win. That was the most curious aspect to the affair. Did President Obama hear him too loud and clear?
If you look at the socialist direction we are heading, why would anyone pay his or her mortgage on time? Why not create a record with your lender of financial problems in order to be eligible for the $100B to be thrown at problem mortgages?
Is it the sanctity of the contract you signed with the bank? As the government has shown Contract Law is in a fuzzy state right now. Many contracts have been broken by all entities from the CDS market participants and Wall Street firms to insurers and third-party and counter-party signers of hedge funds and mutual funds. The list is endless and some would say unenforceable due to the size of the problem.
The fact that the middle-class homeowner, who did the right thing throughout, must abide by his mortgage contract is absurd.
Why not take the monthly payment and place it in a 3-month CD to cover late fees and tell the lender I’m having a bit of trouble. Then make the next month payment and the extra payment once the CD matures. Now you have a record with the lender and will be eligible for a reduced rate or extended terms.
You will never get the principle reduced, because that would make the underlying paper even more toxic, which creates more write downs for the bank.
Washington is counting on you to want to keep up your credit score. WHY would you want a high credit score if no one is lending and we are moving to Socialism? Credit scores mean nothing if everyone is equal and eligible. It’s a ruse to have the middle-class prop up the status quo, which is broken beyond repair.
What if Santelli’s rant is the equivalent of the first shot at Lexington and Concord, Mass during the last labeled Revolution that took place on this soil?
I am not a black helicopter-type per se, but perhaps that’s why the feds are looking to set up disaster camps on US military bases and also have approved for the first time since the Civil War the right to deploy US troops (not just National Guardsmen) on American soil.
So Wall St. is telling the Obama administration that the troubled banking industry should be nationalized with Citigroup and Bank of America being the first candidates. If capitalism still existed these banks would be bankrupt and we could move on, but that is not to be.
The Treasury will prop up Citi and BofA, because secretary Tim Geithner cannot have a Lehman on his hand right now and no one can buy these crippled banks.
Both banks would flat line if they had to survive Geithner’s “stress test.” So now the plan is to re-inflate with treasuries to buy some time, but the market sees through it.
For more on Wall and Washington and the cratering economy see: http://mgray12.wordpress.com