Economics The Opinionsphere

The Battle of the Elites

Matt Yglesias has an interesting observation regarding Jon Stewart’s takedown of CNBC:

Comedy Central vs CNBC nicely captures the cultural battle inside the American elite between “creative class” types and the business manager types. Both sides think the other side is composed of idiots, but their side is mistaken.

Barack Obama Economics Financial Crisis Politics

The Hypocrisy of the Traders’ Revolt


[Click image for larger version.]

Matt Drudge seems to be cheering the call for a ‘Tea Party’ and other civil disobedience in opposition to Obama’s proposed mortgage plan.

ABCNews describes the plan as “help [for] up to 9 million homeowners facing foreclosure or struggling to make their mortgage payments.”

The plan seeks to help two groups of people as described by ABCNews:

  • First, some 4 million to 5 million families who have seen their home values drop, but are not at risk of foreclosure, would now be able to refinance into new mortgages.
  • The other group, 3 million to 4 million homeowners with adjustable-rate mortgages, would be able to temporarily have their loans modified to a lower interest rate – for at least five years.

In order to accomplish this, Obama is proposing that $100 billion be given to Fannie Mae and Freddie Mac to allow these groups to refinance the loans for those whose home values have dropped below what they owe.

For the second group, Obama is propsing that $75 billion be used to help those with predatory loans temporarily modified to a lower rate. That’s a total of $175 billion. The plan doesn’t yet have a complete budget, but these are the basics and the largest elements.

The response being promoted by Drudge and CNBC:

The government is promoting bad behavior… do we really want to subsidize the losers’ mortgagesThis is America! How many of you people want to pay for your neighbor’s mortgage? President Obama are you listening? How about we all stop paying our mortgage! It’s a moral hazard…

My emphases above. Am I the only one who finds it incredible that CNBC and financial traders are talking about civil disobedience and moral hazard and “losers” as soon as Obama proposes a $175 billion plan to directly help about 9 million Americans? Yet these same people assured us that bailing out the banks to the tune of $700 billion was necessary for financial stability – and that plan directly helped how many?

What the fuck is wrong with these people?

Edit: Apparently, the trader explained that “The trading floor is a pretty good cross section of America” as part of his justification. And of course, it’s better to help this “pretty good cross section” of rich America than to help an actual cross section of the population.

Edit again: A commenter over at reddit says that the particular CNBC host in the clip has actually been calling on mobs to go after any CEOs who take the TARP bailout money too. That removes the charge of hypocrisy from him, although not from those others who supported the bailout out to Wall Street but complain about any funds being used to fix the mortgage situation. And it still leaves the CNBC anchor, Dylan Ratigan, open to charges of pure stupidity.


Quote of the Day

The [companies] that are too big to fail may be too big to manage.

Warren Buffett in an interview with Becky Quick on CNBC, commenting on Freddie Mac, Fannie Mae, Bear Stearns, and other large financial institutions.