CNBC - Broadcast or Bloviation

Ryan Avent makes a great point about some folks in the financial industry, namely Rick Santelli. Broadly, I agree with the point, but would go further.

Santelli's reporting throughout the crisis has been a plethora of mistake prone, myopic analysis. So, first we should avoid get angry for any reason, other than the fact that it is gross negligence to let someone go on the air and spread this erroneous crap.

Here is the big issue though. People like Santelli cannot see more than three feet in front of themselves. If he could see six or ten feet in front of himself, he would find a much different picture. The Obama housing plan, is a plan to help mitigate systemic risk, and to get mortgage markets in some type of working condition (or at least to stop the free fall).

Many people refer to the Great Depression with respect to this crisis, but I think Japan in the 1990's is almost a perfect analogy. For many if not most the lost decade was a bad time for Japanese citizens, Japanese standing in the World, and Japanese standards of living. With some exceptions this is true pretty much across the board.

What Santelli and friends do not realize is that if this crisis is not dealt with by use of overwhelming force (a sort of Powell Doctrine for economic crisises), then there could be long periods of extended stag-deflation that Nouriel Roubini talks about . Now, from high a top the financial towers of Chicago this may not seem obvious, but each and every day the banking situation and credit markets are not dealt with chance of such catastrophe grows.

One area that many commentators, including Santelli to some extent, are correct is in the area of of certainty and stability. After the "Stress Test" Geitner and Co. (FED, FDIC, C of C, etc) need to sweep in recapitalize boarder line banks, put the 4 or 5 insolvent banks into receivership, make a statement that this action is final barring some large unforseen event, and a strong statement of confidence in the FED's TALF program.

So, next time you watch the bloviators on TV (most of the right but undoubtly on the left as well), take a step back and realize that their conversations usually involve extaneous poltical and philosophical debates - not serious policy debates.

So where should policy wonks get serious analysis you say? Here and Here, for my money.