(Update1): Bernanke Responds to Santelli’s Statement (bumped)by Tim Manni
By now nearly the whole country is familiar with Rick Santelli and his passionate broadcast last week from the floor of the Chicago stock exchange. During his testimony today in front of a Senate committee, Federal Reserve Chairman Ben Bernanke was asked to respond to Mr. Santelli.
Senator Evan Bayh asked for Mr. Bernanke’s reaction to Santelli’s claim that President Obama’s housing plan essentially rewards homeowners for bad behavior.
“I fully understand the sentiment,” said Mr. Bernanke. “A lot of this goes against American values of self reliance and responsibility.”
He further explained himself with this analogy: if your neighbor is smoking in bed and his house catches on fire, you can punish him by not calling the fire department. Yet, the fire spreads and destroys your property and other houses on the street as well.
Bernanke continued his defense of President Obama’s program saying it will function as a two-legged approach. While the U.S. must take action now to keep the problem from spreading, the government must commit to new reform and regulation to ensure this problem never happens again.
Click here to view the Chairman’s entire response.
There’s something “off” about Bernanke’s analogy. While we can understand his point, it doesn’t seem to fully encapsulate the problem accurately. Would this be a better analogy? Your neighbor’s house catches fire, and the fire company forces you to throw your own belongs over the fire to suffocate the flames.
If you’re not buying our analogy either, perhaps check out this one from SliderOnTheBlack.com (recommended by one of our readers Jay)
Do you buy Bernanke’s analogy?