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Five Questions for CNBC's Rick Santelli

It's time for the next installment of our Wildly Popular Five Questions segment. Last month, our victims were CNBC's Erin Burnett and the Motley Fool's Tim Hanson.

Today, we've teed up CNBC's Rick Santelli.


CNBC's Rick Santelli (Courtesy of NBC Universal)

Santelli, 52, is CNBC's automatic bull-poop detector. In his native Chicago accent, the former trader and financial executive is terrible, absolutely terrible, at hiding his contempt for a bad idea, whether it comes from a Fed chairman or one of his CNBC colleagues. Many of his ripostes begin, "Oh, come on...!" (Search "Rick Santelli" on YouTube and you'll see.)

Santelli frequently appears on CNBC as one of several talking heads in boxes, which he calls "our Brady Bunch boxes." He is usually perched in a lower corner of the TV screen and is filmed from above, shouting up from a trading pit at the Chicago Board of Trade. It gives his rants a classic plain-speaking-little-man-against-the-system feel.

Yesterday, after the markets closed, Santelli agreed to subject himself to our Five Questions. It was good timing: Earlier in the day, Treasury Secretary Hank Paulson had said that the federal government's bailout funds would not be used to buy toxic assets, which he had said in September was crucial to saving the economy.

Our Five Questions are condensed and edited from our interview with Santelli.

1. Today after Hank Paulson gave his press conference, you held up two hand-lettered signs on CNBC: "BAIT" and "SWITCH." What did that mean?

Santelli: I'm not convinced this [bailout] was not orchestrated to save the banking industry. I'm not saying that's not important and essential, but if Mr. Paulson and Mr. Bernanke went on the air and said, "We need three-quarters of a trillion dollars to bail out the banks," I don't think it would have passed.

2. You were a long-time trader and executive. Why did you decide to come over to the dark side of journalism?

Santelli: I started trading around 1979, fresh out of college. In the early '90s, I started guesting for major news media. At that point in time, [TV] was finally allowed to have a live floor presence in the exchanges; before, cameras had to be "out of turnstyle," or off the floor. I had a friend who ran media for the Chicago Board of Trade and she asked if I would help her out.

I found it very invigorating; it hit a chord with me. I liked trying to open up this fascinating insider world to the public and thought I could make a positive difference.

It was right around that time that I started to see the industry was changing in a way that was not beneficial to me and my family -- the amount of risk and effort had gone up and the reward had slipped a bit.

Around 1999, CNBC offered me a full-time post and I'm the happiest I've ever been.

3. Stocks get all the attention. Should investors should pay just as much, or maybe more, attention to bonds (otherwise known as the credit markets)?

Santelli: In normal times, investors should pay more attention to the credit markets because it's the energy by which everything is driven. It's the oil in the engine. But now with the credit issues of the day, you absolutely have to be focused at the epicenter of the credit market or you're not going to know when the "all clear" signal hits.

4. What should people do with their money in this volatile market?

Santelli: I would tell them what I have told my parents to do: Go into T-bills and even though the yields are very low, you don't want to be in anything risky. This gelled significantly in my brain right before Bear Stearns cemented it: When I saw the cascade effect was going to occur and it couldn't be stopped, it didn't make any sense for me to tell my parents to hang in there.

Hanging in there is, to me, real denial, because if the issues of the day are so large that the best and brightest were going to sink in quicksand, what chance does the average guy have?

Go into safe government paper, don't look to make a yield that’s very good. Just try to protect your principal. When times change, make subtle adjustments.

I don't believe anyone should ignore all the fires around you and stand pat and not worry about getting singed. People with 401(k)s need to be very conservative. Picking bottoms should be for insiders and traders.

5. True or false: It’s only because you’re in Chicago and he’s in New Jersey that you don’t punch [your frequently annoying colleague] Dennis Kneale in the nose. Because sometimes, it sure looks like you want to.

Santelli (laughs): False!

Do I agree with a lot of the things Dennis says? I would say "no." But what Dennis does is kind of bring to the table a bit of the devil's advocate perspective, from the sense of what an average, non-inside person would think -- their questions and the anxieties they feel.

5a. Speaking of which, how do you and Jim Cramer get along these days? (A popular YouTube video shows Santelli calling Cramer on a flip-flop.)

Santelli (laughs again): I've been doing this for 10 years and most people who bump into me, the first thing they bring up is the YouTube coverage of about 40 seconds of my life with Mr. Cramer.

My feelings about Jim are that he's been there, he's don't that, he's been hugely successful and he's highly intelligent. My beef is that anybody alive on this planet has been wrong along the way. One thing that served me well with clients was that you back your winners and you back your losers. I was in a mood on that particular morning.

-- Frank Ahrens

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By Frank Ahrens  |  November 13, 2008; 12:31 PM ET
Categories:  The Ticker  
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