Right On Time. Government Sponsored Bailouts

Here we go. Per the Wall Street Journal, the U.S. government is attempting to broker a deal with financial institutions to stop mortgage resets. One hundred years ago, this wouldn't have likely happened. But, New Deal politics have changed the perspective of government's role as society's financial safety net. I'm not making judgement but just stating the facts that the role of government has changed to well beyond what the founders of this country had envisioned. In my opinion, some social programs are quite worthy. Earlier this year we mentioned this very situation likely coming to pass. But, as I wrote then, there is no free lunch. Any such plans, are going to have an impact. And, as was easily anticipated, the impact was likely to be in finance industry earnings. Good for homeowners but bad for financial stocks. Personally, I believe some attempts to help defaulting homeowners are worthwhile although many would disagree under the premise that bailouts of any type are bad for the economy. I don't disagree with that point. But there is also an issue of compassion for those so close to the economic edge in times of crisis. Maybe finance industry executives should cut their personal earnings to help fund any such program since they caused this mess. haha. Like that would ever happen.

In any event, this doesn't remotely affect any economic outcomes.