Bush to “protect” homeowners?

Nah. Despite the President’s "concern" over people just trying to make their house payment in the face of adjusting mortgage rates (which they were told all along would happen), he’s really (in the short run) protecting someone else. From Financial Armageddon:

Even assuming that some troubled borrowers manage to hang on, the truth is that enabling more of the same kind of bad behavior that got people into trouble in the first place will only make matters worse.

The hair of the dog that bit them isn’t a cure. It merely delays the moment of reckoning.

In reality, guaranteeing loans for homeowners who can’t afford the payments, encouraging mortgage-holders to hang on until they’ve been bled dry, and giving false hope to those who would be better off cutting their losses really only benefits one group.

The lenders.

Exactly. The rates will keep adjusting, but a short term band-aid helps the President and his party in 2008. The bill, when it finally comes to the table, will be considerable. Devastatingly considerable.

Posted in Economy, Housing Bubble