mortgage mess rolls on- an ounce of prevention would have been better

George W. Bush jumped into the mortgage meltdown today, publicly promising to help out anguished borrowers who face foreclosure. Surprise, he even went so far as to assert that some of these adjustable rate loans were bad and should not have been offered.  This is oddly not a very laissez-faire attitude from a guy who sings the praises of the invisible hand of the marketplace.

The problem that you run into with this sort of thing is that the government can be left holding the bag from the actions of fraudulent and irresponsible financial gnomes. And when that happens, we all pay for it. But the problem with butting out after the cows have all trotted through the barn door is a similar problem. If George were to play it cool and simply say, "not my problem people you dug the hole so please jump in"- that could have similarly bad consequences. The financial markets do not like uncertainty, and the entire mortgage industry and hundreds of thousands of homeowners are now uncertain.  George does not wish to have the economy go sour, likely dooming the 2008 Republican Presidential contenders. So, he mumbles about keeping it "limited", but jumps right in.

Do we remember the hedge fund flameouts of a few years back, the Savings and Loan debacle of the 1980s? This is becoming a pattern. Investors jump into risky areas, creating new instruments with unknowable results until they fall apart, then come running to momma- or should I say, to Uncle- Uncle Sam, that is.

Look at this whole thing objectively, and you may conclude that it would have been better if adjustable mortgages had never been invented. I submit that the meltdown was not a vague, remote possiblity to cause mild problems. No, it was a ticking time bomb that was inevitably going to cause a major disaster and bring out widespread shrieks of "Save me!" It is notable that George and his laissez faire buddies never had a problem with this financial instrument up to this point. Nope, we live in a dog eat dog world that leads to survival of the fittest, they blandly asserted. Until somebody ate their dog.