Thanks to SK for forwarding this article from the Fool walking through the nuts and bolts of why the Bush “bail out” is so bad. If you have a few minutes and are interested in a quick summary of some of the implications of the current attempt at putting a band-aid on a compound fracture to save some face on wall street, I would take a look.
One note though: I think stopping the wave of ARMs is not a bad idea, I just don’t know why this can’t be done through private sector action. Why can’t the holders just re-negotiate terms with homeowners en-masse if necessary? I know there are challenges of collective action among other things, but if these financial institutions are sophisticated enough to tranche up and price a CDO^3, can’t they pick up the phone and talk to a homeowner who is about to be pushed off a cliff?