Bush is expected to outline on Thursday a plan to freeze mortgage rates for five years (Question ins

What are the pros and cons of this if it were to come into play?

Article:

http://www.reuters.com/article/politicsN...

Bush is expected to outline on Thursday a plan to freeze mortgage rates for five years (Question inside)?

How you view the pros and cons of this depends on how you see the role of government in business matters.

If you%26#039;re a free-market type, then you want to let nature take its course, and stave off a recession through Federal Reserve Policy (Prime Rates, mainly).

If, on the other hand, you%26#039;re pragmatic, you want to see disaster averted for lenders who acted stupidly in giving loans to unqualified borrowers -- and the borrowers who were stupid enough to undertake those loans. And you want to avert a business slowdown or a recession.

So PROS:

Will help stabilize the economy

Will rescue many homeowners and some mortgage companies.

Will prevent the next president from inheriting a big problem

CONS:

Sets a precedent of government rescuing stupid and/or greedy people

Sets up expectations for the next failing industry to ask for a bailout

Doesn%26#039;t let people learn that behavior has consequences

Rewards speculators who will succeed when they would have failed without Govt. help.