Interesting discussion setting up on this blog --
a) Forget a bailout -- these people, and financial institutions, got themselves in trouble because of their own greed, so don't bail them out, let the free markets work it out, and
b) This mortgage mess threatens our entire financial system and economy, so the government MUST do something!
I must say . . .
I can see both sides of this!
I've often said that the only thing worse than having a huge financial problem, is the government deciding IT has the solution! (I said that back in the S&L crisis in the early 90s.) Yes, the free markets would bring housing prices down to the levels they "should" be -- dictated by the market. And people who lose all their equity would simple be foreclosed, have to find rentals (now that their credit is ruined) which would push rental prices up. And those who saved and planned, could buy homes at "bargain" prices.
And peoplewho are scrimping and paying and making the effort to pay their mortgages on time will be justly rewarded, as eventually home prices will rebound. Why reward people who overpaid, over committed, and now must pay the consequences?
On the other hand . . . this is truly ruining neighborhoods (banks don't mow the lawn or shovel show on repossessed houses). And now the financial system itself is taking a hit (see Bear Stearns).
So what's the right thing to do -- bailout or not? And if so, should we "bail out" the homeowners through some kind of revision of their mortgage documents to lower the principal amount owed and the rate? Or is it more important to "bail out" the financial system -- ie the Fed's $200 B "liquidity pool"?
And can we "afford" any bailout? And can we afford NOT to do a "bailoout"?
Please keep talking!!! T$
Terry Savage writes a syndicated personal finance column for the 
No bailout what so ever! These greedy housing speculators made their bed now sleep in it.
SAVAGE SAYS: Unfortunately, the greediest of all -- the mortgage brokers -- took their fees and are long gone.