Another Week, Another Government Bail-Out Plan

It seems like very two weeks the Government is coming out with some type of bail-out plan for the American consumer. Last week, it was the stimulus plan announced by the Government. Weeks before, it was Project Hope. Today, it is Project Lifeline.

Here is what all of these plans have in common:

1) They are nothing more than sketchy announcements where the details are to be worked out into the future. Unfortunately, that never seems to happen.
2) They are never as advertised. For instance, the Government announced that they will make it easier for people with Jumbo Loans to get refinanced. Unfortunately, if you look at the fine print, very few will benefit.
3) They are nothing more than political sound bites. Hillary Clinton announced today that President Bush is finally doing what she said to do all along. With all due respect, Senator Clinton, I wouldn’t put my name behind the so-called solution that President Bush is suggesting.
4) They are all band-aid approaches that only time will fix. These plans just prolong the pain.

So what is the solution? I think that the Government needs to get out of the way and let this credit crunch fix itself. That could have some consequences. However, those consequences will not go away. We either face them today or face them tomorrow.

Congress needs to write strong mortgage rules and regulations that will prevent fraud from occurring again. Unfortunately, the way they would like to enforce the mortgage industry is a real soft approach. They need to get tough with that industry.

The train has left the station and the problems are very real. Unfortunately, all of the political sound bites in the world are not going to correct this problem (that the Government allowed to happen in the first place).

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.