George W. Bush today announced his plan to "bail out" homeowners in danger of losing their homes when their low teaser rates increase, as some 2 million are set to do in 2008.

The plan will have the government in cahoots with non-profit groups, but also various lenders and big banks, including Citigroup (NYSE: C) and Countrywide Financial (NYSE: CFC), both of which are in dire straits due to the subprime debacle. The idea is to "freeze" low-interest rates for certain homeowners to prevent them from going into foreclosure.

I thought the Republican party was about small government and fiscal conservatism. My bad.

Never mind the bureaucratic nightmare of administering this "plan." My question is this: Why bail out people who got mortgages they knew they wouldn't be able to afford when the rates reset? Is the argument that these people didn't *know* their rates would reset in a few years? Is it that they thought the speculative party would go on indefinitely, allowing them to refinance in a few years?

It didn't work out that way. The party was bound to end, and it has. The entire housing market has to correct itself (and the credit market too). People will lose their homes, which they couldn't apparently afford in the first place. And the credit crunch brought on by this orgy of speculation and easy credit will result in a recession of undetermined depth. It's in the cards. That's the way the grown-up world works. The government needs to stand back and let the marketplace correct itself.

Anyone else out there think this government-led bail-out is outrageous?