In today’s WSJ, Alan Reynolds analyzes the Bush administration’s mortgage bailout plan and finds it badly flawed. His piece is here.

Among other things, Reynolds is irked that this is being called a “free-market” plan. Humbug! “It is the antithesis of a free market for the government to fix prices, pressure mortgage service companies into renegotiting contracts, and thereby expropriate property rights of those stuck holding mortgage-backed securities,” he writes.

This is another of those frequent instances where political meddling has led to trouble and the proposed solution (more meddling, of course) will only lead to deeper trouble in the future. Here is Reynolds’ conclusion:

Another president, Richard Nixon, gained ephemeral popularity
by freezing wages and prices on Aug. 15, 1971, but the end result
was disastrous for the economy. The Bush administration may hope
now for some political benefit from freezing interest rates for a
select subgroup of high-risk borrowers. But whenever politicians
attempt to protect borrowers and lenders from their folly, they just
encourage more folly.