The SubPrime Bail Out of Aught 7

Recently the federal government of the USA got with the banks and decided to extend the subprime mortgages for thousands of Americans. Great right? Not so fast my friends. This really a terrible case of negative reinforcement in my mind, but do to the mass amount of people involved the federal gov't had no choice but to step in. Right? Well this is a bit tricky, but due to some of the federal programs, Freddie Mac and Fannie Mae and the like, and the depressed interest rate that the federal gov't has held for the past 7 years it kind of draws marginal people into the housing market. These people wouldn't normally be in the position to buy a house but because of the incredibly good market people just have to get in. Then they go for the best deal at the time, which is of course the adjustable rate mortgage, but when you think about a 30 years and considering that mortgages were in the high teens as a percentage little more than 20 years ago, it really shouldn't be that big of a deal whether you have an adjustable rate of 4% or a fixed rate of 5%. Since both of them are so much better you should bet on the fixed rate being better in the long run, but some people don't see it that way and end up having the gov't bail them out. Sweet for them, but what about the people that got the fixed rate and paid all of the bills on time. Oh, I know, they get nothing! In Japan, they take on no credit and will spend money only on things they know they can afford. Pretty novel idea, "if you can't pay for it, don't buy it". That was one of the pieces of advice from one of my teachers in school and it really is good advice. He kind of took it to an extreme that if he couldn't pay cash he didn't buy it, but I look at it as long as you can pay it off before it accumulates any interest you are still ahead of the game. Back to the subprime bail out though, the program is completely voluntary for one, so you have to know if you are eligible or not, 2) you can't be behind at all on your payments, which knocks out about 22% of adjustable rate housing owners, and the gov't isn't offering any money it just extends the low entry rate. I don't really know how many people will actually benefit from this, and it probably won't change the number of foreclosures significantly, but it just upsets me that people can do everything wrong, buy a house out of their price range, get a finance rate lower than they deserve and then fall bass ackward into a loan guarantee from the gov't. There really is something wrong with this picture, but I am going to teach my kids to take care of themselves when it comes to money, don't overextend for things you really can't afford (champagne taste on a beer budget), pay your credit cards off every month, and buy big stuff when it is same as cash (18 months if you can). I'll put a list together for ways to be good at money and stuff, and number one on the list will be to have good friends click on the old ads to help out the retirement plan. Thanks.