While some, such as homeowners facing foreclosure, members of the financial sector and those who have invested in real estate exchange traded funds (ETFs), may be greeting President Bush’s interest rate freeze with cheers and sighs of relief, others wonder if the government is just sticking its nose where it doesn’t belong. Paul B. Farrell at MarketWatch says that, after all, they’re the same people who got us into this mess in the first place. What makes them think they can get us right back out?

Farrell cites a host of reasons why he believes the bailout moves are more or less just for show and that any optimism is premature, including:

  1. It’s a move that panders to Middle America’s fears, and free market politicians know it won’t work.
  2. The dollar is going to sink lower, and arbitrarily changing mortgage terms destroys the credibility of American private debt.
  3. Millions of responsible homeowners are being undermined and will be indirectly penalized by the freeze.
  4. We’re in denial about our own economy and unable to see or deal with the big issues until it’s too late.
  5. There are too many unknowns in these kinds of situations, and they can trigger some big consequences no one anticipated.

I’ll be appearing on CNBC’s "ETF Tracker" this afternoon to discuss the rate freeze and what it could mean for ETFs and the economy in the long run. Has the government’s move primed us for disaster, or will it give us the boost the economy has been waiting for?

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.