Further explanation of how the sub-prime mortgage bailout is bad for the economy.

Have we completely lost our common sense? Is it really desirable to provide easier money to people and companies that got into trouble by abusing their access to money in the first place? And is it really a good idea both to cancel mortgage bondholders' contracts for the sake of an adjustable-mortgage-rate freeze and to provide a couple of years of grace for stressed-out home borrowers who are likely to eventually default anyway? ...

What has to irk you is the disparity between who wins when things are going well and who loses when things go sour.

When banks make a lot of money, after all, they suck down the profits by giving their executives and boards outrageous pay packages worth tens of millions of dollars, justifying their actions under the rubric of entrepreneurship. And when the opposite happens? They beg taxpayers for a handout. ...

Though the rate freeze would be awesome to a mortgage holder in Muncie, Ind., who wants to get out of his adjustable-rate obligation, it sounds terrible to a pension-fund manager in Munich who isn't getting the income stream he paid for, as well as to the mortgage-servicing company that won't be getting its own piece of the future income stream.

The breaking of these obligations will not be free. Foreign investors will demand a higher "risk premium" to invest in U.S. real estate, which will make it more expensive for future mortgage seekers to get loans. And they are bound to sue to get the payments they thought they were owed, which will drive up mortgage banks' expenses.

And so forth. This sort of meddling is a bad idea all around, despite having the appearance of wisdom on the surface.

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