12/27/2008 05:12 am ET Updated May 25, 2011

New Bailout Actually Working!

The latest government bailout, the $800 billion trash-asset-removal-plan announced yesterday, is actually making a difference, at least so far.

One of the goals of the plan is to reduce mortgage rates through government buying of mortgage-backed securities and Fannie and Freddie debt. And it worked immediately. Yesterday saw the biggest mortgage refinancing activity in a year.

If this trend continues, it will allow some homeowners to get out from under onerous adjustable rate mortgages and into cheaper fixed-rate ones--possibly even ones they can afford (at least until they get laid off). This, in turn, will free up some debt-service payments to be used on other things.

The bailout won't solve the whole problem, unfortunately: consumers are still struggling under a massive debt load, and those who are already underwater on their houses won't be able to refinance. But it's a small step in the right direction.

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