Thursday, July 24, 2008

Seriously, get your moeny to a safe bank or to your backyard

Rising costs of financial turmoil - Yahoo! News: "'To say we could just walk away from Fannie Mae or Freddie Mac without having some severe consequences is really questionable,' says Tim Duy, an economist at the University of Oregon in Eugene. 'The government does have to make that balancing act.'

That balancing act, however, is becoming a fiscal tightrope.

And to the degree that a credit-crunched economy weakens the federal ledger – either through lost tax revenue or direct bank bailouts – one result could be a higher cost of borrowing for the government – a burden that would fall on all taxpayers.

'The credibility of the sovereign is now at risk,' Mr. Morici says. 'It is no accident that we're starting to see articles about the credit rating of the United States.'"

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