deadwood

Fannie/Freddie Bailout 'Disastrous Fiasco'

Grace,
Can you comment on the likely affect on the dollar, mid to long term. It seems to me that the government felt it had to bailout the GSEs for two reasons. First there is the calming the financial markets/too big to fail argument. Then there are all the other central banks, mostly Asian, holding paper from the GSEs that they have been assuming was gov. backed. If we defaulted they would have been a lot less eager to continue buying bonds to finance our overconsuming/undersav... habits. If assuming responsibility for the GSEs weakens the dollar, won't the bond market at some point start demanding a higher return to make up for being repaid in a devaluing currency?