Re: [Pen-l] Wall Street awaits the new RTC

["Jim Devine" <jdevine03@xxxxxxxxx>]

me:
>> why does the Federal government have to worry about the fiscal
>> deficit? it seems that a bigger deficit could be appropriate in a
>> severe recession.

Doug:
> Normally not, but since the GSEs' troubles raise questions about the
> creditworthiness of the USG, deficit spending to save the GSEs is a little
> problematic.

I don't get that. The USG's (U.S. government's) "creditworthiness"
problem would seem to arise from its _failure_ to completely bail out
the GSEs (government-sponsored enterprises). That is, it's supposed to
stand by Freddie & Fannie. It hasn't done so as much as many think it
should, undermining its credibility. But if it comes around and saves
the GSEs, Wall Street would say that "all is forgiven." Right?

I don't think people should worry about the creditworthiness of the US
government: after all, the government's debt to GDP level was much
much higher at the end of WW2.
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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