What the Bank and Insurance Bailouts Mean to All of Us

There's a lot that's been written on the bailouts of Fannie, Freddie, AIG, and even the recent change in status of

But I don't think anything really brings it down to the level I'd like to see, well, until I read the Wire:

Posted at 11:24 AM ET, 09/18/2008
Wall Street Crisis Impacts D.C. Bonds
Post business reporter Zachary A. Goldfarb notes today that interest rates on some District government bonds have doubled as a result of the tightening of the credit market on Wall Street. D.C. Treasurer Lasana Mack tells Goldfarb that the city has budgeted for some of the increase and that he's not concerned that the spike in rates will create a problem for the city to make the payments.

Bonds are often used for infrastucture updates.

Municipal bonds (also known as “munis”) are attractive to many investors because the interest income is exempt from federal income tax, and in many cases, state and local taxes as well. In addition, munis often represent investments in state and local government projects that have an impact on our daily lives, including schools, highways, hospitals, housing, sewer systems and other important public projects.

In Asthabula, the county is building a bridge over the Ashtabula Gorge (Smolen-Gulf bridge). The bridge is being constructed to resemble (and actually be) a covered bridge but using modern technology. Funding for the project comes by way of bonds. It's this funding that provides for the workers and the materials to build the bridge.

Without bonds, roads, schools and even bridges like Smolen-Gulf wouldn't exist. Increaing the interst rate on these bonds (the money paid by the municipalities) will put cash strapped local governments in even deeper trouble. And with that trouble will come fewer improvement projects. Fewer projects means an increase in outdated infrastructure and more issues like the collapse of the I 35W bridge in Minneapolis, as states and local governments try to stretch the life of our infrastructure. For the workers in these areas, it will mean less work available.

The collapse of our financial instututions has a dramatic effect on our lives, bonds, is really just one example.