ALL BUSINESS: Don't count on ailing-dollar bailout

Federal Reserve Chairman Ben Bernanke and other officials have assured us that the government is on the case of the plunging dollar.

Talk is cheap--they won't likely do anything about it.

That's because the Bush administration since taking office nearly eight years ago has not supported any U.S.-led intervention in foreign-exchange markets despite the greenback's steep decline. That action would involve buying the ailing currency to boost its value.

"It would take a rare set of circumstances to get the U.S. right now to intervene," said David Gilmore, a managing partner in Foreign Exchange Analytics in Essex, Conn.

With that in mind, we have to look at what Bernanke told Congress on Wednesday with some skepticism. While noting that intervention is rarely done, he said that temporary action on currencies isn't out of the question.

"Market intervention is a policy that's been undertaken a few times ... but there may be conditions where markets are disorderly, where some temporary action might be justified," he said during a hearing before the House Financial Services Committee.

That kind of rhetoric has been the only tool that Bernanke and Treasury Secretary Henry Paulson have used to bolster the dollar in recent months. In early June, they also floated the idea that intervention was a possibility, giving the dollar a brief run higher.

Bernanke's words on Wednesday gave a little jolt to the battered greenback, which had slumped the day before to a new low against the euro. At one point on Tuesday, a euro bought $1.6038, the most since the inception of the 15-nation currency.

The dollar's decline that day was fed by intensified worries about the health of the U.S. economy and financial system after the government announced a rescue plan for mortgage giants Fannie Mae and Freddie Mac, not long after one of the country's biggest mortgage banks IndyMac Bank collapsed and was taken over by federal regulators on July 11.