I think google will not be allowed to buy Y!. but I'm sure there are a lot of powerful investment funds that are interested to buy Y!
I don't think that Google can afford Yahoo. Although I prefer Google over Yahoo, I must admit that Yahoo is a giant.
but in my opinion the two should compete each other because competition in market is always better for end user than monopoly of one giant!
Here is a link of the story http://www.ft.com/cms/s/2/94131390-e115-11da-90ad-0000779e2340.html I heard MS made an offer of 15 Billion+ But Yahoo did not agree.
Google is the best. I think that there won't be any problem in taking Yahoo! (if that should happen).