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What's Going on with Bond Insurers?
The path has already been cleared by ACA- that is, the path from AAA to bankruptcy. The rating agencies have been practicing up for this, taking AAA rated CDO's down to CCC in a single step. They won't downgrade the monolines, the monolines will just show up in BK court, blaming Ackman the whole way.
Marty Whitman is a smart investor and he will lose his entire investment. He will still be smart, but this one particular idea wasn't. It's OK- Buffett bought shares in USAir after all.
The Case for Foreclosure: Law of Conservation of Homes
The foreclosed houses certainly won't disappear. Some will find new occupants, others may be used as retail outlets for controlled substances.
Collapse of the Yield Curve
Our Run-In With Auction Rate Securities - And What It Taught Me About Markets
Citigroup Bottoming - Plus Some Free Advice for Meredith Whitney
Thornburg's a Huge Bargain After Monday's Crash
Alt-A mortgages are not "subprime," and you are correct to point out that journalists have identified the nation's mortgage problems as only stemming from "subprime." Alas I am afraid that is because distinctions between various kinds of risky mortgages elude our friends in the Fourth Estate.
Alt-A loans should be considered "pre-default"... loans as they are a kind of financial vehicle that no one ever thought of before Greenspan cut rates so dramatically in 2003. They will also have incredibly high default rates as homedebtors realize that Alt A mortgages are free puts issued by the shareholders of companies like Thornburg Mortgage. And when you are in a house in CA, NV or FL that is way underwater, a free put back to Thornburg (inter alia) is a real lifesaver- for your retirement, your children's college fund, or anything else you would like to spend $200-$500k on other than your underwater mortage.
Fallacy of Inflation Targeting
Miami Condo Vultures: A Fool's Game
Ambac: More Smoke and Mirrors?
Some of us remember Enron. Other members of the investment community apparently need to be re-taught these lessons every 5 years or so.
Credit Cards Around the World
Letter Writer of the Day: MBIA's Jay Brown
Ambac Financial: Get Into Bond Insurance Before Buffett Does
Is Silver Point a Television Company Repairman?
A Bank Led, Bank Insurer Bailout?!
"Prescient" then goes on to assert that Citi is "happy to hold" Ambac insured assets - (what?!) and then argues that anyone who does not have full information (which ABK and C of course are not releasing) "is an idiot."
Mr Prescient- all you need to know was revealed to you in Stan O'Neal's last CC as head of MER in which he said they took 30%+ writedowns on AAA rated secs. ABK and MBIA insure far more such paper than MER ever owned. It's just a matter of time. Rage, rage against the dying of the light if you wish, but these companies are going out and they are going out hard.
MBIA Dismisses Ackman: Got A Better Plan?
In the meanwhile, it would be nice (as Ackman proposed) for what little cash flow dribbles out of these companies to be paid first to muni policy holders, and subsequently to structured finance gamblers.
There is a much stronger public policy argument for supporting the muni market (which will live on) instead of supporting the structured finance market, which has about the same life expectancy as a GI who just sat down on a live grenade.