This news is absolutely incredible. In my previous career as a brokers/advisor, myself and the firm I worked for sold CMO's (Collateralized Mortgage Obligations) every day of every month. The firm sold sold millions and millions of these products to our clients. The biggest selling point - SAFE B/C THEY ARE INSURED! Insured by these co's listed here... I can only imagine what happens if those CMO's lose their AAA rating due to insurer's backing being no good now. I can't even begin to tell how the firm told us to sell these products.... "Well Mrs. Jones, this opportunity here is extremely safe b/c it is insured and is rated AAA. We can invest some of your retirement funds here and earn a safe and steady return..."
counterparty risk has been discussed many months ago on this site and others but no one seemed to give a shit... when the looters bust into Wal*Mart...you'll know it's for real on the street level...........
Everytime we survive a financial crisis or some sort of economic adversity we take even greater risks because we survived and therefore it makes it look like those risks were overrated. Until finally something really does go horribly wrong. You dont here about the societies who failed because they aren't around to write about it.
I may be wrong but it appears to me practically everything being done or proposed by pretty much every one involved is just delaying the inevitable.
It's all about confidence or the lack there of. Really the exposure of the bond insurers is not all bad - except if the dominos start falling. Which it looks like they have with ACA and MBI. Once people lack confidence, death spirals continue til everything hits zero. It's really something to see this play out like 1929. The government bailouts. reassurances from the fed, economists, politicans, and the rating agencies. The rosy outlooks from companies qtr after qtr stating "this is probably the worst of it". All this as prices(inv banks,banks, insurers,mortgages cos) spiral lower and lower and companies go BK(mortgages cos, bond insurers?) Read the The Great Crash of 1929 by Galbraith to see what I mean. btw look @ the ABX indices those crap cdo's are trading at anywhere from .20(BBB) to .75(AAA) cents on the dollar and these bond insurers are stress testing for 19% default - madness. All these guys are holding this stuff praying for a big bounce. Who the hell is gonna buy 500 billion in garbage paper?
It will make for a good show for those flying overhead in their private planes looking down. Only the little people need pay...
real estate will be had for cents on the dollar for someone with cash or equivalent.... there's real estate around here that HAS NO BID......
Have you "Professional" traders learned anything since your days of trading? What, you think there will be "run on banks", Massive derivitive blowouts, market crash? LOL, read between the lines and maybe, just maybe you will make a few bucks in 08. enjoy