Man, I'm really glad I didn't play this one for a long term recovery using LEAPs. Up till now people were saying they were not overly exposed to the riskier CDOs. ERRRR, WRONG. MBIA says it has $30.6 bln exposure to CDOs Edit: but it is affecting my other play, MER.
Not just MER but all the financials. The default spreads are blowing up. Looks like a real crisis of confidence developing. I suspect they'll be after the rating agencies soon enough. I think we can label MBI Domino #1 timberrrr!
Apparently MER hedged with ACA Capital but they longer appear to be solvent with the recent downgrade to junk status. Several banks are going to try and prop up ACA. MER is on the hook for $3 billion if ACA goes under.