Bond Insurers … has the domino-kind-meltdown started?
Bond insurer ACA’s rating was slashed by S&P from A to CCC in December, but they gave them a lifeline, which expired Friday. If the CCC rating now becomes effective, it will create the next round of write offs at financials.
Friday now, Fitch cut Ambac’s rating from AAA to AA. Moody’s warned last Wednesday, that they are about cutting Ambac’s rating as well. Moody’s announced Thursday, it considers cutting MBIA’ s rating as well.
And as we know, when one of the rating agencies moves, the rest will follow. The real scandal is the reluctance of ratings agencies to use their brain!
The whole thing about the bond insurers is BUYING TIME to wind down positions. EVERYBODY KNOWS, that they are BANKRUPT!!! The markets have doubts about institutions as Citibank can carry on after such exposure to “nuclear waste” but the rating agencies hold the ratings of bond insurers up??? This is FRAUD!!! I hope, someone will sue them! 
This does not get the money back, but reckless people behind bars!
It seems to be the case, that the Bond Insurer Domino has started. Rating cuts are met by worse refinancing and write offs at the (investment-) banks, then again will be met by more rating downgrades. Welcome to the Tsunami …
To put things into perspective … we talk here about companies who have a marketcap of way UNDER 1 bln$ and have outstanding debt insured ABOVE 500 bln$ … so … THEY WILL GO BELLY UP anyway!!!
This is, why Warren Buffett enters the market … NO COMPETITION … and therefore HIGHER FEES as he will concentrate on public infrastructure business. He will be close to a Monopolist there
The BAD thing about this bond insurer meltdown is, that it is STILL NOT in anyway reflected in the balancesheets of the WallSt. “Biggies”.
Merill Lynch for example has an exposure of close to 7 bln$ to ACA … OMG
And not only them haven’t opened up to reality until today …
It seems to be, that we will have to see more SWF investing or we have to wait until SOME of them GO OUT OF BUSINESS!!!
It would be well deserved anyway as these big headed and big mouthed greed driven idiots lack any level of responsibility!!!
WHO sues them, that they pay back their bonuses as they were completely build on FRAUD????!!!!
Tags: ACA, Ambac, bond insurers, Buffett, Merill Lynch, ratings, subprime
