Bond Insurer timebomb ticking quicker …
After polical pressure mounts to split monoliners into a good insurer/bad insurer-model and FGIC already working on it, MBIA and Ambac seem to follow the same path.
Makes policymakers happy as their muni bond business can go on without being hurt, but should make investors worry, who will be hurt as banks will have to disclose their exposure as the monoline ratings will plummet on their “nuclear-waste-derivatives” and this would force them to write off big parts of it …
This might create the next down wave … still market is bullish on expectations of a SHORT recession and on export growth due to Asian demand. A typical case of denial … IMHO
So be aware of possible action on the bond insurers …
Remember the words of Deutsche Bank CEO Ackermann:
“FINANCIAL TSUNAMI” …
Tags: bond insurers, financials
