Saturday, Jan 19, 2008
Infrastructure Funding Freeze?
Guardian: Sub-prime cracks spread to infrastructure
"Ambac is one of a number of so-called monoline insurers that have become the focus of economists' attention in recent weeks. These companies, many of which were set up in the 1970s when US municipal authorities raised funds for projects by issuing bonds, insure those bonds against default. Such insurance makes it cheaper for local governments to raise cash as the risk of default is reduced for investors." ... "If the monolines run into trouble," said one British fund manager yesterday, "it will make what we have seen so far look like a walk in the park."
Posted by quiet guy @ 07:50 PM (292 views) Add Comment
3 Comments
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1. quiet guy said...
I have to admit that until recently, I was blissfully unaware of this issue. lvmreader has been publishing some articles on the subject but find this one easier to understand. It seems that we will all share the pain for this - reckless borrowers and prudent savers alike.
2. lvmreader said...
I have been running a Ghost portfolio for 2 years. I am provably up over 1,000%.
This municipal bond mularkey was clear as day to me for over 8 months. The whole subprime debacle I have written predictions from 4 years ago.
3. Refusetobuy said...
Monolines calculate their premiums using traditional insurance methods (i.e. they don't hedge their risk, they hold a lump of cash to cover losses).
They don't hold enough cash to cover losses if a number of their insured claim at the same time.
They say there is nothing to worry about as they are very careful who they choose to insure.
Now we will see if they are good judges of character or not.