Wednesday, Feb 13, 2008
Why Buffett’s bail-out can’t save the US economy
MoneyWeek: Warren Buffett gives the bond insurers a good kicking
Warren Buffett has offered to relieve the ailing monoline insurers of their best assets, leaving them the subprime rubbish. You've got to admire his ruthlessness. But are the monolines desperate enough to accept?
Posted by mary @ 12:31 PM (414 views) Add Comment
3 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. happyrenterz said...
FT Alphaville comment
Buffett steps into the monoline crisis
Warren Buffett’s mischievous intervention in the monoline crisis has put Wall St banks under fresh - and very public - pressure to come up with a viable rescue plan for these specialist bond insurers. The billionaire investor told CNBC on Tuesday that he had offered to take the monolines’ traditional (and relatively risk free) business of guaranteeing municipal bonds off their hands - leaving the monolines alone to deal with their troublesome subprime exposure. While the move did not appear to help firms like MBIA and Ambac, it did cheer up the stock market: the Dow Jones index added almost 1.5
2. dbnazz1 said...
In times of weakness the strong are circling like vultures. As more institutions get into trouble they the had of the circling vultures will become stronger, with the insitutions that are in trouble having to pretty much accept what they are offered in order to hust keep themselves afloat.
3. guiriduro said...
Well, this represents better news than the absolutely dreadful news of the upcoming monolines bonds downgrades/insolvency knock-ons. Before the Buffet intervention, the municipal bonds market would also have had to suffer, through no fault of its own, the monolines downgrades based on their CDO exposure. This gets them off the hook. What it doesn't do, is get monolines insurers and banks off the hook. In fact, the existence of this offer is a bad story for the monolines and banks - they would never have countenanced this unless their business were mortally wounded. They look like rejecting the initial offer, but they will at some point be forced to accept something like it, in order to capitalise their business to bail out their CDO losses. No other investor is going to recapitalise these monoline money-pits, because they are effectively insolvent now anyway, and the municipal bonds business is their only asset from which they can get any capital now. That or a government bail-out, which would be bad news for the (US) taxpayer.