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An Attempt At A New Monoline Thread


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Feb. 25 (Bloomberg) -- U.S. stocks staged their biggest rally this month after Standard & Poor's kept AAA debt ratings for the nation's largest bond insurers, easing concern credit losses will extend the worst earnings slump since 2001.

:lol:

Gotta love an economic system where how much profit there is is based on opinion.

How ever did we fall for this?

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The busted banks are putting up money (that can only come from the Fed) in order to save the busted guarantee company. The idea is to maintain the aura of a guarantee so that the busted banks do not become more busted by letting the busted guarantee company fail. Damn, they are good spinners. This is quite a transparent economic bandage. Consider the companies guaranteeing $1 trillion of debt in this financial condition. When splitting the companies was run up the flag pole the market said boo. This act of a new foundation of loose peddles holding up the Empire State Building is financial prestidigitation.

http://www.jsmineset.com/

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it is interesting looking at credit default indices and ratings but as you state its all "smoke and mirrors".

Cash is king and this is where no-one can hide. whilst some banks may be able to generate income to pay dividends look out for those that cut dividends - you know they are hurting!

Most of the financial institutions will survive - banks and insurers and rating agencies - since they never actually have to 'show the money'. im sure youve heard of ponzi schemes were old investors are paid dividends from new investors capital. Well the banks are not different. Dividends are being paid and maintained from revenues. As long as business keeps up - ie the debt issuance continues - all is well.

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Which currency is king?

hmmm, not sure if youre taking me too literally or just joking. but ill attempt an answer anyway...

my point was to say you can misprice assets all day long but when someone asks you for a cash dividend you cant hide behind a paper figure any more.

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Consider this scenario:

The prospect of a bail-out has been used to talk up the market. Those close to the main players have probably used the rise to sell stocks. Next they'll announce that it's hit a snag/is on the backburner. The markets will tank. The players will then buy stocks. Finally, without the long lead up of PR that they had the first time, they finalise the rescue deal and the markets shoot back up. Through the whole process of market manipulation, those involved have skimmed enough cash from the markets to pay for the rescue. Sweet.

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prestidigitation - Skill in or performance of tricks; sleight of hand.

Great word - and precisely and accurately used.

For how long can an illusion bear the weight of the global financial system, though?

Go on pick a Bank any Bank....

Don't tell me....don't tell me....

Its fcuked! :lol:

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http://www.cnbc.com/id/23405541/site/14081545

Abac mBailout Hits Snag, Talks Continue

Topics:Banking

Sectors:Financial Services | Banks

Companies:Ambac Financial Group IncBy Charles Gasparino, On-Air Editor | 29 Feb 2008 | 07:42 AM ET Font size: The bailout of troubled bond insurer Ambac has hit a significant snag, after rating agencies demanded more capital from the consortium of banks involved in the bailout effort, CNBC has learned.

People close to the deal are confident that it will still happen, because the banks and the rating agencies are aware that, if it collapse, there will be a huge decline in the stock market.

AP

--------------------------------------------------------------------------------

The snag was hit Wednesday, when raters said they wanted to see more capital injected in the bond insurer if it is to get a triple-A rating, after the consortium of banks had agreed to come up with $2.5 billion in capital.

The structure proposed by the consortium of banks was essentially dividing Ambac AMBAC Financial Group IncABK

11.8 UNCH 0% NYSE

into a "good bank/bad bank" model by splitting up the municipal bonds book, considered more attractive, from the collateralized debt obligations (CDOs) book.

The consortium will now come up with another structure, which keeps the two together, which could mean that they would need even less capital to keep their triple-A rating, sources close to the deal said.

If the new structure is approved by the rating agencies, a deal could be put into place by early next week, and talks are likely to occur over the weekend, the sources said.

© 2008 CNBC.com

Keep the two together on the principle of cdos 'the solution to pollution is dilution'

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Me neither... looks like S&P have made themselves an irrelevance, their ratings now mean nothing.

Good point, but the bond market knows that ratings are meaningless already.

By maintaining AAA on AMBAC/MBIA the rating agencies may have stoped a fire sale of existing ABS , but at the same time they killed any possibilty of new debt securitisations, because their ratings are now effecively worthless.

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Consider this scenario:

The prospect of a bail-out has been used to talk up the market. Those close to the main players have probably used the rise to sell stocks. Next they'll announce that it's hit a snag/is on the backburner. The markets will tank. The players will then buy stocks. Finally, without the long lead up of PR that they had the first time, they finalise the rescue deal and the markets shoot back up. Through the whole process of market manipulation, those involved have skimmed enough cash from the markets to pay for the rescue. Sweet.

Ok, so they've decided to run it according my script. Even termed it a 'snag'.

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Citigroup Underwrote $6.9 Billion of Ambac's Most Troubled CDOs

dire....

Of those CDOs, $6.9 billion, or 92 percent, are experiencing so-called events of default, Tavakoli said. Such events signal the most-senior classes may not be paid in full.
Ambac's bailout hit a snag this week after ratings companies demanded more capital, CNBC reported today, citing people familiar with the situation.

Moody's said today that it's giving Ambac more time to raise more capital.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Edited by chris c-t
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http://www.safehaven.com/article-9599.htm

Additionally, you are already fully aware of the drama playing out with MBIA and Ambac. I found it rather ironic that the Friday the Dow spurted 200 points up in the last half hour of trading based on a CNBC comment (the ultimate source of truth, right?) that an Ambac bail out plan was in the works, Moody's cut its ratings three notches in one fell swoop on Channel Re from Aaa to Aa3. Who is Channel Re? An MBIA reinsurer whose only client happens to be MBIA. Guess CNBC overlooked that one.
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