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An Attempt At A New Monoline Thread


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A DOOMSDAY SCENARIO

Here's a doomsday scenario for ya: Just like CDOs and other asset-backed securities, credit card debt is separated, divided, and sold off again as packages of securities. Rising delinquencies would hurt not only the banks involved but the securities backed by the credit card receivables. Those securities would decline in value as consumers defaulted, leading to bank losses as well as portfolio losses in the hedge funds, institutions, and pensions that own the securities. If the damage is widespread enough, it could weaken the economy as much as the subprime crisis has done. My conclusion, after ascertaining the monoline problem plus the rest of this financial mess? Man the lifeboats......this mama is going down.

http://www.tickerforum.org/cgi-ticker/akcs...778&page=13

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Is there anything in the above that would prevent their business from being nationalised and their liabilities inflated away, if it came down to it?

I ask because the analysis I've seen so far points to an inevitable deflation as a result of this mess, while I think that an inflationary outcome is also possible (and even likely).

I was wondering that point too. I think there is a reason why they won't be nationalised.

After the ENRON scandal people had to be prosecuted and sent to prison in the US. They can't accept that these sorts of financial shenanigans are an inevitable consequence of capitalism, and always seem to have to find some individuals who have committed malfeasance who can take the blame. These persons then go to prison for 25 years or commit suicide.

Some people are going to have to take the individual blame for the credit crunch. The likely candidates are:

1) People in Goldman and JP Morgan creating the structured finance,

2) People in the monolines who sold insurance confidently, when their approach did not offer real protection.

3) People originating mortgages.

1) will be mostly too powerful, 3) mostly too small.

I would guess that the people who are CEOs, chairman and CFOs of the monolines are likely to be spending the rest of their lives in long drawn out court cases.

So the monolines will be kept as reeking corpses so that their management can be made scapegoats.

So as Groucho said, "it's ten years in Levensworth, or eleven years in Twelvesworth" for these people.

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Anthony Hilton in the London Evening Standard is spot-on about the monoline train-wreck waiting down the line:

This is serious because if the insurers' rating is cut, it will pull the rug out from under every bond that has passed through their hands. It will cut the rating of all the tens of thousands of bonds they have insured - those of respectable local authorities and municipalities will be downgraded along with the toxic credit derivatives. Low-rated bonds have a lower face value and require a higher rate of interest. A rate cut on such a huge scale would trigger hundreds of billions of losses across the entire financial system. No pension, insurance policy or money fund would escape unscathed.

More here:

http://www.thisislondon.co.uk/standard/art...ions/article.do

Edited for link

I think what this article misses is that many institutions because of regulation or otherwise are not allowed to hold bonds that are not tripe A rated. So if the rating drops then these institutions will dump many billions worth of bonds on the market. We all know what over supply does to prices.

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More here:

http://www.thisislondon.co.uk/standard/art...ions/article.do

Edited for link

I think what this article misses is that many institutions because of regulation or otherwise are not allowed to hold bonds that are not tripe A rated. So if the rating drops then these institutions will dump many billions worth of bonds on the market. We all know what over supply does to prices.

That accurate classification could have spared many a lot of angst.

p-o-p

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Thanks, Drexler. I am up to page 8 of that thread (of 18) and my eyes have stopped blinking. This stuff makes CGNAO look like a drunken optimist!

I believe it and that's why I wanted a thread on monolines. You know, if you want to understand why your mortgage rate just went up to 22% all of a sudden.

Apparently the FDIC (Federal Deposit Insurance Commission) is hiring like mad to deal with the approximately 300 US banks they estimate will go bust this year once the monolines go t*ts up (and no, the FED can't backstop them because it would take more $ than the entire US GDP to do so).

As somebody on the thread said, "Serfdom here we come."

And it's coming in the next few months. Bernanke just sacrificed his first pawn today, and he's up against the ghost of Bobby Fischer!

Hi CC,

I came across this forum last year (I think zinney01 posted a link on hpc), these guys seem seriously connected & understand exactly what's going on. (just like a few on hpc I hasten to add :rolleyes: ).

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Hi CC,

I came across this forum last year (I think zinney01 posted a link on hpc), these guys seem seriously connected & understand exactly what's going on. (just like a few on hpc I hasten to add :rolleyes: ).

Yup, thanks for the links everyone, and a great thread CC, most worthy of a bump!

Good to see that inteligent debate can still be had on HPC (sometimes!)

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An interesting thread from Bloomberg.

It's a long one ...

Ambac, MBIA Lust for CDO Returns Undercut AAA Success (Update2)

By Christine Richard

Jan. 22 (Bloomberg) -- Municipal bond insurers such as MBIA Inc. and Ambac Financial Group Inc. had a good thing going.

For years, they earned some of the highest profit margins in any industry -- by writing coverage for securities sold by states and cities to build roads, schools and firehouses. During the past five years, MBIA's average profit margin was 39 percent, more than four times the average of the Standard & Poor's 500 Index, according to data compiled by Bloomberg. Ambac's average profit margin was 48 percent.

The good times are over, and the culprit isn't municipal bonds; it's subprime debt, a market the insurers waded into in pursuit of even greater profits. Some of the biggest bond insurers are facing potential claims that may deplete their capital. Their share prices have plunged, and credit rating companies are scrutinizing their AAA status. Ambac became the first insurer to lose its triple-A rating, when Fitch Ratings downgraded the company to AA on Jan. 18.

With the main players distracted by subprime woes, billionaire investor Warren Buffett's Berkshire Hathaway Inc. is expanding into their core business of insuring bonds in the $2.6 trillion municipal market.

Berkshire Hathaway

``The good, solid, old-fashioned but profitable business may gravitate over to Berkshire Hathaway,'' says Mark Adelson of Adelson & Jacob Consulting LLC, a New York firm that advises on the structured finance market. ``That was the bond insurers' anchor; that's what saw them through.''

The crisis has been brewing for about six years, ever since the insurers discovered collateralized debt obligations. These securities, part of an area known as structured finance, were created by Wall Street by repackaging assets such as mortgage bonds and buyout loans into new obligations for sale to institutional investors.

Attracted by top ratings from Standard & Poor's, Moody's Investors Service and Fitch and by lucrative premiums, the insurers agreed to pay CDO holders -- many of them banks that created the securities -- in the event of a default. Insurers backed $127 billion of CDOs that relied at least partly on repayments on subprime home loans, according to a Dec. 19 report by S&P, the No. 1 credit rating company.

``It looked so profitable and so easy that they let the portfolio shift too far toward structured finance,'' says Robert Fuller, who runs Capital Markets Management LLC, a Hopewell, New Jersey-based firm that advises municipalities and nonprofits. ``It morphed into this monster that is devouring them.''

CDO Rating Cuts

The tipping point came last year when the three major rating companies downgraded thousands of CDOs. Ratings on more than 2,000 CDOs were cut in November alone, with Fitch lowering CDOs backed by subprime mortgages 9.6 levels on average, according to a Dec. 13 UBS AG research report.

Rating cuts on CDOs and other securities backed by subprime mortgages and home equity loans led S&P to conclude bond insurers faced potential losses of $19 billion, the rating company said in its December report. That sent insurers scrambling for additional capital to protect their own credit ratings from being cut -- by the same companies whose judgments they had relied on in backing the CDOs.

Fitch Ratings said at the end of December that MBIA, Ambac and FGIC Corp., the fourth largest, had four to six weeks to raise $1 billion each to keep their AAA ratings.

MBIA Raises Capital

Seeking to avert a crippling reduction of its triple-A rating, MBIA, the largest of the companies, said in December that it would raise as much as $1 billion by selling a stake to private equity firm Warburg Pincus LLC. It said Jan. 9 that it will slash its dividend to 13 cents a share from 34 cents, and two days later it paid a yield of 14 percent to sell $1 billion of surplus notes, bonds issued by insurance companies that state regulators consider equity.

Shares of the Armonk, New York-based company fell 86 percent on the New York Stock Exchange to $8.55 on Jan. 18 from $60 on Aug. 31. They jumped 32 percent to close today at $12.53.

Ambac, the second largest, replaced Chief Executive Officer Robert Genader, 60, on Jan. 16, cut its dividend 67 percent and said it would raise more than $1 billion in capital. Two days later, it scrapped the plan to raise capital. The New York-based insurer announced today a $3.26 billion fourth-quarter net loss and said it is considering ``strategic alternatives.'' The company's shares dropped 90 percent to $6.20 on Jan. 18 from $62.82 on Aug. 31; they surged 22 percent today, closing at $7.97.

May Write Down Stake

Blackstone Group LP, the New York buyout firm run by Stephen Schwarzman, said Jan. 10 that it may write down its stake in FGIC, which it bought from Fairfield, Connecticut-based General Electric Co. in 2003 along with PMI Group Inc. and Cypress Group LLC.

The first to fall was ACA Capital Holdings Inc., whose ACA Financial Guaranty Corp. unit guaranteed $26.6 billion of CDOs backed by subprime mortgages, according to S&P. The New York- based firm was founded in 1997 by H. Russell Fraser, a one-time chairman of Fitch, to insure municipal bonds that triple-A rated insurers wouldn't cover.

S&P slashed ACA Financial's rating to CCC, a low junk level, from A in December and earlier this month suspended ratings on almost 2,150 bonds it insured. ACA Capital shares plunged 93 percent to 48 cents on Jan. 18 in OTC Bulletin Board trading from $6.70 on Aug. 31; the stock was suspended from trading on the New York Stock Exchange before the opening on Dec. 18. The shares rose 20 percent today to 60 cents.

`Played With Fire'

``I knew that if they played with fire long enough, they were going to get burned,'' says Fraser, 66.

He left the company in 2001 over a dispute with the board about insuring CDOs, he says. Back then, it was debt of Enron Corp. and WorldCom Inc. -- companies that later filed the two largest bankruptcies in U.S. history -- that was being shoveled into CDOs.

``Companies that were having problems or were growing very fast began to turn up in all the deals ACA was offered,'' says Fraser, who moved to Wyoming to run a 12,000-acre (4,856- hectare) ranch and turn a ghost town into a museum of the Old West.

Fraser, who first rated MBIA and Ambac in the 1970s as an analyst at S&P and later helped turn Fitch into one of the three major rating companies, says that while ACA's original mission had been to help finance projects such as nursing homes and rural hospitals, the board didn't want to allocate the capital needed to insure riskier municipal bonds.

Credit Default Swaps

Backing CDOs with credit-default-swap contracts was more alluring, Fraser says. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a borrower's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should the borrower fail to adhere to its debt agreements.

By using swaps, ACA wasn't limited to guaranteeing only securities with a lower credit rating than its own. It could compete with AAA-rated insurers to back top-rated CDOs while having to maintain less capital than the triple-A companies. The top-rated insurers collected annual premiums for insuring CDOs with swaps that were 50 percent of the capital the rating companies required them to maintain, S&P said in a July 2007 overview of the bond insurance industry. ACA was scooping up premiums that were 130 percent of its required capital.

`Very Low Risk'

``ACA has had good success assuming exposure to very low risk supersenior CDO tranches, where the goal of the counterparty is risk transfer and the associated mark-to-market relief,'' S&P said.

By December, after S&P completed a ``stress test,'' it projected more than $3 billion of losses on those low-risk securities. Alan Roseman, ACA's CEO, didn't return a voice mail message seeking comment.

The deals could be complex, sometimes involving layers of potential risk related to the same troubled assets while appearing to offer diversification. As recently as June, Ambac insured $1.9 billion of a CDO called Ridgeway Court Funding II Ltd. whose holdings include other CDOs, some of which contain still more CDOs, according to documents prepared for investment managers that were reviewed by Bloomberg News.

Assets Being Liquidated

In one case, Ridgeway Court has a direct interest in Carina CDO Ltd., whose assets are being liquidated, according to a statement issued Jan. 7 by its trustee, Bank of New York Mellon Corp. Ridgeway also has an indirect interest through another CDO holding called 888 Tactical Fund Ltd. that has a stake in Carina. And it has still more indirect interest in Carina through two CDOs, Pinnacle Peak CDO Ltd. and Octonion CDO Ltd., that hold interests in 888 Tactical Fund, according to the documents.

Ridgeway Court Funding II experienced a so-called event of default after declines in the creditworthiness of its holdings indicated some senior investors may not be fully repaid, S&P said in a statement on Jan. 18.

While the bond insurers made big bets on CDOs using credit- default swaps, others in the market used similar contracts to bet against MBIA and Ambac. Credit-default swaps tied to the two companies' bonds declined to 21.5 percent upfront and 5 percent a year, according to CMA Datavision in New York. That meant it would cost $2.15 million initially and $500,000 a year to protect $10 million in bonds from default for five years. The price implied traders were putting the chance MBIA and Ambac would default in the next five years at 65 percent, according to a JPMorgan Chase & Co. valuation model.

FSA, Assured Guaranty

Two of the seven top-rated municipal bond insurers have so far escaped the deepest pitfalls in the structured finance market: New York-based Financial Security Assurance Holdings Ltd., the third largest, and Bermuda-based Assured Guaranty Ltd. FSA is a unit of Brussels-based Dexia SA, the world's largest lender to local governments. FSA and Assured Guaranty are the only two bond insurers that deserve top credit ratings, says Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance, who has written two books on CDOs.

``All the AAA ratings are faux ratings at this point, with the exception of FSA and Assured Guaranty,'' she says.

The three major credit rating companies have affirmed FSA's AAA rating with a stable outlook. Assured Guaranty, which earned a Moody's top Aaa rating in July, opened a new office in Sydney and plans to expand into Asia. Dexia shares declined 31 percent in Brussels trading on Jan. 21 to 13.90 euros ($20.32) from 20.21 euros on Aug. 31; they rose 7 percent today to close at 14.94 euros. Assured Guaranty shares fell 33 percent to $17.46 on Jan. 18 in New York from $26.07 on Aug. 31; they rose about 2 percent to close today at $17.79.

Little Required Capital

The siren call of CDOs was too strong for most insurers to resist. Virtually all of the securities were rated triple A and backing them required very little capital.

``This type of risk is thought to be one of the most profitable for the bond insurers,'' S&P said in a 2007 industry report.

Annual premiums on CDOs averaged 50 percent of the capital that the rating companies required the insurers to set aside, according to S&P. That compared with an average risk-adjusted profit ratio of 8 percent for insuring other types of structured-finance securities.

What the insurers hadn't bargained on was that the rating companies themselves, including S&P, had grossly underestimated the risk of CDOs.

`Charged Too Little'

``Insurers got into trouble because they charged too little for the risk they took on,'' says Joshua Rosner, managing director of New York-based research firm Graham Fisher & Co. While they shielded banks from taking writedowns on their CDOs, they undermined their own credibility, Rosner says. ``They lost their way out of greed.''

The lack of data on the securities that backed CDOs should have been a red flag. CDO prospectuses warned that reliable default rates for some types of securities backing the CDOs didn't exist, Tavakoli says.

Structured-finance adviser Adelson says analysts failed to see that the mortgage market was becoming riskier. They relied instead on models to predict the performance of CDOs based on historical defaults, recovery rates and correlation risks for various credit ratings. They didn't consider how piggyback loans, which are loans used to borrow a down payment, would perform when extended to people with a history of not paying their bills, Adelson says.

'They Got It Wrong'

``They treated it like a math problem, and they got it wrong.''

That became obvious in October, when New York-based Merrill Lynch & Co., the biggest U.S. brokerage firm, announced $8.4 billion of writedowns on subprime mortgages, asset-backed bonds and bad loans. Analysts used the numbers to shine a light on CDO prices. They began to estimate losses in the billions when the guarantees on securities were marked to reflect the market's view of the CDOs.

William Ackman, the managing partner of Pershing Square Capital Management LP, wasn't surprised. Ackman, who co-founded a hedge fund firm called Gotham Partners LP in 1993 after graduating from Harvard Business School, began betting against MBIA in the summer of 2002. The insurer had larger mark-to- market losses on CDOs than it was disclosing, was underreserving against possible losses and didn't deserve its AAA rating, Gotham said in a report later that year.

`Soundness of Our Book'

MBIA's CEO at the time, Joseph Brown, said Gotham was wrong. ``We stand firmly by the soundness of our book of business and the quality of our underwriting,'' he said in a statement reported on Dec. 9, 2002, by Bloomberg News. Brown is now nonexecutive chairman of Seattle-based property and casualty insurer Safeco Corp.

New York-based Pershing Square stands to make billions if MBIA's and Ambac's holding companies go bankrupt. Ackman said in a Jan. 10 interview on Bloomberg Television that MBIA needed to raise far more capital than the rating companies had required to protect policyholders from losses on subprime securities he estimated could hit $10 billion.

``Every action taken to protect policyholders will not be good for the holding company,'' Ackman said. That's because the insurance unit will need to retain capital rather than pass it along to its parent, he said.

Tom Becker, a spokesman for MBIA, declined to comment.

Other Side of Argument

Martin Whitman, the 83-year-old chairman of New York-based Third Avenue Management LLC, is on the other side of the argument. Whitman increased his stake in MBIA to more than 10 percent at the end of 2007. In an Oct. 31 letter to investors, he said MBIA's critics were too focused on its mark-to-market losses.

``The company, however, will remain with a quite strong capital position,'' said Whitman, whose firm is the second- biggest holder of both MBIA and ACA shares.

ACA founder Fraser says the bond insurance industry needs to do more than raise capital: It needs to restore faith in its unquestioned ability to assess credit risk.

``There's no reason for an AAA-rated bond insurer to be doing anything with subprime mortgages,'' Fraser says. ``It's going to hurt their business because municipalities are going to ask, 'Is this insurance really worth it?'''

By chasing the higher profits of CDOs while underestimating the risks, the bond insurers jeopardized their basic business: insuring municipalities against default. In practice, cities and states rarely default. That's because they can raise taxes to meet obligations or refinance their debts. The designers of CDOs don't have those options.

While the big insurers work to restore confidence by getting back to basics, Buffett's Berkshire Hathaway Assurance Corp. is already making inroads. It insured its first bond, a $10 million issue from New York City, after winning approval in December from the New York State Insurance Department to guarantee debt.

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Superb thread (and the one proivded on the link).

It would be good to see our on (hyper)inflationists such as goldfinger and cgnao debate their position with these people. It seems that they are convinced what is happing can only be deflationary. 100% correct, guaranteed.

Edited by frozen_out
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Hi CC,

I came across this forum last year (I think zinney01 posted a link on hpc), these guys seem seriously connected & understand exactly what's going on. (just like a few on hpc I hasten to add :rolleyes: ).

You bet. You should read the "Bin Laden Put" thread from last autumn, when they were talking about a massive short made on the Dow that it would drop 60% in three months' time: worthy of a thriller novel! (I think it turned out to be a hedge fund illegally using the market to lend it money somehow - I'm still trying to figure that one out :blink: )

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Here's a fascinating, and very long thread from tickerforum about monolines....

You might not want to read it if you want to sleep soundly tonight.

http://www.tickerforum.org/cgi-ticker/akcs-www?post=24778

Thanks for this link. They've moved on to talking about the non-borrowed reserves of the US banks (Page 18).

Looks like the US banking system is resting on $200 million of non-borrowed reserves (or was on the 16th Jan)

http://www.federalreserve.gov/releases/h3/Current/

Someone please tell me this isn't as terrifying as it looks.

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An interesting thread from Bloomberg.

It's a long one ...

REPO13 - great article. Lays it all out in irrefutable detail. Cheers.

Frozen Out: yes, it does all sound a little deflationary, doesn't it? Go read the posts by "Nothing" on the Market Ticker thread. She's good. It sounds as if ALL credit will be sucked out by the vapourising of the monolines. Tin-foil hattish? I don't know, but it's the miror image of CGNAO's take; the other side of the coin. Worse or better? Again, I don't know. The rich want inflation as they can always buy assets, whereas deflation hurts them by eroding the value of assets (better for the poor who own nothing, but only relatively so). My guess is that the system will try to inflate but the monoline cataclysm will overtake it. Note to Goldfinger: I would still want gold!

Edit: DEflationary! Doh!!!

Edited by Captain Coma
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Thanks for this link. They've moved on to talking about the non-borrowed reserves of the US banks (Page 18).

Looks like the US banking system is resting on $200 million of non-borrowed reserves (or was on the 16th Jan)

http://www.federalreserve.gov/releases/h3/Current/

Someone please tell me this isn't as terrifying as it looks.

Further to this I've looked back at the history of the non-borrowed reserves. Nothing like this going back to 1959.

http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt

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From the Times Today

http://business.timesonline.co.uk/tol/busi...icle3234693.ece

Fed rate cut triggered by fear of bond insurance collapse

"Fears that America’s bond insurance market could implode triggered the US Federal Reserve’s biggest interest rate cut for more than a quarter of a century, Wall Street economists claimed yesterday.

Market analysts said that Wall Street had spent last week gradually realising the grave consequences of a major bond insurer defaulting on its commitments and attributed the surprise rate cut to averting such a crisis."

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On the face of it, the following two solutions appear to be possible:

1. The US government states that it will stand behind the monolines, with the intention not so much of bailing them out financially but of sustaining the AAA rating of the insured bonds and thus preventing contagion spreading to the rest of the financial system.

2. Legislation allowing funds to hold non-AAA bonds. Not ideal, but then neither is a firesale.

Apologies if anyone else says something similar further down the thread, I'm just jumping in here.

I think the key solution is number 3 - banks invest in monolines until they're recapitalised and keep their AAA rating because even if that's basically throwing money into a big hole it's nothing compared to the losses they'd make if they had to downgrade everything else.

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Apologies if anyone else says something similar further down the thread, I'm just jumping in here.

I think the key solution is number 3 - banks invest in monolines until they're recapitalised and keep their AAA rating because even if that's basically throwing money into a big hole it's nothing compared to the losses they'd make if they had to downgrade everything else.

Your solution is effectively the US Government standing behind the loans - the US banks don't seem to have any available reserves to do this

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Your solution is effectively the US Government standing behind the loans - the US banks don't seem to have any available reserves to do this

From the article above each insurer only needs to rustle up $1bn of capital each, that's small change to them. Much easier to rustle up that between them than to make way more substantial write downs.

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From the article above each insurer only needs to rustle up $1bn of capital each, that's small change to them. Much easier to rustle up that between them than to make way more substantial write downs.

Two points as I see it

1. It’s not clear that $1 billion will be enough to maintain their ratings. Ambac were unable to raise the capital and has been downgraded. MBIA have been placed on negative watch for downgrades despite managing to raise the capital. Also Ambac lost over $3 billion last quarter.

2. If I’ve interpreted the data in the links I posted above correctly (hopefully I’m badly mistaken) then the US banks only have $200 million dollars that they haven’t borrowed from the Fed.

I’m no expert on this by any means so take this with at least a pinch of salt; it’s my best interpretation of it.

Edited by The Emperors New Clothes
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Two points as I see it

1. It’s not clear that $1 billion will be enough to maintain their ratings. Ambac were unable to raise the capital and has been downgraded. MBIA have been placed on negative watch for downgrades despite managing to raise the capital. Also Ambac lost over $3 billion last quarter.

2. If I’ve interpreted the data in the links I posted above correctly (hopefully I’m badly mistaken) then the US banks only have $200 million dollars that they haven’t borrowed from the Fed.

I’m no expert on this by any means so take this with at least a pinch of salt; it’s my best interpretation of it.

I see citigroup is giving out $11bn in bonuses this year, even after a shit year just to give some idea of the scale of money involved. Even if it's $10bn for each of the three or four major monolines it can be raised between the banks whose balance sheets would be buggered for at least $50bn from the collapse of any of them.

THe monolines can be recapitalised by the banks, no problems. It's rather ethically dubious but it can be done and if the prophecies of apocalyptic financial contagion from a monoline collapse are true then it will be done because it's the least worst option.

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THe monolines can be recapitalised by the banks, no problems. It's rather ethically dubious but it can be done and if the prophecies of apocalyptic financial contagion from a monoline collapse are true then it will be done because it's the least worst option.

As far as I understand it, that would be finger-in-the-dyke stuff. If a single monoline is facing $10 billion plus losses already (see article posted above), and if that is just the beginning (first loss always the smallest, etc.), its new capital will be depleted faster than it can be replaced. And would the banks contunie to dummy up money as they see the rate of bond defaults accellerate? Seeing as they're hoarding money to save themselves, you know?

Of course this is predicated on the assumption that more insured bonds will default. That's certainly my assumption.

Anybody know of any monolines in the UK, incidentally?

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Some people are going to have to take the individual blame for the credit crunch. The likely candidates are:

1) People in Goldman and JP Morgan creating the structured finance,

2) People in the monolines who sold insurance confidently, when their approach did not offer real protection.

3) People originating mortgages.

The ratings agencies should be in there too, I would say. Near the top of the list IMO.

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The ratings agencies should be in there too, I would say. Near the top of the list IMO.

Yes, but they need the rating agencies to be sound, otherwise the all the banks and companies are in trouble.

Remember the key idea is that the problem is not down to greed or capitalism, it is down to a few bad apples. The old monolines are unneccessary moving forward, so they are for the chop...

It will require some nimble footwork on the part of prosecuters to ensure the blame falls on a specific few in the monolines. But I am sure there will be paperwork in those companies that proves they knew that their insurance wouldn't hold in the event of a systemic property crash, and they won't have disclosed it to the poor, innocent rating agencies who were only doing their job.

Obviously everyone in the whole industry knew it was a house of cards, it is a question of who doesn't have an an excuse and isn't required moving forward.

As a starter I'd suggest

AMBAC

Robery J Genader

Sean Leonard

MBIA

Jay Brown

Gary Dunton

Neil Budnick

ACA capital

Alan S. Roseman

Those are the names that are going to become as familiar as Kenneth Lay, Jeffrey Skilling and Bernie Ebbers.

Indeed it is already happening.

http://www.euroinvestor.co.uk/news/shownew...storyid=9698329

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Yes, but they need the rating agencies to be sound, otherwise the all the banks and companies are in trouble.

Remember the key idea is that the problem is not down to greed or capitalism, it is down to a few bad apples.

Right, I see what you mean. Maybe those guys you listed need to head for South America :ph34r:

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