Posted on 06/22/2008 7:03:17 PM PDT by TigerLikesRooster
Bond insurers want $125bn of cover wiped out
By Aline van Duyn in New York
Published: June 22 2008 23:30 | Last updated: June 22 2008 23:30
Bond insurers such as Ambac, MBIA and FGIC are talking to banks about wiping out $125bn of insurance on risky debt securities in what could be the only way to limit the financial damage surrounding the bond insurers.
(Excerpt) Read more at ft.com ...
I thought this was an “Outer Banks” story. Sorry.
Oh my!
Nice business model. Take in premiums, refuse to pay out.
They do 'own the banks', don't they? :-)
Not exactly.
Take in premiums. Wait until something bad happens, but no one knows how bad. Make an offer to settle now at a fixed price.
The old saying, back when $1,000,000 was real money, “If you owe the bank a thousand, you’ve got a creditor; if you owe the bank a million, you’ve got a partner”.
Privatize the profit, socialize the loss.
I am beginning to think the government should have a role to ensure that no one company is allowed to be large enough to threaten the entire system. I am not usually in favor of more regulation, however the actions of these companies indicate a recklessness that must be contained.
Contrary to “popular” opinion, it looks like this is far from over.
Don't worry that someone is going to pull your free market credentials. Serious economists have long settled this issue, called the welfare theorem. In order to obtain the benefit of a free market you have to have 3 things: 1. NO MONOPOLY (or near equivalent) 2. No information asymmetries, and 3. No externalities.
Money center banks violate all three. Because of the incentives for monopolies to misbehave they have to be regulated to protect the proper functioning of the market.The most ardent (non Randian) free-market economists have long settled the issue. How much regulation, and how do you avoid perverse incentives for the regulators and in the resulting regulation is a serious subject of study that is hotly debated.
You are on solid ground.
“Lets pretend we never insured you. Don’t mind, do ‘ya?”
Imagine if your house burned down and your home owners underwriter asked if it’s OK not to pay you for it. Incredible.
The great financial crisis continues to unwind, slowly. This is going to go on and on for years. All I can say is “BULLISH!”
Indeed. Lots of people want to pretend the worst is behind us, or they are ignorant of the scope of the crisis. We haven’t even hit the Alt-A resets yet. Mortgage rates have yet to rise much. It will be very telling to see if the FED continues to leave rates low in the face of escalating inflation. More than that, will we ultimately have inflation or will deflation outpace it? I have no clue, but yes, this is very far from over despite the FreeperAnnas and others who want to believe the liquidity crisis has run its course. Cue Travis McGee’s quote on it...
It’s just the start!
Wait until the leased cars are returned, cars by the millions are repoed and the credit card defaults start slaming the system.
I think we’re headed for a world wide depression within the next year or two.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.