Fitch puts MBIA on Negative Ratings Watch
Submitted by
CalculatedRisk on Thu, 12/20/2007 - 12:21pm (23 comments)
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O RLY?
If Fitch was running a hospital, they'd move dead patients from "critical" to "stable".
oh, snap!
Something tells me Warburg Pincus is about to pull an Emily Litella.
C'mon Warburg; wake up and pull the deal ('cause you're gonna need the $1B, trust me).
What logic can be used to justify the present state of economic theory. For the last 10 years we have lived a sham. Can it continue for another 10 years? It's as if common sense no longer makes applies. If only I could apply the same rules to my finances that the Wall-street types have apparantly been given exemptions by the gov to live by. Combined with the gutting of the Constitution - it appears to me that we no longer live in a "free" country.
If Fitch was running a hospital, they'd move dead patients from "critical" to "stable".
and if you're a mortgage broker, they put you on "heaven watch negative".
This is as great a time to buy banking mortgage stocks as it was a year after Enron spilled some of the beans:
Re: The demise of the Enron Corporation occurred relatively swiftly. Over a 16-month period, Enron's stock price declined from a high of $90 to a low of under $1 before the giant energy-trading company declared bankruptcy.
The simple answer is wanton corporate greed combined with looting of the US treasury by Bushco.
One more time the cost of Bush to America since 2000 is $32 Trillion dollars in total liabilities and unfunded commitments for future payments.
Who is going to pay for this ?
Mostly Gen X, Gen Y and others after.
If Edwards gets to be Pres. then the upper 1% will see their taxes go up and rightly so.
In a speech earlier this week at the National Press Club, GAO Comptroller General David Walker said:
"If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and some people would be talking about whether the companys management directors needed a major shake-up".
The federal governments total liabilities, Walker explained, translates into a de facto mortgage of about $455,000 for every American household and theres no house to back that mortgage. In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.
Roubini sez:
"Of course a downgrade of monoliners will have a severe knock-on effect of potential downgrade on muni and other bond markets; analysts have estimated that such downgrades could cause losses writedowns of about $200bn"
Yep. $200b
Everyone keeps saying the banks don't trust each other enough to lend, which is entirely untrue....they trust that they'll get a good shellacking if they lend.
We have way more trust that usual, which is why we have a credit crunch. We need to get back to the days where people were deluded enough to think low risk and high return aren't mutually exclusive.
Shoot. that terminating bold got away from me.
According to the Bank for International Settlements, the total outstanding notional amount is USD 516 trillion (as of June 2007) .)[1].
Exchange-traded derivatives are those derivatives products that are traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. The world's largest[2] derivatives exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options), Eurex (which lists a wide range of European products such as interest rate & index products), and CME Group (made up of the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of Trade). According to BIS, the combined turnover in the world's derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of derivative instruments also may trade on traditional exchanges
KnotRP -
I saw an interesting note somewhere yesterday (I forget where because I'm reading too many blogs at the moment) speculating that the problem wasn't that banks were afraid to lend to each other, but that their ratios were already weak and they were unable to lend at the margin.
I'm wondering if unwinding to get their ratios back into shape may be contributing to the dollar's rise. Selling whatever and buying dollars to bring home.
blah blah here we go with the scary notional derivatives crap again. No matter how many times you copy paste it, it doesn't make it any more sensible.
I can take out two offsetting derivative contracts myself, that represent huge notional face values but only expose me to losing (or gaining) 50k of real money.
Just because the sum(notional) of the derivative market is something-trillion doesn't mean squat unless you can say something about what the npv of all those derivatives are (hint: most npvs are a fraction of the notional) and how the entire bolus of stuff including the hedges reacts to different market moves, or different counterparty or country BKs.
Justin -
You can take out two offsetting derivative contracts through MBIA too. What do you think your exposure will be then?
Yes those boyz at BSC with their offset derivative contracts from ACA are taking great comfort from your analysis Justin!
Knotty's unique (bent) [twisted] take:
We have way more trust that usual, which is why we have a credit crunch. We need to get back to the days where [only some] people were deluded enough to think low risk and high return aren't mutually exclusive.
Too much insider information has caused the inside to move outside and now we are all subprime [Tanta's TM]..just staring at each other in disbelief that there is no client pool...no other client pool.
MLM - I always figured that the dollar would fall low enough to set off a competitive devaluation.
Makes you wonder if holding a Euro is going to help, no?
Knot,
Competitive race to the bottom AND they have their own real estate bubbles (though not all Eurozone) starting to deflate...
Knot -
I know who I think is in a position to devalue faster. If you think the wrangling in Congress will take some time, imagine the EU trying to get there.
Still, it does make one think there could be a buying opportunity coming up in things that are hard to devalue.