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Reneging on the $900m may well prompt an another downgrade almost immediately.
I think things are going to get interesting again.
So CR are they really going to start a 'newco' with the $900M and let their monoline slip into run off mode?
Is that your take? Are the insurance regulators going to let them do that?
What will the newco do? Take on BuffetCo? Buy REOs? What? Not trying to be completely snarky but it kinda smells fishy.
Cmon Moodys even a broken clock is right twice a day
CR,
"every time they've made a forecast, the housing market has surprised to the downside."
Hmmm...I don't actually consider what they call a forecast a forecast. If one is making "forecasts" one should actually, more than occasionally, be accurate. Their "forecasts" are wishful thinking.
Proper forecasts by these ratings asshats should have them at BBB at best, and that should have been in 0907.
IMO.
Cheers,
dryfly writes:
So CR are they really going to start a 'newco' with the $900M and let their monoline slip into run off mode?
I think their feeling is that S&P put them in run-off mode when they downgraded them.
Here's a great story: <a href=http://online.wsj.com/article/SB121321901442365679.html?mod=rss_whats_news_us">Lampert Puts Money On Housing Rebound
This guy is determined to wind his fund down to nothing....
Dear Jay Brown,
Your BS skills have certainly not changed.
The rating agencies simply woke up and realized that they had really screwed up in February. So, your positing of that as the question of the day simply provides you license to BS rather than providing any real information.
CR,
You have to go back to the advertising that has always been in the foreground with MBIA.
They have ALWAYS said...we don't rely on S&P or Moody's analysis or ratings. We are credit market pros and we do our own.
For them now to be trying to pawn off analysis of credit issues on the ratings agencies is a total cop-out and a renunciation of what they've always said and believed.
Yes, they are talking about how S&P and Moody's rate MBIA, not MBIA-insured housing-related bonds.
But if MBIA were living up to its mantra, MBIA would have its own worst case analysis to share with the world. And it wouldn't be rose colored glasses.
You see, this is the real hype at the core of the municipal bond insurance business.
Through 30 years of good times, we did our own analysis and had a zero loss mandate. When things turned against us in spades, our analysis got very blurry and really disappeared. In the end, there's no accountability. And for MBI, the end is very near.
None of these rating agencies have any credibility anymore. The fact they still garner so much media attention as if what they say still matters is a testament to the tenacity and endurance of human stupidity.
Here's a great story: Lampert Puts Money On Housing Rebound
Ya I read that over at Barry's Place... my thought was if those companies don't go BK he'll eventually be right someday... two key words: if & eventually.
there are some very interesting comments over at Yves blog on this. the comments are excellent and i had some similar thoughts about the potential legal ramifications and the last rounds they raised. This is going to be very interesting...
After reading Jay Brown's letter in its entirety, I believe that it is likely MBIA's insurance company is weeks away from being taking into receivership by the New York State Department of Insurance.
Jay Brown has tipped his hand as being aligned with MBI shareholders, not policyholders. It's a conflict-of-interest smoking gun.
The only adversary who can stand up for insurance policyholders as a counter balance is NY State.
The primary goal of NY State, I think, will be to protect municipal bond insurance customers (issuers) and their bond holders. I do not think the state places as high a priority on housing-related bonds or derivatives.
I would expect that Eric Dinalo and his department are already working on the MBIA insurance takeover plan. Once they take over, Jay Brown is gone. He is just a semi-senile cheerleader for shareholders anyway. And his letter is either deluded or intended to delude.
Bob_in_MA writes:
Here's a great story: Lampert Puts Money On Housing Rebound
This guy is determined to wind his fund
down to nothing....
WSJ just wants to sensationalize. You just drank the cool-aid. His portfolio is $10BB. he has put about 6.7% of his portfolio in housing stuff. That is too little to bring it down to zero. Has made a big bet in Citi.
Anyone betting on the upside of housing right now will be greatly disappointed. Not sure why it is so difficult to understand fundamentals. Mr. Lampert will be financially hurt.
I'm now convinced that except for about 5 investors, big investment is just a dart board and right now that dart board is so far away these "asshats" are completely missing the board.
Mr. Lampert will be financially hurt.
Him hurt? Not according to the Law of OPM.
Losing money hurts whether it is on the front side or back side.
dryfly,
"Him hurt? Not according to the Law of OPM."
Yeah...disgusting isn't it?
Cheers,
Has made a big bet on Citi, and also made a bit bet on Sears (you're great grandmother's favorite mail order company-if you will in Nebraska) and KMart for the real estate. KMart was really hot in the 1980s, then WalMart happened, then Target found a way to differentiate, then we ran out of money.
...And Buffet comes out looking like a genius, again...
KMart was really hot in the 1980s, then WalMart happened, then Target found a way to differentiate, then we ran out of money.
Coincidence or causation?
coincidence or causation
the process of trying to beat your competitor
Nikkei taking short walk below -321.78
Tora Tora Tora
So MBIA starts a new co they own, then BK because they used all thier money to start a new company, MBIA then loses new company in BK. How can that work??????
Just like when the very first hedge funds managed by Bear Stearns reported problems, there was a news blackout and they seemed to go into silent mode for quite a while. When MBIA and AMBAC disappear, I expect the same thing. We'll all be wondering, "what happened to what they were insuring?" We'll be wondering about this because the top officials will have a complete lock down on disclosure...air tight. It's how it goes.
OT,
I never knew there such a thing as a 'subprime credit card' ...
FDIC Seeks in Excess of $200 Million Against Credit Card Company and Two Banks for Deceptive Credit Card Marketing
I think I follow his line of argument. S&P and Moody's are setting their ratings based on forecasts of home price declines and losses which make their way through to bond insurers. Their view of the world has gotten markedly more pessimistic.
No problem there. People at this blog were 1-2 years ahead of the rating agencies on that one.
Now, there is a second point, which I think he is correct on. His duty to shareholders is to maximize long term value. That is not necessarily the same thing as maintaining a particular rating. For most companies who are manufacturers or retailers, this is true. I'm not quite convinced for MBIA.
Now, he raises an interesting prediction, which my work allows some insight on. He says the debt MBIA backs is rapidly being retired, refinanced, or cancelling insurance coverage. I hate to say it, but he's right. However, he needs to exercise some caution about selection bias. A large number of auction rate securities have been refunded into something else, and the original bonds were retired. Thus, MBIA isn't at risk for those bonds. Other bonds are maturing without incident. The real question is whether the bonds that are getting refunded are precisely the ones which wouldn't have problems anyhow. I have a funny feeling they are disproportionately bonds where the issuer has a good underlying rating.
If someone who tracks MBIA wants to do that analysis, I think it will be very insightful.
Let me see if I get this: MBIA is doing a buy and bail, right?
Back when dinosaurs ruled the earth EL made a ton of money but lately his timing is O-Joe in nature.
After ESL/sears's pullback a while ago I've been looking for a entry point and it gets worse and worse.
I guess ez money makes everybody look like a genius.
I read RayOnTheFarm's link regarding FDIC action on sub-prime credit card issuers @ 11:27 pm.
My immediate reaction was that the banks were marketing to desperate people who ignored any downside in order to get the credit they needed, or at least thought they needed.
It would be an interesting exercise to see what these credit cards were used for; food or frivolities? That would tell us a bit about the 20% of the population with "sub-prime" FICO scores.
What's more desperate, the "subprime" credit card, or the 401(k) debit card?
Workers warned about 401(k) debit card perils
| Reuters
Oh gosh, this doesn't sound good
Central bank body warns of Great Depression
BigR,
401K debit card. You can't get blood from a rock but you can from a 401K.
Cheers,
ChopperOne,
Perhaps you've missed comments with the term "Greater Depression" in them.
Yeah...many here have been tracking it.
Cheers,
Nikkei looking good. Nice close today, although volume on the indices was only moderate.
If we can get the CR vistor indicator down below 50 in the next hour or so we should be able to look forward to a decent down day tommorow.
How's this emoticon for a greater depression:
(((((((((((
The new reality is to "walk away" - yup we insured you, but today we are walking away...
The rating agencies are staying well aware from this mine field - they have everything to loose
asian indecies all down, all, one to three percent at one in the afternoon... (tomorrow) its thursday in Niho
There is a need for a site where insiders can
reveal dirt in confidence after validating their
identity (and legitimacy) with some trusted
gatekeepers.
Their identity would be subject to discovery
through court order, but even then might not be
made public unless they become a defendant.
Fat chance ?
oh pishah mock and Barley...
It's all bloody contained. You're getting your signals mixed. I refuse to believe S.S Bernutty and pals don't know what they're doing...
....
....
Damn! gotta make sure the Super Colander Tin Foil Hat has power.
Cheers,
O/T
Asia seems to be all in the red. Financials taking it on the chin.
The PPT will be on full alert tomorrow.
Mainland factory prices rise 8.2pc as costs surge
Fastest increase in 3 years shows inflation pressures remain
China and India inflation pressures as bank rates rise to cool price increases...
Guess what they are already in the system. Now what...Export the goods at the new prices and inflate other economies
the little dutch boy only had ten fingers
wonder how many the PPT has
many i suppose
but
we will see
i own the straddle
cause i know i don know
Could June be the new January? They better get this turned around soon else it'll blow through all the recent lows before OpEx.
"The economic disaster will get worse"
The economic disaster will get worse - Telegraph
OT: recent tornadoes in MW
Everyone says that the area from ND south to TX is the Saudi Arabia of wind, and, of course, we need to capture the wind for energy dependence. But, if there is one thing that is more complex and interconnected, it is the weather. The adage is that a butterfly flapping its wings in Tibet can cause a tornado is Kansas.
Did anyone ever consider creating thousands of acres of wind farms might alter weather patterns? Now, that would be the ultimate irony.
the reason its so windy in Oklahoma is because texas blows and kansas sucks
Krish: First time that I've comments on the situation from across the pond.
Makes me realize how ridiculous it is to blame political parties with our current situation. The characters change but the game's still the same.
"It is ironical that a Labour government should be responsible for enabling the property speculators to flourish whilst their supporters have been taken to the cleaners - repossessions; negitive equity; inability to get on the property ladder."
"You can blame Brown if you like but the real problem has been the destruction of our manufacturing base.
We are too dependent on everyone else for pretty much everything"
The adage is that a butterfly flapping its wings in Tibet can cause a tornado is Kansas.
I've been killing butterflies here in San Diego,...so far so good,...no tornadoes in Tibet.
Anyone in Kansas thought about sending Tibetans some insecticide?
Why do all the trees in Connecticut lean west?
Because the Yankees suck.
Now if we could only harvest that energy of the Yankees sucking.
The downside here is that I'm afraid the New Yankees repeat that win/lose pattern of last year, sucking before the all star break then playing good ball the 2nd half to become contenders (or pretenders).
The Black Swam author said that that chaos theory adage "a butterfly blows Kansas and Tibet has an earthquake" is commonly misunderstood.
I think I just ran an experiment showing that Americans misunderstand that adage.
I think a more commonsense line of thought is whether the lights go out before we get the wind generating capacity up.
Why does Kansas bury their farmers only three feet deep?
So they can get a hand out.