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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: timers who wrote (89305)4/3/2001 1:59:26 PM
From: patron_anejo_por_favor  Read Replies (1) of 436258
 
I'll give it to you in 2 sentences (applies to ABK as well).

Business model depends on providing "insurance" for defaulting debt instruments, without adequate reserves to cover said obligations. Appears to be producing steady "income growth" in good times when default rate is low, but will be absolutely routed in a recession (especially the deflationary kind).

Disclosure: No position on either MBI or ABK for the moment.
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