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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (110609)1/18/2008 6:13:02 PM
From: Knighty Tin  Read Replies (2) of 132070
 
Ambac has been downgraded and may not be able to write any new business. Like a shark, if a bond insurer isn't moving, it's dying. I've only been predicting this for 15 years, so I feel like I'm vindicated and ticked off that I was wayyyyyy too early. When they announced they were going to insure something besides munis, I got scared. Munis are safe. You can insure them at very low margins and make money. Munis rarely default, and, when they do, the insurers usually get all their money back plus court costs. The same cannot be said for some of the goofus derivatives they've been insuring lately. Yet, they have not expanded the margin to cover this much greater risk.
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