Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Elroy Jetson who wrote (75114)	2/23/2008 8:49:08 PM
From: Sunny Jim	Read Replies (1) of 116555

<<According the Bank of America, banks will need to write down $340 billion (of CDO debt) if the bond insurers fail>> This is truly unbelievable. If the banks would have to write down $340 billion, how in the world does a $5 billion investment save that? Somewhere there is a number (apparently unknown or at least not divulged) of the amount of insured stuff that is or has a high probability of defaulting. Obviously that number exceeds the capital resources of Ambac or there wouldn't be such a stink about it. My guess is that it is probably in the middle of zero and $340 billion, so that's what the banks will ultimately have to pony up. Are they between a rock and a hard spot or what? It's pure stupidity to think that putting anything into Ambac isn't throwing good money after bad.

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