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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: XBrit who wrote (38763)	11/18/2000 2:43:42 AM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

More Saturday morning reading: Yesterday's Credit Bubble Bulletin is a must-read, perhaps Noland's finest effort to date. We've been trying to peg where the ultimate risk falls in some of the ABS/MBS credit insurance hedge positions. Noland names some names. prudentbear.com The first line of defense in the event of defaults impairing mortgage backed security defaults is usually those credit impairment poster children, the GSE's. In other forms of ABS's and more exotic credit insurance, some less well-known players loom large: So, today we are looking at a market for credit derivatives estimated to now surpass $1 trillion, as well as the thinly capitalized GSEs that have guaranteed “timely payment of principle and interest” on more than $1.8 trillion of mortgages-backs. Add to this, a truly staggering amount of credit insurance written by a host of aggressive financial institutions. The two largest credit insurers are MBIA and Ambac Financial. MBIA now has net (gross insurance less amount reinsured) insurance written – “Net Debt Service Outstanding” – of a staggering $670 billion. These policies are supported by a “capital base” of $4.4 billion, thus creating a “capital ratio” of 152:1. At Ambac, net insurance – “New Financial Guarantees in Force” – of $402 billion is supported by “capital” of $2.7 billion, or 149:1. So, for these two credit insurance behemoths, over $1 trillion of credit insurance has been written, supported by a capital base of $7 billion. I will leave you to ponder how valuable all of the credit derivatives, guarantees, and credit insurance will be in the event of the type of major financial and economic dislocation that I believe is the inevitable consequence of truly unprecedented excesses. To underscore the systemic posed by such widespread reliances on these undercapitalized "insurers", Noland points out: Over the coming weeks and months, it will be interesting (and critically important) to see if market confidence wanes regarding the mountains of credit derivatives and credit insurance. If and when sentiment turns, we would not want to be left holding asset-backed securities, asset-backed commercial paper, or any of the sophisticated “paper” created during this bubble. With the very poor initial quality of so much boom-time lending, and with the dramatic deterioration in the general credit environment, there are enormous quantities of securities in the marketplace backed by weak (and weakening) underlying loans/collateral. It may be triple-A, but “buyer beware.” Here's a link to MBIA's(symbol-MBI) profile (for fun, click on the "financials" link and check out their assets...then compare it with the notational value of their insured positions) biz.yahoo.com ...and here's Ambac (ABK): biz.yahoo.com Of course, it the larger financial institutions are expecting these guys to foot the bill in the event of a major recessionary downturn, they may get a rather rude surprise. Therefore the banks themselves (espeicially the more derivatively-challenged ones...you guys know the usual names) are certainly on the hook as well. Finally, even if more questionable loans are starting to be turned down by banks, it's clear that the ABS game is still running at full speed, "offloading" all that loan risk to the money markets, insurance cos and others desparately seeking "quality" short term return: biz.yahoo.com Got T-Bills?<NG>

To: XBrit who wrote (38763)	11/18/2000 8:44:33 AM
From: Oblomov	Respond to of 436258

Amazon.com joins the old economy: dailynews.yahoo.com

To: XBrit who wrote (38763)	11/18/2000 10:14:59 PM
From: chic_hearne	Respond to of 436258

He forecast the end of phase two will come after a "climactic four-five days that will really knock the stuffing out of the market" and take the Comp to as low as 1800 -- or more than 40% below Friday's close. Someday he will be right. I lust for the day I can be a value investor and go long and then go on vacation for months and not have to worry. But at this point, it's damn frustrating dealing with bear market rallies and in my opinion we are a minimum of one year from a final bottom. Crash poots are attractive, they are still giving them away if you go front month. My guess is in a 1-5 day stretch these players that have been giving away crash poots will have years of gains wiped out as money flows to this threads accounts skyrocket. -ggg-