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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (75113)	2/23/2008 2:19:39 AM
From: Elroy Jetson	Read Replies (5) \| Respond to of 116555

You realize the banks are trying to play make-believe with the Ambac bail-out. According the Bank of America, banks will need to write down $340 billion (of CDO debt) if the bond insurers fail. When Ambac volunteered to split into two firms, one for Munis and the other for CDO crap, the banks suddenly realized it would be less expensive to bail out Ambac than to write down their CDOs. Of course bailing out Ambac to continue a AAA rating on their CDOs doesn't mean their CDOs aren't actually worth 70% less than face value, but they get to continue pretending they are still worth full face value. .