Friday's news was about the munis
Mar. 1st, 2008 12:35 pmThe big news Friday wasn't the decline in the stock markets, but the other one, in municipal bonds. There was a huge selloff - billions of dollars worth - over the last few days but Friday in particular. MaxFunds calls it a crash, which may be a little hyperbolic, but then, these kinds of moves - as small as they might seem in comparison to the stock market - are still pretty severe. Pimco reports that it's happening because of margin calls, which is how the 1929 market crash got going, which probably isn't very cheerful, but is the first thing that leaps to mind. The Bank of Montreal is an example of an institution facing these calls. In their case, the calls are worth Can$500M (US$510M at time of story).
Relatedly, AMBAC posted US$650M in January credit derivative losses, a number a variety of people think is understated, if anything, and MBIA - one of the big monoline insurers I've talked about repeatedly - says gosh, nobody wants to buy our insurance now. One has to wonder how they're going to be able to pretend to pay off claims if they're already broke and nobody is sending them any new business.
Finally, the bad-but-quite-likely case is finally reaching columnists at CNN - or one in particular, anyway - who talk with Dr. Roubini about how bad it's likely to get, vs. how bad it could get, but probably won't.
Relatedly, AMBAC posted US$650M in January credit derivative losses, a number a variety of people think is understated, if anything, and MBIA - one of the big monoline insurers I've talked about repeatedly - says gosh, nobody wants to buy our insurance now. One has to wonder how they're going to be able to pretend to pay off claims if they're already broke and nobody is sending them any new business.
Finally, the bad-but-quite-likely case is finally reaching columnists at CNN - or one in particular, anyway - who talk with Dr. Roubini about how bad it's likely to get, vs. how bad it could get, but probably won't.