oldlures1

The Stock Market: Searching for Signs of Intelligent Life

I forgot to add to my comment...

And while the mkt is distracted by the chaos, the AA-downgrade effectively shuts the monolines doors, thus allowing BK's newly opened bond insurer nearly unfettered access sans competition from those pesky #1 and #2 players, MBI and ABK.

The rating agencies downgraded both ABK and MBI without conducting a review. That's a fact, and one you won't see pointed out in the headlines. [note: Moody's has initiated a review, to be concluded in the weeks ahead]. In either case, it's odd, wouldn't you say? Downgrading MBI and ABK impacts over $1 trillion in securities; quite a bold move in the absence of a thorough review.

Furthermore, the rating agencies substantiate (albeit weakly) their actions now by questioning "franchise value"; the ability to generate new business. This too is odd, because if you look at the numbers, not the headlines, you'd see that MBI was the 3rd largest originator of bond insurance this year. Obviously, there IS franchise value...today...that would likely increase with time. But that door has been effectively shut by the downgrade, thus ensuring whatever franchise value they had is now gone! Again, doesn't this strike you as odd? It should.