prospector

Beware of the 2008 Sucker Rally

Warren Buffet is a very smart investor. Absolutely, he's trying to make a profit off of the "deal" he offered to the bond insurers. He offered to take ALL of the nearly 0% risk muni bonds off of the "big three" insurers hands and leave them with the subprime junk bonds. This effectively removes any certainty of income for the companies in the future after the subprime worries are a thing of the past.

Buffet, in my opinion, doesn't care if MBI or ABK goes bankrupt. I don't believe there's enough junk in their portfolio that would cause them to go bankrupt. Berkshire Hathaway, owned by Buffet, is in competition with MBI and ABK. Why would Warren not want 2 less competitors.

The offer he made was to help speed up the insolvency process of the insurers in question.