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Thoughts on Ambac Bailout, MBIA, Berkshire's Muni Bond Backing

Disclosure: no position in ABK, MBI
But, I'd have to say there was/is an element of manipulation with a hint of a deal and a lot of weasel room / ambiguity that it would be somewhat difficult to dispute its plausibility.
The strange thing is: why should almost the whole market go up with a potential (or actual) capital solution to one existing, financially troubled, insurer? There are new market entrants such as Buffett and likely others, which can fill the void of coverage needed. Is finding a solution to this one company: (a) the panacea for the whole market? (b) putting more into the hands of the consumer to drive the economy?

Hardly think so, so go figure when technology companies and other seemingly less correlated industries suddenly rebound.

The credit market meltdown can be attributed to lack of risk exposure tracking/management and possibly some common sense. Spreads/premiums were decreasing to rather low levels. Many derivatives were/are involved. In contrast to an underlying security with derivatives, there is a winner and a loser. Too many persons on one side of the market. Oh, and of course, the underlying underwriters/insurers of the credit risk letting their underwriting discipline disappear. And how about that AIG which forgot to consider (and/or record) the credit risk quality of the underlying companies (vs just the quality of the securitized vehicle)? The "pump" is certainly on at AIG with the WSJ publishing multiple articles to defend the stock.

Is the credit situation an acute (very hard hitting, one time) event or is it a chronic (ongoing, still hard hitting though we may think it is a shock at the magnitude of the first round, future rounds are quite bad also) event?

More problems in the credit market in my opinion. It's also amazing how overseas markets rocket when there is a hint of a recovery in the US economy -- ya think it's fixed overnight? for every sector?