John Hempton_

MBIA, Ambac and GICs: The Other View

Crocodilan gave the reason why I think Ambac and MBIA might be worth speculation - but other companies are not.

A financial that loses the faith of the markets is usually dead. Witness Indy Mac. What happens there is that their funding disappears.

Ambac and MBIA are NOT FUNDED MODELS. Its a trivial point - but they have issued guarantees. If the market loses faith - so what. Put them in runoff.

If it turns out well then all is well.

But with Indy Mac the market lost faith and the government (aka FDIC) stepped in.

Crocodilian misses point. These do not require faith of the market. If anything faith of the market is a BAD THING because they can buy back some CDS issued at a discount...

J