Owen

Ambac Collapse: Anticlimax of the Week

Michael,

You claim that "any company whose business model depends on maintaining a certain debt rating has a fatally flawed business model to begin with." But tell me, would you buy life insurance from a company you suspect might not outlive you?

Every insurance company on earth depends on its credit rating for survival. No insurer can possibly cover a worst-case scenario in which all claims arrive at once. The days when an insurer's assets could have covered all possible underwritten claims have ended about 300 years ago.

Ambac, MBIA: Thinking About Book Value; Looking Forward to Earnings

Actually, both judgment and judgement are legitimate spellings, according to all major dictionaries. Glassbox uses the older British spelling, while you use the more common approach of showing off your ignorance.

P.S.: Using a broken link for your "My Website" robs you of your credibility.

Ambac, MBIA: Thinking About Book Value; Looking Forward to Earnings

The GAAP mark-to-market CDS number uses the market to obtain the view of all market participants and assign a value for the portfolio at which a third party is willing to buy or sell the assets. The "analytical adjusted book value" uses the unsupported opinion of one highly-biased individual with an undisputed interest of presenting the company he runs in the most favourable light. Would Mr. Brown be willing to buy that CDS portfolio at the "analytical value" he assigns it using his own money? If so, he'd be the only one, since the market clears at a much lower price. This is one case where GAAP got it right.