Here’s the theme of a best seller, another in our series of the Best of Capitalstool.com.
“All the Kings’ men and all the Kings’ Horses cannot put the A-A-A rating back together again!
How many times have we been told about the bail-out of the bond insurers?
First we had the Federal government bailout discussion. Did not happen and can’t happen, but that’s another story. Then we had Wil Ross on Crapvision in January and saying he is looking at the bond insurers. Did not happen. And mind you, all these stories caused the market to rise for a day. Then we had Warren Buffet’s pitch. Did not happen. Then we had the state bail out discussion. Now we have the bag holders, rather the banks, looking to buy an AAA rating.
The story on Crapvision just demonstrates that you can’t make a Triple AAA rating out of junk, nor can you buy a AAA rating. But this is what the pig men have been doing.
Their thinking is bankrupt and so is their system.
But more importantly, the article really tells you how desperate things really are.
This latest bail out story will have the opposite effect. On Monday, if a deal is announced the banks stocks will be sold again. Just like they were sold after the government SIV deal fell apart forcing the banks to bring back that bad debt onto their balance sheet.
When will folks realize they can’t fix this mess?
Next Best Seller: Bond Rating School for Dummy’s entitled:
How to get Triple A Ratings on Junk.
Of course this best seller has already been written.
All these “in-process” blow-ups have to be the best “Who-Dun-It” stories of all time.
What a pathetic mess.
Thanks to Schonthaler for that post!
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This is a variant of the failed M-LEC plan whereby the primary beneficiaries are were the entities injecting the funds merely to defer the day of execution. One can the oz of prevention logic but it is hardly coming from true external sources. This is simply a self-funding scheme aimed at maintaing an artificial ratings and shows clearly the shameful interest conflicts embedded in the whole CDO insurance coverage and rating systems IMO.
Wouldn’t these banks be better off simply paying bribes directly to Moodys, Fitch, and S&P?
Whatever became of honor among thieves?
There is a way to bring all the FC onto the books; don’t count it as cash! “Cash equivalents” are not cash, as we have found out. Let’s do something truly innovative; let’s call everything by it’s name.
Cash = Cash.
Bonds = Bonds.
CDO and all like it = Betting No cash value at this time.
All forms of MBS = 50 cents on the dollar
Stocks = 50 cents on the dollar
This would have the effect of reducing FC to Zero in no time. Of course, it would put a drag on lending and borrowing, slow down the economy, and make us all live within our means, but nobody would lose their house, no matter how humble. Bitter medicine, but did you see what economists predict will happen when FC evaporates and money is worth 0 cents on the dollar?
I suspect the ultimate pigmen objective is to have a taxpayer bailout so massive as to artificially prop up home prices under the rubric of averting a deep recession. There were not so subtle hints that this is their goal in today’s NY TIMES.
None of the other abuses spotlighted by the credit meltdown, including the real estate meltdown, could have happened without the fraud of labeling credit deficient mortgages as AAA.
The securitizers and the ratings agencies have committed the crime of the century. It looks like they will get away with it too. The price for that will be the integrity of the credit markets will never be whole again.
Doesn’t anyone do simple math anymore? Why would a bank invest $2 billion to insure a trillion dollars of risk?
Ok, let me get it right: The banks have in their portfolio AAA junk insured by MBIA & AMBAC (the only evident reason why they got this high grade label)and if these bond insurers get downgraded by the rating agencies, that AAA junk will not be ‘investment grade’ quality and as such will have to be liquidated. So the banks are trying to come up with a plan to save the bond insurers in order to keep that AAA junk in their portfolios and not realize the losses.
Ha-ha-ha-ha-ha-ha-ha-ha-ha…excuse me for my big laugh but I cannot contain it. Isn’t this equivalent to drug dealers bribing judges in order not to get prosecuted and go to jail for their heinous crimes.
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