Bond insurers like Ambac and MBIA are the next shoe to drop. If they default, and it’s looking highly likely, then the banks and other’s with bonds they insure on their books could be facing writedowns that I’v been told will make CDO’s look like child’s play.

My only saving grace is that BRK just got into that business and with no bad loans on their books they might own that market for the foreseeable future. BRK has been up for the last few days.

Look for the Fed. Govt to step in soon. That $500 billion we’re spending in Iraq would do wonders here.