Bailout of Insurers

[Allan from Fallbrook]

I don’t know if the large insurers have priced this in yet. I might be wrong, but I think the reinsurance problem has just begun the process of unwinding. While the big players like AIG own their own reinsurance companies, quite a few of the other larger players don’t. If the reinsurance companies suffer from the same opacity as the banks, there will be quite a scramble to ascertain who is holding what in terms of bad debt and liabilities.

A friend of mine works for Intel, and was recently in China. He echoed what you said, and also mentioned how quickly the consumer culture has sprung up. They are apparently minting millionaires at a frenetic pace.

[4plexowner]

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic exchange dry index is an indicator of how much stuff is being shipped around the world

This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”

The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index

~

Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow

Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range

Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade

Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”

I know what my answer to that question is. We will be finding out shortly what the market thinks.

[4plexowner]

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic exchange dry index is an indicator of how much stuff is being shipped around the world

This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”

The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index

~

Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow

Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range

Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade

Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”

I know what my answer to that question is. We will be finding out shortly what the market thinks.

[4plexowner]

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic exchange dry index is an indicator of how much stuff is being shipped around the world

This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”

The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index

~

Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow

Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range

Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade

Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”

I know what my answer to that question is. We will be finding out shortly what the market thinks.

[4plexowner]

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic exchange dry index is an indicator of how much stuff is being shipped around the world

This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”

The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index

~

Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow

Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range

Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade

Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”

I know what my answer to that question is. We will be finding out shortly what the market thinks.

[4plexowner]

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic exchange dry index is an indicator of how much stuff is being shipped around the world

This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”

The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index

~

Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow

Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range

Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade

Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”

I know what my answer to that question is. We will be finding out shortly what the market thinks.

[NeetaT]

You underwrite and lose, you pay!!!! I lose a bet in Vegas, I pay!!!!!

[NeetaT]

You underwrite and lose, you pay!!!! I lose a bet in Vegas, I pay!!!!!

[NeetaT]

You underwrite and lose, you pay!!!! I lose a bet in Vegas, I pay!!!!!

[NeetaT]

You underwrite and lose, you pay!!!! I lose a bet in Vegas, I pay!!!!!

[NeetaT]

You underwrite and lose, you pay!!!! I lose a bet in Vegas, I pay!!!!!

[Bubblesitter]

I guess the net impact of the insurers going belly up is a worsening of the credit crunch. The MBS market will not likely come back as anytime soon, premium to insure these thing will probably go up big time.

The only game in town for a long time may be conforming loans bought up by GSEs Fannie Mae, Freddie Mac.

Not sure % of homes financed with conforming loans in SoCal, it must be low. Net result, more downward pressure on home prices. Anybody hazard a guess at any other possible scenario?

Large downpayments with perfect credit become even more important. I wonder who will be in position to finance jumbos or any type of exotic loan? The GSEs may be the only ones standing with financial ability

Bubblesitter

[Bubblesitter]

I guess the net impact of the insurers going belly up is a worsening of the credit crunch. The MBS market will not likely come back as anytime soon, premium to insure these thing will probably go up big time.

The only game in town for a long time may be conforming loans bought up by GSEs Fannie Mae, Freddie Mac.

Not sure % of homes financed with conforming loans in SoCal, it must be low. Net result, more downward pressure on home prices. Anybody hazard a guess at any other possible scenario?

Large downpayments with perfect credit become even more important. I wonder who will be in position to finance jumbos or any type of exotic loan? The GSEs may be the only ones standing with financial ability

Bubblesitter

[Bubblesitter]

I guess the net impact of the insurers going belly up is a worsening of the credit crunch. The MBS market will not likely come back as anytime soon, premium to insure these thing will probably go up big time.

The only game in town for a long time may be conforming loans bought up by GSEs Fannie Mae, Freddie Mac.

Not sure % of homes financed with conforming loans in SoCal, it must be low. Net result, more downward pressure on home prices. Anybody hazard a guess at any other possible scenario?

Large downpayments with perfect credit become even more important. I wonder who will be in position to finance jumbos or any type of exotic loan? The GSEs may be the only ones standing with financial ability

Bubblesitter

[Bubblesitter]

I guess the net impact of the insurers going belly up is a worsening of the credit crunch. The MBS market will not likely come back as anytime soon, premium to insure these thing will probably go up big time.

The only game in town for a long time may be conforming loans bought up by GSEs Fannie Mae, Freddie Mac.

Not sure % of homes financed with conforming loans in SoCal, it must be low. Net result, more downward pressure on home prices. Anybody hazard a guess at any other possible scenario?

Large downpayments with perfect credit become even more important. I wonder who will be in position to finance jumbos or any type of exotic loan? The GSEs may be the only ones standing with financial ability

Bubblesitter

[Author]

Posts