This is really starting to scare the crap out of me:
MBIA Inc. and Ambac Financial Group Inc., the two biggest bond insurers, have a more than 70 percent chance of going bankrupt, credit-default swaps show.
Prices for contracts that pay investors if Armonk, New York- based MBIA or New York-based Ambac can’t meet their debt obligations imply a 73 percent chance the companies will default in the next five years, according to a JPMorgan Chase & Co. valuation model.
Ambac shares plunged 52 percent yesterday and rose 11 percent today to $6.94 in early trading on news the company was scrapping a plan to raise equity. MBIA dropped 31 percent yesterday and rose 0.9 percent in early trading today to $9.30. Credit-default swaps on the companies, which rise as confidence erodes, are trading at record highs.
I think what scares me the most is that from everything I have read in the last week, no one knows where the rot is- remember, I am a layman, but apparently this stuff was sliced, diced and repackaged so much that there is no telling where all the bad loans are- which means everything is vulnerable. Again, if I am mis-characterizing this, please correct me.
And I really don’t see what a piddling 150 billion stimulus package is going to do.