http://www.nakedcapitalism.com/2008/02/new-bond-insurer-storyline-downgrade.html Sun, 22 Nov 2009 04:39:16 -0500 http://wordpress.org/?v=2.8.4 hourly 1 http://www.nakedcapitalism.com/2008/02/new-bond-insurer-storyline-downgrade.html#comment-3724 Lune Tue, 05 Feb 2008 22:38:00 +0000 http://www.nakedcapitalism.com/2008/02/new-bond-insurer-storyline-downgrade-likely-but-not-so-terrible/#comment-3724 Downgrading the monolines will lead to mass downgrades of the bonds they insure. IMHO, that means the effect should be similar to the ratings agencies directly downgrading a whole rash of bonds at once. This has been happening almost every week, with the most recent being >$100 bil downgrades in one fell swoop. So far, the financial industry has taken these downgrades and still survived (although it's been a painful process to be sure). So would the monolines being downgraded lead to armageddon any more than the mass downgrades already taking place? Downgrading the monolines will lead to mass downgrades of the bonds they insure. IMHO, that means the effect should be similar to the ratings agencies directly downgrading a whole rash of bonds at once. This has been happening almost every week, with the most recent being >$100 bil downgrades in one fell swoop. So far, the financial industry has taken these downgrades and still survived (although it’s been a painful process to be sure). So would the monolines being downgraded lead to armageddon any more than the mass downgrades already taking place?

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