Very few of Ackman’s critics have read what he has written. He has repeatedly given regulators proposals about what to do to protect the insured subs.

Moreover, investors who have been on the monolines’ conference calls for years have written to tell me that the stories that have appeared in the press, with specifics as to what the ratings agencies said in private to the companies, show them to have been liars. That is probably a big part of why the market have been down on them; they’ve shown they aren’t truthful.

Monolines, together with the rating agencies, business is a scam, and every municipality is waking up to the fact. Defaults on munis are orders of magnitude lower than on corporate “AAA” paper, there virtually is nothing to insure against. The trash CDOs were rated AAA, and every pension fund bought those, but the low-risk munis need insurance? Ackman is right, and his interests are in line with the rest of the country, and every town in it.

Did I say that? Of course the monolines are going to talk up their business. The point is that Ackman wins if the monolines go under. Even if he’s right about their financial position, and he has been so far, there’s no reason whatsoever to listen to his proposals for a solution. His interests are diametrically opposed to those of most of the country, indeed the world.

The Invisible Hand has many tenacles, eh? It also shows how vulnerable we are to an Orson Welles-type media event ending in financial bliss or chaos, especially when you realize there is an infinite source of Orson Welles-types sources (i.e. CNBC, etc.) out there.

God help us all. Thanks for your great website/blog.

Steve B.
STL, MO

That’s all true, but at the same time, pretty much everything Ackman has said and done over the last few months has been intended to kill the monolines. His testimony to Cognress was entirely self-interested.