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December 05, 2007

MBIA Shares Drop After Moody's Says Capital in Doubt

This is a must read - "MBIA Shares Drop After Moody's Says Capital in Doubt".

Some of the richer passages:

"The loss of MBIA's top ranking would cast doubt over the ratings of $652 billion of state, municipal and structured finance bonds that the company guarantees.

"It's Moody's firing a warning shot saying 'you have two weeks, so do something,''' said Paul Berliner, a trader at Schottenfeld Group, which manages $100 million in New York. "The drama behind MBIA and Ambac should be the most important focus for the entire financial sector right now. Everyone should be on the edge of their seats wondering how this plays out.''"

$653 billion at risk! That is more than anyone has owned up to so far, combined, if my memory isn't shot. Shit, meet fan. Of course the market is rallying hard today... ho hum.

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