Wednesday, December 22, 2010

AMBAC 2010's Bear Stearns?

Media preoccupation with other matters, either the WikiLeaks drama or the Holiday Season, has meant that the bankruptcy of AMBAC, the second largest bond insurer before it suffered huge losses on risky mortgages, has gone relatively unnoticed.

The Global European Anticipation Bulletin issue No. 50 is suggesting that this oversight on behalf of the media isn't a complete accident, noting the hyperactivity of e.g., the Financial Times which has been publishing two or three articles a day on the so-called Euro Crisis, a crisis which the Bulletin dismisses. It points out that no investor has lost money on the recent Greek and Irish crises whereas tens of thousands have lost considerable sums in the recent US muni crash.

According to the GEAB article, the US Muni crash is only a minor harbinger of things to come and it foresees a major crisis in sovereign debt in the coming year at which time the Ambac failure will be likened to the way in which Bear Stearns' failure preceded the earlier crisis by a year.

Anyone with any interest, which is to say everyone, will want to read the article and pay attention to the items referenced in the footnotes.