AMBAC bankrupcy = ? impact

[Adeptus]

I've been reading headlines since 2007 about the downward spiral of the 2 largest bond insurers, AMBAC & MBIA (wikipedia links).

But at long last, looks like AMBAC is about to topple over as Bloomberg reports:
Ambac Faces 99% Chance of Default as Deadline Looms, Swaps Show

Is this what could trigger the stock market leg down in Q4 2009? Or is a $23.1 billion default / halting in payment of CDS what could cause the $600 Trillion of unregulated OTC derivatives to finally domino? . Click the following link for the full 55 Minute PBS video on The [derivatives] Warning.

I see the scary Bloomberg headline, but I'm not educated enough to understand the actual potential cascade effects of an AMBAC bankrupcy... assuming course, they don't get bailed out.

Your thoughts?

Thanks,
Adeptus

[Jay]

Re: AMBAC bankrupcy = ? impact

I've been reading headlines since 2007 about the downward spiral of the 2 largest bond insurers, AMBAC & MBIA (wikipedia links).

But at long last, looks like AMBAC is about to topple over as Bloomberg reports:
Ambac Faces 99% Chance of Default as Deadline Looms, Swaps Show

Is this what could trigger the stock market leg down in Q4 2009? Or is a $23.1 billion default / halting in payment of CDS what could cause the $600 Trillion of unregulated OTC derivatives to finally domino? . Click the following link for the full 55 Minute PBS video on The [derivatives] Warning.

I see the scary Bloomberg headline, but I'm not educated enough to understand the actual potential cascade effects of an AMBAC bankrupcy... assuming course, they don't get bailed out.

Your thoughts?

Thanks,
Adeptus

After Lehman, I think everyone gets free money. Except those who actually work.

[thriftyandboringinohio]

Re: AMBAC bankrupcy = ? impact

I also followed the AMBAC / MBIA saga for quite some time. Conditions are different after the bailout. Before, only the bond insurers vouched for the huge balance sheet entries for CDOs on the books of large banks. Now the US Gov't and Fed and TARP and TALF have taken on much of that role with a combination of purchases and guarantees, so the failure of Ambac won't have the same effect now that it would have in 2007.