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Losses - $12.01/share, $32.83/share

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January 17, 2008 – Comments (10) | RELATED TICKERS: ABKFQ.DL , MER.DL2

The financial losses are huge and they aren't over.  Credit card defaults are up, and commercial real estate is now showing that businesses paid too much just like homeowners and defaults are up. 

Ambac reported the $32.83/share loss and  Merrill Lynch posted the $12.01/share loss.  I am not going back to check, but with Ambac I think the dividend was 7c, so that is a 4-500 year to pay back kind of loss...

Companies like Ambac which insured other financial companies are as of yesterday being looked at again by the corrupt bond rating companies and the corrupt bond rating companies have increased loss estimates from 14 to 19% on what these insurers are insuring, so they are once again at risk of losing their "AAA" rating...

The bigger picture on these things is the ripple effect of no longer having insurance is not priced into other financial stocks.  This is a really stupid game that everyone knows the insurance is insolvent, yet the risk and losses that other will suffer stays hidden until it is official that these companies are no longer "AAA."  This is corrupt.

10 Comments – Post Your Own

#1) On January 17, 2008 at 9:40 AM, dwot (72.18) wrote:

 My reading list this morning, there goes the pension funds...  I am sure this sector is going to hurt pension funds big time.

"CREDIT CRUNCH CASUALTY

The credit crunch has spread to a new sector of the domestic fixed-income market. Canada's $4-billion commercial mortgage-backed securities (CMBS) sector is "effectively shut down," the words of TD Securities fixed-income strategist Sheldon Dong, as financial firms close their operations.

One of the largest dealers involved in Canadian commercial mortgage securitization, Merrill Lynch, cut 25 per cent of its CMBS staff last week, the TD analyst said in a report late Monday. He did not say how many jobs were lost.

The downsizing came on the heels of total retreat from the domestic CMBS market by two other major players: A unit of Credit Suisse and Capmark Canada, a global commercial real estate finance company.

Shutting down CMBS teams in Canada is the latest sign that credit woes rooted in the U.S. subprime residential mortgage market continue to spread."

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#2) On January 17, 2008 at 10:46 AM, abitare (33.78) wrote:

dwot,

Good post. I finally broke 4000 points! My hatred of solar and shipping has come through for me.  I wish it could have broken 4000 points on a great bull market, as apposed to a credit default implosion.

I did not short these two, but Mish was right one the money with this call.  

"My Comment: Insurance from MBIA and Ambac is Worthless. Neither Ambac nor MBIA come remotely close to deserving AAA ratings. Everyone knows it, but Moody's, Fitch, and the S&P all pretend otherwise."

http://globaleconomicanalysis.blogspot.com/

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#3) On January 17, 2008 at 1:30 PM, Imperial1964 (97.75) wrote:

$32/share?  Holy Crap!!!

And the worst of it hasn't hit yet.

I'm going to have to do a little analysis tonight to prove it, but it looks to me like Ambac is close to insolvent.  I'll post a blog.

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#4) On January 17, 2008 at 3:45 PM, floridabuilder2 (99.31) wrote:

dwot you were right congrats to making the top 10... i am still languishing on the second page with my international longs and my penny stock shorts

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#5) On January 17, 2008 at 7:12 PM, Imperial1964 (97.75) wrote:

Congrats on the top 10!

Where did you get the info about the $32/share loss?  I saw the headline about Merrill,  but the only thing I can find on Ambac is about Moody's potential downgrade.

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#6) On January 17, 2008 at 10:22 PM, dwot (72.18) wrote:

http://biz.yahoo.com/bw/080116/20080116005511.html?.v=1

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#7) On January 17, 2008 at 10:24 PM, dwot (72.18) wrote:

I may have been premature, say "expected to."  This company is still insolvent...

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#8) On January 17, 2008 at 11:53 PM, Imperial1964 (97.75) wrote:

Thanks.  I had just found a brief mention of it embedded within another article.

You would think something that is enormous news like that would actually make the news.

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#9) On January 18, 2008 at 12:08 AM, dwot (72.18) wrote:

I think the bigger news is that as soon as these guys are correctly rated there's another $200 billion in write-off that they were supposed to insure.

I am at the point that I completely do not trust insurance.  I haven't had many claims and I've definitely paid far more in insurance than I've made claims, yet when something does happen, you get a run around or an excuse that it isn't covered.  And look at health insurance, the biggest pay cheques are going to those who figure out how to cut off people who now actually need their health insurance. 

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#10) On January 18, 2008 at 12:15 AM, dwot (72.18) wrote:

Mish did another blog on Ambac.  I have never read such a silly letter in my life as the one from the Chief Investment Officer of Evercore to Ambac.  And the advice to the other share holders is just as silly.

The company is insolvent, sell and take what you still can... 

 

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