Tuesday, February 12, 2008

Savior or the great bond swindle?

Buffet looks to take insured Muni portfolio off the hands of bond insures? Is it just me or am I the only one that knows that that’s not where the problem lies. Munis are only insured if they don’t need it. That’s what makes it such a great business. He is not touching the mortgages which are where the problem lies because to paraphrase “with the mortgages no one knows what the values are”, no sh*t isn’t that the whole problem to begin with? Looks like back to square one well maybe …

I know that separating the muni market from the mortgage market will decouple that market from the sub prime mess which should give investors confidence but It seems unlikely any solution is going to let the people who inject the capital walk away without taking any risk and leave the government or the market to swallow the toxic mortgage portfolio.

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