I was watching news night yesterday and they were talking about all of the banking failures and said this is directly comparable to the depression, wow! It was everything we have been talking about for years rolled in to one sentence. Whilst this is clearly a pivotal moment, I really expected some big moves on gold yesterday, but alas (and again!) it hasn't happened. The fall out of this appears exponential and yet so far nothing... What will be the catalyst that sends this into an uncontainable downward spiral and gold soaring, the demise of AIG? I am still amazed they have managed to keep the wheels on MBIA and AMBAC, surely these boys are going to go pop soon. Why has there been so little noise about the monoliners, are they receiving undisclosed assistance?
Dazed and confused...
Monolines are either going down the good bank/bad bank route (with CDS/CDO counterparties taking a hit) or mothballing operations for 2-5 years until (they hope) this crisis has blown over. As they only have to pay timely principal and interest on debt they have insured, they should be able to limp along for a good few years.
Unless the US economy tanks big time (e.g. a repeat of the last 12 months - increasingly a possibility), in which case they will breach regulatory capital limits, get taken over by the NY state regulator and prompt a firesale of assets with onward impact on bank's CDS/CDO mark to markets (both on monoline collateral and their other collateral).
Monolines seem to have dropped out of the picture of woe of late, but they remain a festering boil on the arse of the global banking system.
GOLD
in Gold, FX, Stocks / Diaries & Blogs
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Monolines are either going down the good bank/bad bank route (with CDS/CDO counterparties taking a hit) or mothballing operations for 2-5 years until (they hope) this crisis has blown over. As they only have to pay timely principal and interest on debt they have insured, they should be able to limp along for a good few years.
Unless the US economy tanks big time (e.g. a repeat of the last 12 months - increasingly a possibility), in which case they will breach regulatory capital limits, get taken over by the NY state regulator and prompt a firesale of assets with onward impact on bank's CDS/CDO mark to markets (both on monoline collateral and their other collateral).
Monolines seem to have dropped out of the picture of woe of late, but they remain a festering boil on the arse of the global banking system.
Monty