U.S. Credit Markets Collapsing

[katty]

more: http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1453

U.S. Credit Markets Collapsing!
by Martin D. Weiss, Ph.D. 02-18-08

The U.S. credit markets, the giant growth engine that powers the American economy, are collapsing ... with few credit sectors spared from damage, few investors escaping losses, and little hope of federal action that's quick or strong enough to make a major difference.

Here's what's happening ...

First and Foremost, the Fall of
The Nation's Three Largest
Bond Insurers Is Accelerating

This is the "Great Ratings Debacle" I highlighted last year.

And now, the critical watershed event that I said would trigger the next phase — the collapse of the bond insurers' triple-A ratings — is here in aces and spades.

Without the triple-A rating, their whole reason to exist falls by the wayside: They cannot enhance the credit of bond issuers. They cannot do more business. They may as well close their doors and go home.

The facts:

Financial Guarantee Insurance Co. (FGIC), the nation's third largest, just lost its triple-A rating last week. Moody's literally gutted its rating by a full six notches in one fell swoop.


At the same time, Moody's warned that unless FGIC can raise the needed capital, it's ready to cut FGIC's rating to a hair above junk.


To underscore that it means business, Moody's has already downgraded FGIC's senior debt to junk, threatening to drop it to deeper junk.


Ambac's triple-A rating was zapped by all three major rating agencies in late January.


Next, MBIA is on the chopping block, slated to lose its triple-A rating within a matter of days.

[annabanana]

1. I don't understand it. . . and that usually means

that I will end up paying for it, sooner or later.

[Systematic Chaos]

2. It just means that the banks are next, followed by the stock market

and all our jobs, for what that's worth.

Nothing to see here... move along people.

[snappyturtle]

4. Time for a strong alcoholic beverage! n/t

[snappyturtle]

3. I surely wish I understood it. On second thought.....maybe not.

This doesn't sound good even though I haven't a clue. Guess I have something in common with McCain. How awful is that?

[bemildred]

5. Moody's is going to get itself replaced with someone that will play the game. nt