RE: CARNAGE NOT DONE...........bob pisani of cnbc wrote today...........
"But Wall Street is once again worried about subprime, but there is a new wrinkle now: while financial firms like Merrill Merrill Lynch & Co have been aggressively writing down UNHEDGED exposure to subprime CDOs, there is a whole other area--HEDGED exposure, that has not been touched to a great extent.
Look at Merrill. Merrill went out and bought credit default swaps on about $20 billion worth of CDOs (collateralized debt obligations)—this is where most of the subprime problem is. This is basically a put option; if the CDOs turn south, Merrill is (theoretically) protected.
Here's the problem: the counterparty on most of these credit default swaps are the monoline insurers--Ambac AMBAC Financial Group Inc
and the others. It's a small group. Last night Moody's came out and said they have placed Ambak under review for a possible ratings cut. Any cut to something below a AAA rating would be disastrous for the company.
Ambac now says they probably won't be able to raise capital in the manner in which they expected.
What happens to firms like Merrill who bought protection from, say, Ambac and other monoline insurers? If Ambac and MBI go under, they are obviously not able to take on the exposure from Merrill or anyone else. This means that all this supposed protection that financial firms bought may be worthless and they may have a lot more exposure than they thought."
WOW!!...........now thats scary in that what they thought might be protected interests may not be. What idiots these institutions truly r - and yet they r so willing to treat the average hard worker seeking money like a true piece a crap.