Bad Dream

Some will win, some will lose
Some were born to sing the blues
Oh, the movie never ends
It goes on and on and on and on
--Journey

Laugh of the week has to be the Ambak (ABK) situation. Initiatives discussed to keep the struggling mortgage insurer afloat have included breaking the company into 'good' and 'bad' liability entities, a straight buyout by a group of financial companies, and government sponsored relief. A day or so back, ABK announced that it will head to the capital markets to raise funds.

Currently, this company enjoys a top shelf credit rating from S&P and Moody's. The question, of course, is how does a company that needs a financial bail out merit such a high credit rating?

For the answer, study the fragile condition of the credit markets, and the domino effect that would be put in motion with an ABK credit downgrade.

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