A: Remember the days in early 2008 when Charlie Gasparino was on the air every day with the 'bond insurer' saga and whether or not they would get downgraded from their AAA rating! The insurers adamantly backed their AAA standing and the credit rating agencies were hesitant to downgrade them even though we all knew their portfolios were garbage and the claims made on them would be tremendous. MBIA Chief told us that insolvency risks were 'without merit'; MBIA trades at $4 today. UrbanDigs first discussed the bond insurers in 2007, why it was important if they were downgraded from AAA bullshit rating at that time, the saga that ensued in early 2008 and finally the affirmation of the AAA ratings for Ambac & MBIA in late February 2008 that was good for about 400 Dow points. Today we see Ambac get cut to Junk Status - out of sight, out of mind was in full force in early 2008 as we now see beyond the garbage that was dished out to all of us when the markets were on the verge of chaos.

The reason the bond insurer saga was so important was because if some of these guys failed and/or lost their AAA rating resulting in a big hit to capital raising plans and operations, the ripple effect in the financial system would have made the problem worse - at the time our banks were forced to take billions in write-downs and this would have made the problem worse.

So what did we do? What we always do, affirm that all is OK at the time and then later reveal that it was all a bunch of crap. Since the markets are forward looking, it is easier to digest the news later when it no longer is the center of the media universe. Out of sight, out of mind, the way the markets like it.

Today's headline, "S&P Slashes Ambac to Junk on Expected Losses", no doubt is not news at all! Amazing isn't it:

"Bond insurer Ambac Financial Group (ABK) this week estimated statutory impairment losses on credit derivatives for its Ambac Assurance segment rose by $1.6bn to a total $4.9bn in Q209.