So someone borrowed money on bonds used to borrow money.
Is there any real money left in the world?
bump
MBIA and other monoline insurers have been propping up the value of trillions in securities by providing insurance against default to investors. When their ability to pay claims becomes suspect, the credit rating and therefore the value of the insured securities does as well. In many cases it will force institutions to dump securities that no longer meet their charter-required AAA ratings.
This threatens to further collapse the debt markets. It’s like your fire insurance company going out of business before they can pay the claim on your burned-down house. Suddenly, a large number of investors are on the hook for losses that they thought they were insured against. Watch for the federal government to try throw taxpayer dollars at it.