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And dropping like a rock. There were actually professional investors trying to go long on this stock. Amazing. It is just below $5 now, down from $21 last week and $66 dollars in October. What a phenomenal short play for those that were aware of the real fundamentals. The entire monoline sector is bleeding scarlet red. This is going to spread quickly into the other sectors that I follow. I may need to hire more analysts!

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From CNBC:

Ambac Possible Downgrade: "Death Knell" For ABK?

The big story this morning is in bond insurers. Bond insurers weak (again) today as Moody's placed Ambac under review for a possible ratings cut. What happened? Last month Moody's affirmed the rating with a Stable outlook. They cited the higher than expected losses and the abrupt retirement of the company's chairman and CEO.

This is not good news, as Friedman Billings Ramsey noted this morning: "A rating agency downgrade would be the death knell for ABK, and merely the threat of a downgrade complicates the company's capital-raising plans even further."

More importantly, a cut in the rating of the company would also mean the ratings of the bonds they insure would almost certainly be lowered. That means the owners of those bonds would have to mark down the value of the bonds, which may lead to the final round of (painful) write downs of CDOs in some upcoming quarter.

Ambac cnbc_quoteComponent_init_getData("ABK","WSODQ_COMPONENT_ABK_ID0ENF15839609","WSODQ","true","ID0ENF15839609","off","false"); down 14 percent, MBIA cnbc_quoteComponent_init_getData("MBI","WSODQ_COMPONENT_MBI_ID0ELCAC15839609","WSODQ","true","ID0ELCAC15839609","off","false"); down 12 percent.

This the full rundown on the insurers, can be found here: Insurers and Insurance and this story - Monolines swoon, CDOs go boom & I really wonder why the ratings agencies are given any credibility.