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Why in the world would the media (rhetoric question) report the street rallying when Buffet offers to buy the only thing keeping monolines afloat? He is effectively holding the sword labeled monoline hari kari.

From Bloomberg :

" Berkshire would put up $5 billion as capital for the plan and is offering to insure the municipal debt for 1.5 times the premium charged by the bond insurers to take on the guarantee. The insurers could accept the offer and back out within 30 days for a fee, Buffett said."

Of course, management (at least the ones with any gray matter left) are saying thanks, but no thanks. Wait a minute, though. They say that CDOs have value and the mark downs are a temporary thing that will amortize and revert back to par or above by maturity. If that was truly the case, and you are strapped for capital that no one appears to want to give to you, Buffet's offer makes plenty of sense. After all, he is willing to pay you 2/3rds of what you paid for this low growth risk, but you get the capital that you seek so desperately and you get to capitalize on those structured products that you feel the market undervalues so foolishly. That 's a damn good deal for someone who is scrambling for money. Then again, that's only if you really believe your own structured product story. I don't think they do.

The only stock that should be rallying is Berkshire Hathaway. Outside of potential for Buffet's stock holders, nothing has changed. Even the Buffet equity potential has not changed much. We all knew this is what he wanted to do - take advantage of the mistakes that the monolines made with very little risk.