On Tue, 20 May 2008 12:29:21 -0700, "John R. Carroll"
wrote:
snip
My bet is on a CDS default resulting from a major municipal or
IDB default, possibly in California. Most likely not as a direct
result, but the consequence of the municipal bond insurer
attempting to exercise the CDS they have which "insured" the
bond, which exposes how "bare the cupboards are" and triggers a
mass stampede for the exits.

That's a possibility but the next round of mortgage defaults on mortgages
known as Alt-A's is where I'd place my money.
Sub primes were a small fraction of the entire mortgage market.
snip
==========
Unfortunately one does not exclude the other, and indeed one may
even trigger/promote the other(s).

Its always dangerous to extrapolate from a single data point, but
this could be the first drops of water seeping through the cracks
as the dam bursts, although Vallejo is not a major municipality.
-----------
Vallejo, Calif. files for bankruptcy protection

By TERENCE CHEA, Associated Press Writer Fri May 23, 5:36 PM ET

SAN FRANCISCO - The city of Vallejo filed for bankruptcy
protection Friday to deal with a ballooning budget deficit caused
by soaring employee costs and declining tax revenue.
The San Francisco Bay area suburb of about 120,000 residents
became the largest California city to seek bankruptcy protection.

Mayor Osby Davis said the city's attorneys filed papers seeking
Chapter 9 bankruptcy protection in federal court in Sacramento.
snip
for entire article click on
http://news.yahoo.com/s/ap/20080523/...O4E58xR vzwcF
-------------

Anybody know how much in municipal/ID/ED/revenue/authority/etc.
bonds may be involved, who the raters/insurer(s) are, and if any
CDSs are involved?

And what are the major political concerns while this is occurring
-- Gay marriage and gas prices!!!!!! Unfortunately, California
is unique only in that it first.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).