fraught friday

ok.. the sideways trend continues.. often threatening to let out that potential next leg down... sometimes promising to reel in that bag limit of bears firmly hooked on the line..

On the value front, the POTENTIAL calamity has been spelled out overnight in usa market news.. I think the letter from cerebus ceo is very clear..

http://www.bloomberg.com/apps/news?pid=20601087&sid=an15nuhm7JxA&refer=home

so you've got to think all the current bad news, including worst ase scenario risk, is in the market..

but at the same time there is a firming up of options about what to do about the monoline insurers.. and they seem to be the biggest immediate obstacle to an unfreezing of credit markets.. the possible scenario outlined is indeed what Warren BuffetT has suggested, a separation of insurance for good bonds from insurance for mortgage bonds ...the good insurance is readily saleable. That leaves the mortgage insurance issue... what are the options there.. FreddyMac has stepped up to take over some of the insurance burden if the monolines have ratings lowered..but I also think this possible separation is a step towards the us government taking over the mortgage insurance businesses directly.. and if that happened.. stock markets would rally like there was no tomorrow.. imho