Matthew Lickona 7 a.m., April 24
Stock of Ballpark Bond Insurer Zooms 72 Percent on Bailout Rumors
Stock of Ambac, the municipal bond insurer that backed the ballpark bonds, soared 72% yesterday after New York insurance regulators asked major banks to pump money into the industry. But the banks themselves need capital. So the rumor then escalated to talk of a government bailout. MBIA, another muni bond insurer, saw its stock surge 33%. There was also talk in the Senate of a bailout of bad mortgages. The Dow Jones had a 632 point swing: it was down more than 300 and ended up almost 300. Goodbye, moral hazard. It looks like the federal government and Federal Reserve will try to bail out Wall Street by claiming it is aiding the economy. However, the ploy may not work. Violent swings like today's are signs of a bear market, although stocks are technically not there yet.