And then we found the rabbit hole of creative finance: The Bond Insurers go Belly Up

When the companies who insured the cards go bankrupt, the whole house of cards falls apart.

And that's where we are today.

You're going to need to do your own reading and research on this one, and if you take the time and effort, you'll be amazed what you find. Get ready to go down the rabbit hole of "creative finance". But be warned - you'll be frightened at what you find. Banks and the government bailing out bond insurers so that the banks and government themselves don't fail. Amazing.

Here's a good start. Good luck. Report back.

Ambac, MBIA Outlook Lowered by S&P, ACA Cut to CCC
``The hits keep coming,'' said Gregory Peters, head of credit strategy at Morgan Stanley in New York. ``It's been our view that these guys are in a much more difficult predicament than investors or the companies themselves believed.''

``Everyone got greedy and thought they were smart enough to write structured product insurance like it was the same as insuring municipal bonds,'' said Rob Haines, an analyst with CreditSights Inc. in New York.

Analyst warns Merrill's write-downs may mount
"We believe Merrill, like its peers, has entered hedging contracts with ACA [Capital Holdings]," Trone said. "Should ACA falter, Merrill would end up with more subprime exposures as those hedging contracts terminate. This will in turn lead to more write-downs."

US$ & Monoline Bond Insurers
The main theme of the banking debacle in 2008 will be the extension far beyond subprimes into PRIME mortgages, as fully detailed in the article last week. The impact fallout from the bond insurers might hit home soon, as Wall Street will be forced to bring countless more wrecked billion$ in mortgage bonds onto balance sheets.