MBIA and ABK.N insure the principal payments of bonds. With so many bonds in apparent danger the stock prices of these two have dropped, 98% in the case of AMBAC. This in turn has further pressured bond prices as there may not be anyone to pay off in the event of their default.
Meanwhile, Fannie Mae and Freddie Mac finally melted down as Jim Rogers has been predicting for years. FNM at 15 and FRE at 12, geez. These are public companies that buy mortgages and re package them to re sell to all sorts of buyers. It is literally these firms that make the mortgage market liquid. Without this function mortgage money would not have any liquidity and the real estate market would really shut down. Before FRE and FNM there was no way to re sell mortgages. The originating bank had to just sit there and hold them. Allowing the bank to re sell the mortgage, and then re lend again with the money from the mortgage sale truly got things going in real estate since the creation of FNM and FRE.
This is a bear market of huge proportions.
Professor Elam 
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