Yesterday, Warren Buffett, the billionaire head of Berkshire Hathaway Fund offered to personally shore-up the four companies that insure all bonds, and are at risk of having their own credit-worthiness downgraded (which would send a huge ripple of skittishness throughout the economy – a ripple, in my opinion, just waiting to happen).  Mr. Bufett’s offer has been publicly rebuffed, and, yet, such bravado on the part of MBIA and Ambac isn’t making anyone feel the rock solid security they’re trying to convey.  Everyone knows that when the defaults begin in bundled mortgage backed securities, they will not be able to come up with the $800 billion, and then, those holding more traditional bonds, those issued by municipalities and states, will be dependent upon the tax income of those entities, which are dwindling as the home foreclosure rate goes up. 

And the Swiss are having none of it.  So, yesterday, New York City's Health and Hospitals Corp.’s auction of $64.9 million failed.  Likewise, the Port Authority (of New York and New Jersey), saw its auction debt soar to 20 percent on Feb. 12 from 4.3 percent a week ago. 

Meanwhile, the CFO of MBIA, Charles Chaplin (no kidding), has taken his show on the road, telling everyone who’ll listen that everything’s okay, nothing to see over here, have faith.  Earlier this week he announced that they had enough to cover any degree of failure that may occur, and today, he’ll be testifying before Congress that “A bailout of highly credit-worthy companies, who, at most, are at risk of losing the very highest ratings available, is misplaced.”  But no disclosure of details has been made.  So far, this roadshow is all talk, and I, for one would prefer to see the balance sheets.  As the bonds themselves aren’t selling, the interest rate will have to go up to entice buyers.  But that just increases the risk for the insurers.  The problem snowballs.

By the way, did anyone notice that platinum hit $2,000./ounce last night? No wonder.