Karachi, Guarantors & Write Downs

Karachi erupts in riots... Ex-Pakistan Prime Minister Benazir Bhutto assassinated by a suicide bomber.

Guarantor loses rating...

last week S&P sliced ACA's rating 12 levels to CCC from A, casting doubt on more than $75 billion of debt the company guarantees.

ACA specialized in guaranteeing municipal bonds with credit ratings that were below those others were willing to guarantee.

Fitch last week gave MBIA, Ambac and FGIC four to six weeks to raise at least $1 billion or lose their top ratings.

More Lay & Write offs...

William Tanona analyst for Goldman Sachs reports Citigroup may need to slash its dividend 40% to preserve $5 billion in capital...

and with Merrill Lynch and JPMorgan Chase may write off $33.6 billion of debt this quarter.

Estimated write down vs last quarter: Citigroup $18.7 vs $11 billion; Merrill Lynch $11.5 vs $6 billion vs and JPMorgan Chase $3.4 vs $1.7 billion

After the projected write-downs, Citigroup would still be exposed to $24.5 billion of CDOs, Merrill $7.7 billion and JPMorgan $5 billion.

Merrill announced 1600 layoffs.