OptionsTrader, one of the financially knowledgeable members of the RPForums posted this today. http://www.ronpaulforums.com/showthread.php?t=93667
Ambac Financial and MBIA can go out of business and it won't effect the bond markets ability to buy and sell bonds. The interest rates on bonds will change but there are bonds todat that are sold without insurance and do fine (with higher interest rates) The reason behind their troubles is that they rated sub prime CDOs with AAA ratings only later to watch their values crumble when the housing market went down. Also you'll have other players come into the market place such as Warren Buffett who just setup an Bond Insurance firm because insuring municipal bonds is a very lucrative market. http://www.forbes.com/feeds/ap/2007/12/29/ap4480991.html