Why you should worry about bond insurers

Municipal bond insurance is usually a dull old world. But dabbling in exotic structured finance products may mean credit-rating downgrades. And that may start a chain reaction which could hurt us all.

Don't shout it too loudly, but it looks like the US monolines are about to be downgraded.

Your initial reaction may well be - so what? At first glance, the arcane world of bond insurance doesn't seem fertile ground for an interesting story. But just read on for a moment. Because although it all seems rather remote, we've already seen from the infamous US sub-prime fiasco how ripples from the other side of the pond can turn into tidal waves round the world.

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