Essentially bankrupt entities like Fannie and Freddie have seen their stocks surge this week. Ambac, too, has been on a tear.
Is this yet another sign of a big bubble… punters taking a flyer on these penny stock irrelevancies.
Kind of. Essentially they’re trading like options on the putback issue becoming huge. If the major banks seriously have to buy back a ton of mortgages, that could (maybe, theoretically) pump some life into these companies. Most likely not, but for a few cents, why not take a gamble. (Thanks to Automatic Earth for the heads up).