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22 Jan, 2008

The Interpreter: Hendersons says monoline insurers are to blame for volatility

> Henderson Global Investors have pointed the blame for the last two days of volatility firmly at the threat of downgrades to US monoline insurers.

The group's director of economics and strategy, Tony Dolphin said: 'If you ask why now? It is down to the risk of downgrades to monolines in the United States, the bond insurers.

Dolphin said that if the monoline insurers are downgraded then it could lead to very serious problems in bank's balance sheets, so serious in fact that cuts to US interest rates will prove powerless to stop either recession or a worsening of the credit crunch.

He said: 'This could lead to a recession which is impervious to the cuts in interest rates. You could see seriously impaired balance sheet at banks and a bid credit crunch.'

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