Glasses on index sheet
Glasses on index sheet - 
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Scott Jagow The problems in the credit markets may get deeper still. The latest casualty could be monolines. What is a monoline? Well, let's ask our man in London, Stephen Beard. Stephen?

Stephen Beard: These are bond insurers. They provide a guarantee against bond issuers defaulting. So they're very important for investors. The bond issuers' core business is the American municipal bond market. And we're talking here about $2.5 trillion in value.

Jagow: And how did these bond insurers get wrapped up in subprime market?

Beard: Well that, of course, is the absolutely key question. Because while municipal bonds are their main business, some of them have also been getting into the more exotic stock, including the subprime stock that's causing such problems.

Jagow: What's the worse-case scenario here?

Beard: Well, the worse-case scenario is that several of these big bond insurers could go bust. Then, many more bond issuers -- perhaps even American municipal bonds -- could fall in value as a result. And we could possibly then see -- and this is the worse-case scenario -- pension funds and other investors dumping these previously triple-A rated bonds on the market. And indeed, there are some commentators on this side of the Atlantic who are saying this is the second shoe of the credit crisis about to drop, and it could be far worse than the first.

Jagow: Hmmm. OK, Stephen Beard in London. Thank you.

Beard: OK, Scott.