February 21st, 2008
Is everything open source?
To see just how big a buzzword open source has become, look to the troubled bond insurers MBIA and AMBAC.
These two companies started off insuring municipal bonds against default, then got in trouble with the complex mortgage instruments known as the Big Shitpile.
Hedge fund manager Bill Ackman wants to take the companies apart, saving the municipal bond business and letting the rest go bankrupt.
He’s not alone in this. Warren Buffett offered to do this a few weeks ago, and the state’s insurance regulator has suggested a split-up makes sense.
So why are you reading about this here? Because Ackman put his analysis of the companies online and called it an open source model.
Is it? Certainly it’s an exercise in transparency. Ackman found out a lot about what’s insured by the companies, and made estimates of the losses he expects. (He figures about $12 billion on MBIA alone.) You can download his figures yourself and make your own estimate.
But this assumes he’s got the right figures. MBIA calls it “half truths, innuendo and faulty analysis” aimed at giving him a “profit from his short positions.” But they’re not releasing financial code in response.
Which, again, is why Ackman called this an “open source model.” It’s aimed as much at giving him the political high ground as anything else. Here are my numbers, run them yourself, where are yours?
But, again, is this open source? I sure don’t see it in the OSI definitions. Can we expect a nastygram from Michael Tiemann on the group’s blog? Or would that be stepping in it?
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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