Heads up. The rumours of a massive monoline bailout are now gaining wide spread acceptance...

MBIA, Ambac Likely to Get Bailout, UniCredit Says (Update1): "MBIA Inc. and Ambac Financial Group Inc., the biggest bond insurers, are likely to be bailed out to avert worsening credit-market turmoil, according to analysts at UniCredit SpA."

Also, on Calculated Risk:

A CounterPartyParty: "Big banks and brokers that are counterparties to struggling bond insurers met with regulators in New York on Wednesday ... The counterparties to Ambac Financial and other bond insurers such as ACA Capital met with the New York Insurance Department, spokesman David Neustadt said in a statement. He declined to say what options were specifically discussed ..."

Should a bailout indeed be announced, expect an explosive short covering rally in all equity indices. I'm talking