Prospects of another downturn in the credit crisis continued to increase, this time on an old standby: a credit-ratings firm threatening to downgrade the bond-insurance companies.

Moody’s Investor Service said it is “most likely” going to downgrade MBIA and Ambac Financial because they’re having trouble ginning up new business, Bloomberg says. Any lowering of their AAA ratings would cause another wave of tens of billions of dollars of losses on Wall Street and elsewhere as banks would be forced to write down the value of more than a trillion dollars in assets that aren’t insured as well as had been supposed.

The Wall Street Journal says on its Money & Investing front that “the relative calm that has prevailed over credit markets since mid-March… shows signs of dissipating” with junk-bond rates up again, default-insurance costs rising and the costs of bank-to-bank loans still high.

But the Financial Times says that the downgrades don’t seem quite as threatening to the financial system as they did three or four months ago.

Since then, many banks have reduced exposure or made provisions for losses. “As time drags on, financials are more able to take precautionary measures,” said Ciaran O’Hagan, head of fixed income strategy at Société Générale. “So what once seemed like the end of the financial industry a few months ago now barely registers as a blip.”

The whole dance between the credit-ratings firms and the bond insurers over the last several months has been bizarre. The bond insurers have been forced to raise capital to cover impending losses, but markets don’t believe it will much matter and the two companies’—the biggest in the industry— stocks are down more than 90 percent in a year, while the cost of insuring them against default is enormous—and implies their debt is the junkiest of junk—not top-notch AAA as Moody’s and Standard & Poor’s say it is. Fitch Ratings already has downgraded MBIA and Ambac.

The bond insurers’ entire raison d’etre is based on their AAA credit rating, as Reuters helpfully notes, and a downgrade would “effectively” put them out of business.

The stock market fell for the fourth straight day on renewed credit worries.

Verizon behemoth on horizon

The papers say Verizon Wireless is discussing a $27 billion bid for cell phone company Alltel, while Bloomberg this morning reports that France Telecom is offering $42 billion for Swedish phone company TeliaSonera.

An Alltel deal would come just seven months after the company’s leverage buyout by TPG Capital and Goldman Sachs for $27.5 billion. The Journal on page one says the “possible rapid resale is a powerful sign of how the credit crunch is roiling the business world.” It says the banks that funded the acquisition—including Goldman—are still holding some $20 billion of debt from the transaction that they can’t get rid of, and the value of the debt has been about 89 cents on the dollar, though it shot higher yesterday on news of the possible deal.

The New York Times on C1 says it would be “one of the quickest flips in corporate history,” and is being driven by the lenders not being able to sell the debt. They’d have to take a small hit on their loans, it and Bloomberg say. TPG has been buying back the debt from its lenders at a discount and would make money by selling it for more, the WSJ writes.

The FT embarrassingly misses the credit-crisis angle completely.

Everyone says a Verizon/Alltel deal would create the biggest cell phone company in the country, helping the two compete better with AT&T.

The new homesteaders

The NYT posts an interesting story on A1 about hedge funds and other big investors that are placing big bets on agriculture—and not via commodities markets or other ways they’ve traditionally invested. More of them are getting into farming markets directly, “by buying farmland, fertilizer, grain elevators and shipping equipment.”

The paper says all the investment could help boost food output at a time when rising prices are threatening the globe, but that their entry could be a destabilizing force.

By owning land and other parts of the agricultural business, these new investors are freed from rules aimed at curbing the number of speculative bets that they and other financial investors can make in commodity markets. “I just wonder if they need some sheep’s clothing to put on,” (a commodities-brokerage president) said.

A concern is that these big investors, who now have direct access to food supplies, will pull some of them off the market to cause price spikes. The investors say they’re consolidating operations and land to help boost production.

FCC aide accused in Ponzi scheme

The Times on C1 reports on a bizarre turn of events at the Federal Communications Commission, where a top aide to the chairman is being accused of participating in a Ponzi scheme that cost investors $54 million. The aide, Daniel Gonzalez, was on the fraudulent energy company’s board and personally guaranteed $7 million in loans despite being not having nearly enough money to cover it (of course, they went bad). The company was run by a dude named Robert Miracle.

Despite all that, the FCC chairman Kevin Martin declined his offer to resign several months ago, saying there “was no evidence that Mr. Gonzalez violated any ethics rules or criminal laws.”

Maybe not under this administration’s standards, but his poor judgment alone ought to be reason enough for him to be gone from such an important job in a conflict-ridden industry.

Mr. Gonzalez has denied the lenders’ accusations. But commission officials said they were baffled by how one of the most important telecommunications regulators in Washington—one known to be a cautious lawyer leading a seemingly modest lifestyle—could be accused of being so careless.

Another electricity retailer goes belly up

The Journal reports on A4 that an electricity retailer has defaulted in Texas, becoming the third one to do so in the past two months as wholesale prices for energy have soared there—“slammed by a deregulated market.”

To fend off more crashed companies, Texas is considering re-regulating its market, for now, in an emergency board meeting. The Journal says the price spikes are “unexplained,” but the Houston Chronicle says they’re due to an overloaded grid and soaring natural-gas prices.

Kinder, gentler Wal-Mart?

The Times on C1 says Wal-Mart’s union-backed foes are beginning to acknowledge that the Arkansas retailing giant has changed some of its bad ways.

The mellowing of the anti-Wal-Mart movement is an unexpected development for the retailer, whose public image and share price were bruised by the well-financed union campaigns… The union-financed campaigns were started in 2005. As the groups turned up the heat on the company, Wal-Mart was at first defensive, but eventually it responded in ways few of its critics expected. The company expanded its health care plans to cover more workers, though still not enough to satisfy the unions. And it made commitments to the environment, like becoming the country’s biggest seller of more efficient light bulbs.

Indeed, Wal-Mart has gone so far on some initiatives, like the environmental programs, that it has started to draw scattered attacks from the right…

It’s a good story, but the Times should have noted that part of the reason for the decreased heat on Wal-Mart is surely due to the fall of the company’s outlook from a few years ago, which has revealed chinks in its armor that weren’t apparent then. It’s seriously scaled back its expansion plans as new stores increasingly cannibalize each other, for instance, as the Journal notes in a B1 story on the company.

Hey, that’s our oil!

The Los Angeles Times reports that Mexico is considering allowing foreign oil companies to help it drill offshore in part to fend off oil companies that are encroaching on its territory.

Mexicans fear that companies drilling in U.S. waters close to the border will suck Mexican crude into their wells. Actor Daniel Day-Lewis’ fictional oilman in “There Will Be Blood” likened the concept to siphoning a rival’s milkshake…

But for a growing chorus of Mexicans, sharing a milkshake is preferable to watching your neighbor drink it up. Mexico has no viable deepwater drilling program to match U.S. efforts near the maritime border. And it lacks an iron-clad legal means to defend its patrimony. Some are urging their government to partner with the U.S. to co-develop border fields or risk losing those deposits.

The paper says the U.S. has approved drilling rights just ten miles from Mexican waters. The two countries have a prickly history over oil—Mexico nationalized its industry in the 1930s because of interference from Standard Oil. The country faces declining production and doesn’t have the ability to drill in deep water.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.