MBIA is about to issue earning. Ponder the Bear Case Scenario and determine if American capitalism is in decline or you just have a really great short position in the making. MBIA is in the financial guarantee business. You need a good name and capital to back up the name plate. You need to have the resources to back up poor underwriting decisions.
Financial guarantees are a form of risk transfer. A parent underwrites a child until circumstance change. The strong back the weak but worthy. What if they were not worthy? What if the child always needs an allowance. What if the chickens come home to roost.
North America’s financial model remains ultra precarious. Debts have been hidden in strange closets and bills continue to come due. For a couple of points you take the equity risk. Equity is not compensated for a couple of points. Basically the whole crap shoot is under-priced and will remain so.
No point. There is just no point to it.
George Gutowski writes from a caveat emptor perspective.