Sunday, June 22, 2008
Look Out Below!
On December 29, 2007, Bill said this:
Moody recently downgraded MBIA from AAA+ to AAA+ (negative outlook). Critics argue that Moody is being easy on them in an effort to not be blamed if things fall apart. The same crooks who packaged the mortgage bundles are the same crooks who perform ‘due diligence’ on municipal bonds.
Municipal bonds are headed for a fall.
At the time MBIA stock was trading at around $30/share.
Today Bloomberg says this:
June 21 (Bloomberg) -- MBIA Inc.'s five-level downgrade by Moody's Investors Service probably will force it to make $7.4 billion of payments and collateral postings.
MBIA stock is currently selling at $5.59/share and is still overpriced. Later this year we will begin to see a wave of municipal bankruptcies. Bondholders will push their municipalities to file for bankruptcy sooner than later so that they have a chance to collect some insurance money from bond insurers before the insurers become insolvent.
Posted by Bill at 5:06 AM