MBIA's Strange Behavior

It looks like March 2008 will be remembered as the time when banks pulled the plug on leveraged speculation. Management of Thornburg Mortgage would tell you that it is now in question whether ANY business model that uses repos or warehouse LOCs deserve to even exist. The big Wall Street banks don't want anyone too have liquidity & profits off of their backs and the Fed is supporting this desire. Crazy times.

But the March 2008 award for craziest development in financial markets has to go to MBIA, who this morning announced a downward repricing of stock grants. This is a practice which, the last time around (summer 2002) led to a massive crisis in CEO confidence. And earlier this week, MBIA CEO Jay Brown played the rating agencies like a mafia don and spelled Warren Buffett's name with one T at the end, in a sentence where he expresses respect for the Oracle of Omaha.

In the current sell-off round I am short staffing stocks. I have been expecting ugly employment numbers to "seal the recession deal". So far the public at large still doesn't see the recession that started in December (or January), but this morning's job numbers might help the cause.