There Just Aren’t Any Words

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Well, not apart from these:

In this corner, we have S&P (”Sluts and Pimps”) reaffirming the AAA ratings on the monolines:
S&P Affirms MBIA, Ambac

Since the beleaguered bond insurance industry was thrust to the foreground of the credit crisis, MBIA has sold $1.6 billion of stock and $1 billion in bonds, fortifying a $17 billion cushion the company has available to pay claims.

S&P said raising this money “is a strong statement of management’s ability to address the concerns relating to the capital adequacy of the company.” Based in Armonk, N.Y., MBIA insures $670 billion in debt.

So they have $17 billion saved to pay up to $670 billion in potential claims? Just a 2.5% default rate will bankrupt the “AAA” MBIA. Now THAT’s a strong financial position…

And in the other corner, we have MBIA (”More Bullshit, Insanity and Asshattery”) itself cutting their dividend and suspending new insurance on credit derivatives:
MBIA Eliminates Quarterly Dividend

MBIA Inc., a bond insurer fighting to hang on to its top-notch rating, said Monday it is eliminating its quarterly dividend in a move expected to save the company $174 million a year.

The company also said it will stop ensuring new derivative credit contracts, and suspended the writing of new structured finance business for the next six months.

$174 million per year! That’ll put a dent in that $670 billion. Stopping new and existing lines of business will also help, too. If your business actually does better when you don’t do anything, you might be in a crappy business (or you’re just doing it wrong…)

MBIA has been scrambling to raise cash to mollify ratings agencies that are threatening to downgrade its financial strength rating because of exposure to risky mortgage debt.

One of those agencies, Standard and Poor’s, Monday afternoon affirmed its “AAA” rating on MBIA and Ambac Financial Group Inc., another bond insurer fighting to stave off a downgrade.

MBIA has already sold $1.6 billion in stock and $1 billion in bonds to fortify its cushion of capital used to pay claims. But as the canceled dividend shows, the company appears willing to take further steps to maintain its top-notch rating.

“MBIA will continue to take reasonable and prudent actions such as this dividend elimination in an effort to retain and strengthen our Triple-A ratings,” Brown said in a statement.

This would be laughable if it wasn’t so incredibly disingenuous. God bless America, where you can stand up and say with a straight face that a bankrupt company with more exposure than the red light district in Amsterdam has a better credit rating than New York City and their $17 billion in debt, ironically also affirmed by “Sluts and Pimps”.

Unbelievable.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com