MBIA

There was a fascinating interview in the WSJ on page B1 with Joseph W. Brown, the CEO of MBIA. I normally don't read those type of interviews that the WSJ has every now and then because they usually don't say anything. This one I thought did between the lines!!

Most fascinating part.

WSJ: What are the odds you might have to raise more capital?

Mr. Brown: We defer our revenues over a 30-year period, and so every week we are producing new earnings, and every week some of the liability is running off. That effectively raises capital. Our view is over the near term, the next three months, six months, it doesn't look likely that we would want to go out and raise capital.

WOW!! I may be reading to much into this but a couple of things.

1) You are only raising capital every week as the liability runs off if you are not writing any new business. This was actually asked earlier in the interview. He said they got "the first reasonably big deal, a big toll road." He was quick to add "it's not like turn-the-faucet-wide-open it will come a day at a time." Obviously it is one day at a time if he considers it raising capital as a result of liability runoff.

2) Much more importantly who wants to raise capital???? Who wants to dilute shareholders??? A total failure to answer the question. When I was at Highland one thing that was required was for us to go through deceptive training by Business Intelligence Advisors which is run by former CIA and FBI operatives. One of the head guys was an interrogator at Guantanamo Bay. Anyway this interview has several deceptive wording and behavior issues that we were trained to pick up on. Another example is the use of the word reasonably is a qualifier. It's not that he is lying in anything he is saying. It just shows high probability for deception. Like most of those WSJ interviews the questions were full of fluff. The one question with any meat I thought Mr. Brown was less than being 100% non deceitful.

Did not matter, at least for today. MBIA finished up over 10%.