MGIC is the largest U.S. mortgage insurer – outside of the U.S. Government, of course. They released horrible results, forecast massive future losses, and will issue $700 million of new stock on top of $300 million in junk bonds. Perhaps – with much emphasis on that modifier – there might be asset coverage for the bonds. The stock is worthless. Hey but fear not – Goldman Sachs is managing BOTH offerings – “c’mon in guys, the water is perfect!” Here’s the link: In Goldman We Trust. The underwriting syndicate will probably make about $50 million in fees.
Einstein said the definition of “insanity” is making the same mistake over and over again – and expecting a different result. Do you really want to take the other side of something Goldman Sachs is selling?
I heard from a associate yesterday who told me one his client’s called him to inform that is house in Florida, formerly worth $1.4 million, now might be worth $450k. His neighbor’s house, formerly worth $1.5 million, was appraised for $500k. 66% decline in value for non-distressed homes. This type of real estate revaluation will spread to the whole country.
I’m sure that if I went thru MGIC’s financials with a fine-tooth comb, I could demonstrat that even the debt on MGIC worth, at best 50 cents on the dollar, assuming today’s real estate prices. It will only get worse…
Laissez les bon temps rouler – Let the good times roll![ad#Gold Color Ad- 300×250]
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