Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: stevenallen who wrote (28561)	3/14/2005 7:03:58 AM
From: russwinter	Respond to of 110194

Investors shrugging off problems? Analysts prefer to see no evil, hear no evil, speak no evil By Herb Greenberg, MarketWatch SAN DIEGO (MarketWatch) -- Either investors are becoming tolerant of fraud allegations or they're simply shrugging it off as irrelevant. But the barely-batting-an-eyelash response by MBIA investors and analysts to the company's announcement last week that its financial statements will be restated going back to 1998, after learning that all was not what it appeared, is simply the latest example of this complacency. "People in America have very short memories these days," says Lynn Turner, former chief accountant of the Securities and Exchange Commission. "Also, the incidence of fraud by management has become so common place, it seems like it is 'old news' to a lot of people. It seems as if it takes a major tumble in the markets to get their attention." By then, of course, it's too late. In the meantime, investors prefer to gamble, hoping that they'll wind up with another Take-Two on their hands. You remember Take-Two (TTWO: news, chart, profile) : It was nailed by regulators for buying product from itself. It was then, almost immediately, bailed out by one big-selling game, Grand Theft Auto about (how ironic) the crooks beating the cops. It then got merely a slap on the wrist from the SEC. Not even a "60 Minutes" report about how Grand Theft Auto game has led to real-life crime could put a crimp in investor enthusiasm over the company's potential. (Moral of that story: Crime pays -- in more ways than one.) MBIA, however, is a different story. As I noted last week in my subscription newsletter, Herb Greenberg's RealityCheck, away from issues that have prompted investigations by the SEC, the New York Attorney General and the U.S. Attorneys offices, MBIA (MBI: news, chart, profile) also suffers from what it terms "challenging" business conditions. But rather than downgrade the stock, this is a case in which analysts prefer to see no evil, hear no evil, speak no evil. And for good reason: MBIA is the biggest player in providing insurance needed to float many new and secondary offerings in the enormous debt markets. Would you want to be the agency or analyst that pulled the plug on the company's coveted (and required) Triple-A credit rating -- or even put it on watch with negative implications? That could be like pulling a finger out of a leaky dike. P.S.: Last week MBIA issued a press release with a headline that said that it had raised its dividend by 20 percent. But as MarketWatch reporter Carla Mozee points out, it was really just a 17 percent increase. Why the discrepancy? Mozee says she was told by an MBIA spokeswoman that the company merely "rounded it up." Can't help but wonder what else has been rounded up.