The more we think about the tremendous bounce in MBIA’s share price yesterday the less we like it. It bothered us so much yesterday that we spent plenty of time going back through the slides and our notes from the endless conference call trying to decide what could possibly have persuaded the markets that Warburg Pincus and MBIA were right about this while Pershing Capital and Meredith Whitney were totally wrong. It was like unspooling at roll of endless tape. We were tempted to buy into Felix Salmon’s thesis that MBIA executives had bored investors into being persuaded.

In the end, we concluded that it’s just the same old error of “well, at least we now know how bad it is” that emerges every time financial company announces credit market derived losses. We’re now on round three or four of this process, and every time it happens we hear a chorus of voices telling us that the latest announcement discloses losses that are so deep that they must represent the entirety. In fact, we’re starting to wonder if careful traders, especially options traders, haven’t started to rely on this effect for their trading—buy before the disclosure, wait for post announcement run-up, then sell.

We hate to second guess markets. It’s arrogant and even solipsistic. Just because we think something matters doesn’t mean the market will eventually come around to our way of thinking. We’re sure it’s just some kind of analytic blindness that has made us distrustful of MBIA’s internal risk assumptions. They were wrong before! Could they really be wrong twice in a row! They control acceleration—and seem totally willing to control it all the way out of the business of insurance by refusing to accelerate when it is obviously called for. But somehow that won’t drive away customers! They live in a land where they hung the jerk who invented work and paddle canoes on lakes of stew and whiskey too.

They blamed “unjustified fearmongering” and “distortions” for their stock's decline. (Don't ask about what the specific distortions were, please.) No-one has ever done that before. They are wisdom in action!