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No. of Recommendations: 2

Berkowitz is a smart guy, and it's probably unwise to bet against him. But MBI isn't doing well compared to a couple of its obvious peers. My position in MBIA is now down to a single bond (due to accepting tenders and to doing some trimming), and I'm not inclined to add (for having too many other projects going on to dig back into MBIA and do the needed due-diligence). My tiny, tiny position is RADIAN offers a 17.2% YTM, and it is up 37% over my entry. So that was a good play.

But my bigger concern right now is to get set up to go short the broad equities market. Sooner or later, the sand of Federal deficits and debts is going to hits the fan, and prices are going to crash hard and deep. We're already seeing tiny tremors in the bond market. It's just a matter of time before some seemingly random hiccup somewhere sets off a rush to get out the door before the whole house of cards collapses. As soon as this summer? Just after Labor Day? Who knows? But it's going to happen. No county can borrow $0.40 cents for every $1.00 it spends and not default sooner or later. For sure, the default won't be called a 'default'. But its impact will be the same, a massive repricing closer to intrinsic worth.

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