"Short Seller Sinks Teeth Into Insurer" is the headline to an article in Saturday's New York Times. The article was written by Joe Nocera, among the most savvy of financial reporters who writes a weekly column in the Times business section.  The insurer, actually a bond insurer, is MBIA about which I have done several Spines before.  (And here let be make the confession again: I have a significant short position in MBIA and have had one since 2003.  This is a company in which I do not believe.)  The short seller is actually a hedge fund manager named Bill Ackman, whose teacher I was 20 years ago.  Pershing Square is his fund on whose advisory board I sit.

Anyway, back to Joe Nocera who heard (and watched) Ackman give a talk to an investment conference (which I also attended) on Wednesday in New York.  Then Ackman held a press conference which I did not attend but left for Washington to visit with Ehud Olmert.  (First things first for me.)  But Nocera stayed for Ackman's meeting with financial reporters.

As you can read in Nocera's article, MBIA is in deep troubles.  The short of this scandal is that MBIA has been covering up its difficulties -tremendous difficulties, actually- with the help of the rating agencies (Moody's, Fitch S&P, a few others) which have produced reports that judge this company and its comrades in bond and mortgage insurance to be AAA.  They are not and cannot be.

If Nocera tempts you on, as he should, you have Ackman's (long) Wednesday report: "How to Save the Bond Insurers."

There's lots of stuff around the web, as well.  If you are committed to the market system know that the kind of monkey business done by MBIA is what endangers it.  If you are not this is the kind of stuff that confirms your worst assumptions.