They're going to losses on CDO's and CDO-squareds that are in MBI's own portfolio that are getting written down, as well as paying off problems in CDO and structured products they're insuring.

The attitude of MBIA's management on the conference call is not impressive. First big red flag is that they're commenting on their stock price. When you hear management talk about their own stock price, or worse yet, make predictions about their stock price... it is a big red flag. Something is either wrong or the CEO/CFO are not ready for prime time.

If you're curious where folks are betting the stock price will go, all you need to do is look at the options chains on the stock. Check out the volume of the $5.00 strikes out in Aug '08 and Jan '09.

Then NB that a $2.50 strike has been added out in Jan '09 that doesn't exist closer in.