Ambac Odds of Default 73%, MBIA 71%

Welcome to a market dynamic that will continue to slaughter longs: if you want your failing company to stay afloat, you have to take on expensive debt (harming future profits) or sell off equity (diluting existing equity). Either way, its bad for existing shareholders (and shares). MBIA and Ambac are learning that, as are holders of Citigroup, and as did holders of Countrywide, ad infinitum. It's not enough to be "bailed out" in this market; the piper must be paid, and he will be paid not only in bankruptcy but also more widely in share value. So needless to say, we expect continuing pain for financials (and much of the consumer-exposed market) for quite some time.