Genworth financial is now heading down into final BK plunge.

Genworth(less) Financial (GNW) was one of the over-leveraged, very weak players of the last collapse.  It will certainly not survive the coming "liquidity crisis" (aka "solvency reality").   Today it tried to paper over its insolvency by issuing "earnings" of 31 cents per share which is actually quite excellent sounding for a $19.... errr.... $14 stock.

If earnings are so great then why such a huge drop on such good SOUNDING news?  Well, for exactly the reasons I have been stating for the past 7 years: when you "buy" earnings using debt then you can look good for a long time whether you are Toyota or Genworth or GE.  But at some point the piper must be paid and the EW charts are telling us that the SOB is standing in front of us right now with his hand out.  He's saying "pay up bitches".

GNW will now decay very rapidly.  Why?  Because it is now in a 3rd wave down.  Expect the waves of pain to just keep coming and coming.  3rd waves do not provide any time to think or act.  The falling stock price will, in and of itself, make everyone fear the company.  Nobody will loan it anything nor will people want to do business with it because the word going around right now is that it is capital impaired.

But we already knew that!!  How?  Because of this statement from the above press release:"prompted a company review of whether its reserves are adequate".  They have to disclose this lest someone go to jail after the BK.  The simple truth is that they sold lots of "long term care" insurance to old people and now those costs are rising just as quickly as the people they insure get older.  Folks, 90% of your medical bills come in the last 10% of your lifetime.  GNW knew this and they did it anyway because it was quite profitable while the Ponzi lasted.  We also know they have an Australian mortgage division and those homes are 3x overpriced even though nobody thinks they are in a bubble.  That means GNW loans a lot of money to home debtors who fully intend to walk away in case of 2008 redux.  There is no penalty for doing so short of losing your 2% down payment.

Look at their options.  They have Jan 2015 $2 puts going for a few pennies.  I don't know if Jan 2015 is enough time for it to BK but I do know that 3rd waves collapse a lot faster than most people think possible. I also know that credit can lock up in a very rapid time frame and nobody will see it coming because they are too busy looking at distracting things that do not matter.  Talk about your asymmetrical bet.  I think I will spend $200 maybe $300 bucks and and take an educated risk in order to chance making a fat killing in terms of percentage gain over the next 5 months.