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"Fool me once, shame on -- shame on you. Fool me -- you can't get fooled again." (The wisdom of President George W. Bush)

Written By Brian Hicks

Posted November 26, 2007

Countrywide Financial (CFC) would now have us believe that it has ample capital and liquidity to stay in business. They disclosed $35.4 billion in reliable liquidity. And they disclosed “sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions.”

Waiter… I’ll have what they’re drinking.

But who are they fooling? They burned through the $2 billion Bank of America cash infusion, burned through the $11.5 billion credit line, used to eases liquidity issues. They burned through Fed cash infusions. And they burned through that $50 billion cushion it said it had.

Who are they fooling?

They said they had ample capital and liquidity in August 2007 when they said, “Our mortgage company has significant short-term funding liquidity cushions and is supplemented by the ample liquidity sources of our bank. In fact, we have almost $50 billion of highly reliable short-term funding liquidity available as a cushion today. It is important to note that the company has experienced no disruption in financing its ongoing daily operations, including placement of commercial paper.”

Seven days later, the company announced it faces “unprecedented disruptions” in debt and mortgage markets. Still, they want us to believe, today, that everything’s fine. But hey, a sucker is born every minute.

Technically, Countrywide is toast. It’s done… kaput… over… and is confirmed by the falling knife that’s already pierced multi-year support levels as it looks to retest lows not seen since 2003.

When all is said and done, CFC will be a $5 stock. There’s still plenty of time to short it here. I’ve been telling investors that since $35 with put options recommendations.