Not in history of mankind has a company with negative $60 billion common equity been allowed to trade on public markets. The chance that Fannie or freedie will be able to pay back the $60 billion in preferred stock which is ahead of the common shares is about 1 in a billion.
It is a travesty to the markets that these stocks are even allowed to trade. Anything higher than 10 cents is too high IMHO.
These companies never makde $60 billion in good times when they had tens of billions in positive net equity with which to try to make a return.
I know alot of folks here do not understand accounting. But try to understand this. Fannie and Fredie have negative $60 billion to work with to try to make a return. And they are required to pay dividends on this $60 billion which means even if defaults decline to near zero, they still will barely be able to clear the quarterly dividends on preferred stock that is owed to the government every quarter.
Common shares are not allowed to pay a dividend and are worthless until the government is paid back. it would take 30-60 years in the best of times to earn enough to pay back the gvt... and that is if they had positive equity...But they don't have that so really it is implausible they could ever make $60 billion in a milenium going forward.
More than likely, these cos will be reorganized in the next few years, long before the 1000 years it will take for them to ever make $60 billion and pay back the government.
Furthermore, the $60 billion owed in form of preferred...will likely increase to $80-$100 billion in the coming 18 months.
You've made your point many times.
Why are you still here? Is it because you feel insecure and need attention? Is it because you were deprived of a bicycle when you were a child?
You're on ignore.
He's here for same reason as you. And same sentiment on FNM as you did up to several days ago when you were bashing FNM.
He's point is valid compared to many here with emotional attachment to FNM and vulgarity for an explanation.
FNM is an anomaly that entirely depends on what politicians decides to do. Non of us know it's faith, we can only apply logic based on what we know. And we don't know much... Your guess is good as his.
Not in the history of mankind such a ridiculous post was ever posted by a moron. We had bashers all over the TV, internet and organizations, including so called American mortgage groups, trying to sabotage this stock. Despite all the shortcomings, and outright bashing and trashing of FNM, it is doing much better than any other stocks. You are a laughing stuff.
Do you understand what "conservatorship" is?
The only reason why FNM and FRE and AIG did not go to "Receivership" is that here is no one big enough to "receive" them.
AIG is being auctioned off / garage saled.
FNM and FRE are going to be restructured and recapitalized.. like the GM that Obama just got done "saving"... It does not mean the shareholders!
"Saving" means saving the jobs in the case of GM, in the case of FNM and FRE it is saving the home mortgage credit industry so people can buy homes.
FNM was a speculators momentum trade, easy money. Now the party is over... the shares are worthless.
Hate to tell you BUD there is a big difference between public accounting and private accounting. Do you really believe the Congress who created FNM and FRE are going to dissolve it. Your logic defies reality.
They are not going to disolve the business. They are going to view it very similar to the "save" of GM...
Shareholders get replaced by new shareholders with fresh capital.
FNM and FRE are needed.
Do your DD on cash flow.. the M2M really doesn't matter that much..
Hey Fidelity.. at least I wasn't the only one stating the obvious... what a "pump and dump" and even CNBC warned everyone last week...
my name just doesn't have the "status" as that MS name yours carries...
Hey, shithead, you've obviously convinced yourself re. Fannie and Freddie.
So what's your mission now, schmuck? You want us to run with you? You and your ilk are never cease to amaze me. If you're so down on Fannie and Freddie, then why the hell are you here, numbnuts??????
Scumbag is not down my friend!! He simply accumulates under a buck and flips it on the rise. Although he's right about Fannies and Freddies demise he simply adds to it by sucking the life out of it on the spikes.
How bout China & Japan started buying up the FNM & FRE common and bought 51%. They could tell the U States to go get screwed on the dividend. It is not cumulative!! Everyone is so worried about the preferred stock. I own preferred stock that does not pay a dividend. Where does F & F stock go if China & Japan start buying!!
Well since these companies are playing a vital role RIGHT NOW to stabilize housing and the mortgage market and not make a profit, they have plenty of value. Oh and did I mention they have the backing of the actual entity that created it in the first place?? I agree that IF this were any other company and not a tool of the govt., it would be BK. But its not. If if and buts were soup and nuts, we'd all have a Merry Christmas! This has trade value as long as people are willing to trade it. Since nobody knows exactly what will become of these companies until congress tahes p the issue in Feb., the long term investment outlook is unclear. Until then you might want to cover your short position and join the party. It's O.K, tell them you're with me and they'll let you in.... :-)