You want stability in the market place, you want to nationalize this industry, $11B, about $10 a share, and everybody walks away, and we're a lot closer to fair, as if fair counts anymore.
The total package of common stock is CHUMP change! C.H.U.M.P. CHANGE.
No there's no guarentees in the current law, but look at the advantages--instead of Soviet style nationalization, you get full faith and credit for the NEXT iteration of stock when the next time these entities are brought back into the market place.
This is a nickel dime expense, one one HUNDREDTH of the ANNUAL economy, to show investors full faith and credit of the United States extends to them also, and encourage future investment in these entities when they once again regain the marketplace.
It's just a thought, if you're going to work this right, work it right all the way.
You're 100% correct on the "stability" end and if we are looking at nationalization a Bear Sterns type deal at $10-15 pps will prevail. Will never go to zero and leave the commons on the street...would be too much downside on the "full faith psychology" and the lawsuits would be a drain on a quick recovery. I personally think the October 1 Housing Bill recovery options will clean up most of the problem mortgages and either quick big block 40-cents on the dollar sells or foreign greeen card deals will put a close to this chapter of gross irresponsibilty on the part of the Feds and financial community. FNm/FRE won't even need the government bailout money and will stay as is. I think a year from now both stocks will be back to their highs of &70 pps and most of you will be kicking yourselves in the arz for not buying. I also see a massive uptick in MO since that industry will come under FDA regulatories and eliminate bs lawsuits and excessive state income tax on tobacco. Folks gonna light up again on cheap ciggies. QUICK DIDDY: Somebody has their crosshairs on RAD....expect quick pop to five bucks.
If you're worried or lamenting all that's left is full faith and credit, may I remind you that psychology of the market is just about all that is being played:
a. with extra Fed driven liquidity crashing into higher loan standards at a refi headquarters near you,
b. all that is left after we went off the gold and silver currency standards 1933 and 1971 and left with greenbacks (or is that gayly colored mauve and puce-backs?)
c. all that is left after we twisted the arms of central banks to dump commodities and buy dollars these past three weeks...
Lament all you want, we've got other tools in play, armtwisting, bombs, invasions, nationalizations, mortgage "short sales" at 65 pennies to the dollar (all carried off balance sheet of course) tax losses carried as assets ( my God, break out the paddles, my CPA just went debib!)
That's the kitchen sink kid, and what it says is, these two companies, FNM of the thirtees, and its poorer neighbor FRE which has to float 10B more stock soon....those tools are making sure you may make a buck on the downside, but that is about it....
The valuation of a stock is in it's worth, performance, efficiency, projected outlook, earnings, etc. FNM stock is worth ZERO. Rewarding bad behavior isn't going to happen. The co. will go into Gov. recievorship, the stock will be worthless and this pathetic and worthless co. will not have to weigh on the entire market any longer.
If you value FNM as a financial, you're right. If you view it as a start up with big losses, you're dead wrong.
Real estate got ahead of itself, wasn't regulated, and deserves oversight by the govt that put it in business, this company alive since the thirtees. The thirtees were marked by the Deprression, and the banking of America and mortgages were likewise bankrupt.
Life's a do over, and FRE and FNM, especially FNM, can weather the storm.
No snapshot of FNM health this next four quarters, will avail itself of anything but gloom and doom.
They need a year, not ninety day wonders, and those who have faith will be rewarded.