There's lots of nat gas in the world. It's plentiful and its cheap. But only when it first exits the well-site. Quatar, Australia, Iraq have lots of it. Russia has lots of it. But Russia has the pipeline infrastructure to move it to market. That's a huge investment expense and lengthy timeline for construction. Pipelines are not popular,anywhere in the world. There's a reason why Canada wants a Keystone pipeline routed through the U.S. instead of traversing Canada. They don't want it in their backyard, either.
It is very hard and very expensive to move nat gas across borders, steep terrain, water and protect the mechanical integrity and security of the mechanisms moving billions of cubic feet of explosive gas against terrorist threats in remote parts of countryscape.
Then there is Cheniere. HUGE investment in Cameron Parrish liquifaction facility. Already in mass-production while others struggle with permits and licenses, let alone financing. And SO MUCH CHEAPER to transport than compressed Nat Gas. Clean energy. Borderless transport. Available now. Plant funded at historically low borrowing rates. Established customer base. Virtually sold out when Train #6 comes up to speed.
Chanos and his short strategy were stupid. CQP is the place to be.
I will give you full credit for bringing the CDO issue to this board, earlier this year, when you posted excerpts of Fiderer's comments disputing dismissal of synthetic CDOs as playing a role in the crisis. I do not agree with everything Fiderer states, but he was first to the table on exposing the Magnetar Trade and related issues, alongside the Propublica team.
This is a HUGE part of the Fanniegate saga that no one seems to want to discuss because small brains explode when tasked with difficult concepts that must be analyzed, not just pom-pom shaken.
But, never fear. This, too,will have it's hey-day in court before the lights are turned out.
Maybe the resistance to releasing documents has absolutely NOTHING to do with Fanniegate except a reluctance by the White House to acknowledge a key Obama insider may have played a role in protecting a campaign and PAC donor who maybe played the synthetic CDO/ Magnetar Trade prior to the eventual collapse of the markets?
The FCIC showed that "Most Synthetic CDOs Were Designed to Fail" according to David Fiderer.
The answer might be a lot simpler to figure out than Taibbi's sophomoric and thinly researched treatise. Maybe the financial secrets being protected have more to do with White House "biggies" and less to do with Fannie Mae? It's maybe all in the Magnetar CDO/big-bank vault. Ever heard of Rahm Emanuel?
Two of the largest mortgage financers are online websites Quikken Loans and Lending Tree and there is a burgeoning segment that offers loans online to veterans, union members, etc. There are also rumors that Costco may move into that arena as it has in new car sales and travel packages. The world is changing. The banks have no future monopoly on anything. Competition is good for the consumer. The more greed exhibited by the banks, the faster their market share will be grabbed by new, cost-focused competition.
15 year, fixed rate mortgages are available EVERYWHERE at lower interest rates than 30 year mortgages. If people's homes were paid off in 15 years, what do you think they will do with that cash for the next 15 years? Instead pf paying the interest to banks or FnF, they get to spend it like a real consumer.
Balderdash. People are getting married later, or not at all. Having fewer kids. Millenials favor renting over home ownership, anyway. The rest of the world gets by just fine without our 30 year mortgages. So can we.
And, yes, I paid cash for my championship golf course home just off the fifth green.
During the lead-in period to conservatorship, Fannie Mae was under investigation by Congress, the Justice Department, the Securities and Exchange Commission and OFHEO. The smell of scandal was in the air and in the Fannie Mae headquarters. Anyone who was surprised by the takeover was an idiot.
If people bought a house they could really afford with a 15 year mortgage, saving the succeeding 15 years of principle and interest payments would be the biggest wealth builder in the history of the U.S..
Where the heck was Judge MoeRon Steal?
I thought he was the Messiah soon to lead the shareholder masses to The Promised Land.
Pretty much irrespective of who wins the next election, the tax advantages of home mortgage deductions are likely to go bye-bye.
The point in eliminating the 30 year mortgage option inherently includes a recasting of consumer's aspirational choices to more reasonable, affordable prices. A transformation where people actually bought homes within their actual family needs and ability to repay would be a huge improvement.
I'm quite sure Sam takes no itemized interest deduction on his refrigerator box.
New article out in Forbes, today.
This refutational analysis clearly challenges the tired, old platitudes about wealth building, and it further explodes the myth that taxpayers are not at risk of another bailout.
Good read. Succinct and fact-based.
"This" started under Clinton, but what sank housing and the GSEs was not simply subsidizing housing as a social agenda. The elevation of risk came far more from arcane, new financial machinations introduced to housing finance... CDO's, hedging strategies, derivatives, fringe-legal trading. Study the Magnetar Trade as just one example of gamesmanship engorging the risks in mortgage financing where the GSEs were the largest players and potential victims.
Maybe it was Tim Pagliara that needed eyesight help since he seems to have missed all the obvious danger signals that Fannie Mae and Freddie Mac were gasping for air. Instead, he left his clients invested in what became dead money, zero-dividend deadweights and now wants to shift blame on to someone else.
Glad to share my thoughts. The preferred shares are non-cumulative, though several pending suits seek court remedy to restore them. The biggest payday will be on commons, potentially, in almost everyone's analyses, assuming the GSEs can avoid going to liquidation.
Preferred shares would spike with a favorable ruling at least to par, but some with extended call dates and high coupon payouts could see an extended gain. An example: the FNMAS shares with an 8.25% coupon will not be callable until DEC 31, 2017 might fare better than the FNMAT shares that have the same coupon rate but can be called DEC 31, 2017.
Good luck with your trade.
There is no simple, pat answer on commons vs. preferred shares because of the multiple lawsuits pending and the different remedies sought by various plaintiffs. Nobody can predict with any certainty if any suits will prevail and, if one or more do, what the court may do to FHFA, UST and the government, auditors and boards of the GSEs. There is also no certainty that shareholders in Fannie Mae will receive the same court treatment as the shareholders in Freddie Mac. Some pending suits seek certification as class actions, which would invoke different remedies for shareholders of stock in different timelines based on dates of share accumulation. There's more, but I'm sure you get the idea. The litigation circus complicates EVERYTHNG for EVERYBODY.
So here's my short version answer for you. Where there's so much smoke in courtrooms across America, some adverse judgement against defendants is most probably in the cards at some point looking forward. This triggers a discussion on settle or appeal. My guess is that all the very expensive, high-powered legal investment in a multiplicity of jurisdictions will lead to some outrageously costly penalty for the government. Whether that outcome translates into anything that benefits any shareholder or litigant team is still a question mark. But the rancor in D.C. can best be predicted as a retaliatory "the shut 'em down" response. That outcome has been a goal of many legislators for a very long period of time. A big judgement against taxpayers will put the nails in FnF's coffins in all likelihood. In that scenario, preferred shares have liquidation preference and carry that extra protection like an insurance policy against getting wiped out. They also have, as Seeking Alpha observed, a par value protection ($25 or $50) compared to one cent for commons.
I think preferreds are the best bet, and that is all that I own at the present.
New CNBC report out today showcases the need for and magnitude of underwater mortgage loans held by Fannie where mortgage balances should be written down in a much larger venture than the present program envisions. This is a socially responsible but very expensive position for FHFA to undertake, and could be potentially hugely draining on metrics presumed when MBS was packaged and sold at fixed coupon obligations that cannot be adjusted.
The number ofhome mortgages still underwater was surprisingly large to me, shocking even after so many years of market recovery.
If they had replaced Andrew Jackson with Teddy Roosevelt to get rid of the slave ownership weight I would be less upset. But to to replace him with a person many African Americans don't even know just panders to giving in to populist pressure from the Twitterverse and the politically correct pundits who pound heir figertips bloody with the socially-aggrieved complaint of the day.
Makes me SICK.
Reuters reporter Gina Chon reported yesterday the extent that both GSEs had dwindled down reserves for any future asset losses due to any economic dislocation. This is, no doubt, part of the rationale for the new Mulvaney bill pending in the House. It's a terribly flawed bill, but the concern for pulled down reserves is a legitimate concern for taxpayers.
A ten year profit pro-format that is based on DTA and reduced reserves is not much of a celebration for a healthy business, going forward. When Tim Geithner put forward the Amendment 3 sweep, it came at a point in time where very little of the bailout had been returned to Treasury, and experts like Professor Anthony Sanders of George Mason University and the Mercatus Institute were waving warning flags and claiming Fannie needed to be shut down and replaced with a new platform that got taxpayers off the hook.