doughishere

couldn't disagree more. non-cumulative pref is like senior common, which is why warren buffett spits on non-cumulative prefs. if NWS is invalidated, $90B value drops to fnma pref and common. if pref was cumulative pref and it had a huge accumulated dividend, then pref would go to par. Class a shares and class b shares. I can see that. Class a still gets a "par" dividend before class b's get anything

Think of the prefers like a bond. With an interest component. It should go to par before the common even goes to 1c

Markets can stay irrational for a long time....

Lol

What if Obama signed an Executive Order terminating the GSEs....you guys are worked up about it now. That cleans the legality issues up and sets an amazing precedent.... Although i just looked it up EOs "are generally used to direct federal agencies and officials in their execution of congressionally established laws or policies." .....generally.

@hardincap Great quote by bethany

You can't argue with one micro scenario when it comes to a macro decision like cutting or raising interest rates. This is the paradox of aggregation. Higher interest rates may lead to higher income for savers, but for creditors they naturally have the opposite effect; they tighten credit and this – in aggregate – slows down the economy and leads to less spending. Though I doubt that negative interest rates would be very effective I don't think that central bank are so clueless that they accidentally tighten monetary policy when they want to ease it. I think thats the argument for the 4% inflation "sweet spot". Creditors will still lend if they can get an over 4% return....I havent put a lot of though into the other side of that...ill be the first to admit it.......seems like we can control inflation...we did it in the 80s. One could argue that we saw deflation in the depression yeah we did but a different kind of deflation. There are significant changes since. One is we are no longer on the gold standard...we are now on the interest rate standard. You can hardly fault the central banks and those that run them...we've given them an impossible job and to be honest old ways of thinking dont work but you must keep the old ways in mind because the could one day bef very true....i just that the central banks need to think differently. I highly suggest you all listen to Mr. Napiers speech that was posted here a number of weeks....I did about a dozen times and combined with some mico level academics and accounting it seems to fit....Im talking about getting a spread sheet out and do annuity payments and bond payments. nothing fancy the numbers just need some moving to where the current environment has them. Edit: Look at what a lump sum of an annuity has to be if you want annual 100$ payment at various interest rates ....now take into consideration if you want those lump sum payments to grow because maybe you are a University and want to help grow your scholarship fund or pay for research and developments(a very worthy cause) now multiply that by the number of universities. Now add on every busines out there, forget the corporations, ask the "small" business owners because they really want to pay their employees more to make them more productive and happy.....When business and Universities have less money or cant count on future cash inflows they begin to cut and begin to save. This is the risk adverse behavior the smart guys talk about. When you get a "risk free" 4% growth well you are most likely going to accept that...when you have to start taking more risks for that same 4% growth well.....everyone thinks they automatically understand it but no one is s-p-e-l-l-i-n-g it out. And im not really trying to critque this board its more of the people on the tv, controlling the message and such....they always look like they have such a hard time understanding whats happening but have an opinion on how to fix it. Who knows maybe the centeral banks already know this...they are just constrained by the forces of the people.....weve given them an impossible job. vox populi - the opinions or beliefs of the majority.

These would seem the logical outcomes and are what the central banks are looking for. The question is why haven't they shown up? Or is it just a matter of time? Invert...always invert: 1. Since I won't get interest I need a lot more money to retire. 2. So save more, buy less 3. Less demand @Investor20, I think your spot on with this...Interest income is a real part of income. You have less income you spend less...easy as that...I think the M2 hawks are not quite inverting. Theyve given Noble prizes for less thinking. @ni-co, Higher interest rates lead to higher income which leads to more likely to spend which leads to more demand. Think of it on a small basis. A single mom and pop near retirement or a Grandfather on social security who only has savings in the bank. They are less likely to spend becasue the interest was their sole source of income...Americans have a Labor Force Participation Rate is at a 40 year low of about 60% so that leaves 4 out of every 10 americans required to save money if they care to have it in the future.... How quickly we forget our micro. So in a way if you have someone who does not participate in the labor force but still has savings and there is a "higher than zero" interest rate then they are "technically" earning income to be able to spend. Its almost as if they have a job but they dont work....now extrapolate this to people who work but also have a job. In a way if interest rates are "less than zero" and they have a job and they have savings then the portion of income from interest is almost a "second job." Further extrapolate this to business who think about future capital out lays based upon how much they think they are going to make in the near future....well if your a company your less likely to make those future out lays if a portion of your "interest income" is gone. You need to save that money. Simple microeconomics applied to the macro level folks....they've given Nobel Prizes for less. BLS LFPR Google Search:https://www.google.com/search?q=Labor+Force+Participation+Rate&oq=Labor+Force+Participation+Rate&aqs=chrome..69i57.402j0j9&sourceid=chrome&es_sm=91&ie=UTF-8 Edit: Bundesbank seems to agree with me: https://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Discussion_Paper_1/2014/2014_10_27_dkp_27.pdf?__blob=publicationFile There are many financial models out there that no longer make sense. What is the cost of future pension liabilities if one discounts by negative rates? Is it infinite? What is the value of the equity of companies legally bound to meet pension fund shortfalls.

Is it meaningless any more because now you have a negative number with a 0% discount rate. Surprise! That means something now. I sent this to Mr. Napier a few weeks ago. He agreed. No one else did.

poor choice of words on my part. I agree with your comment....mea cupa

YEah so heres an intersting tidbit I just looked up Guess who's at the Harbor investment conference today? Mona Sutphen, Served as the White House Deputy Chief of Staff for Policy in the Obama administration from 2009 to 2011. She is ... https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=mona%20sutphen http://www.valueplays.net/wp-content/uploads/Screen-Shot-2016-02-05-at-10.06.09-AM.png Same Person? Special envoy to the Shareholders? Most likely not.

Cherzeca, has kinda hit it spot on. Lawyers tend to give you an answer as to how they think its going to go and say "but theres always the possibility of not winning." And I think that to a degree they are correct in doing so. The markets may think that since the lawyers dont know then they default to the "group think." That being said a number of "the guys" i talk to off line are skeptical of its potential. But they are guys who deal in Futures and option trading in Chicago. One works for a fund in DC but i think they all take their cues from the markets and say well the "market is all knowing and correct all the time" they must have discounted this properly. The guy who works in the fund in DC is a much more value oriented guy and he just doesnt have the skill set to dive into the law stuff....nor the time..nor willing to make the time. Ive even talked to a Law student at top-teir university,whom is intelligent enough to get a good job at a great firm right out of school, who thinks what Cherzeca and Merk have said is correct, and ive given him other highlights also but he still discounts the fact that the market knows something that we dont know. That may be a function of time and energy he puts in. Hes into other things at the moment. For the record, Hes actually the one that found those academic articles i posted a few days ago. And I think thats it...they just dont trust their analysis enough to counter the "markets all knowing" characteristic....[sarcastic] after all if the markets were wrong on MBS in 08 well that was a one off thing.[sarcastic] I know im kinda "credential" dropping here but the people i am asking are what i would consider to be above average intelligence market participants. Lets put it this way...I expect to get a number of phone calls if some of these cases start getting called in the shareholders favor..... The other answer that i usually get from these guys is, and i think is a tad bit hypocritical, the "its the government they can do anything they want" argument. So there it is again the lawyer answer "we may be right but theres still a possibility of loosing" The attractiveness to me was when i first looked at Third Aves. letter and they mentioned it...i cant even remember which one it is but then fairholme got into it so I became more aware....bought my stake sometime then.....after that Ackman(who i think is a pretty good independent thinker) and a few of those other guys got in. Theres a number of firms out there that have taken stakes in it basically the fairholme split between common but heavier on the prefs....but i think are seeing what fairholme sees and think the same thing...after all everyone of these firms i think sees the same thing.... Similarly along these lines...there are a lot more people who think the same way...just the sheer number of cases tat have opened up against the govt. in the last 18 months says more people are "ambulance chasing." i dont know if thats good or bad that they all see generally the same thing. Its certainly what i see from our chats and such. 2 more thoughts. 1) I think if we got a administrative record we would see the insider dealings and just see how much the govt has extended its mandates. The lack of insight and some of the redacted material that has come out in the last year or so makes me question the integrity of the govts position. I think there is some scandalous? stuff under there. 2) I think there is a bit of half truth telling on the part of Carney and i think that has added to the confusion of the trade...after all he reaches millions of readers and i think that they read some of his headlines and automatically dismiss what the hedge funds have to say...I think Carney has some sort of cognitive bias towards Hedge funds and he sees it as his mission to do what ever to impede their progress. So naturally, guys like my buddies read his headlines and it looks much more grim than it is. Edit: I often wonder what a young Buffett would do in this situation. He's not going to purchase a stake in it now but im sure hes well aware and may just stay out because they want to keep their "reputation."...lets face it buffet does have to protect his rep now since hes so big. And it would bring some ire with shareholders as well as others....plus i think buffett likes to be more passive now...its much easier to get along with people than to fight them.

Can't be too careful Great show.

This one? http://financialservices.house.gov/uploadedfiles/hhrg-113-ba00-wstate-jmillstein-20130424.pdf

In general, the issue is how you re-capitalize (and eventually re-privatize) the GSEs when you have just screwed the last group of equity holders. It is difficult for me to see anyone providing what will have to be hundreds of billions of private capital when the last guys were wiped out for reasons having nothing to do with the profitability of the enterprises. I know we've talked about this before but I still don't see a reason why they have to recap and release. If we lose all the cases, what's the incentive in doing that when they can get an endless stream of profits to help pay for the budget? I know there is pressure from many sides to do this but it's their choice and I don't see them walking away from free money. "Congress did not authorize the Treasury Department to nationalize these two companies. "

He may be refering to the prefs and not the common "Preferred stock is not common stock. Preferred stock is a contract, a contract that protects our bundle of economic rights. One of the rights it protects is a liquidation preference, a priority claim with regard to the repayment of principal. The contract is between a buyer and seller, and it is backed by the nation’s laws. The Treasury also owns preferred stock. We own Preferred stock, the Treasury owns preferred stock, and a preferred stock is a preferred stock. But the Department of the Treasury seems to make up the rules as they go."

Why are you better than Johnny Manzell or Trump?...silence

People flock to the United States. Is being born here a sigma event? Latest letter from Buffet he thinks so.....this is the Corner where Birkshire and Fairfax meet is it not? Is thinking somthing over valued. Is that a sigma event? All these "smart" people what's the difference? What does Howard Matks say in his book?...who cares he's a sigma event..I guess

Thinking something is undervalued. Is that opportunity a sigma event? There's smart opinionated people in these forums. Trumpaficate

Is picking a winner stock a sigma event? What would Ben Graham say?

Can anyone quantify how much of their success is based off of others?

Michael Burry a Sigma Event?

Mark Zuckerberg, Patrick Kane, Lebron James, Kanye West, Gisele, Tom Brady, Tiger Woods, Lady Ga Ga, Sun Zu, [insert Name Here]. Obama. Are they all sigma events?

these academic farts are just fulfilling publish or perish quotas. f'em I just keep my ear to the ground. what does munger say...only allowed to have an opinion if you can argue the other side

Guys like Ackman, Buffett, Munger, Paulson, [insert name here], are they sigma events? Wikipeida fat tail distribution if you don't know what I'm talking about?......Discuss.