Fat Pitch

So the central bank will never ever increase the supply? No more bail outs during recessions? Bunch of crap, there's nothing they can do to stop this tide of private sound money.

"If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry." -Satoshi Nakamoto Worked from 5 cents to $8.3k

This is to discount moore's law. Don't you think there will be advances in ASCI chips to make them more energy efficient? 5 billion has been invested in mining hardware just this year alone. Bingo. They are looking at scaling solutions... It's just kind of crazy that it's valued at $120B and they haven't implemented scaling yet. Usually when you develop a software solution that needs to scale you take care of that at step 1, not after the software is live. This sounds like another way to say "there are so many fools left to sell to!" It takes slightly more than 8 days of energy for the average house to complete each bitcoin transaction. If 10x more people used bitcoin then I'd guess at least 10% of all US electricity consumption would go towards bitcoin mining (currently 0.7% but we'd need to account for consumption inflation inherent to bitcoin design)... We'll all be spending our bitcoins to pay our electricity bills to keep our bitcoins valuable!

The single most important demographic opinion on Bitcoin: https://www.forbes.com/sites/spencerbogart/2017/11/08/7-stats-that-highlight-a-millennial-propensity-for-bitcoin/#4297b62232c4 Decent chance 120B will look very very cheap down the road. Bingo. They are looking at scaling solutions... It's just kind of crazy that it's valued at $120B and they haven't implemented scaling yet. Usually when you develop a software solution that needs to scale you take care of that at step 1, not after the software is live.

R-ship then bankruptcy court takes over. 1. Declare gov't was paid back and tangible equity is distributed to jr prefs and left overs to common. 2. Declare sr prefs is still outstanding and jr prefs get a donut. 3. Call jr prefs back. Might be other scenarios but the above look most pragmatic. Fat Pitch, if the plan being discussed today is implemented, do you think Treasury just lets jr prefs sit and they do nothing with them? Curious of your thoughts on how they deal with jr prefs.

Gov't needs a permanent revenue source and setting the GSEs as pass through entities where treasury collects fees looks like a solid plan (Has 250 billion authorized by Congress to backstop). Will Mnuchin treat jr prefs as a contract that he will honor? Common looks toast as far as I'm concerned.

They are following HERA. R-ship then transfer charter to another entity and implement whatever they want. Possibly outcome will be a pass through entity where treasury back stops. Only hope is for treasury to call back jr prefs but why bother?

HERA was passed by Congress which allows the regulator to ignore the Constitution and every judge agrees. But let's forget that. If cert is denied can you explain why would the gov't give anything to shareholders? They basically have a clear and legal path to take everything. Shareholders rolled the dice in court and lost. Hope I am wrong and justice prevails. Everything hinges on Mnuchin. Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory? You read HERA. Again. R requires very specific and narrow events to be triggered. It is not a free willing tool to be used at will, but of last resort.

R-ship is just a process of wiping the balance sheet clean to recapitalize. Read HERA it is specifically stated that r-ship is to remove claims and then can transfer charters to a new entity and forbids any prior claims from transferring over. Look shareholders lost in court so SCOTUS is last hope. If denied cert why on Earth would they give shareholders anything? Sure we won a tiny claims damage that Lamberth will award .01 cents as damages and be done with it. Berk punted to SCOTUS before discovery was finished... there's no smoking gun in the documents. Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory?

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

Removing incentives makes 51% attacks costless. Bitcoin's consensus algo assumes everyone is a hostile actor so you put rules in place that makes it irrational to attack the network. I mean you still can attack bitcoin, but you are consuming electricity and depreciating your hardware. Anything that promises huge scaling comes at the cost of security. Blockchain doesn't make sense for most businesses. They are better off using trusted execution environments which gives them strong encryption and you can scale rapidly using centrally hosted cloud infrastructure. ICOs are in a bubble since they lack mechanisms to capture any value. Only bitcoin and maybe eth are capturing any value. If bitcoin can achieve store of value status, then the market valuation of any other use case will be peanuts.

Right and then the follow up is so gov't intention was liquidation from the start. That triggers liquidation preference and then we tally up how much the gov't received and see if anything left over remains for jr prefs under the original bailout. There is tangible equity left over for jrs. The docs might be enough to show c-ship was just r-ship this whole time and our claims hold up. I used to believe in the "all it takes is one" theory but it's clear all of these courts just want to follow each other and the DC opinion specifically. Maybe these docs make a difference but so far nothing has made a difference, and we've lost case after case. Just my humble non legal opinion. The only case that's giving me hope is Sweeney's but that seems to be moving at a snails pace. I still own prefs but have minimized my position. Re "We need to remove the capital so the markets don't get the impression these entities are healthy" As we know, anything can be interpreted in any way. Just like that case of a sign post on a highway where the keyword subject to interpretation (or misinterpretation) was "or". The appeal's court put an end to that one with the statement "or means or" (from the Oxford Dictionary of English). In the above case, all you need to add for a bingo are 4 more words: "We need to remove the capital so the markets don't get the impression these entities are healthy. Because they are not." ... and some judge somewhere will agree with the government that winding them down was the right decision is spite of HERA. If the government does it, it is not illegal. lol

I think the same way. After reading a statement by a treasury official saying "We need to remove the capital so the markets don't get the impression these entities are healthy" might be enough to push things shareholders way. I don't think Gov't want to risk this going to US Supreme Court. I used to believe in the "all it takes is one" theory but it's clear all of these courts just want to follow each other and the DC opinion specifically. Maybe these docs make a difference but so far nothing has made a difference, and we've lost case after case. Just my humble non legal opinion. The only case that's giving me hope is Sweeney's but that seems to be moving at a snails pace. I still own prefs but have minimized my position.

After looking at the docs, I think shareholders may have enough to make the gov't question their legal strategy in the courts. All it takes is one win to unravel all of it.

Lamberth will ask himself: "Would I have a reasonable expectation of getting my money back if I bought at pennies on the dollar?? Nah" And that's that folks. Lawsuits are a side show. Our only hand we have left is bribing the gov't with $100 billion in warrants. seems to me the circuit court just punted on the whole measure of damages question. left it up to district court to determine whether segmenting the plaintiff class is proper.

Here's a good start http://www.usv.com/blog/fat-protocols It requires you to re-think the current business models of the internet economy.

Could be wrong, but that would legitimately trigger the takings claim. The stock/jr prefs still trade to show to the courts no "takings"/"deprivation" of property has taken place. The courts have pointed out the claims are not ripe since the stock still trades. The gov't messed up the original bailout, it should have been a clean wipe out and this thread wouldn't exist. We could still be wiped out, but tsy would have to show courts taxpayers were at risk... what judge would buy that when taxpayers were paid back per the original terms? Heck gov't took a small loss on AIG, but jr prefs came out nicely. Rationally this should be a slam dunk for the jr prefs, but we are truly Alice in Wonderland. The post mortem once this is concluded will be something.

HERA provides the framework and legal authority to the regulator to send the GSEs into receiver ship. While in r-ship they can create a new entity (Limited Life Regulated Entity) and the charters will transfer to the new entity. Shareholders cannot have ownership in the new entity. Assets will be liquidated and pay off any outstanding claims. This is where liquidation preference of the jr pref kick in and you will need to pray to God Mnuchin considers the outstanding sr prefs paid which I think he will. That's the end game. Why would they potentially raise a ridiculous amount of capital on a dirty capital structure? Clean slate IMO.

I think most of the jr prefs holders just want par and the special interest can do whatever they please. If Mnuchin considers the Tsy paid in full, then there's enough tangible equity to pay close to par in receivership and float out whatever structure they want. The Blackrock piece acknowledges the Tsy will have full administrative powers to do what they want Jan 1, 2018. So why not just compromise, recap the GSEs to be the backstop in the system, limit their market share and open their platform for outside capital to come in and compete. This will be bad news for the common since the economics of the businesses will change. What's great is that they acknowledge investors/capital must be respected :)

http://video.foxbusiness.com/v/5420142826001/?#sp=show-clips Sounds like Mnuchin isn't going through Congress. Going to reach out to groups and gather info and make a recommendation to the POTUS to what the solution should be. Getting bipartisan support just went out the window.

Finally someone is thinking. The idea of r-ship has been floating around and it makes perfect sense to start with a blank slate to raise large amounts of capital. Once in r-ship the conservator has the power to create a limited life regulated entity. If assets exceed liabilities, the assets may be transferred over to the new entity. No shareholder will have rights in the new entity (ie commons are wiped). This is all stated in HERA. The details here is, once in r-ship the liquidation preference of the jr prefs are triggered and are entitled to par or remaining equity before liquidation/transfer of assets. Perry appeals ruling confirmed such rights are intact. Bankruptcy court doesn't look at GAAP financials, but will look at tangible equity. Conveniently enough, gov't senior prefs have a liquidation value of 1 billion and equity over left after 15% DTA hit is roughly 20 billion and you have 19 billion jr prefs for Fannie Mae. I think jr prefs are called before assets are transferred to new entity. Sure they can not give anything and we go to court again, but the laws governing this end game looks straight forward. We won't know for sure what will happen, but I think the plan will slowly get leaked and the gap between common and prefs will widen to reflect that. would you please explain the underlined portion of your post? Sure, reading the SPSA the liquidation preference of the senior preferred for Fannie/Freddie is 1 billion. The fly in the ointment is if Mnuchin determines the treasury wasn't paid back and 117 billion is still outstanding then we are all screwed. https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/2008-8-7_SPSPA_FactSheet_508.pdf Ironically the senior preferred have the same language in terms of liquidation preference as the jr prefs. So if assets are transferred to a limited life regulated entity, the senior prefs must get par or what's left of the equity. Anything left over will presumably go to the jr prefs. It's probably in the jr prefs best interest to go through r-ship and get called immediately then stick around couple years trying to rebuild capital slowly.

Finally someone is thinking. The idea of r-ship has been floating around and it makes perfect sense to start with a blank slate to raise large amounts of capital. Once in r-ship the conservator has the power to create a limited life regulated entity. If assets exceed liabilities, the assets may be transferred over to the new entity. No shareholder will have rights in the new entity (ie commons are wiped). This is all stated in HERA. The details here is, once in r-ship the liquidation preference of the jr prefs are triggered and are entitled to par or remaining equity before liquidation/transfer of assets. Perry appeals ruling confirmed such rights are intact. Bankruptcy court doesn't look at GAAP financials, but will look at tangible equity. Conveniently enough, gov't senior prefs have a liquidation value of 1 billion and equity over left after 15% DTA hit is roughly 20 billion and you have 19 billion jr prefs for Fannie Mae. I think jr prefs are called before assets are transferred to new entity. Sure they can not give anything and we go to court again, but the laws governing this end game looks straight forward. We won't know for sure what will happen, but I think the plan will slowly get leaked and the gap between common and prefs will widen to reflect that.

The political facts haven't changed. The GSEs need to be recapped or face another bailout when corporate taxes are lowered or by Jan 2018. Does Mnuchin recap using current structure and monetizing the warrants to show something for his efforts? Or does he wipe everyone out clean and start fresh and forgoing the warrants. If anything this court ruling gives him cover to cram the common with the warrants. Jr Prefs are the wild card, but seems easy to leave them alone and they get par eventually.

Courts are saying that the 8 docs not produced are docs that shareholders should not be worried about since the content is already revealed in other sources that are now available to us. This looks like a victory or am I missing something?

I think this bill will credit all the profits that was swept from the GSEs. Doubt the bill will pass, but there's already momentum on all fronts. Good luck everyone!