SnarkyPuppy

My point is that it seems a foregone conclusion to some here that Mnuchin is pro-shareholder.

it looks like it is stand alone. it has just been reported out of committee. still needs to be passed by house (likely) and senate (if 60 votes needed, as i think it needs, then who knows) If this is true I see it as great news. Any administrative reform/4th amendment would come at Trump's request, and he would hardly sign this bill into law in that case. I can't see it passing, getting vetoed, and passing again with 2/3 happening before January 1. If this bill passes and Trump does sign it....well, at that point it's likely "abandon ship" for me. At much, much lower prices. I find it absurd that nobody here is contemplated incentive structures consistent with an anti-shareholder plan.

http://www.valuewalk.com/2017/12/fannie-mae-foes-gse-reform/ Seems one potential outcome to me is bank-centric reform is passed by congress (facilitated through jumpstart extension) as referenced in the link above. Bulls will argue that this doesn't: 1. Maximize the value of governments warrants 2. Solve for outstanding litigation Regarding point 1: Maybe we're missing the true incentive structure here? Is it possible that maximum economic benefit for the US government is truly the #1 incentive driving trump/mnuchin decision making? Is it possible that alternative incentives are involved? Mnuchin worked 17 years for a "TBTF" bank and likely has large incentive to increase business for the banks. Maybe his relationships w/ Paulson and Berkowitz are only a small segment of his broader network which could benefit from housing finance reform? If re-election is the #1 incentive at play, it's possible that providing economic benefits to large banks provides reciprocity in the form of fundraising for the 2020 election? If tax reform is the #1 incentive at play (has more legacy value), it's possible that conceding value to shareholders in favor of increasing likelihood of passing tax reform is a rational move. [*]Regarding point 2: lol. Just trying to provide an alternative perspective here. I think it's increasingly obvious where Congress is directionally headed.

Agree, we aren't all the way there yet but becoming increasingly likely that this works out favorably with a target of par for the preferred. Like I had mentioned back probably 300 pages ago my capital at stake is aligned with Berkowitz, Paulson etc. Ill take that any day in a situation that has the relationships we hashed out before. I know a fear for some has been preferential treatment for those bringing suit against the gov but that is not the clean solution I believe the gov is working towards. I was thinking too it really makes more sense now that Paulson and Ackman mentioned Corker working on a bill and targeted an early 2018 for the investment working out favorably. They knew Corkers actions, the time table laid out does not seem all that unrealistic now. I think one has to look hard at passing up a possible ~400% return to par in some of the preferred issues +/- a div for the common which seems to be a bit of a black box. Is the risk for more then a 400% return worth what you could lose in common? First thing I would say if I read this typed by someone else is fat chance the div gets restarted, and I agree. But why is the market pricing it in then? Its odd. The market is pricing this at a ~25% of success but respecting the dividend payouts the securities had. ..and to fuel my overwhelming confirmation biased I added more FNMAH today Those involved have generally already doubled and tripled down over the past couple of years when things looked arguably just as optimistic as they do now. I'm still completely lost as to reconciling Ackmans praise and the fact that it seems directionally commons might not perform well. Also completely weirded out by henslaring "doubling down" on getting rid of F/F but comprimising on other aspects of reform. The presumption is ackman isn't an idiot, but I'm skeptical that corker doesn't have some mischievous plan in mind. F/F shareholders have been personally attacking his name for years now, and it strikes me as odd that anyone in his position wouldn't try to harm shareholders for that reason alone.

Is it possible that you're explaining two independent and largely unrelated situations with one framework? Is a bubble (severe price rise without similar increases in value) fundamentally different for a brand new commodity versus a business with cash flow stream? Is it possible that future events are easily predictable and obvious at first glance? Is it possible that you're correct and this is the most obvious bubble of all bubbles? Absolutely. Is it appropriate to simply dismiss as a bubble because of recency bias related to asset classes which are valued in fundamentally different ways from the asset we are currently discussing? I'm not so sure. I think you're over analyzing. It's basically exactly what Peter Lynch talks about in his books. When you start to hear regular people talking about a new hot investment concept often, it is a red flag for excesses. It's just crazy right now. I know of at least two people, who probably couldn't explain what a mutual fund is, that are buying bitcoin. When easy money is being made, that is also a huge warning for speculation. Howard Marks always mentions, "What the wise man does in the beginning, the fool does in the end." Couldn't agree more. With that said- the presence of these attributes != bubble in and of itself.

Is it possible that you're explaining two independent and largely unrelated situations with one framework? Is a bubble (severe price rise without similar increases in value) fundamentally different for a brand new commodity versus a business with cash flow stream? Is it possible that future events are easily predictable and obvious at first glance? Is it possible that you're correct and this is the most obvious bubble of all bubbles? Absolutely. Is it appropriate to simply dismiss as a bubble because of recency bias related to asset classes which are valued in fundamentally different ways from the asset we are currently discussing? I'm not so sure.

Same thing came to mind. But we are all subject to confirmation bias here

Just curious, at what age and price point would this move from being tulips to being an actual store of value ala gold? Ignore volatility, bc it seems obvious to me that at a certain market cap volatility will be similar to that offild today.

+1

Largely agree but having trouble reconciling Ackman's recent comments (praising corker/warner and related legislation) and his position being primarily common stock. Unless he has subsequently substantially swapped his stake- which I don't think is very likely and could be easily interpreted as trading on material non public information

High five

Does anyone have access to the politico link?

I thought it was determined that any administrative actions by Mnuchin could be blocked by congress?

In a year? If he's apathetic why say anything?

The GSE (Fannie/Freddie) #mortgage model is “wrong, broken, irreparable...it needs to be scrapped.” Per @RepHensarling speaking @nardotrealtor conference. Chair Hensarling: gse reforms still under consideration in House, but F/F must be wound down and their charters repealed. Should be interesting to see how this is twisted as bullish

Yeah, gotta be one of the stupidest f'ing things in the proposal. Do you see this in the final bill? I can't find it anywhere

Well if this is not a catalyst for something to happen, I don't know what is. Mnuchin likely has the opportunity to show all his cards shortly

So it will be taxable? Kind of like stocks? Yes the IRS declared years ago (2012 or 13 maybe?) that it was going to treat bitcoin as an asset and selling it is a taxable event, like stocks. My comment was made in jest. Those pointing to the IRS wanting taxes as bearish is utterly absurd

So it will be taxable? Kind of like stocks?

Bitcoin cannot be a store of value. Valuation - by definition - requires some kind of cash flow. You need earnings, dividends, interest, etc. Valuation of a commodity can be based on its use in an industrial context. Even fiat currencies can be valued, based on the underlying tax levying authority of a government. The governments of countries have value based on the taxes they can generate each year for the foreseeable future. Bitcoin has no cash flows whatsoever. It is solely valuable for transactions, yet this is a trivial function. Many virtual currencies exist and can be used for transactions. There is no sense in which a currency must have a store of value to be useful for transactions. Therefore any attempt to value Bitcoin is ultimately just tulip mania. A price of $0, $10, $100, $1000, $10K, $100K, and $1M per Bitcoin are equally valid valuations. Because ultimately 95% of the use of Bitcoin is speculators who buy Bitcoin on the erroneous belief that it is a store of value and must increase in value. Gold doesn't produce cash flow, is a store of value, and has a market capitalization of $7tn. Most of your points are made irrelevant when compared to gold as a store of value. Fiat currencies do not produce cash flow (holding fiat is effectively negative cash flow). Your argument regarding governments controlling/backing fiat as a source of value/valuation point may be seen as a strength of bitcoin by some. The fact that a store of value, such as gold or bitcoin, is not valued based on cash flow earnings is precisely why this is not a bubble. It may not work out, and it is absolutely still speculative, but it cannot be a bubble if there is valuation anchor for fundamental analysis. Those focusing on prior % gains and shouting bubble will continue to be stunned as the price of bitcoin continues to rise. Those who focus on bitcoin's current capitalization as a % of the capitalization of one very real potential outcome recognize a bet that is highly asymmetric and almost definitely +expected value. As each day passes, the perceived safety (value) of bitcoin increases. As bitcoin rises in popularity and acceptance, the perceived safety (value) of bitcoin increases. And every rule has an exception and gold is the exception. The only major store of value that has survived generations without producing cash flow. You're saying bitcoin is also an exception but the burden of proof is on you, not us. Gold has thousands of years of history as store of value to earn its status today. To compare the two is just silly. No, fiat currencies do not produce cash flow; also fiat currencies depreciate over time. The U.S. dollar FYI is not a good store of value. What? Even if bitcoin goes to $100,000 or $1 million, nobody here has made a case as to why it's a buy at this price. It'll go up there and you all will claim victory but will just get lucky. I just want to be clear on my stance here. I have absolutely no idea what will happen and I bought in at much lower prices (greater asymmetry i.e. expected value significantly higher). With that said, my stance is that the future is entirely unpredictable (tell someone 5 years ago that Trump would be president and get a more visceral reaction than saying bitcoin might become a store of value) and that the historical % gains of bitcoin indicating a bubble are a kneejerk reaction that do not tell the full story. Given the lack of predictability, the fact that there is a non-0% probability that bitcoin does replace gold as a store of value (we can debate this, but we'd BOTH be speculating), it remains to be highly asymmetric and IMO a positive expected value speculative gamble. Regarding volatility/gains- if you accept the bull thesis (store of value -> comparable store of values worth ~$7tn), the new asset class will have volatility as it rises to becoming a store of value. I see this as a binary outcome over a long period of time- either it becomes a widely accepted store of value (NOT currency, imo) or not. $0 or $7tn. It is not currently a store of value, but if it were to rise to those levels volatility would likely be consistent with the volatility we see in gold today.

Bitcoin cannot be a store of value. Valuation - by definition - requires some kind of cash flow. You need earnings, dividends, interest, etc. Valuation of a commodity can be based on its use in an industrial context. Even fiat currencies can be valued, based on the underlying tax levying authority of a government. The governments of countries have value based on the taxes they can generate each year for the foreseeable future. Bitcoin has no cash flows whatsoever. It is solely valuable for transactions, yet this is a trivial function. Many virtual currencies exist and can be used for transactions. There is no sense in which a currency must have a store of value to be useful for transactions. Therefore any attempt to value Bitcoin is ultimately just tulip mania. A price of $0, $10, $100, $1000, $10K, $100K, and $1M per Bitcoin are equally valid valuations. Because ultimately 95% of the use of Bitcoin is speculators who buy Bitcoin on the erroneous belief that it is a store of value and must increase in value. Gold doesn't produce cash flow, is a store of value, and has a market capitalization of $7tn. Most of your points are made irrelevant when compared to gold as a store of value. Fiat currencies do not produce cash flow (holding fiat is effectively negative cash flow). Your argument regarding governments controlling/backing fiat as a source of value/valuation point may be seen as a strength of bitcoin by some. The fact that a store of value, such as gold or bitcoin, is not valued based on cash flow earnings is precisely why this is not a bubble. It may not work out, and it is absolutely still speculative, but it cannot be a bubble if there is valuation anchor for fundamental analysis. Those focusing on prior % gains and shouting bubble will continue to be stunned as the price of bitcoin continues to rise. Those who focus on bitcoin's current capitalization as a % of the capitalization of one very real potential outcome recognize a bet that is highly asymmetric and almost definitely +expected value. As each day passes, the perceived safety (value) of bitcoin increases. As bitcoin rises in popularity and acceptance, the perceived safety (value) of bitcoin increases.

Shocker

Right- it doesn't give insight to any specific structure. "Craig Phillips, a top adviser to Mnuchin, told credit union executives in September that “we think the right approach is to consider an explicit, paid-for, full-faith and -credit guarantee for federally sponsored mortgage-backed securities with added protections on the front of that guarantee to make it really usable when you are in very exigent circumstances.” "

All signs pointing to explicit MBS guarantee as one of the principles that will be released.