merkhet

Why would anyone quote disconfirming evidence? :P What exactly is this quote "disconfirming"? Here is the full Bloomberg interview btw. I didn't expect someone to validate my point so quickly, lol. In any case, I suspect some of this comes down to the differential understanding and/or usage of the word "crisis," which garnered some attention in a different thread. It's a slow morning, so I figure why not list out the disconfirming evidence from the 30 minute video: @ 8:05 Later on, Dalio talks about risk premia being low right now, and when there are corrections, the risk premia increase, and liquidity rushes in, which causes choppiness in the markets. However, he specifically rules out the idea that we're talking about "crises." @ 13:56 Not to pick on you, ni-co, but since you're the person who responded to the disconfirming evidence question... To be fair, you say "crisis" is the wrong word, but then what is the right word? @ 20:40 For what it's worth (to make a long post even longer), I agree with how Ray Dalio and Richard Koo see things. Richard Koo talks about using fiscal stimulus during a balance sheet recession, and Ray Dalio talks about the monetary stimulus machine breaking down and requiring a different mechanism to get stimulus through to the people. They're both talking about the same thing. That said, if you're not buying the general market as a whole, what does it matter? Again, for what it's worth, choppy markets are generally good markets for value investors... And now I've reached my macro limit for the year...

Why would anyone quote disconfirming evidence? :P What exactly is this quote "disconfirming"? Here is the full Bloomberg interview btw. I didn't expect someone to validate my point so quickly, lol. In any case, I suspect some of this comes down to the differential understanding and/or usage of the word "crisis," which garnered some attention in a different thread.

The Delaware case isn't just about the Net Worth Sweep being illegal under Delaware and Virginia Law. The case also talks about the conservator having a fiduciary duty, etc. so a 99% sweep would also violate their fiduciary duty, assuming we win on that part as well.

Unfortunately, this stuff does not reduce all that well to numerical probabilities . Instead, I'd say that it's likely that the Delaware district court treats Fannie & Freddie as not being instrumentalities of the U.S. government as a result of FHFA's involvement as conservator, and, therefore, the companies are subject to state law when it comes to things like the Net Worth Sweep. Now, the 9th Circuit is not directly controlling because the Delaware district court sits in the 3rd Circuit, but it's persuasive authority for the Delaware district court judges -- and it's something that Judge Sleet will likely take into consideration when thinking through this case. The only higher court than the 9th Circuit Court of Appeals is the Supreme Court, and I don't think that case is going to be argued up to the Supreme Court.

I went outside, turned around, spit and cursed.

Things are looking pretty good right now. I hope the Delaware oral arguments aren't scheduled for while I'm out of the country. I would love to sit in for that.

how would this motion be fully briefed and decided before the admin record production date of 3/10? of course if judge decides after 3/10 to reinstate she can make it retroactive, but this is rather strange procedure Yea, no idea.

Saxton plaintiffs are opposing the Defendants' motion to reinstate the stay on the administrative record. Motion will also be filed under seal.

There is literally no way to answer this. I mean, other than just making things up.

I suppose it would depend on what a release/recap looks like. If you can release them with access to the CSP which provides a guarantee on the securities but only after some significant equity loss on the part of the privatized entities, that would seem to preserve stability.

Yes. There's a second one @ the Senate. I uploaded them as attachments somewhere in this thread.

In that case why not just release them regardless of the courts? Actually I agree that 80% up front is better for multiple reasons and wouldn't be surprised if does just that right before the election. It makes for a great headline number, and if I were a politician I'd rather spend 80% all by myself than share 100% in perpetuity with others. But again, why fight it to death in the courts? Re: the capital, in the Government's hands they have an infinite line of credit to cover any losses so it's not like they need all that capital at all times or any given moment. I didn't read Watt's statements yet but I don't understand why do all these people think that recap and release is essential? From their perspective (non financial) what are they worried about if they have essentially unlimited govt backstop in the situation we have today? Because politics is the absence of reason? Why don't we have an infrastructure bill that will create thousands upon thousands of jobs and increase public safety? I don't think the government has unlimited capital. They have a lot of capital, but you forget that they have to pay for it. You're making the spread between 9.3% and the 2% cost of capital. Alternatively, you can in a very short-term make 40% and tie up your capital for a very short period of time. You should read Watt's recent statements and Millstein's previous statements. It will be a little more clear.

Well, that depends. The companies can earn about $14 billion after-tax, so do you want $14 billion a year or $168 billion immediately? (80% of a 15x multiple) And, remember, just because the companies are "under conservatorship" and the FHFA has suspended their capital requirements doesn't change the economic reality that the entities need capital. So under the $14 billion a year option, the government is, let's call it, "economically responsible" for $150 billion of capital or $120 billion of capital under the recap situation. The math works out to a 9.33% return in perpetuity or a 40% immediate return and then whatever return you might get from applying those funds to other uses. In any case, on a non-financial level, Watt & co. are correct about the conservatorship being untenable over the long-term. And you can see that from reading the posts from way, way back that I posted concerning Jim Millstein's speeches before the House and the Senate -- very briefly, the gist is that without restructuring the GSEs in a way that re-privatizes them, the housing market recovery will remain tepid if not moribund.

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.

That's the reason that it's not binary.

You don't need to own a share to go to the meetings. You can just pay $5 for shareholder passes from Berkshire on eBay.

Why would anyone quote disconfirming evidence? :P

Sounds like the tide is turning a bit on the legal front. Judge Steele submitted the following letter to Judge Sleet in Delaware. 2016-03-02_Letter_to_Judge_Sleet.pdf

I'm not sure what the point of this is either... more surprising to me is that Sullivan & Cromwell used to have a contingency-fee plaintiff's practice? What?!?

Some people don't know what they own. I've seen that a few times.

I liked the end of the three hours when Kernen joked about masturbation. Actually, it was more about how uncomfortable Andrew Ross Sorkin was with the joke.

They didn't agree to allowing for the stay. Look a few posts up. They consented to letting the Defendants take leave to file the motion. They didn't consent to the motion to stay itself. They're different.

They consented to the motion for leave to file the motion to stay the deadline under seal. That's not the same as consenting to the motion to stay the deadline.

It's interesting, but I'm still a little skeptical. On the one hand, it seems like the motion to stay the deadline for the administrative record should be granted because the reason for the original stay was that you might as well deal with the motion to dismiss before you deal with the administrative record. No reason to get to administrative record if the whole thing is going to be dismissed anyway. i.e. the original reasoning for staying the production of an administrative record should still be intact On the other hand, if that were the case, why wouldn't the court have just reinstituted its stay on its own accord? Why would the Defendants have to make a motion for it? I'm dying to know what was in Judge Reade's Sealed Order (Dkt. #60).

"move for leave to file under seal Defendants’ forthcoming Brief in Support of the Motion to Reinstate a Stay of the Deadline to File an Administrative Record" Could you tell me what this language means? Does it mean the defendants acknowledged that they indeed should file the administrative record, and they will comply with the deadline? If this is the case, then why did they previously argue that they don't need to do so, but suddenly changed their mind? It means they want to file a brief so that they don't have to file an administrative record.