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So Berkowitz is expecting court loss, basically? Did he say he expects this to go to SCOTUS? Or did he simply say that he expects a decision from the 6th circuit by the end of the year and that *if* that decision goes against him, he'll take it to SCOTUS?
Who dug this up? Surely Berkowitz knows this too, wouldn't he? Wouldn't all the big funds know this? Wouldn't the wall st insiders and TBTF stooges even know that Moelis has a prior business history with Trump?
And does this suggest that Moelis himself ordered his analysts to construct a deal that he would guess Trump would accept?
Defendants will propose 12/31/17, Sweeney'll counter with 12/21/22.
Has been my fear of Sweeney all along. I could easily imagine her saying it's not her jurisdiction or something like that after another year or two of discovery. When the defense's gvt lawyers have run out of delay tactics, Sweeney will finally decide whether the case will move forward or not, and she could simply say no, it won't move forward in my court.
At that point, i'm not sure but maybe it would start all over again in some other court!
Well I would agree SCOTUS setting precedent makes more sense than all lower levels also setting precedent. But still, even SCOTUS has made clearly wrong decisions such as Dread Scott and Kelo, and if the law was followed rather than precedents, perhaps better rulings would be made.
I think precedent-worship distorts the law over time. I wish judges would simply rule on the law instead of ruling based on how some previous judge interpreted the law.
Thanks! Haven't had time to read it yet, though, unfortunately. Would you care to briefly summarize the suit?
Don't you mean Michigan, not Minnesota? Or am i missing a Minnesota lawsuit?
"Wind down" again???
I bought around $160 2013 and have held ever since. Fun ride!
How can gvt continue to withhold 11k documents? Didn't Sweeney order that they be produced by the end of May?
Lookup "Annenberg Challenge". The former president has been doing that with money he siphons from private sector for many many years, long before he was known beyond Illinois.
I had the same thought!
Legal Question: berkowitz said it could take another 5 years if it goes to SCOTUS, etc etc. Can anyone here offer an explanation of what would happen this happens?
the GSEs hit zero capital, and congress winds them down, replacing them with a new utility that does the same thing. This is completed by, say, 3 yrs, so from zero cap date, 3 yrs is 2021. Commons are screwed in the restructuring. Then comes a final, ultimate legal decision in 5 yrs (2023) and the court decides the gvt was completely wrong all along and everything it did was illegal. Well, commons were extinguished 2 yrs before that decision, and the GSEs don't exist anymore. What relief can the judge order then?
Well that makes perfect sense.
Why's Berkowitz speaking same day NWS payment's due? This cannot be a coincidence. And isn't it reasonable to assume that Berkowitz already knows whether or not the 6/29/17 NWS payment to Treasury will actually be made or not? Wouldn't he have found out by now if Mnuchin, Watt, etc will continue this madness for this quarter?
Assuming he already knows, then why prepare an hour long call for that same day? To call for an uprising against gvt if they take another NWS payment? To gain publicity for this cause to stop the NWS? Or to announce a settlement? Or...what?
Search for Annenberg Challenge. This is something the former president had done a lot in his life: take $ given for some cause and give it instead to radical leftist causes. You see, it's very important that the mainstream media cover the current president's ice cream habits, but it was never important that they look at all into the life and work of the former president before he ran for office.
Www.wsj.com/articles/SB122212856075765367
Www.cato.org/publications/commentary/wreck-annenberg
Www.discoverthenetworks.org/printgroupProfile.asp?grpid=7644
Thanks for your thoughts on this. I'll just add a last thought of my own. That is: just the fact that there was a lot of talk and rumor about the NWS leading to "wind down" (a phrase whose meaning is itself debated and subject to some interpretation), is not a) something that a pro investor, who bases his decisions on original sources, including securities laws (which even you agree have been violated), and quarterly statements and the like, would base his decision to buy shares on, b) there was no definitive plan or legislation taking shape, just proposals and bills that sometimes didn't even get out of committee, and c) not something that would, i think, hold up in court, as it were. Rumor, opinions, failed legislation are all not things a legal decision (by a judge for example) should be based on. Therefore, although you say no investor should have bought after the NWS without considering the talk and rumors, and that is true, certainly, there is no legal "teeth" that exist in that idea that they "should have foreseen" they'd be in trouble if they bought after the NWS, as far as I know.
But conservatorship is temporary. That's the purpose of it. I know there is no legal force that can compel a conservatorship to be successful in that the companies return to solvency, but in this case the companies were successful and the conservator is the party who did and continues to do the existentially threatening damage to its ward.
An investor could reasonably expect, yes "expect" that a conservatorship will be temporary. Such an investor could also be said to be speculating that that will be the case, because nothing can compel success. But it's a reasonable expectation that conservatorship will be temporary. What an investor can't expect, is that the party in charge of improving the GSEs would in fact be the same party that ended up causing the GSEs' demise. So they could certainly argue standing even if they had bought after the NWS.
That's where I stand too. Go, Washington Federal! If Moelis's plan were to be adopted, certainly the powers that be would certainly require that all lawsuits be settled, wouldn't they?
Or would they just use "back channels" to make sure the lawsuits were all decided in gvt's favor?
How can Moelis be implemented with so many lawsuits outstanding?
And it is amazing that none of the hedge funds' chosen legal strategy involved questioning the original '08 actions at all.
I disagree. Buying after NWS does not automatically mean that the investor assumed that conventional, ages old investment laws would be followed. An investor who bought after the NWS might very well have read all the prospectuses and known that it is illegal for a senior shareholder to take 100% of profits and send zero to juniors and common. He might have expected also that, based on ages old FDIC laws, upon which the relevant GSE conservatorship was founded, would hold true and be controlling. Such an investor might also have believed that the gvt only wanted to accelerate the payback on its original 10% dividend by enacting the NWS because, as we all noticed, the GSEs were becoming profitable again, leading one to imagine that the conservatorship might end soon, what with a Dem controlled WH, where traditionally that party has been more sympathetic to the GSEs' cause. Such an investor might not think it would be realistically possible for the GSEs to be wound down without severe disruption, and that bo private capital would be able to backstop 30yr mortgages, and he might have assumed that the gvt would never be willing to ensure the elimination of the 30yr mortgage.
All of those things an investor who bought into shares after the NWS are very credible and realistic investment thesis, and certainly are equally feasible to the investment thesis you proposed as an argument agains post-NWS investors claims. You said basically "they should have reasonably known they'd get screwed" to paraphrase you. But even if that is true, there was no law that clearly proved that they would get screwed. So they invested with an understanding that the law would back them up, perhaps. We all know it hasn't so far, but there was certainly a good enough case to be made that the law MIGHT back them up, otherwise no one would have invested after the NWS at all!
Ackman etc know TBTF's trying to take GSEs, don't they? I would assume Ackman and Paulson Berkowitz and Perry fully understand that the TBTF are trying to screw them over and take the GSEs' business. But I could be wrong and if I am, it means that maybe they don't all fully get that.
The email quoted in that article could be taken either way. The investor says basically -why is recap and release a bad thing to say these days?
He could be asking the question himself, or asking it to get readers to start thinking of what the answer could be. Hard to tell. But the answer is the TBTF are in the way, in the form of their bought and paid for politicians.
Now that is an interesting take! How much did the funds pay Moelis to come up with this plan btw? I'd be interested to know bc it would illuminate how viable your suggestion would be. But I know the total $ involved in this GSE mess is so huge, even if they paid $1million to Moelis to have them keep a few analysts working on this for a few weeks, it could very well be worth it if it works for them. But piling on fees like that plus legal fees, etc...at what point do the funds call it a day and hand the GSEs over to the TBTF?
Very interesting, that 2nd paragraph. Thanks.
And #1 had worked very effectively. Only hedge funds have taken big enough stakes in commons to have any impact at all on the possible enforcement of the law. Some Hedge funds with commons have sued. Well the TBTF/DC complex knows that that's not much of a threat bc of how long it takes and it could even go their way. Plus, politically m, hedge funds are the furthest thing from a "protected class"! Politicians would die for any chance to bash "evil capitalist hedge funds". They can even use the phrase "wall street" when referring to "evil hedge funds". So hedge funds advocating for shareholder rights is not much of a problem for the TBTF/DC complex.
They basically "capped" the performance of GSE commons by delisting them, and gave themselves a clear path towards "reform" with only a small concern that some rogue judge might...just might....after 5 or 15 years...rule in favor of the hedge funds that hold commons. At that point, there is always...the APPEAL! And the TBTF benefit by the additional delay and chance to win in Appeals court. If the TBTF/DC complex totally fails at SCOTUS level after 10-15 yrs, then heck, they still haven't "lost" anything bc they never had the GSEs' business to begin with! This is all chess being played with years between moves and a decades long view of the 2nd larger bond market in existence. That's how TBTF sees this. To them? Hedge funds are gnats at their picnic.
Delisting/Commons iced-out & interest rates/10% dividends.
I have 2 thoughts to share and would love anyone's comments. 1) i saw somewhere else online somebody make an extremely interesting point.
He said that, as we know, when FnF were delisted and put onto the OTC, it meant that no institutional money could continue to hold those shares. It's against their own rules to hold OTC stocks. We're talking pension funds, etc. Here's where the interesting point was made...by eliminating institutional investors from the ranks of common shareholders, it meant that in the future, when reform of the GSEs was to be addressed, there would BE NO COMMONS AT THE NEGOTIATING TABLE AT ALL! And THAT would make it much easier for the TBTF to use its politician stooges to steal FnF's business. Pension funds would have enough clout, lobbying power, and $ to mount serious lawsuits against what was done to FnF if FnF had remained on a major exchange and/or over $4 or $5 or $10 (most pension funds' minimum allowed). So, delisting was probably done for the purpose of getting the institutions out of FnF, so that a "reform" plan could then be put forth that wipes out commons and paves the way for TBTF. Very interesting, isn't it? Not all of that would be news, but that different viewpoint on the exact purpose of delisting is fascinating to me.
2) we all have wondered why the abusive 10% dividend rate for senior prefferreds. Isn't there some strategic reason for that high rate such as; combined with gvt controlling the GSEs activities, there'd be no way the GSEs could borrow $ at the historically super-low interest rates to pay off the 10% mandated dividends? The criminals who setup the 10% knew that interest rates would very soon plummet to historic lows. They made sure to tie the GSEs' hands and prevent them from getting any relief in paying that 10%. (This was all before the even more criminal NWS escalated that issue to new levels of madness).
Do you know if Kelo's losing side used anything like my argument during the case?
Great point. That's the perception, I guess, of judges because they have this reputation for being independent, and since the other two branches involve groups of people (congress is many people and the executive branch is much more than just the President). So judges seem like they are "one independent person with a view of the law." But you're right. That's not what they often are. They're often part of the machinery of tyranny.
Omg I HATE Kelo decision! Worst decision in decades! It absolutely subjugates property rights to the whims of the collective. I've commented on it many times here actually, I think.
Honestly, Kelo was a big wake up moment for me, helping me see the true brutality of what our gvt has become. It continues to bother me even over 10 yrs later. Just 2 weeks ago a thought/argument against the Kelo decision it popped into my head. Tell me what you think of this, or if you know whether or not this argument was made in court:
The decision interprets eminent domain to extend to the gvt's interest in increasing tax revenues, not just providing infrastructure, etc. But taxes are CHANGEABLE subject to the will of the elected officials and through the collective will of the people voting for those officials. In theory you could have no or extremely low taxes. It's unlikely but it could happen if the people wanted it strongly enough. So why would the court go so far to extend eminent domain to increase gvt's tax revenue potential at the expense of protecting property rights, which is really maybe THE SINGLE PRIMARY DUTY of the gvt (even defense can be seen as simply protecting property rights), when the issue at the crux of the matter, tax revenues for gvt, is subject to the whims of that local gvt's tax policies and rates, which are necessarily FLEXIBLE?! In theory, instead of using eminent domain to steal property from an unproductive resident to give it to a commercial developer, couldn't the gvt simply raise taxes to meet its needs? Kelo decision basically removes pressure from gvts to act responsibly, and gives them a radical tool to use to "increase revenues" if it decides it is too politically unpalatable to just raise taxes. How can the court have decided the way it did when on one hand is a constitutional and natural right (property rights) and on the other is a flexible, elected-official-decided tax rate number, which can be changed at any time when needed? They favored the wrong hand, that's for sure.
Ah. Sounds familiar. Thanks! So again, if people are thinking along these lines, it comes back to the States. So we should all remind ourselves that the Federal government actually works FOR the states, and only with the STATES' permission does it even exist! So if people want to advocate for some kind of show of force from the citizens, it would have to involve governors deploying the national guard against DC. Wow...that would be an amazing and scary thing to imagine or watch.
You did? Wow! I've studied a lot of Russian history and studied the wretched evil of communism and socialism for decades now! I also love the great Russian authors and composers more than those from other regions/nations. I'm glad you made it here!
But it's people like you who specifically can be very helpful in warning others here about what you see happening. As I'm sure you know, most people don't follow things closely enough, don't know history, and they never think such awful things "could happen here and/or now". But you certainly know they can happen. Anyway, please never be afraid to say something. Psychology studies have proven that it often only takes one person to speak up and challenge the mislead masses or the groupthink in order to change many minds.
You see what's happening with millennials, for example? Over 50% of them don't believe in free speech! Even just a decade ago most people would have said "that could never happen in America."
If you're gonna call for that, consider using the phrase "national guard" rather than "military". I think you'd turn off fewer people that way.
It's interesting to imagine how the people could actually change this mess of a gvt. And fun to compare to history. One relevant fact is that during the American Revolution, only a very small percent of the people living in the colonies actually participated in the Revolution.
Money changers = Fed Reserve. The Fed is only the latest iteration in the long history of what money changers always do to a society. Even if one is not Christian or religious at all, it is very interesting to understand that the historic Jesus knew what blood-suckers the money changers were, and how they basically took a lot from society without really adding anything to it of value, which is fundamentally an economically unnatural condition.
Trace the history of money changers and you'll see how they evolved into Central Banks, and you'll then have a better understanding of how and why wars really happen, especially in the modern world dominated by the U.S. Dollar, which is backed by nothing other than...the money changers themselves. When anyone dares to threaten the money changers' precious fiction, the jet bombers start fueling up and doing their pre-flight checks.
Just see ancient Rome for solutions to corruption. Rather, read about it to see how bad corruption can get in a simpler world. Their solutions were usually violent and only increased the corruption. Well, today, corruption isn't just easier and more vast and severe, corruption basically IS the government (much like had happened in Rome). Corruption and government are one and the same. The two have merged. So, as fleeting as your thought might be, it is definitely time for the citizens of this nation to think of and enact some massive, immediate, and innovative and brave effort to take power away from DC. The "convention of the states" effort that is ongoing with a little momentum recently seems to be the most potentially effective non violent tool to accomplish that. But its current proposed constitutional changes don't go far enough, in my opinion. And I'm not suggesting Trump himself is a creature of the corruption. But obviously most or all of congress and the agencies are such creatures.
Best summaryYet of what the U.S. has become.
In a few sentences, you've explained the "skeleton" of the actual macro operation of the U.S. better than I've seen done since maybe Rothbard.
Nice work there!
The "economic freedom-based U.S." died long ago, in 1913.
I didn't just figure that out, fortunately. I've just learned a lot more detail about it by following this saga so closely. And it is worse than I ever thought...and before following this saga, I already thought it was incredibly and totally saturated by corruption!
Mafia/TBTF scared Mnuchin into silence. He has a family, after all, doesn't he? He's about to get married, I think, at least.
Next Sweeney'll say "not within my jurisdiction. Dismissed."
Hope I'm wrong! I'm just being pessimistic there as a way of venting. Wouldn't that be just par for the course in this saga? Imagine...The ONLY judge who has shown any respect to plaintiffs (despite giving gvt huge...huge leeway and delays) ends up issuing some half-assed decision in which she says this case doesn't fall within her jurisdiction and/or dismisses it for some other reason. How shocked would you be? I'm trying to not be shocked by anything but this mess has taught me SO much about just how deeply and thoroughly mafioso our gvt is, that I wouldn't be shocked if Sweeney did that. I can't allow myself to be surprised by stuff like that. Gvt power is simply mafia power by means of a legal monopoly (gvt is a monopoly by default).
Not wiped out, diluted out. Common shares that exist now would still exist technically after the Blueprint's implementation. But there are so many levels of dilution of commons that are built into the Blueprint that after all is said and done, commons will be worth a tiny fraction of what they would be worth if, say, the billions of NWS $ paid over the original "investment" amount were applied to recapitalize the GSEs instead of just being taken "for a big taxpayer profit."
Dilution by 4x occurs when warrants are exercised. Then another level of dilution occurs when preferreds are converted to commons. Then another level of dilution occurs when brand new shares are issued and offered on the open market to start the recapitalization. Then a final level of dilution of commons occurs when yet a 2nd capital-raising issuance of brand new shares happens a year later. That's 4 episodes of dilution, with the exercise of warrants being the most severe, and the conversion of preferreds into commons being, if i'm correct, the least severe.
If NWS overage were applied to capital and the warrants canceled, the value of commons would be probably up in that $50-125 range (according to valuations done by the real Tim Howard and others), depending on how any additional recap were executed. But after the Blueprint is executed, the pps of commons will be around $9-13, it appears.
Issue of when shareholders bought? Is that the question this article addresses? Please summarize the author's points. The court seemed to suggest that on remand, the lower courts could distinguish between common shareholders who bought before and after the NWS (or maybe the point in time to distinguish them was '08). But isn't doing that just plain wrong? Aren't stocks simply contracts and whoever sells and buys is buying the transferable protections that contract guarantees?