Fannie Mae-No Politics (FNMA)

[chessmaster315]

The "dilution of commons" hypothesis is based on a the following false premise:

That FNMA needs recapitalized (likely true), and, that some type of IPO will recap fannie.

The reason is that new investors are not lining up to buy shares of a company where the US government has a right to confiscate all the earnings. Who would do that?
No. The lawsuits need to be settled, and earnings transferred back to shareholders, along with possible dividends before any wise investor would want to consider investing.

For investors to profit, they have to believe there is potential earnings.

While there most certainly is potential earnings, none of that matters if the government takes it all. This is why our shares earn $5 or more, and trade for about a half buck.

Why on earth would a new investor buy shares of fnma(new) for $30 or $40 per share, when they could simply buy shares from current shareholders for $.57?

Answer: Only a fool would pay $40 FOR A new IPO on an even keel with sharholders when they can buy them for $.56

For an IPO to raise captial to work, the lawsuits need settled, and the earnings go back to sharholders for dividends and retained earnings.

Remember, investors are not "chickens" waiting in line to get their heads popped off and turned into KFC chicken. Instead, we hear the screams of "burning investors" and wont go near this until these screams stop.
It has to be done "in order". You are putting a roof on the home, before you start the foundation. The roof has to have a solid foundation and walls to support the roof before building the roof.
In a similar manner, an IPO can not be built on shaky earnings only to be confiscated by the government. It has to be on earnings "not already encumbered" by the government. "Unencumbered earnings" (which are available to investors who invest).
Its almost like a ponzi scam..where old investors are paid with investments from new investors. Its just a matter of time before it all falls.