" But if you get someone to invest two million in equity, then what is your net worth? Positive one million dollars, because that two million debit to cash now goes along with a credit to equity instead of liability.
"
andydub,
Your reasoning and logic is correct here, but you stop short of making correct conclusions and rely on FHFA conservatorship's use of fraudulent classification of SPS. FHFA conservatorship used of fraudulent classification of SPS to rob the companies (through NWS).
Since we are on the same side, we also need to have same correct understanding of facts.
In the corporate history company managements have issued variety of shares for genuine company needs as well as to commit fraud on investors. That is why in some countries companies are allowed only to issue one class equity shares and variety of debt instruments (debentures, bonds, LOC...).
SPS and JPS are hybrid securities but have no equity rights like below.
1.Net worth or equity is basically residual value left after liquidation (assets - liabilities) as per common knowledge. Only common shareholders have ownership rights to equity or net worth. JPS and SPS holders have preferential rights to get paid but only up to contracted redemption value.
2. The company is not obligated to pay fixed Rate of return on Equity capital and also it can not cumulative. JPS have non-cumulative fixed rate of return. SPS had cumulative fixed rate of return before NWS. After NWS, SPS rob all the profits and net worth but have maximum investment commitment of $200B.
3. Only Equity holders have unquestionable rights to liquidate the companies.
4. Only equity holders have voting rights in the matters of company management. SPS holders using unlawful SPSPA agreement control the companies.
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