Fannie & Freddie.Truth or Consequences. Part 2

Running Out of Options

With the recent collapse in share price, both GSEs are going to have a very difficult time raising capital. You won’t find many buyers of the stock after its recent dive. And issuing debt doesn’t seem to be much of an option.

The last thing investors want is to buy debt from companies involved in the mortgage mess. Even if they could find buyers, they would be forced to issue a very high coupon, which would add another drag on cash flows.  

For Fannie and Freddie to have any chance at all to raise additional capital, it’s likely they’ll have to issue some type of convertible preferred stock, with very attractive features (warrants, enhanced voting rights, very attractive conversion rate, etc.)

The Truth Won’t Always Set You Free

All of this aside, we need to remember there’s no real evidence that either GSE is flirting with insolvency. However, we cannot ignore the market sentiment. We must keep in mind that market perception can create a self-fulfilling prophecy.

I have seen market panic or even rumors destroy companies many times in the past. The stock gets beaten down, and then rating agencies downgrade the debt, causing higher interest payments to be made due to the increased risk. Finally, the company cannot raise capital since the stock is so low.

If the stock remains low over an extended period, rating agencies sometimes downgrade the company and its outstanding debt. Sometimes debt covenants are triggered, forcing immediate payment of debt. There are numerous possibilities. The point is that it is never a good situation – unless you had a short position, which points to incentives to create solvency rumors.

NOTE: Mike Stathis predicted the precise details of the financial crisis in his 2006 book, America's Financial Apocalypse.

The Jewish Mafia REFUSED to publish this landmark book because it exposed the widespread fraud committed by the Jewish Mafia.

Instead, the Jewish Mafia published useless marketing books written by their broken clock tribemens (like Peter Schiff's useless book which was wrong about most things and was written a year AFTER Stathis' book).

Stathis also released a book focusing on strategies to profit from the real estate collapse in early 2007.

The Jewish media crime bosses prefer to simply ignore those who speak the truth and threaten to expose them as the best way to hide the scams from the public.

In contrast, the Jewish media crime bosses continuously promote Jewish con men and clowns who have terrible track records as a way to enrich them all while steering the audience to their sponsors, most of which are Jewish Wall Street and related firms. Figure it out folks. It's not rocket science.

 

View Mike Stathis' Track Record here, here, here, here, here, here and here.

 

 

Membership Resources

 

 

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Mike Stathis holds the best investment forecasting track record in the world since 2006.

View Mike Stathis' Track Record here, here, here, here, here, here and here.

 

Check here to download Chapter 12 of Cashing in on the Real Estate Bubble.

 

 

 

 

So why does the media continue to BAN Stathis? 

 

Why does the media constantly air con men who have lousy track records?

These are critical questions to be answered.

You need to confront the media with these questions. 

Watch the following videos and you will learn the answer to these questions:

You Will Lose Your Ass If You Listen To The Media

 

  

 

 

  

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