Frannie's
Courtroom Crushing - (online.wsj.com)
The bell has tolled for Fannie Mae and Freddie Mac.
Even the most optimistic investors should take heed. U.S. District Judge Royce
C. Lamberth on Tuesday tossed out challenges from some investors to the
government's sweep of profits at the two giant mortgage finance companies,
instituted in 2012. This demonstrates just how far-fetched the quest by
investors including Pershing Square Capital Management, Perry Capital and
Fairholme Funds to squeeze value from their shares has been. Common and
preferred stock in Fannie and Freddie slumped in response. But the breadth of
the ruling, and the likelihood that other courts will come to similar
conclusions, mean the shares probably have much further to fall. Judge Lamberth
ruled that shareholders in the case, including Perry and Fairholme, aren't even
entitled to their day in court. These investors had challenged the government's
right to take nearly all of Fannie's and Freddie's profits. In many cases, they
had invested when the shares were trading for minuscule amounts, hoping that a
legal or political victory would give them value.
Spanish
Dynasties Cling to Indebted Family-Run Businesses - (www.bloomberg.com) Like any family business dynasty worthy of the
title, the Koplowitzes have provided their share of drama. Whether the saga
continues depends on the negotiating skill of Esther Koplowitz, who came to
inherit what was once Spain’s biggest builder after her father Ernesto fell off
a horse and died 52 years ago. Koplowitz, 61, is trying to refinance debt of
about 1 billion euros ($1.3 billion), according to two people with knowledge of
the talks who asked not to be identified because they’re private. Her
predicament stems from her 1998 decision to take the biggest loan ever given at
the time to an individual in Spain to buy her sister Alicia’s stake in Fomento
de Construcciones & Contratas SA. Esther Koplowitz now controls 50 percent
of the company, according to regulatory filings. Families run 85
percent of the businesses in Spain, according to the Family Business Institute.
Some Spanish dynasties have been particularly hard hit. Too much debt, some
second-generation management snafus and six years of economic crisis have
pushed them toward the end of family dominance.
Strikers
threaten to blow up French factory, stalling Hollande's bid for economic
reforms - (www.nationalpost.com)
Striking factory workers in
France have threatened to blow up their place of employment in the latest round
of hostile industrial action stalling President Francois Hollande's economic
reforms…Pharmacies across the country also shut their doors for the day
yesterday and staff took to the streets to protest against government plans to
deregulate dozens of professions and trades -- from GP surgeries to taxi firms
-- who for decades have been sheltered from open competition. Chemists, for
example, are keen to keep their monopoly on selling painkillers by stopping
supermarkets from stocking the pills. Notaries -- lawyers who have the monopoly
on property transactions -- have also criticized President Hollande in an
attempt to continue limiting the number of people who can enter the profession,
in which the average monthly income is €13,000.
Russell
2000 Collapses To Negative Year-over-Year For First Time Since 2012 - (www.zerohedge.com) From
a 40%-plus year-over-year in late Dec 2013, the Russell 2000 small-caps
index has just hit a crucial milestone to trade negative year-over-year. This
is the first time since mid-2012 that small-caps have been under-water
year-over-year and what saved them then was the promise of QE4EVA... While
Trannies are still up over 11% year-to-date, Russell 2000 is now down over 6.8%
and The Dow is rapidly heading red YTD...
Family
Farmer Explains How Subsidies Are Killing Small Farms - (www.businessinsider.com) While some family farms receive subsidies,
they disproportionately benefit corporate mega-farms,
which are able to buy more land and dominate the market. As the Heritage Foundation has noted, about
75% of larger farms collect subsidies compared to 24% of relatively smaller
farms. The massive amount of money that goes to larger farms, in turn,
increases demands (and prices) for land and other resources small farmers need.
Farmer Kevin Smith, the co-owner of upstate New York's Sycamore Farms,
recently explained to us how farming subsidies actually kill the market: When
the government subsidizes corn and grain in the Midwest, a farmer can afford to
grow 10,000 acres of corn, no matter the demand. All of the corn is
pre-contracted and supplemented on the back-end. It would make no sense for a
small farmer to try to grow that much corn because you can't sell that much at
market. There is only a fixed amount of materials like seeds and fertilizer in
the market. As subsidized farms buy and buy materials (which they can because
of the subsidies), resources get scarce and prices go up. The scarcity drives
up the cost of materials, but it doesn't drive up market prices of
produce.
U.S.
lawsuits related to Fannie Mae, Freddie Mac profits dismissed - (www.reuters.com)
JPMorgan to face U.S. class action in $10 billion MBS case - (www.reuters.com)
JPMorgan to face U.S. class action in $10 billion MBS case - (www.reuters.com)
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