Financial Crisis

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Originally Posted by pete

I read that the state now guarantees something like 2billion in preferential shares/loans because of the Nationalisation? Seems bizarre that shareholders would be compensated at all. Would they have a case against the state for lapses in regulation?

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I presume this refers to Anglo's "subordinated debt" which sits between equity and senior debt in terms of seniority. I think if the state allowed this debt to default then every other class of debt would default too and they'd have to honour their guarantee on ALL Anglo's liabilities. Therefore it's cheaper to nationalise now, keep the debt outstanding because the amount of cash they'd require to stump up otherwise would be enormous. What's the figure - EUR 50 billion?

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Originally Posted by Stuttgart88

I've just heard that the Marx quote is a fake anyway.

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The actual quote might be, but not the theory behind it.

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Originally Posted by Stuttgart88

I presume this refers to Anglo's "subordinated debt" which sits between equity and senior debt in terms of seniority. I think if the state allowed this debt to default then every other class of debt would default too and they'd have to honour their guarantee on ALL Anglo's liabilities. Therefore it's cheaper to nationalise now, keep the debt outstanding because the amount of cash they'd require to stump up otherwise would be enormous. What's the figure - EUR 50 billion?

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That makes a lot of sense - moreso than some of the other conspiracy theories flying around.

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Originally Posted by monutdfc

That makes a lot of sense - moreso than some of the other conspiracy theories flying around.

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I've been off line, but I presume the conspiracy theories revolve around the builders party bailing out the builders bank and therefore bailing out the builders? Interestingly, the Guardian said part of the reason was the threat to the Health insurance market. Who's a major shareholder in Anglo, which health insurer do they own, and in who's hotel did FF hold their conference a couple of years ago?

I'll reserve judgement to see how much above the share price the investors get.

I do believe at a time like this we can learn from Marx so in his own words

Wherever you go
Whatever you do
I will be right here waiting for you
Whatever it takes
Or how my heart breaks
I will be right here waiting for you

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Originally Posted by Macy

I've been off line, but I presume the conspiracy theories revolve around the builders party bailing out the builders bank and therefore bailing out the builders? Interestingly, the Guardian said part of the reason was the threat to the Health insurance market. Who's a major shareholder in Anglo, which health insurer do they own, and in who's hotel did FF hold their conference a couple of years ago?

I'll reserve judgement to see how much above the share price the investors get.

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basically yes;
another theory (which compliments Stuttgart88's) was that it was triggered by wholesale deposit withdrawals (the conspiracy being that the timing was managed by FF for their friends in the know)

Seanie Fitz the Anglo -Irish Headmeister *****ster should have been wheeled out to the masses/shareholder today to be given a medieval style Horse kicking - What a Crook I can't believe he has walked away from this with impunity:mad:

I just listened to that clown Eamonn Keane on Newstalk covering the EGM. He interviewed some woman shareholder coming out who demanded compensation as "the shares were 17 euro and if I'd known then what I know now I would've sold them immediately". Brilliant:D

Also lots of guff about pensioners losing money invested in shares. If a pensioner is heavily invested in equities either the advisor deserves to be locked up or if took the decision without advice they deserve to lose the money.

I'm not buying any of the conspiracy theory hoopla as it only seeks to legitimise erronous shareholder claims.

Here's the bottom line:
Anglo was, in my opinion, a glorified pyramid scheme, not a bank. FWIW I was told it didn't even have a collections team until recently!! Which, if true, shows that it wasn't a bank.

It focused solely on balance sheet growth, funded by the market with little regard to risk. This business model was unsustainable....live by the sword die by the sword.

And equity is there to take the first loss. To the shareholders, dry your eyes and remember next time that risk and return are always linked.

And spare a thought for the decent employees, although being a civil servant is probably the safest place to be at the minute.

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Originally Posted by OneRedArmy

I just listened to that clown Eamonn Keane on Newstalk covering the EGM. He interviewed some woman shareholder coming out who demanded compensation as "the shares were 17 euro and if I'd known then what I know now I would've sold them immediately". Brilliant:D

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ROFL. She might as well just have walked outside and screamed "I'm a moron! I'm a moron!" at the top of her voice. Clueless bint.

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Originally Posted by OneRedArmy

Anglo was, in my opinion, a glorified pyramid scheme

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In what sense? In that it needed new funding to redeem existing funding? Isn't that what all banks do?

I said earlier that I was amazed that Anglo survived so long after NRock went down in 2007.

In fact NRock's loan book was far superior to Anglo's, yet both had a reliance on "wholesale" funding albeit of different types.

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Originally Posted by Stuttgart88

In what sense? In that it needed new funding to redeem existing funding? Isn't that what all banks do?

I said earlier that I was amazed that Anglo survived so long after NRock went down in 2007.

In fact NRock's loan book was far superior to Anglo's, yet both had a reliance on "wholesale" funding albeit of different types.

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More the completely unsustainable level of balance sheet growth.

On the composition of the balance sheet, whilst the liabilities side was over-focused on short-term wholesale funding, I'd have more of a problem with the concentration on property financing on the asset side.

Actually "concentration" is too weak a word, IIRC about 80% of their loanbook was property related. Absolute madness. Collateral isn't worth tuppence when you have such high correlations between the assets and the security. Where was the diversification?!

Lads is it true that David Bowies idea has a link to the Financial crisis. I heard that the other day. Not sure of the exact details.

http://www.exclaim.ca/articles/gener...844&fid1=35727


While its seems crazy for him to be blamed and only a fool would suggest that, was he the first to do such a thing and did the banks practice this before Bowie Bonds.

Er, the article you link to actually states that the banks were doing this years before Bowie ya daft coot.

Missed that bit at the end but also I am sure the article I reference is not the most reputable website or source anyway so just wondeirng out loud thats all

It has now emerged that Fitzpatrick has E129m loans with Anglo Irish. Superb work by the Financial Regulator & Auditors (Ernst & Young) to spot this.

From the IT:

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At an extraordinary general meeting today, current chairman, Donal O’Connor, revealed that in 2007, Mr FitzPatrick, owed a total of €129 million to the bank, but only €7 million of this was reported, as he repaid €122 million before the balance sheet date, before borrowing the cash again shortly afterwards.

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:rolleyes:

AIB down 40% today, BOI something similar.
The State could (just about) afford to Nationalise Anglo, but not AIB or BOI. What will happen if AIB / BOI bondholders make a call on the Guarantee (as there will be a technical default very soon - there's probably a minimum market capitalisation clause in the bond terms, definitely there'll be a downgrade clause - which will allow all the bondholders to look for repayment under the guarantee)? I am afraid, very afraid.

Brian Goggin (BoI CEO) has announced he's going (but not retiring 'til the summer.....). Why wait 'til then?

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Originally Posted by OneRedArmy

Brian Goggin (BoI CEO) has announced he's going (but not retiring 'til the summer.....). Why wait 'til then?

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Victory lap?

Seems the markets have spoken & are showing their lack of confidence in the Irish government. In recent months the markets seem to have been generally correct like when they didn't believe the banks when they said they didn't need any cash a few months ago.

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Originally Posted by pete

Seems the markets have spoken & are showing their lack of confidence in the Irish government. In recent months the markets seem to have been generally correct like when they didn't believe the banks when they said they didn't need any cash a few months ago.

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An element of self fulfilling prophecy at work though as well I would've thought? Also tied in to the UK too. No one believes this is the final bail out plan.

We should just be proactive and nationalise all the banks now. Bond prices already reflect the exposure to bad debt due to the failed guarantee model, might as well have the benefits of the bank profits as well as the risk.

What bank profits? Those are long gone and paid out as dividends and won't be back for a long time :D

Agree that nationalisation looks more likely than not at this stage. As you say, the Government are already on the hook for the risk.