I don't believe the OPs question has actually been answered yet (where is the money invested in Anglo going).
Apologies for over-simplfying, but the answer to this is that Anglo are:
1) selling a large number of its loans to NAMA at a value way below the amount actually lent to the customer originally (the "haircut"). This crystallises an actual loss.
2) reducing the estimate of how much customers who loans aren't transferring to NAMA will eventually pay back (bad debt "provision"). Harder to estimate than 1), but still creates a hole in the accounts that needs to be filled.
Banks are required to hold a certain amount of cash (or near cash equivalents) to ensure its depositors and bondholders can get paid ("capital"). Because of one and two, and because the percentage of minimum capital banks must hold has been increased by regulatory bodies as a result of the crisis, the Government has been forced to inject money to ensure Anglo's capital ratios are maintained and that ultimately bondholders AND depositors can be assured of getting their money back.
If Anglo was left without Government assistance (i.e. if the guarantee hadn't been given), depositors and bondholders would lose money, in all probability the bulk of their investment.
The current thinking seems to be that Anglo (and INBS) should have been let go back in 2008, with a selective guarantee of deposits, but allowing bondholders (international pension funds and banks in the main) to suffer the loss. Simulataneously, AIB and BoI should either have been nationalised or guaranteed to assuage the international finance community and maintain confidence that Ireland isn't a "serial defaulter" and its Government bonds can be trusted.
I see two problems with this
1) Hindsight is 20/20.
2) I'm not aware of any large bank being allowed to fail and bondholders being stiffed outside of Lehman's. To say that didn't go well would be a monumental understatement. So for those who say we should have let Anglo go, the only example we have of that taking place was a catastrophic failure and generally now acknowledged as the wrong decision. Those people who claim that there would be no associated cost in terms of Goverment debt to letting Anglo go are fooling themselves. Its almost undeniable that the price of Government debt would have shot up, and its highly possible the market would not have bought our debt at any price because we simply could not be trusted ("the Irish Government let Anglo go, why should we believe they'll pay their own debt back".
I must admit I'm hugely frustrated, not just by the clowns who run the system, but equally by the Joe Duffy brigade who don't have a notion about what they are talking about yet still think they have the whole thing cracked.
My own view, which I've repeatedly stated, is that the cost the country will ultimately bear for the financial crisis is completely and utterly fixed and was pretty much inevitable post-2005/6. i.e. regardless of what actions the Government took, the financial cost would be the same. We need to focus on why this was allowed to happen, i.e. the events in the 5 odd years leading up to this, yet all the media attention is about how we reacted to a situation that was a fait accompli. Government overstimulation of the property market, planning corruption, complete and absolute regulatory failure, lemming-like banking sector.........
Maybe more controversially, I reckon the reason Joe Public, led by the medja,is focusing on the response to the pre-ordained outcome, is that they don't want to look themselves in the mirror and accept that the writing was on the wall, we knew about the FF corruption, we knew it was all a little too rosy, yet a significant percentage of the population decided to re-elect the Government.
The truth hurts.
Meanwhile, I don't see any real sense that in 30 years the same thing couldn't happen again.
Depressing.
