To the best of my knowledge contracts for difference enable you to take a position by entering a contract and paying now for 10-25% of the share value. Once you have done that you are entitled to any dividends but do not pay stamp duty. However at some future date you will have to pay for the entirety of the share cost at the date of the contract. So you hope like hell that the share increases in value. They are mirror of shorting, they assume the shares will increase. Imagine it as being the person providing shares to the person shorting and gambling against them.

tonys wrote:

Auditor #9 wrote:

tonys

"sub prime" means "higher risk"

Some massive half-finished developments down the docklands worth a fortune that are not going to perform anytime soon could be said to be risky.

I think Ireland had sub-prime for developers

It means the borrowers were “sub prime” when the loans were given and now have no chance of servicing their loan.
There is nothing to suggest here that loans were extended on a sub prime basis by any of our banks, which in turn means even with a serious fall in property values the banks here stand a very much better change of getting out with their arse intact than those involved in “sub prime” lending.

"Sub Prime" "Ninja" borrowers often had their "income" adjusted by mortgage brokers. Perhaps people lent money to these people - family, friends, the broker himself?, other institutions, etc. so that money appeared to be in the person's bank account when they were applying for their mortgage.

It is speculative on my part that something like this might have happened in the Irish Banking sector but with all the regulatory failures don't you agree that it is a possibility ?

On the figures - 100 million, with the fractional reserve system, would translate into one billion normally at 10:1 leverage but the likes of Bear Stearns had 33:1 leverage. Which would make 200 million as big as 6bn ...

Audi

I think you can forget the normal views of banking. Person A deposits bank lends about 10 times to B-K. In that world the bank has 10% to cover as regulation requires them to cover they loans (assets). So what do the bright lads do they bundle them up and move them on. etc etc etc. They have leverage and re leveraged.

That is why I keep saying that the only way to deal with such institutions is to get a good receiver and some very capable auditors in. It is the only way to get a clear picture that you can take as being close to gospel.

I am a mere mortal and when I am presented with a statement representing the state of a company, or a business proposal, I know that I have to get help to go through it properly and explain it to me. That is just for a normal company and normal activity. When it comes to Banks I cannot comprehend at all how anyone can decide in the dead of night to weigh in and bail out. Cavalier doesn't even begin to describe it.

Squire wrote:

To the best of my knowledge contracts for difference enable you to take a position by entering a contract and paying now for 10-25% of the share value. Once you have done that you are entitled to any dividends but do not pay stamp duty. However at some future date you will have to pay for the entirety of the share cost at the date of the contract. So you hope like hell that the share increases in value. They are mirror of shorting, they assume the shares will increase. Imagine it as being the person providing shares to the person shorting and gambling against them.

We might be hearing more about this as Joan Burton keeps bringing it up in relation to Anglo.

As you say, scrutinizing the books of any company might be difficult let alone those of an investment bank but someone has to do it or should be doing it or should have been doing it. I've read it was the banishment of the "Glass Steagall Act" of 1933, by Greenspan and Clinton which saw the end to regulatory structures that is one of the source of this. Fair enough a ton of property was built but when the unemployed are looking for jobs now they will be doing so in order that crazy investment decisions be paid for over the next 10 years or more - maybe twenty - a lifetime of work for some people in order to cover other people's losses ...

But it was always as feudal as this I suppose.

Anglo Bill went through so this thread will be locked. I'll make a new thread out of it from the last three or four posts.

Please continue the Ango discussion on the Nationalisation thread
https://machinenation.forumakers.com/economy-business-and-finance-f8/nationalisation-watch-anglo-irish-bank-nationalised-dail-debate-discussion-here-t1307-800.htm#bottom