Sunday, December 9, 2007

The Bigger They Are ....(bumped)

Adolf hears a whisper that in about two weeks a very high profile finance company will fold.

On September 3rd 1725, British King George 1st signed the Treaty of Hanover which allied Britain, France, Prussia, Denmark and the Netherlands against the perceived threat of an aggressive duo comprising Austria and Spain.

No such treaty will save the hapless and naive debenture holders of New Zealand's 21st century finance companies which have borrowed short and lent long.

Update: '..unable to develop the business in the current climate...' usually is code for'...this outfit is a pile of shit.'

The image “” cannot be displayed, because it contains errors.

I wonder if the little sawn off short arsed news reader who used to spruik about 'trust and reliability' will be sued by some of Winston First's followers who lose their shirts.

Further Update:

Here's the balance sheet a year ago. The next one should be interesting. Look for the $100m cash and cash equivalent to see if it is still there.


Adolf Fiinkensein said...

Someone today suggested that the total book of failed finance companies would exceed $2 billion. That's a stack of dough for retirees to lose and I imagine the bulk of it will be oder people's life savings.

Winston will have to talk Cullen into a massive bribe for 'old buggers' to preserve his political skin. A special one off grant to finance company victims who can prove they voted Winston First.

DO you think I'm joking? They'll be planning it right now.

Anonymous said...

If Hanover goes, confidence in the economy will tank, and probably take down a host of other companies with links to Hanover with it, like FAI Finance and United Finance.

Barnsley Bill said...

I think the Blue Chip situation is more serious in real terms. Sure hanover are a household name (and my aren't they advertising like crazy at the moment)but if they go pop people will lose deposits. Most of Blue Chips "investors" have borrowed....
Funny how the advertising increases just before collapse!!

Adolf Fiinkensein said...

Barnsley, I don't agree. Most of BlueChip's investors have title to a property which they can sell to defray their mortgage commitments. The ones who are caught are those who have paid $100k deposit on a property which is not yet built and accordingly do not yet have any title. They are unsecured creditors and I understand some have been so for nearly three years.

Barnsley Bill said...

My understanding was that many were tied into deals where they did not have title, but a deal where they share in the capital gain and tax benefits.
The enormous commissions paid on these deals and the rental guarantee have to come from somewhere adolf.
Typically in the deals i have looked at that offer a rental guarantee you are just simply paying over the odds to create a buffer for the developer or broker to fund a top up for a fixed period. And capital gain in the current market on a property that somebody has paid over value for in the first place is going to be a stretch

Adolf Fiinkensein said...

Yes Barnesley, but I think you will find there are no longer any rental guarantees in force - renegotiated and or no longer being sold. That in itself is a bad sign.

Yes, the people who do not yet have title are caught if the show goes belly up and yes, I would expect that IRD would have some fun lokking over the motives for many of these purchases. Tax free capital gain was the prime sales driver. Funny how nobody seemed to recognise the trap two years or even one year ago.

Anonymous said...

What amuses me about the type of mum & dad investors who're attracted to finance co debentures, 100% leveraged property investment (and I do know something about the Blue Chip type model)are that they'd be the first ones to tell you how risky equities are.

Anonymous said...

Any inside word on when Hanover will fail, Adolf?

Anonymous said...

Adolf, well done on a successful prediction.

Barnsley Bill said...

Hope the holiday is going well Adolf.
Interesting to look back on what we all thought a few months ago