The doom and gloom of Ireland’s economic situation grows ever darker, yet one man is risking a lot of money on the hope that we recover. Who is he and what is he up to?
So, our economy is up the creek and yet some bloke has bet €4bn that Ireland will meet the terms of its bailout. Who exactly is this mystery billionaire?
His name is Hasenstab, Michael Hasenstab and he’s not actually a billionaire. He’s the vice-president of Franklin Templeton Investments, so basically he’s a money manager from California who looks after other peoples money and invests it as he sees fit.
Wait, he does what with your money?
He invests it in whatever he thinks will turn a profit. You give your money to this guy and his company will use it to invest in something, be it a budding company, a new housing development or in our case, a failing nation.
In our case, Ireland borrowed money it couldn’t afford, so to make ends meet, the Government asked investors to ‘buy’ back one euro’s worth of debt for a lower price, lets say 95c. So once the debt is paid back, the investors stand to gain the extra 5c for every euro they invested.
Now, five cent out of one euro doesn’t sound like a massive profit, but when you turn that one euro into four billion, things get a bit more… “kha-ching”.
Interesting. Io why invest in Irish bonds? Surely that’s mistake no.1?
You’d think so. However, Mr Hasenstab believes that buying Irish bonds (which is just fancy business language for IOU’s) is a winning move as he is convinced the Government here will never default on its debts.
He thinks that Enda and the lads would pay back all of their bondholders rather than get a slap from Europe and the IMF. Well, wouldn’t you?
And how much is this guy going to make on the back of us?
According to the Irish Independent, Mr Hasenstab is remaining tight-lipped about his dealings, but Irish traders believe many of the bonds were bought at prices as low as 80c in the euro. That could see Hasenstab walk away with close to €750m or $1bn in profit to split between him and the investors.
So what is he saying about the three-legged pony that he backed?
Well, Hasenstab actually has nothing but good to say about the ‘three-legged pony’ that is Ireland. In an interview with the Wall Street Journal he was noted to have said: “Ireland’s example could offer other indebted countries some inspiration for solving their own crises. Irish citizens and politicians rolled up their sleeves and quickly worked to repair and rebuild.”
So are we going to have to fork out even more money for this guy?
Well, no actually. Hasenstab is making his massive profits off the back of rival investors who sold out early. As a matter of fact, because Hasensatb is investing so much into Irish bonds, other investors are beginning to think Ireland is actually a good investment.
So what sounds like a stupid waste of money (on his part) could be exactly what the country needs.
