Blood Money by Julian Page Read Free Book Online

sum the guy up. He was one of the key players who personally targeted the downfall of HBOS and Northern Rock with aggressive short selling once the rot in confidence set in. So you see, he wantonly makes money out of a situation that could have ended up bankrupting the entire country and then leaves it to the British tax payers to bail out the banks.”
    Stopping momentarily to put a bit more Chinese food in her stomach she summarises the situation, “John, believe me, there is no way Kronos is that successful without some form of ‘sharp-practice’ going on. And with the volume of the trades Kronos makes there won’t be just the odd bit of market abuse going on, it must be endemic. So I’m more than just a little bit peeved that my team has never had so much as a whiff of how he’s doing it. That fat fuck must think he’s so smart, the slimy little tax-dodging shit!”
    Influenced by the wine and years of frustration, Rebecca realises that her last comment went a bit far, but at least she’s showing her boyfriend how strong her feelings are about Alexis Vasilakos…
    â€œBecc’s, so I don’t say something dumb tomorrow when I go over to Kronos HQ, in layman’s terms go through with me once more what’s so special about Hedge Funds. Why do they seem to make more money than anything else going on in the City? And in particular explain again how short-selling works.” John knows that city bankers are often real arrogant arseholes and he really doesn’t want to advertise his ignorance of their world.
    Knowing that John normally turns-off when she talks about such things, she checks first “If you’re sure, but you’re going to have to let me pitch it how I pitch it. I’m not doing it to be condescending or anything, I’m pretty sure you know much of this stuff already but I’ll give you the full picture for ‘completeness’, okay?”
    John nods for her to begin blasting him with City-speak. “Ok honey, I’m tuned-in and ready. Take it from the top.”
    â€œOk babe, here it comes…-Hedge Funds have only risen to notoriety very recently; because they’ve been creating many of the very richest people on the planet. The idea behind them is the principle of ‘shorting’. Shorting allows you to bet on falling share prices rather than the traditional technique of trying to buy what you see as undervalued shares that will have the potential to rise over the long term. With shorting, the ‘fund manager’ finds someone to ‘borrow’ shares from; shares that he thinks will fall in value. He’ll ‘borrow’ (not buy) them under the terms of a written contract, the contract will say that for a specified fee he’ll return them at a specific date in the future. Anyway, once he has identified a stock that he speculates will fall in the very near future, he approaches people who own them and who will agree for them to be borrowed and makes a contract. Now that he owns some borrowed shares, the manager sells them, for example for £1.00 each, and if he is correct and the share price falls, the manager can buy them back after a relatively short period, like maybe 2 months later, at a lower price, e.g. at 80 pence each. The fee might be say 6% for 2 months (6 pence commission to the person they were borrowed from), so the manager makes 14 pence of profit from each share.”
    â€œIn contrast, the traditional way of making money from shares is ‘Going Long’ -jargon for buying shares as an investment, hoping that many, many months in the future the value will rise so you make a profit when you sell them. And by the way, whilst you are waiting, you also get to earn a ‘dividend’, -a bit like an annually paid amount of interest on the money you’ve got tied up in a bank account.
    Now there is a new way of making a profit from a falling share price in a relatively