The Plan
Page 57
Fitzwilliams had survived and with each new morning he congratulated himself on having done so. Looking closely in the mirror of the private dressing room that adjoined his office, readying himself for his departure for Moscow, he was not only pleased with what he saw, but also understood, and not for the first time, his class always would survive. It was the parvenus who paid the price, as they should. His stroked his cheeks with his well-manicured hands, his skin glowed, given the price of the face cream he expected nothing less, his permanent tan was fresh, not overdone, his blond hair, only slightly greying at the sides.
He stepped back to admire the full view in the mirror, his noble head set-off by a pale blue shirt, styled specially for him by Crombie & Sons, with a matching tie. His pin stripe suite was cut in an elegant gentleman’s style, unchanged for decades, though tailored in the finest of modern cloths. Not unlike Michael Douglas, he thought idly and without vanity, remembering the film based on a Wall Street banker, but without being able to put a name to the title.
He had every reason to feel pleased with himself, with the creation of INI his personally worth would rise to well over one and a half billion pounds, making him one of the richest men in the United Kingdom.
Fitzwilliams was forty seven, perhaps a touch too young to be at the head of the old family bank, and certainly the youngest leading banker in the City of London. His destiny was different to men like Kennedy, who had not been brought up to command, who had arrived where they had by chance, and, to a certain degree, he was forced to admit, by their natural and acquired skills. Fitzwilliams fit well into the class of men who pulled the strings in Britain’s financial institutions, he was not an arriviste, he was above the Blairs and Browns, small middle class men who rode to glory on populism, men who rose, then after a brief moment of glory fell, condemned to history.
Fitzwilliams had never been destined for a place in politics, a calling his family had always scorned, a tradition that had paid and contributed to the family’s survival through the turbulent years of Ireland’s political history during the late 19th and better part of the 20th centuries. He was the continuation of a family whose origins could be traced back to the Norman Conquest; they were part of a centuries old Anglo-Irish aristocracy and were proud of their Anglo-Norman heritage. The family’s leadership was the task that he had been entrusted with after David Castlemain’s, tragic adventure in the Caribbean some years earlier.
It was not however an undertaking for the weak hearted; it took courage and enterprise to guide his family’s fortunes through the risks of modern day banking. Things were different from the days when his great-grandfather entered banking in the early nineteen twenties. It was his means to survive the upheavals caused by the tribulations of the newly created Irish Free State, a time when many Anglo-Irish families were pressured into flight ― abandoning their great landed estates.
Fitzwilliams was a leader, a builder, and he was now poised to spread his empire to Moscow, fortified by the idea that the Keynesian concept of pouring tax payers’ money into an ailing economy was beginning to produce the first stirrings of hope. The markets had scuttle-butted along what seemed to be the bottom of the curve for months, perhaps in fear of another catastrophe waiting to happen, and as the government threw mountains of money at lame duck banks. Then, miraculously, share prices rose, the long announced green shoots suddenly appeared in every garden, politicians jumped on the occasion to point to the success of their policies, and low and behold banking profits bounced back into the black.
Everyday reality was quite different. A large part of the forgotten mass of working-class homeowners, at the bottom end of the spectrum, was not so lucky as creeping depression slowly took hold, owners trapped by a combination of mounting unemployment, falling wages, negative equity and growing mortgage costs.
It seemed that a turning point had been reached. For many it was the first good news since Blair’s well timed resignation in June 2007. The images of Tony Blair, Britain’s charismatic leader, striding across the world stage, camping the role of a superpower, had set many a British heart beating, whatever his or hers political leaning, long after Britain’s empire had faded into history. As George Bush’s best pal, Blair had leaned on America’s might, the power of the English language and above all the City of London’s supremacy as the world’s leading financial centre surfing the wave of globalization.
Regrettably it was all an illusion. Britain, like the other larger European nations, had lost its place as a world power. Of course there was still an aura of past glory, but like other middle sized powers, it had to take into account the BRICs…the new kids on the block. What Britain had failed to realize, in its euphoric illusion, was its future lay in building Europe, finding a central role in the Union, as it no longer pulled the kind of punch needed to face the US or China as an equal.
The threat of financial meltdown had the pulled the carpet from under Britain’s feet with the humiliating nationalization of its leading banks. The illusion of general wellbeing created by the media had suddenly evaporated; it had been no more than a thin veneer that hid a nation living on credit, emulating the fleeting success of a football champion, a rock artist, a talk-show star, a CEO in the City, or a politician. A semi-detached house in Romford was no more than what it had been before the boom; a semi-detached house in Romford.
It suddenly seemed as though everybody had had their hands in the cashbox; that is except the unemployed, pensioners and working people. Those at the top in the public sector and government got all the advantages whilst the bosses pocketed the profits. In the course of the previous decades the rules had been slowly and subtly changed in favour of the rich as the average man saw his pension fund dwindle and his hard earned savings swallowed by bankers and their fellow travellers.
Banking had become a self-seeking and self-serving oligopoly totally disconnected from its customers. Men like Fitzwilliams and Tarasov had seized the opportunity offered them by weak government and poorly regulated markets, developing their interests not only in banking, but also in property, services and utilities.
It would take at least a decade for most businesses and individuals to recover from the crash, providing there were no more aftershocks. Britain was to all intents and purposes bust, and billions would be needed to pay back its debts, raised by higher taxes and spending cuts.
All of a sudden the world had changed and finally the curtain was drawn on the last pathetic act of Britain’s imperial role with the Shadow Foreign Secretary announcing the nation’s diminished role in a speech: ‘It will become more difficult over time for Britain to exert on world affairs the influence which we are used to.’ After Blair’s last glorious fling, a page of history had been turned and Britain would have to accept a lesser role in world affairs, leaving America to fight its own wars.
There was no New Deal to save Britain as the burden of sovereign debt prevented a sustained Keynesian effort to invest in utilities and infrastructure to revitalize industry and absorb the growing army of unemployed. Entire countries and whole swathes of populations were caught in the West’s self-made trap of globalization.
Barely a dozen years had passed since Tony Blair swept to victory, promising a new age and a New Britain. His moment of glory had been brief, his mistakes many and his legacy Gordon Brown’s Britain, a state as dull and unpromising as that of Britain’s post-war leader Clement Atlee. Cool Britannia would be remembered as a fleeting moment of euphoric grandeur that made London the financial centre of the world.
Seen from a 2007 standpoint, the events of the previous three years would have been inconceivable. No one could have imagined international banking’s star performers collapsing into bankruptcy and nationalisation. Northern Rock was the first to go under, then came Bear Sterns, followed by the devastating bankruptcy of Lehman Brothers with the debacle of mortgage giants Fannie Mae, Freddie Mac hot on their tails, and finally the British government’s forced nationalisation of HBOS and RBS. It was tectonic shock of Hollyw
oodian magnitude.
During the preceding years, few had paused to consider the words of wisdom written by Adam Smith more than two centuries previously: ‘No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.’
Fitzwilliams’ was about to launch a fundraising campaign to finance the expansion of the Europa Property Fund to capitalize on the slump in property values. He planned to raise half a billion pounds in fresh equity capital from institutional investors and private individuals prepared to put in a minimum of thirty to fifty million pounds each to leverage finance for a portfolio of first class acquisitions.
Though a window of opportunity had opened for Fitzwilliams’ property fund, the losses of large banking groups continued to grow, forcing many of them into asset firesales to offset a mountain of non-performing loans.
The dark days were far from over with the world struggling to find a way out of what was probably the worst financial fiasco in history. It dwarfed that of 1929, Ponzi’s scheme, the Teapot Dome, the South Sea Bubble and tulip bulbs. As for Madoff he was almost reduced to a walk-on role in the drama as billions turned into trillions.
Inversely the conditions for the launch of Fitzwilliams’ property fund could not have been better and leveraging the two billion for the new fund would pose few problems. The new fund would offer flexible terms to investors, with incentive fees based on performance over the duration of an investment, rather than annually.
Though the commercial property market had begun to stabilise, developers saw their projects thwarted for lack of capital and the lack of debt financing. It was a situation that the Europa Property Fund’s managers could take advantage of; acquiring stalled landmark property projects at firesale prices, then pumping in fresh capital to complete construction. They set their sights on multi-billion pound projects such as the Wood Wharf development in London’s Docklands, where a two hundred metre tower designed by Pelli Clarke Pelli was planned, or the forty eight floor Pan Peninsula Tower, a residential development at Canary Wharf, where during the boom apartments had been sold to wealthy City high-flyers and overseas investors.
Chapter 57 AN OLD FRIEND