PART THIRTEEN
VANDERBILT
In the meantime Pat was absorbed by the excitement of discovering the City of the Monkey God deep in the jungle of eastern of Honduras. He with his newly made Japanese friend bumped over the dirt road that climbed through lush-green forest towards the base camp in a small village on the jungle edge. It was not unlike all the other such villages, its wooden houses and their plaited palm roofs, chickens pecking insouciantly at the dirt as small black pigs rooted in the encroaching undergrowth.
Far to the south in Nicaragua it seemed as though the canal project had drifted into the doldrums, there was little movement despite HKND’s claims the construction of the first phase, a port on the Pacific Coast, would begin before the year end.
The lack of visible movement on the ground was clearly discernible, apart from the occasional Chinese engineers surveying the terrain. This compounded with the sudden stock market setback in China had rattled Pat and it had taken a visit to the Panama Canal museum to rekindle his enthusiasm. There he discovered the history of the first transoceanic canal and the difficulties of such as vast undertaking. Pat was forced to admit the 2020 deadline for completion was looking optimistic and realised it would require time, perseverance and courage, to overcome the many obstacles on the long road to success: political, financial and physical.
Cornelius Vanderbilt, the American railway magnate, had attempted to build a waterway in the 1850s and as a triste monument to his effort the mast of his dredger was still visible, emerging from the waters of Morgan’s Lagoon near Greytown in south-east corner of Nicaragua.
The dream of cutting a canal across Nicaraguan isthmus dated back centuries. It was Ferdinand de Lesseps who put an end to the idea when he broke ground for the Panama Canal in 1881. Before that date, Nicaragua had been the most likely option for a transoceanic waterway to reduce the journey from California to the East Coast of the US.
From a rickety hut in the village Pat watched the news from Shanghai on his laptop with its jerry rig to a satellite dish. Screens flashed green and small retail investors vented their anger as the Shanghai Composite Index continued its plunge. Those who who belatedly rushed into the market at its peak counted losses of nearly forty percent.
It seemed as though the world was lurching towards an unknown future. The aura of power and control that had surround the spectacular emergence of the Middle Kingdom suddenly faded as the Shanghai stock market dived into a gut wrenching spiral. China’s leaders seemed helplessly in a situation that was rapidly getting out of control.
Map of Lake Nicaragua
Contagion rippled through the world’s international financial centres. Nothing had been achieved by massive state intervention in the market as buyers unloaded their shares to meet margin calls
The credibility of the Beijing government was shattered, it was as if it had lost control of the magic dragon that had transformed China from a peasant society into the world’s second largest industrial economy.
Whilst the effect of the market collapse on the man in the street in China was indiscernible, the entrepreneurial classes were shaken, their élan dashed, which could affect those they employed, all of which led to questions about the ability of their government to control the economy.
Fear stalked Chinese investors, who had bet on financial markets and property. Anger rose as small investors unable to sell their shares, amongst them many elderly people who had put their savings into the market, bitterly regretted their foolhardy punt. Railing at all and sundry, accusing foreigners for waging a currency war against China, just as those in Russia who were caught in the maelstrom of Putin’s fool hardy adventures.
Anxious faces were scotched to brokerage screens that flashed green as indexes plunged, red when they rose. Losers counted their losses in silence, accusing the media for having misled them, but few were those who dared to publicly accuse the government. Some spoke of the good old days under Chairman Mao as others suffered shame and loss of face after losing their family’s savings.
THE CITY OF THE MONKEY GOD
The ruins had first been spotted in 2012, during an aerial survey of one of the few scientifically unexplored regions on the planet, a vast one hundred thousand square kilometre region of jungles, swamps, rivers, and mountains of La Moskitia, explored in the last century by Theodore Morde, who emerged from the jungle in 1940 claiming to have found a lost city: the City of the Monkey God.
The site lay in the east of Honduras, a region only accessible by air to the north and east of Catacamas, a city of fifty thousand souls. Beyond Catacamas lay a vast empty and almost impenetrable region of mountains and jungle.
The mysterious valley lay approximately four hundred kilometres from the capital of Honduras, Tegucigalpa, a city of over eight hundred thousand, which Pat Kennedy had never heard of until the moment he bought the ticket for the flight from Managua to Honduras.
For centuries legends of a lost city abounded, explorers and adventurers had brought back tales of vast stone fortifications overgrown by dense jungle. The local Indian tribes spoke of a vast white house hidden deep in the rainforest where their ancestors had hidden from the ravaging conquistadores, a paradise lost.
Starting in the 1920s, several expeditions tried to find Ciudad Blanca, as it was known. The most famous of which was that of the eccentric American explorer Theodore Morde in 1940, sponsored by what is now a department of the Smithsonian Institute, then the Museum of the American Indian.
Morde claimed to have seen the city and when he returned from Moskitia he brought thousands of artefacts with him as proof. He recounted the story of how the local people told him how a giant statue of the mythical Monkey God stood in the centre of the city. But he refused to divulge the location of the city fearing it would be targeted by looters.
Some time later Morde died in mysterious circumstances, conflicting stories say he committed suicide, or was killed in an automobile accident, but whatever the reality the secret of his site disappeared with him.
In 2009, a team of American specialists including archaeologists, anthropologists, ethnobotanists, forestry experts, a Lidar1 specialist, documentary filmmakers and journalists from National Geographic magazine set out to find the site.
The untouched nature of the site was reported to be unique and if preserved and properly studied could reveal incomparable knowledge as to how its inhabitants had built a civilisation in such hostile territory.
Archaeological site in La Mosquitia, north-east of Tegucigalpa
Equipped with the latest laser technology the team launched an air search probing the jungle where they believed the ruins of the city stood with the aid of a Lidar scanner, capable of piercing the canopy of the rain forest and locating the presence of archaeological traces, to map a site.
The images confirmed the presence of man-made structures stretching along the river banks in the valley below warranting a ground expedition which led to the discovery of what appeared to be an ancient plaza built by a vanished civilisation. In addition the vestiges of ceremonial architecture, giant earthworks, irrigation canals and reservoirs were identified, confirming the presence of a pre-Columbian city.
The hidden valley, like the whole region of Moskitia, was covered by dense rain forest, where jaguar, snakes, spider monkeys, tapirs had roamed for centuries, was believed by archaeologists to be the site of not just a mysterious city, but that of a lost civilization. Their goal was not simply to scientifically investigate the site, but to also prevent looters from plundering its priceless archaeological vestiges.
1. Lidar – Light Detection And Ranging, a downward looking radar-like laser system
DUBAI ON THAMES
The Dubaiesque metamorphosis of Nine Elms was taking place under the incredulous eyes of Londoners. Each morning as suburbanites commuted into Vauxhall and Victoria they saw the pharaonic project grow in the knowledge they could never aspire to being an owner of one of the homes in the futuristic towers. What had long been a near derelict indus
trial site on the south bank of the Thames was being transformed into an extension of Central London for the well-being of its privileged few.
The sales were managed by the Henry Wiltshire estate agency based in Canary Wharf and its on-site office in Vauxhall, the latter curiously situated between a homeless peoples’ shelter and a bus station, both of which were destined to be demolished to make way for the swish new neighbourhood.
Jack Reagan, in spite of his wealth, mainly built on Pimlico real estate, felt uneasy crossing the river. It was another ball game as Kennedy would have said. Reagan had been used to dealing in nineteenth and early twentieth century properties and had always viewed the South Bank as off limits for investment. However, further to the east he had seen the transformation of abandoned dockland warehouses and derelict sites into attractive business, residential and tourist districts. There was the Shard, the New Tate, and even the LCC1 Town Hall which was transformed into a business centre and tourist attraction including a Marriott Hotel, the London Sea Life Aquarium, the London Dungeon and an amusement arcade.
An estimated twenty thousand new appartments were in the planning, under construction or already built on Nine Elms site, situated in a triangle bordered by the Thames, Battersea Park and the Southern Railway line into Waterloo. They were almost exclusively high rise luxury apartments in contrast to Reagan’s gracious low rise nineteenth century world across the river, something that caused him considerable trepidation when it came to investing his money in the new development. He was concerned the sheer quantities would result in an oversupply, a glut, given the numerous riverside developments east of Tower Bridge.
It did not require much research to determine that in total more than fifty thousand luxury homes costing more than one million pounds each would be coming onto the market in London’s prime property districts, a number he estimated was in sharp contrast with demand.
His experience, as a property owner and former head of an engineering design firm, told him that the combined market driving forces were: politics, that is to say government inspired economic development aimed at growth; finance and its banking and investment components; industry, which consisted of developers together with architects, construction firms; estate agents and lawyers; and the vast industrial machine that supplied concrete, steel, mechanical services including lifts, electricity, water supply and drainage systems, heating, airconditioning and ventilation plant, to which was added an almost endless list of diverse materials, equipment and services. Beyond that were the infrastructure needs: transport, service roads, sanitation and garbage disposal and so on.
It was a vast organization designed to generate profits and growth for the well-being of all, in the form of homes for the wealthy and jobs - mostly for the less wealthy.
Billions were being invested in the transformation of what had until recently been an industrial wasteland into a vast new residential and business district. It was one of the Europe’s largest urban regeneration projects, eclipsing even that of London’s 2012 Olympics.
The hype gushed: politicians hurried to add their upbeat encouragement; stars were hired provide the glitz; journalists to spread the word, television to sing the praises, but the question still remained: who would live there? Reagan wondered whether the residents of Pimlico, Chelsea and Knightsbridge would trade their fine nineteenth and early twentieth homes for a fortieth floor flat in a forest of glass and steel?
Was the monstrous brick power station really worth saving? Reagan, who was not a stick in the mud, had always seen it as an eyesore and would have demolished it transforming the site into an extension of Battersea park, adding two or three cultural attractions, but there was no gain in that. When all was said and done the monster, which was so vast St Paul’s Cathedral could have easily fit inside, was not an object of beauty, and its creators had never intended it to be.
Would the buyers from Asia and the Middle East live there, probably not. Buyers from Beijing and Shanghai saw London properties as an investment and a safe haven for cash, as did many Middle Easterners. They were bolt holes, a refuge when things got nasty at home, as they had in Iraq, Syria, Lebanon, Egypt, Libya and the Yemen. For Russians and Ukrainians it was a hedge against Mr Putin’s impulsions. And they were not far wrong as the dangers seemed to be confirmed almost daily.
One thing was certain in Westminster alone one in ten properties were owned by offshore companies and one in three offshore tax havens were British. What that meant for the average Briton was uncertain: on the one hand money flowed into the UK, on the other there was tax avoidance, legal or otherwise. Then came the question of homes for Britons and the prices of homes; the rush into London did nothing to keep prices down, and finally what would happen if all those offshore owners decided to get their money out for one reason or another?
The idea people would coming over the river from Chelsea to Nine Elms was fallacious, at the very best they would perhaps have a speculative punt. In any case Jack Reagan had his doubts about the interest of British buyers, which became apparent to him after an evening concert at the Queen Elizabeth Festival Hall.
Strolling along the Southbank, admiring the Thames side view, one of his friends had causally pointed out that most of the appartments in the fifty two storey Vauxhall Tower were in darkness. This was explained by the fact that almost two-thirds of homes in the Tower were owned by foreign companies or individuals, many via offshore companies based in tax havens, most of whom did not occupy their respective properties.
The five-storey penthouse was owned by the family of the Russian oligarch Andrei Guriev, a former Russian senator. The two thousand plus square metre penthouse, bought in May 2014, was unoccupied.
Other owners included by a former Nigerian government minister, a Kurdish oil magnate, an Egyptian mogul, an Indonesian banker, a Uruguayan football manager and a racing car driver. In addition there were buyers from Hong Kong, Singapore, Malaysia, China, Saudi Arabia, the United Arab Emirates, Russia, India, Iraq, Qatar and Switzerland.
There was a strong odour of speculation when the supermarket chain, Sainsbury’s, got in on the act demolishing one of its supermarkets to build hundreds of homes in seven towers. At the same time foreign money was poured in with the Chinese property group Dalian Wanda announcing it would build one of Europe’s tallest residential complexes at One Nine Elms: two towers, one sixty stories and the other forty five.
1. London County Council
St George Wharf London
In spite of his doubts Reagan decided for a punt after the enthusiasm of investors was given a fillip, when in quite separate decisions, the American and Dutch ambassadors announced they would sell their respective embassies at West End London sites to move Vauxhall. At the worst Reagan calculated it would not cost him more than his ten percent deposit if at a later date he decided to pull out.
As for Pat Kennedy he was not about to trade in his magnificent home on Cheyne Walk for a place at Nine Elms, even if Damien Hirst had decided to open a gallery to house his art collection in a converted warehouses in Vauxhall. In any case Pat had already experienced living next to the power station in his stylish modern bachelor pad, subsidised by the bank, overlooking Chelsea Bridge, which he had since rented to his delighted protégé, Liam Clancy.
DEBT AND SPECULATION
As Barton watch BBC World News, he remembered his visit to the Greek islands seven years back in July 2008. In many ways it had been a moment of insouciance in Europe and especially in Greece. At the time, almost a year had passed since the Northern Rock collapse and the appearance of the Sub-prime crisis, which concerned essentially the mortgage industry in the US and UK.
In 2008 Gordon Brown was Britain’s incumbent prime minister and he like other European leaders had promised a soft landing. Little did he realize the looming liquidity crisis and the Lehman Brothers drama would metamorphose into a catastrophic crash landing which was to destroy RBS and HBOS, respectively the number one and the seventeenth largest banks in the worl
d.
Since the birth of modern Greece, in 1832, the country had lived in a state of quasi bankruptcy. According to Gerassimos Notaras of the National Bank of Greece: From the beginning, our state had no other choice than to live on credit. We were born in debt.
Few remembered the days when Greek shipping magnates were the world’s playboys with their yachts and extravagant parties in the Aegean. Stavros Niarchos and Aristotle Onassis were the amongst the world’s richest and most famous men at that time with their exploits regularly making the front page of the tabloids in the 1950s. If proof was needed Onassis, after courting the opera singer Maria Callas, married Jacqueline Kennedy, the blue blooded wife of John F Kennedy.
Those good days were gone: famous Greek shipping magnates like as George Economou now lived in Monaco, John Angelikousis in London, Philip Niarchos and Spiro Latsis in Switzerland.
Nemesis, the god of divine retribution, had appeared in the form of Angela Merkel and Greece, guilty of presumption by gods, had to pay for its sins.
The day of judgement was at hand: if at midnight June 30, Greece failed to make a scheduled payment to the International Monetary Fund, it would become a pariah: the first advanced economy in the history of the respected institution, founded in 1945, to default on a loan repayment, an event that would have huge consequences for both Athens and the IMF.
Alexis Tsipras and Angela Merkel
Four days later, American Independence Day, the US markets were closed for the holiday. It was a pity, because the bad news from Athens would have sent traders scurrying. But that was small beer compared to the bad news pouring in from China. As the world’s attention had been focused on Athens, another drama was being played out on the opposite side of the planet. In the space of just three weeks the Shanghai Composite Index lost a massive thirty percent of its value, bankrupting countless small punters who had either bet their life savings or borrowed money to play the bull market.
The Shanghai stock market bubble, which had seen share prices double in the space of a year, had burst and as usual it was the late comers who had stampeded into the market, the small punters, who lost their shirts, even their homes. More than twenty million new retail accounts had been opened in the weeks leading up to the crash and to make matters worse the Chinese government had approved rules that allowed investors to use property as collateral to guarantee margin calls.
Both amateur and professional speculators faced margin calls on their highly leveraged positions and as in all market panics they started selling as fast as they could, with both hands and both feet as one commentator put it.
One of the factors that accelerated contagion was the important role margin financing had played in the bull market. However, it was individuals who were hit, and that in itself was not sufficient to cause a systematic collapse.
The trouble came as businesses were suspected of margin trading and using their own stock to obtain bank loans. This posed a different kind of problem making them vulnerable to margin calls and explained why many companies had suspended the trading of their shares to pre-empt action by the banks.
Was this the disaster Gordon Chang had been predicting for years? Maybe, considering a Chinese blogger had been arrested in Beijing for spreading rumours that brokers were jumping off roofs. True or not it was a sure sign of growing nervosity.
As Shanghai and Shenzhen stock markets boiled over, six hundred million Chinese peasants continued to live from hand to mouth, as they had since time immemorial. Would they ever escape their misery? It began to seem unlikely as the prodigious growth trajectory of China flattened out. The easy part was over, the difficult part was yet to come.
All that apart the situation was not as bad as it appeared. Pat Kennedy was reassured with the thought that in just one year the Shanghai Composite Index had gone from 2000 points to 5000 plus, so even at 3600 points the bank had made solid gains, pulling back from the speculative brink when it had.
A SAFE HAVEN
It was reported one in three rich Chinese wanted out. They had made their packet and wanted to make sure it, or at least part of it, was safely out of reach of authoritarian action, and Sarah Kavanagh was only too willing to help.
That morning she bubbled over as she checked out the Shanghai Composite Index. In London it was eight in the morning and Chinese stock markets would close in half an hour. The index had plunged another six percent. But what was bad news for many Chinese punters was good news for Sarah. The young real estate agent was inundated a surge of interest in the already hot London property market as wealthy Chinese investors sought a safe haven to escape the turmoil of Shanghai’s stock market.
Market instability had sent Chinese buyers scrambling for shelters to protect their money and in the last week alone she had signed up half a dozen clients for properties in the Vauxhall development and anticipated more deals before the month was out. The interest was such that one buyer was looking at acquiring a whole block of apartments.
In Shanghai, retail investors had rushed into the market, more often than not with money borrowed from securities firms through margin-trading schemes. Others jumped in via umbrella trusts, which loaned investors money from wealth-management products, peer-to-peer lenders and asset-management firms.
The market plunged and accusations flew. Regulators clamped down on futures trading, launching a witch hunt for what they labelled as illegal or malicious short-sellers. Rumours circulated foreign short-sellers were sabotaging China’s market.
The recently egalitarian Communist nation had become one of the most unequal on the planet with high worth individuals accumulating mountains of cash destined to secure their future against crises and a lot of that would be heading overseas.
INI Hong Kong Private Bank was attracting huge cash inflows and its City based property funds prospered as Chinese investors dumped their stock holdings. Smart money had been flowing out of China for months as its stock markets rose to dizzying heights. Savvy investors had got out during the first and second quarter, after doubling their winnings, and winnings they were.
Even Angus McPherson was surprised by the number of new individual Chinese investors capable of putting upwards of ten million dollars into the bank’s Dublin based funds. Lili’s family had been behind the new bank, Eireann Private Bank, Kennedy had incorporated in Dublin with branch’s in London and Dominica, offering worried Chinese industrialists, who had no other place for their excess reserves, an attractive investment in its dynamic funds.
Sarah had seen the boom coming and was pleased with the efforts she had invested in acquiring a passable degree of spoken Mandarin with a crash course of business Chinese at the Confucius Institute. After eighteen months she could converse in simple everyday Chinese, something that gave confidence to her clients and their wives, some of whose grasp of English was practically non-existent.
GREECE
News came of Syriza’s capitulation as Slovakia’s finance minister told the world they had reaped what they sown with their ‘Greek spring’. The parallel was unjustified considering the Arab world, encouraged by the West, had attempted to throw of the yoke of despotism and oppression, which was not the case in Greece, theirs was one of pitiful government and widespread corruption. There was no torture or death, the days of the Colonels were long gone.
Certain commentators likened the Greek acceptance of EU demands to another Versailles, of course there was not twenty million dead, or great swaths of Europe devastated by war. It was a simple bankruptcy arrangement whereby the debtor was put under the supervision of the court.
It was a result of Greece’s inability to reform, of pursuing policies that appeased every demand, popular or otherwise, of procrastination, the accumulation of unsustainable debt, in the vague hope their problems would go away. Were the Greeks profligate? Certainly, but no more than fellow member countries of the EU, including France, Italy and the UK, whose decision making process dodged the real issues and whose debts were perhaps the greatest in history i
n time of peace.
The vociferous British press cried foul, leading a sustained campaign against the Eurozone and the EU in general. To have found a comparable outpouring of vitriol it would have been necessary to go back to the time when English pamphleteers lampooned Napoleon, at the moment his armies occupied large swaths of Europe and his marionettes, including his own family members, were foisted onto the thrones of Europe, namely Italy, Holland, Spain and Westphalia.
Napoleon had declared: I wished to found a European system, a European Code of Laws, a European judiciary: there would be but one people in Europe. The ideas was noble, not the means. In 2015 democratically elected European leaders, wrangled through the night to find a compromise, as they had been doing for sixty years, which was surely better than waging war.
Had Europe come of age? Could those fools who stood on the sidelines crying for disunion and strife: the little Englanders of UKIP; Podemos; the Front National, the PVV of Geert Wilders and others, be held in check? If not the dogs of war and strife would be unleashed and the consequences terrible.
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