Chapter 56 FITZWILLIAMS
Fitzwilliam had survived and with each new morning, he congratulated himself on having done so. Looking closely in the mirror of the private
a dressing room that adjoined his office, readying himself for his departure forMoscow, 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 AngloIrish 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
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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
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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 Hollywoodian 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
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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.
