The finance ministers and central bank governors of the G20 countries met in London for a dress rehearsal of the much publicised summit meeting planned to save the planet from self-inflicted ruination. Their goal was to prepare a plan to restore confidence in the world’s hard hit financial system.
One of the big questions was whether the BRICs could or would take advantage of the West’s debacle. Barton for one was not sure; the India he had discovered had clearly demonstrated that ineptitude was not a monopoly of the West. As for China its growth had stalled as exports were hit and vast numbers of unemployed peasants were making their way home to their poor villages far, from the country’s rich coastal manufacturing regions.
After the dress rehearsal came the show the world was waiting for: the British premier’s all-star spectacular with Barack Obama heading the bill. As proud host Gordon Brown organised a lavish, almost Roman-style gala, to welcome his guests before the cameras of the world’s television.
The jamboree was touted as the last chance of averting the mother of all financial disasters. George Soros, like all those who fed on chaos, dreamt of repeating his legendary coup by betting on the UK being forced to beg the IMF for a bailout. The enormity of the situation was highlighted when an auction of British treasury bonds flopped for the first time in over a decade. Few were surprised. Foreign investors, holders of a large part of the nation’s debt, demanded greater returns in the face of inflationary risk.
The media frenzy reached boiling point as the show opened with a display of show of one-upmanship by competing leaders. It was a Hollywoodian farce as leaders vied with each other in their declarations of eternal friendship, accompanied by backslapping and preening. Lesser leaders scrambled to be seen shaking the hand of the newly elected US president Barack Obama. As for the new boy on the block, the Chinese leader Hu Jintao, he got a feeling of things to come with subservient leaders dutifully lining up to pay homage to the modern day Emperor of the Middle Kingdom. Even the Queen of England was enrolled to add a dash of pomp and circumstance, offering a state dinner on the house for the guests. However, the evening was somewhat spoilt when the Queen received a slap on the back from Barack Obama, and ended in farce with Silvio Berlusconi’s ever present buffoonery. When the final curtain came down, participants and spectators could have been forgiven for wondering whether or not they had mistakenly attended a Cannes Film Festival, rather than a last ditch meeting to avert the world’s financial system from imminent collapse.
For the most part, the trillions, announced in the final theatrical communiqué, were nothing more than money already pledged by governments over the preceding months; though it was agreed additional funds be set aside to assist the world’s poorer countries. Brown’s proposal for a fiscal stimulus was neatly dodged without another brass farthing being pledged by the other leaders.
It was logical, the BRIC’s and their banks held few of the toxic mortgage related products that were causing havoc in Western banks. As for China, it looked on with a good dose of schadenfreude as it continued to pump out cheap export products, manufactured at sweatshop rates, destined for Western markets.
Those who dared imagine the BRICs would be the driving force necessary to pull developed nations out of the crisis were very much mistaken. As the crisis spread financial markets in Shanghai, Bombay, Moscow and San Paulo were caught in the downward spiral, with shares losing as much as half their value.
The sudden credit freeze on bank lending was strangling exporters. China needed at least seven percent growth to provide jobs for the tens of millions of peasants that flowed into its manufacturing regions every year. Any slowdown would have disastrous effects and could lead to unrest with unpredictable consequences. As to Russia it was already bracing itself for social conflict.
The idea that China alone could rescue the West was a pipe dream. Over the course of the previous two decades the world’s economic system had evolved, becoming an inextricable network of exchange through which goods and credit were channelled. The only positive effect would be that Russia and belligerent regional players, such as Venezuela, would be forced to rein in their fiery rhetoric, as the flow of dollars necessary to fuel their dangerous ambitions slowed to a trickle after oil plunged to less than forty dollars a barrel.
The collapse of oil, a welcome windfall for consumers in the West, was a dramatic reversal for Russia and Middle East oil producers, whose economies depended almost entirely on petro-dollar revenues.
Pat Kennedy, who watched Brown’s concluding speech, from the comfort of his armchair at Saint Mary Axe, likened the conference to a group of alcoholics anonymous gathered for a booze-up.
He like most other informed observers had few illusions as to the real results produced by the meeting of the G20 leaders. The much vaunted conference was nothing more than a farce designed to appease the growing fears of people in the respective countries of those leaders present. Gordon Brown’s declaration that a new world order had been established was pathetic, unless of course he was referring to China’s entry into the arena as a powerful player. As for his for his proposals for a new Marshall Plan, it was nothing more than wishful thinking.
‘Typical Brownian crap, long on rhetoric and short on action,’ commented Fitzwilliams.
‘Did you read what one fellah said,’ asked Kennedy looking at his iPhone. ‘We’re now in so much debt that if you can summon up the courage to look at your share of it, you will scream, faint and shit your pants all at the same time.’
‘You always see the vulgar side of things Pat.’
‘Well being polite, I suppose all this amuses the masses.’
‘It all sounds to me like a feel good prescription.’
‘Like Aldous Huxley’s soma.’
‘Ah, you’re becoming an intellectual Pat.’
‘Well a gramme is better than a damn.’
Fitzwilliams grunted.
‘We weren’t the only ones to jump feet first into the property boom,’ said Kennedy shrugging off Fitzwilliams’ derision. ‘If you look at China, Russia and India, they’ve all ploughed huge sums of money into real estate. Look at what’s happening to Russia. They’ve been hard hit.’
‘Yes. And it seems our friend Sergei Tarasov is not without his problems.’
‘Sergei is different.’
‘I hope so.’
‘Not forgetting your friend Malcolm! The jury is still out on his deal with the Chinese!’
‘Personally I think he’s been very astucious.’
‘What! Getting into bed with Stanford. I’d say he was truly fucked.’
‘Well he came out of that smelling of roses.’
‘I hope so for him.’
‘And us, remember we’ve got money tied up in the Emerald Pool development.’
‘Peanuts,’ snorted Kennedy.
‘Why don’t you shut up for once Pat!’ replied Fitzwilliams irked at being caught out.
They met at Fitzwilliams’ elegant eighteenth century Georgian town house on Merrion Square in Dublin, far from prying eyes, to discuss the bank’s strategy in the wake of recent economic and political events.
‘I mean how should we handle things with Tarasov?’
‘Well it seems as though he wields considerable influence in Moscow,’ said Francis as he sipped his Cognac.
‘You mean political leaders?’
‘Yes, but not only.’
Francis trod carefully, he did not want to hurt the sensitivity his banker friend.
‘Well yes, his economic status gives him economic power.’
‘I’m not sure what that means,’ replied Fitzwilliams.
‘Well people like him can use it for political leverage.’
‘Give me an example.’
‘For example he’s not like Mark Zuckerman, the founder of Facebook. Zuckerman has enormous economic power, like Bill Gates, or any one of those who made their fortune in computers, social networks and that kind of thing. They have billions, they can buy and sell companies and
fire people. That is one kind of power, but money is not everything. George Bush is measure of economic power, although he is not rich like Zuckerman or Gates.’
‘Political power then?’
‘Yes, in the case of Bush, when he was a graduate student at the Harvard Business School, his father was chairman of the Republican National Committee, which led to Bush senior becoming President of the United States. Before that his grandfather was an influential Senator, a board member of Yale, and of many companies and banks. That meant his son George W. Bush had a huge socio-economic status, although he was just a student at the time.’
‘I see he had just to bide his time.’
‘That’s it.’
‘So Zuckerman has little chance of becoming president.’
‘Not entirely, Ronald Reagan was an actor, but you get the gist?’
‘Yes, but what's your point?’
‘I mean a man like Tarasov has huge influence.’ Fitzwilliams nodded. ‘
‘I see, John, but what are you getting at?’
‘Tarasov could help your future plans.’
Fitzwilliams said nothing.
‘Let me develop my idea. Take Pat Kennedy, although he was neither born rich, nor the son of a lord, or a powerful personality, he has influence,’ Francis explained, then adding with a smile, ‘He’s not even a rich banker.’
‘I still don’t see your point.’
‘It’s not what you know, but who you know. What I’m saying is Pat is a special person, he can open doors, build bridges. To many he represents the bank, he has great socio-economic status, another kind of the status, without being part of the founding family.’
‘And....’
‘Well he can do things you can’t do, or wouldn’t want to be seen doing.’
‘I see, you mean with Sergei for example.’
‘Right.’
‘Used wisely, he’s a valuable asset, he can ask questions you wouldn’t like to ask.’
‘Hmm....’
‘Your role is above the melee.’
Chapter 24 THE HARDER THEY FALL