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John Francis Kinsella

  THE TURNING POINT

  in the beginning

  2007-2008

  Banksterbooks

  LONDON-PARIS-NEW YORK

  The Turning Point

  Copyright John Francis Kinsella 2012

  John Francis Kinsella has asserted his right under the Copyright, Designs and Patents Act, 1988

  to be identified as the author of this work

  This novel is a work of fiction. Names and characters are the product of the author’s imagination and any resemblance to actual persons, living or dead, is entirely coincidental

  All rights reserved. No part of this publication my be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electrical, mechanical, photocopying, recording, or otherwise, without the prior permission of the publishers

  This book may not by way of trade or otherwise, be lent, resold, hired out, or otherwise circulated by telecommunication or other means without the publishers consent.

  Cover image Massimo Catarinella (wikimedia commons)

  To Tilla, Selma, Eléonore, Noé, Xaver, Elyas,

  Adélé & Camille

  CONTENTS

  1 Prologue

  2 2007

  3 Spring

  4 Summer

  5 The City of London

  6 The Basque Country

  7 London

  8 2008

  9 February

  10 North Atlantic

  11 A Tourist

  12 Spain Phuket

  13 Notting Hill Gate

  14 Bangkok

  15 Miami

  16 Phnom Penh

  17 Oil

  18 April

  19 Rehabilitation

  20 June

  21 England

  22 Kennedy

  23 July

  24 Santorini - Greece

  25 The New World

  26 Wall Street

  27 New York – Miami

  28 August

  29 Dominica

  30 The City

  31 Pondok Indah Dominica

  33 The Emerald Pool

  34 The Commonwealth of Dominica

  35 September

  36 The Basque Coast

  37 A Journalist

  38 Russians

  39 France

  40 Babkin

  41 The Crisis Grows

  42 Dublin

  43 Transformation

  44 New York

  45 The Celtic Tiger

  46 Local Cuisine

  47 Ireland

  48 Hendaye

  49 Bloomberg

  50 Offshore Paradise

  51 Black Monday

  52 Iceland

  53 An Optimist

  54 Biarritz

  55 Surrey England

  56 Sergei Tarasov

  57 Guarantees

  58 A Fateful Weekend

  59 Collapse

  60 October

  61 Liquidity Shortfall

  62 Marbella

  63 November

  64 Investment Banking

  65 Antigua

  66 Globalization

  67 Hedge Funds

  68 Dubai

  69 Scams

  70 Governance

  71 A Last Fling

  72 December

  73 Back in Town

  74 The Villain

  75 The Viking Feast

  76 Iniquity

  77 A Banana Republic

  78 Home

  79 New Years Eve

  Economics was invented in order to make astrology look respectable.

  John Kenneth Galbraith

  For a number of diseases, 20% of the population account for around 80% of the disease spread. The present financial epidemic has broadly mirrored those dynamics.

  Epidemiology provides a second key lesson for financial policymakers – the importance of targeted vaccination of these 'super-spreaders' of financial contagion. Historically, financial regulation has tended not to heed that message.

  Andy Haldane Bank of England

  The story of its ruin is simple and obvious; instead of enquiring why the Roman Empire was destroyed, we should be surprised it lasted so long.

  Edward Gibbons

  PROLOGUE

  After the champagne and fireworks, the toasts and good wishes, came the almost inevitable hangover. The twenty first century got off to a bad start with the dotcom bust. Barely a year later the world was shaken by the events of September 11. The monstrous and unexpected attack on the World Trade Center, a senseless tragedy for so many Americans, saved George W. Bush from a trivial destiny, elevating him to the role of self-appointed saviour of the Western World, or the narrow world of the Midwest and its Bible-punchers.

  Launching his war on terror, Bush galloped, accompanied by his faithful sidekick, Tony Blair, to create a different version of Bush the father’s post-Soviet New World Order, where, in Winston Churchill’s words: the principles of justice and fair play...protect the weak against the strong — or was it the other way around?

  The widely hailed New World Order held a number of unexpected surprises in store for those who had acclaimed it. The neo-liberals had won the battle, through deregulation and by abandoning state control and protectionism, allowing the world to continue its path towards the economic and political model preached by Reagan and Thatcher. Market forces replaced governments in determining economic direction, whilst the world, and more especially China, discovered that liberalization could exist without democratization. The consequence of these changes tilted the balance of economic power inexorably towards the East.

  Under Bush and Blair interest rates were slashed and a loose monetary policy was pursued to compensate the loss of business confidence and weak share prices. This led to a global credit and property boom, signalling the start of an uncontrolled race for wealth by the world’s investment bankers and financial institutions.

  Unwittingly the leaders of the rich nations had started a count down to what was, by its very scale, the greatest financial crash in all history, the consequences of which led to a historical turning point, a momentous loss in the relative wealth and economic power of the nations that had ruled the world for more than a century, and more significantly that of Great Britain.

  As the summer of 2007 approached its end anxious savers formed long queues outside Northern Rock branches all over the UK to withdraw their savings. What had commenced as a temporary liquidity crisis signalled the beginning of a long series of convulsions that announced a pivotal change, a catastrophic shift, which was to transform the lives of countless millions of people.

  There would be winners and losers. One of the winners was China; the UK an also ran. The former appeared poised to claim the lion’s share of the global economy, and the latter to finally admit the remains of the predominant global influence it had built over two centuries in industry and finance were gone — forever.

  As this modern tragedy was played out certain actors congratulated themselves, perhaps prematurely, for having avoided the worse and even profited from the changes that had been forced upon their world.

  Spurred on by the encouragement of the West’s compelling leaders, many determined men had grasped the chance that destiny had unexpectedly thrust upon them. Michael Fitzwilliams was one of them, his dream was that of transforming his relatively modest bank into a global finance and investment institution, with quite naturally a deserving place in the adrenaline driven heart of the London’s square mile.

  2007

  Spring