That same Friday, September 12, just before three in the afternoon, Liam Clancy found himself staring blankly at a half empty glass of Guinness at a table in a quiet corner of Gogarty’s, a popular pub on the corner of Anglesea Street in Dublin. Quiet it was, there was no joy in the air, a feeling of disaster hung over the Stocmhalartán na hÉirean, the Irishness of the name seemed futile and irrelevant in the chaos that had almost without warning engulfed the small Irish Stock Exchange, which in any case depended on the Deutsche Börse. Worse the disaster was now about to hit Clancy’s, up until very recently, blithe life.
The Irish Times, no doubt looking through shamrock coloured glasses, announced Irish shares had outperformed Europe’s the previous day, omitting that those same Irish shares were probably the worst performers in the world over the course of the previous eighteen months, the ISEQ Share Index falling almost vertically from just over 10000 point to a little less than 3000, a staggering loss of seventy percent. The newspaper at the same time announced retail sales were the lowest in twenty four years. Decidedly things were not looking up for Ireland.
On the international front the Dow Jones was hovering at around 9000 points, more than 5000 points less than its all time high only twelve months earlier, whilst European stock exchanges were plumbing unimagined depths. The VIX had gone wild; a series of jagged highs and lows, a sure indication that fear had infected the market. Clancy’s own portfolio was worth almost nothing and to make matters worse the price of his fashionable house had fallen twenty percent in twelve months.
The Celtic Tiger had been caught in the whirlwind of the sub-prime crisis and was beginning to seem more like a bedraggled gutter cat than a tiger. Clancy’s father had warned him of Irish dreams, advising him to put his money into something more down to earth — like some good farming land in Wexford. His favourite quotation was Ghandi’s ‘Account for everything that comes in and goes out of pocket’. Clancy did of course not listen to his father; who does? Ireland was living in a new age, farming and all that crap was what had always held Ireland back: industry, business, finance and real estate was where the real money was.
As he looked into his Guinness he knew his father had been right, his wealth had disappeared as if by magic, not only had his investment portfolio evaporated, the repayments on his pad in Dublin had rocketed as new interest rates came into effect, his year end bonus would be zero, and he would be lucky if he had a job when Christmas came around.
There would be no more cool mid-morning breaks at Starbucks, spending ten pounds for a latte and croissant. It would be goodbye to luxurious Champagne holidays in Spain and Croatia. Goodbye to his Porsche. Goodbye to those leggy Icelandic girlfriends — now forced to holiday at home in the freezing mists of their barren land — casualties of their country’s banks great foray into casino capitalism. And goodbye to his own dreams of becoming another Tom Cruise style market player.
He searched his mind for a solution, a way out, but to no avail, there was little alternative to selling the house, that is unless he rented it, the problem was wealthy tenants were disappearing fast as the Irish nouveaux riches were seeing their fortunes evaporate as fast as Tullamore dew in the summer sun. Liam was not left totally high and dry, the house was paid for, his handsome bonuses had seen to that.
In spite of a twenty percent fall in Dublin property prices the house could still fetch almost two million euros, if he moved quick. The property, next to Phoenix Park, had been bought at less than half that price: five bedrooms, two bathrooms, on the banks of the Liffey and a private jetty.
The house, design by an architect friend, included a car turn-table, a cinema room, under-floor heating, a security system, a fully equipped contemporary kitchen, and luxury bathrooms. It represented all that was expected of a young dynamic trader. A place where he could invite his peers for drinks to admire the view of the garden, the river bank and the jetty, and just fifteen minutes from the city centre by car; a Porsche Carrera, or more leisurely along the Liffey, but boats weren’t his thing.
Only twelve or fifteen months ago he had been surfing the wave of new wealth, flying down to Marbella in an executive jet with the London mortgage broker, Tom Barton, who offered potential buyers of the luxurious apartments being built at the Guadalmina Golf and Country Club development unlimited financing from West Mercian Finance. Luckily for him the deal was not completed, some complications with the legal papers. Before his old fashioned Irish solicitor had completed his laborious communications with the Spanish lawyer West Mercian Finance had crashed. The mortgage market went into deep freeze and neither West Mercian nor the Irish Netherlands Bank was willing to look at a heavy loan on a second home in Spain.
Clancy was a mite too young to remember the strange story of the Irish Netherlands’s previous president, David Castlemain, who had disappeared with his yacht in a Caribbean hurricane. Miraculously, the unfortunate Castlemain was found two years later by turtle hunters, living like a latter day Robinson Crusoe on an uninhabited island off the Cuban coast. Castlemain had lost his head and was now interned in a psychiatric centre near the small town of Enniscorthy, in County Wexford, his nephew Michael Fitzwilliams, whom Clancy had shaken hands with on more than one occasion, was now the bank’s head.
Since that memorable weekend in Marbella, events had accelerated, West Mercian no longer existed and Barton seemed to have vanished. Clancy’s only consolation was the loan on the Porsche and his credit card debt might disappear if the Irish Netherlands went down the tube. That was however improbable and his more immediate problem was to find a quick way to offload his house, then if the worse came to the worse he would perhaps head down to Spain where he could spend a few months in the sun.
The idea cheered him up a little and glancing up at the TV screen, which under any other circumstances would have been tuned to a sports channel, he watched Bloomberg’s afternoon anchorman present the good news of the day: the Fed had not expanded its panoply of extraordinary measures to support the US banking system; no major central bank had announced an emergency cut in interest rates; the US Treasury had not announced it was propping up yet another too big to fail financial institution; there was no nationalization of a European bank; Congress had not come up with another massive rescue plan and the Securities and Exchange Commission had not extended its ban on short selling.
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