Turning Point by John Francis Kinsella
Arriving in his more than generously spacious office high above the narrow streets of the City of London, Fitzwilliams, sporting a fresh tan, felt very relaxed after his week of yachting and partying in Poole. He sat down to his morning coffee and picked up the neatly folded copy of the Financial Times his secretary had placed on the coffee table before him. There was not much serious news; trade between rich and poor countries and some nonsense about pig bladders.
He buzzed his secretary.
‘Is Pat in yet?’
‘No, he’s called to say he’ll been in about lunch time.’
Fitzwilliams snorted. Thinks he’s still on holiday, he mumbled to himself putting down the phone.
Over an hour later Kennedy waltzed in looking pleased with himself. His sunburn was looking less vicious, probable due to the fact he had sloped off with a nice-looking Russian blond, one of Sergei Tarasov’s party, present on the Marie Gallant II for the weekend.
‘Been taking care of your sunburn,’ asked Fitzwilliams sarcastically.
‘Fitz,’ he said in a familiar bantering tone. ‘I was showing Anna around London.’
‘I’ll bet you were. Swatting up your Russian!’
Kennedy shrugged uncomfortably.
‘I’m starving,’ said Fitzwilliams moving on to something more to the point. ‘Let’s get something to eat.’
‘Where? Upstairs?’
‘No. The pub.’
The Stone Horse Paper Cow was a short walk from 30 Saint Mary Axe. A quick glance around assured Fitzwilliams they would be safe from lurking City journalists ready to transform a beer and a sandwich into a wild rumour. It was still relatively quiet with many City workers still on holiday.
They ordered beer and sandwiches then seated themselves in a couple of comfortably worn leather arm chairs around a low table in a quiet corner.
‘After all the Champagne and caviar it makes a changed to have an old fashioned cheese and pickles sandwich.’
Kennedy nodded stuffing a ham sandwich into his mouth.
‘Quiet isn’t it.’
‘Holidays.’
‘Hmm.’
‘There’s talk about a liquidities problem in the States.’
‘Will it affect us?’
‘Difficult to say. I mean we’re in the mortgage market.’
That afternoon there was a buzz about a problem at the French bank BNP Paribas. The rumour concerned three of the bank’s funds that had lost over twenty percent of their value during the course of the previous week.
Wednesday morning, August 9, the BNP Paribas formally announced the suspension of three of its funds that had invested in US sub-prime mortgage assets using short-term borrowed money.
‘The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly, regardless of their quality or credit rating,’ the bank’s spokesman announced.
The non-specialist world suddenly discovered sub-prime mortgages: the riskiest kind of property loan, conceived for buyers with low credit ratings, payment difficulties or a poor credit history.
Fitzwilliams immediately called a meeting of his closest advisors to determine the impact a liquidities crisis could have on the Irish Netherlands Bank, which with its broad based retail banking business had recently turned, like its rivals, to non-retail funding for its mortgage products.
It had never occurred to Michael Fitzwilliams, when he sipped Champagne with friends and hangers-on, aboard his luxurious motor yacht during the heady boom years, that the future would be any different, a utopia of greater profits and personal wealth. An observer could have been excused for wondering whether Fitzwilliams had forgotten all he had learnt at the LSE, or if he had simply become blinded by his own cupidity.
In the happy summers of 2006 and 2007, holidaymakers strolling on the quay in Poole gawked at the rich at play on their yachts. Those blessed by fortune included bankers and traders, property developers, estate agents and mortgage brokers. Many lesser mortals certainly asked themselves where they had gone wrong, how come they had missed the gravy train in the speculative years of the property boom?
2008
February
He buzzed his secretary.
‘Is Pat in yet?’
‘No, he’s called to say he’ll been in about lunch time.’
Fitzwilliams snorted. Thinks he’s still on holiday, he mumbled to himself putting down the phone.
Over an hour later Kennedy waltzed in looking pleased with himself. His sunburn was looking less vicious, probable due to the fact he had sloped off with a nice-looking Russian blond, one of Sergei Tarasov’s party, present on the Marie Gallant II for the weekend.
‘Been taking care of your sunburn,’ asked Fitzwilliams sarcastically.
‘Fitz,’ he said in a familiar bantering tone. ‘I was showing Anna around London.’
‘I’ll bet you were. Swatting up your Russian!’
Kennedy shrugged uncomfortably.
‘I’m starving,’ said Fitzwilliams moving on to something more to the point. ‘Let’s get something to eat.’
‘Where? Upstairs?’
‘No. The pub.’
The Stone Horse Paper Cow was a short walk from 30 Saint Mary Axe. A quick glance around assured Fitzwilliams they would be safe from lurking City journalists ready to transform a beer and a sandwich into a wild rumour. It was still relatively quiet with many City workers still on holiday.
They ordered beer and sandwiches then seated themselves in a couple of comfortably worn leather arm chairs around a low table in a quiet corner.
‘After all the Champagne and caviar it makes a changed to have an old fashioned cheese and pickles sandwich.’
Kennedy nodded stuffing a ham sandwich into his mouth.
‘Quiet isn’t it.’
‘Holidays.’
‘Hmm.’
‘There’s talk about a liquidities problem in the States.’
‘Will it affect us?’
‘Difficult to say. I mean we’re in the mortgage market.’
That afternoon there was a buzz about a problem at the French bank BNP Paribas. The rumour concerned three of the bank’s funds that had lost over twenty percent of their value during the course of the previous week.
Wednesday morning, August 9, the BNP Paribas formally announced the suspension of three of its funds that had invested in US sub-prime mortgage assets using short-term borrowed money.
‘The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly, regardless of their quality or credit rating,’ the bank’s spokesman announced.
The non-specialist world suddenly discovered sub-prime mortgages: the riskiest kind of property loan, conceived for buyers with low credit ratings, payment difficulties or a poor credit history.
Fitzwilliams immediately called a meeting of his closest advisors to determine the impact a liquidities crisis could have on the Irish Netherlands Bank, which with its broad based retail banking business had recently turned, like its rivals, to non-retail funding for its mortgage products.
It had never occurred to Michael Fitzwilliams, when he sipped Champagne with friends and hangers-on, aboard his luxurious motor yacht during the heady boom years, that the future would be any different, a utopia of greater profits and personal wealth. An observer could have been excused for wondering whether Fitzwilliams had forgotten all he had learnt at the LSE, or if he had simply become blinded by his own cupidity.
In the happy summers of 2006 and 2007, holidaymakers strolling on the quay in Poole gawked at the rich at play on their yachts. Those blessed by fortune included bankers and traders, property developers, estate agents and mortgage brokers. Many lesser mortals certainly asked themselves where they had gone wrong, how come they had missed the gravy train in the speculative years of the property boom?
2008
February