BANKERS & OLIGARCHS
a novelised fresco of the early years of the 21st century
by
John Francis Kinsella
The rich have become richer, and the poor have become poorer; and the vessel of the state is driven between the Scylla and Charybdis of anarchy and despotism
Shelley 1821
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Barton opened his eyes, it took some moments to figure out where he was. Daylight filtered through and around the thin curtains. He looked at his watch; it was just after ten, in the morning it seemed.
It took some moments more to recall he was in Bogota. Colombia. He swung his legs out of the bed and sat there trying to recall the reason for being in that South American city. It was a long and confused story.
That stunned feeling that had invaded him over the previous days, pulling him into a black abyss, had faded, replaced by one of space, distance, detachment. It was if he had arrived in a kind of limbo, perhaps awaiting judgement. He briefly wondered what the others were doing: Pat, Michael, John Francis....
He wondered whether he was some kind of rat. Then pulling himself together, he abandoned his sombre thoughts, dressed and found his way to the breakfast room. There he ordered coffee, in English, from the pretty Colombian waitress who invited him to help himself from the buffet. He was alone, the other guests already eaten, they had plans for the day, week, which was more than he could say for himself.
On a table next to the fruit juices several newspapers were laid out; local dailies, all in Spanish. Glancing at the headlines Barton was relieved to discover his relatively sketchy knowledge of the language still seemed workable.
He had arrived in Bogota the previous evening, a couple of hours behind schedule. Bad weather conditions had delayed the connecting flight at Barajas, Madrid. The taxi had taken him to the Villa de los Indios, a boutique hotel for the discerning tourist: small, stylish and discrete according to the brochure given to him by the driver, evidently used to visitors who arrived tired after a long flight and a little lost in a strange new country. A simple glance told the taxista where they came from and the budget they could afford.
He looked at his phone, there was no connection. He remembered he had removed the SIM card earlier the previous day in Zurich. It had seemed like a good precaution. Getting a local card would be one of his first priorities.
After a light breakfast and a couple of coffee refills he felt better. From what he could decipher the headlines in Bogota Times concerned the ongoing negotiations between the Colombian government and the Farc. Then there was a report on a terrorist attack in Paris. He turned his attention to the financial pages where the news was devoted to the ongoing economic turmoil in Russia and the price of oil.
After a quick visit to his room he headed out to make acquaintance with limbo. He had never been to South America, the Caribbean yes, but the Hispanic continent no. Once he got his bearings he could start to think about plans, at least for the immediate future … the next few days.
Kennedy had not chosen a good moment to cross the border. More than a million people were expected at the crossing over the four day Autumn Festival, the most important holiday in the Chinese calendar after their New Year. That day the traffic peaked with nearly eight hundred thousand on the road into and out of Hong Kong.
He revelled at the idea of being an anonymous European traveller in the Chinese throng. It would be a unique experience, as though he was some kind of an adventurer, a latter day Marco Polo, venturing into a strange and incomprehensible foreign world. That weekend it seemed all of Hong Kong was heading for Shenzhen, a Chinese Special Administrative Region, and Canton, as dense crowds of mainlanders flowed in the opposite direction to Hong Kong.
Equipped with his passport, visa and a light travelling bag Pat made his way to the Hung Hom MTR East Rail Line station, a short walk from the Peninsula, where he took the metro in the direction of Lo Wu, a journey of about forty minutes. Kennedy unlike Fitzwilliams - who would not be seen dead on the underground, was not averse to using public transport, it offered him a view of the real world, the world unseen by those who travelled in chauffeur driven limousines.
The MTR surprised him by its cleanliness, modernity and apparent efficiency in comparison to the antiquated District and suffocating Piccadilly lines he frequently used in London.
On leaving Hung Hom there were few passengers, but as the train left down-town Kowloon and entered the New Territories more and more passengers piled on, loaded with bags, gifts and foodstuffs. He had been forewarned the trains would be crowded and waited until ten in the hope the rush had died down before leaving. His effort had been in vain and in spite of the warning he was surprised by the crowd.
Arriving at the border terminus he was pushed, shoved and elbowed by the crowd as they piled off the train and rushed along the platform towards the exit. Pat stood to one side as best he could waiting for the bustle to die down; he was out of luck, looking to his left he saw another train already pulling into the station. Reluctantly he joined the throng pressing up the stairway to the footbridge that crossed the muddy stream that marked the border between Hong Kong and the rest of China, in the direction of the frontier control area.
He was propelled by the crowd towards immigration, where with some effort he bifurcated to a channel marked foreigners. First came the Hong Kong passport control for those departing, then the Peoples Republic control point for arrivals. Twenty minutes later he found himself standing outside on an esplanade, facing the China Railway station in Shenzhen. He was in China, and for the first time.
After finding his way to the metro station and puzzling over the map he took the Luobao Line to the Convention and Exhibition Center station, a short walk from the Ritz-Carlton on Fuhua San Road. If he liked to rub shoulders with the crowd, he did not like sharing their hotels, as for their restaurants his cast iron stomach was his passport to culinary adventure.
It was midday and being in no particular hurry, Kennedy, armed with a city guide headed for the Mixc shopping mall which he thought would be a good starting point for his tour of discovery. What surprised him most was Shenzhen, apart from the absence of hills, was not that different from Hong Kong, newer and brasher, with gridline planning, but fewer foreign faces. The pavements were broad and thronged with crowds going about their business. A closer inspection told him they were for the most part different from those of Hong Kong, less stylish, more wary of the world around them.
He paused, a metal cage on lay the ground before him, a kind of shoe box shaped bird cage, it required a double take to confirm it contained a very large rat. Its owner accosted the passers-by with a continuous incomprehensible harangue. In his hand he held a plastic wire and what looked like a table lamp switch. Seeing Kennedy’s curiosity he point at the rat and pressed the button, the rodent leapt into the air and the crowd pressed past as if nothing had happened. The panhandler’s trick was to send an electric shock through the animal in an effort to extract a few coins from the indifferent crowd.
Kennedy paused, not knowing whether to be amused or shocked, then continued on his way marvelling at the roads, traffic, shops, hotels, office and residential towers, all of which recalled the familiar images he had seen of China’s great cities like Shanghai. The giant Mixc shopping mall in itself was essentially not very different from those he had seen in the Hong Kong, luxury boutiques as far as the eye could see: Cartier, Dior, Louis Vuitton, Prada, Tiffany & Co and Balenciaga, amidst a bewildering kaleidoscope of Chinese signs no doubt encouraging shoppers to spend.
How could those millions - and millions they were - buy Vuitton handbags and the like? Shenzhen with a population of eight million had already surpassed Hong Kong in numbers, a staggering transformation considering it had been a small, poor, village when Mao departed to his Communist paradise. There was no visible trace of the global financial crisis, and if there was a Chinese bubble in the making it was definitely not visible in the Mixc Shopping Mall; making the doomsters’ prediction of a slow down for 2011 seem exaggerated.
If anything Kennedy was a realist when it came to economics and everything he had seen up to that moment belied the imminent eventuality of a crunch of any kind in China. Perhaps their banking system was flawed, perhaps there was a mass of bad debt out there, but given the country’s massive reserves and its single party government, its leaders would ensure the right levers were pulled at the right moment.
Deep down Pat, like many of those who succeeded in life, was an authoritarian and could not help admiring a system that was not shackled by the endless squabbling of politicians that inevitably led to the kind of situation in which the UK and many other Western countries were mired.
Kennedy did not linger any longer than was necessary: the message was crystal clear, and after consulting his guide headed for the ancient Hong Fa Temple. That evening after a visit to Shekou, where he ate a steak, he returned to the Ritz-Carlton for an early night.
The next morning he took a taxi to the Shenzhen Rail Station; destination Canton’s Guangzhou East. The high-speed shuttle service departed every ten or fifteen minutes. He was shown aboard the train by a uniformed hostess and took his place in the first class wagon. Opposite him was seated a Chinese girl engrossed in her mobile phone.
As soon as the train pulled out the girl looked up, almost surprised to see Kennedy, the only European in the wagon. She smiled and placed her phone on the pull down table.
“Are you going to Guangzhou?”
“Yes, Guangzhou East,” he replied mangling Canton’s Chinese name.
There was a pause.
“How long does it take?” Kennedy continued.
“About one hour. Where are you from?”
“Ireland.”
“Oh. Aierlan.”
Kennedy nodded. The girl was attractive, dressed in a light grey business suit, a Vuitton brief case and handbag by her side.
“Are you on business?”
“Yes, two or three days, then Shanghai.”
“I see. What’s your business?”
She doesn’t beat about the bush, thought Kennedy, a little surprised by her directness.
“Banking.”
“Oh.”
“And you?”
“I’m going home. To see my family for the Autumn Festival holiday.”
“Your husband?”
“No my parents. They live in Guangzhou.”
Kennedy glanced out the window as the dreary landscape marked by factories and housing developments flew past.
“What do you do?” asked Kennedy keeping up the conversation.
“I’m a lawyer with firm in Hong Kong. We help foreign firms with Chinese business law.”
“Is it a good business?”
“Very good. Chinese law is complicated.”
They continued to chat and the girl presented Kennedy with her business card.
“Lili is my first name Wu is my family name,” she explained pointing to the characters.
Kennedy obliged with his own card.
“Pat Kennedy,” she said reading his name aloud. “Senior Executive Director. INI Banking Group. That’s in London.”
“Yes. London, Moscow, Amsterdam, Dublin ….”
“Where are you staying in Guangzhou?”
“At the Pearl River Hotel.”
‘That’s nice. Is it your first visit?’
“Yes, my first visit to China.”
“Huanying, huanying. That means welcome,” said Lili.
“Is it in the centre?”
“There are many centres in Guangzhou. But as its name suggests it overlooks the Pearl River.”
The hotel was situated in an historic area of the city on an exclusive island that had once been the home to rich merchants.
“Where do you live?”
“In a district called Ersha Dao,” she replied. Then seeing his blank look added, “On the Pearl River, not to far from Shamian Island.”
It meant nothing to Pat.
“Do you know anybody in Guangzhou?”
“No. To be honest I’m discovering China.”
“Oh,” she said perplexed, wondering why a high ranking City banker knew nothing about her country.
Before she could continue the public speaker system interrupted her train of thought with the announcement of their imminent arrival in Guangzhou. Kennedy checked his watch surprised at how fast the time had gone. Looking outside he saw the suburbs of the city already flashing past.
“Are you taking a taxi?”
“No I’ll take the underground.”
“I wouldn’t do that, the city is big and complicated. Take a taxi. I’ll show you where.”
Kennedy nodded in approval.
Lili was taller than most of the girls he had seen in Hong Kong. She was attractive and her openness had intrigued him. It was a pity he couldn’t talk with her more.
She guided him through the crowd and quickly put him in a taxi with instructions to the driver.
“Zaijian,” she said. Then after a pause added: “If you’d like me to show you the city tomorrow, I can call you at your hotel?”
Kennedy nodded approvingly and waved goodbye as the taxi pulled out in the traffic.
As Lili had told him the hotel was situated on the banks of the Pearl River and from his twenty fourth floor suite he had a splendid view over the broad river and the south of the sprawling city.
The strangeness of everything in China astonished him and even though he had experienced a foretaste in Hong Kong this was different. It was as if he had stepped into a strange future, far different from that of America. Pat had been a science fiction fan as long as he could remember, first it was comic books, then through his teenage years a solid diet of Galaxy and Fantasy Science Fiction. The Middle Kingdom recalled his visions of weird and wonderful worlds to come.
After lunch in the coffee shop he set out to explore the strange new world, starting with the environs of the hotel. It was situated on Shamian Island, clearly a very exclusive residential district dating from pre-Revolutionary days, and visibly it had recovered its past status. He enjoyed the fine weather as he strolled along the tree lined streets, past elegant stone town houses, an obviously very smart restaurant, and one or two chic boutiques. Arriving at a river or canal, which defined the northern limit of the island, he crossed the stone bridge to a broad nondescript traffic laden avenue. He checked his map whilst waiting for the red light, then crossed, entering what was obviously a more typical residential area where the architecture consisted of irregular, grimy, unremarkable rather run-down buildings and a busy street market.
He wandered through the market stopping at stalls overflowing with vegetables, fish, meat and unidentifiable foodstuffs. Then after a left and right he found himself facing a down-town Holiday Inn and an arcade that led to what was evidently one of the main shopping areas of Guangzhou, quite unlike Shenzhen, or Hong Kong. Two or three storey buildings, shops and eateries of all kinds, one after the other, but no bling Kowloon style brand name boutiques, although many offered more popular brands of the likes of Adidas and Benetton. A dense crowd of shoppers moved in all directions, carrying bags, eating take-outs of all kinds. Kennedy could not help remarking he was a head taller than most as he moved through a uniform sea of black heads.
Arriving in a large crowded plaza giant screens flashed familiar publicity spots and newscasts, he noted a McDonald’s, a KFC and other well-known American fast-food outlets. The façades of the buildings were covered with a wall of neon lights and illuminations, all competing to convey every imaginable kind of consume message, in Chinese.
He found himself in a parallel world, which confirmed his earlier impression: it resembled a kind of Times Square, but at the same time it was totally different. He went into the McDonald’s, joined the queue of exclusively young people and ordered in English by pointing to the pictures of set meals. He sat down to eat and rest his feet. The customers were Westernised in their clothes, dressed-down fashionable, as would be expected in a London McDonald’s, with the reserve of those gathered at a watering hole.
Kennedy made his way back to the hotel and flopped down. He like so many others before him was dazed by the crowds, the movement and the difference. Hong Kong should have prepared him for his meeting with China, but not entirely, it was too Western. His mind had been prepared for the difference and the crowds, but what he had not anticipated was the scale and how it was repeated, first Hong Kong, then Shenzhen, and now Guangzhou.
If he drew a circle, about one hundred miles in diameter, around the Pearl River Delta, an area somewhat smaller than that of Wales or Massachusetts, it would englobe Hong Kong, Shenzhen, Guangzhou, Macau, Foshan, Dongguan and other cities. A megalopolis of fifty five million people - China’s leading economic powerhouse. A quick check on Wikipedia showed that the GDP of the Province of Guangdong was well over half of India’s. He wondered how many more similar such megalopoli were scattered across China.
The economic power of Southern China was nothing new. In the sixteenth century the Portuguese had described Canton as rich in agriculture and fisheries, producers of rope, cotton, silks and pearls, possessing iron ore deposits for the manufacture of pots, nails, arms and metal goods of every description. Labour was skilled and abundant, and merchants had exported a profusion of goods under the control of a well organised system of administration composed of powerful mandarins.
Kennedy had travelled across Europe, Russia, the USA, the Caribbean and South America, all different yet the same. In China the feeling was that of another world, familiar, yet so very different.
He dozed off and slept for an hour or more. When he awoke it was dusk and the lights of the city twinkled beyond the broad river where boats moved slowly transporting their cargoes to and from the open sea fifty miles to the south.
He sat on the edge of the bed, zapped on the television and as he wondered what to do next when his mobile rang. He did not recognise the number.
“Hello. I hope I’m not disturbing you. It’s Lili. We met on the train.”
“Oh yes. Hello Lili.”
“I was wondering what you planned to do tomorrow. Perhaps I could show you some of the sights of Guangzhou?”
The surprise was complete, but Kennedy quickly found his voice.
“Well I’ve got nothing special planned apart from a little sightseeing. Yes, that would be very nice.”
“Fine, I’ll meet you in the hotel lobby at say eleven. How does that sound?”
“Great.”
“So, I’ll see you tomorrow. Have a good evening,” she said and rang off.
Kennedy pleasure was immense; tomorrow he would have a guide and a pretty one at that. He bounded off the bed, reinvigorated and suddenly feeling hungry. It was time to shower and explore the hotel.
The fact that Pat Kennedy was still in love with Middle Kingdom was more to do with Lili than the exploits of modern China. He was in the honeymoon period that all those who discover a new country experience. Whatever Pat’s feelings for Lili he was not naive, he had glanced behind the scenes and had discovered China’s other face. A face that was not so very different to that of the UK’s a century or so earlier, where children worked ten hours a day, where miners and steelworkers slaved, where small holders struggled to make ends meet, and where after the introduction of mass production millions laboured in wretched factory conditions for wages that barely allowed them to exist.
In twenty first century China there were blighted industrial regions that resembled certain parts of contemporary Britain, where many of Her Majesty’s citizens lived in no-hope misery, where generational unemployment was commonplace and contrary to popular belief not all of them watched footy on the latest HD TV with a can of beer at the ready.
Kennedy’s friend, John Francis, could have explained the effects of rapid, poorly planned, industrialisation and its negative effects. What was good for capitalists out for a quick buck was not the same for those who would live in the rust belts that were left when industry moved on.
China’s phenomenally rapid economic leap forward, which had promised an Asian century, was now beginning to show the first signs of the ills industrialisation had brought to Manchester, Sheffield, the Ruhr, Pittsburgh, Detroit and more recently the industrial heart of post-Soviet Russia. Everything moved faster, including the decline of China’s heavy and state owned industries.
After decades of spectacular growth China was slowing down and would have to adapt to the conditions of a more mature economy. The dash for wealth and prosperity had run its course. Countless millions of peasants had been left behind, stuck in the trap of rural poverty. Those who had made the quantum leap to modernity were discovering that growth fuelled by massive credit was unsustainable. They, like others elsewhere in the world, would learn that ever rising living standards were a chimera.
Large parts of China’s industrial landscape were beginning to look bleak, an ecological nightmare. A crippling legacy of disease provoked by industrial pollution and unsustainable debt, the cost of which would fall on the shoulders of future generations. Who would pay for the clean up? Who would care for those whose health was destroyed? Who would repay the debts?
*
A question academics like John Francis frequently asked was: How long would the West continue to rule?
It was a difficult one, considering a recent challenger for the title: Japan, had failed to achieve the destiny promised by economists and crystal ball gazers in the eighties. Instead of dominating the world’s economy it had contrary to all predictions plunged into more than two decades of stagnation and decline, aggravated by a natural disaster of huge proportions.
The next postulant, China, was now facing its own problems. Problems that dwarfed for example those of the EU, a union of democratic nations with open economies, which in spite of its ongoing economic difficulties, and the threat of a Brexit, enjoyed the kind of prosperity and freedom most Chinese could only dream of.
With the sudden and unexpected rebound of the USA, China’s hope that it would become the world’s leading nation was beginning to look like a vain hope. Its problems were multiple, starting with its one child child policy which was beginning to take the form of a demographic time bomb. As its population aged China would be confronted with the kind of problems experienced by Western societies: environmental protection, pollution, health, pensions and care for the elderly, but on a gigantic scale.
China’s National Academy of Sciences calculated that air pollution, caused by coal fired power stations, would reduce life expectancy by an average of five-and-a-half years for the five hundred million people living to the north of the Huai River, situated in central China between the Yellow River and Yangtze River. In addition industrial poisoning was present on such a vast scale that millions of Chinese would die prematurely and the regions in which they lived would be transformed into a toxic wasteland.
In a sense China’s development resembled that of the Great Leap Forward, a blind rush to development, from which the fallout out would spell disaster for countless millions of anonymous Chinese.
Beyond China’s extraordinary achievements lurked a hidden cost, an unimaginably heavy toll to be paid by its population. Once world beating industries, such as Rongsheng Heavy Industries, the world’s largest private shipbuilder, struggled with overcapacity, falling demand and debt, a model reminiscent of the Soviet Union’s failed industries. The state picked up the bill, squandering its reserves on unrealistic plans and obsolete industries, pursuing policies that had proven so infructuous in the UK, East Germany, Poland, Japan and Korea.
Fitzwilliams was used to market surprises and remembered how in early summer 2011, just when he was congratulating himself on his bank’s almost miraculously escape from the economic crisis that had struck in 2008, how a new and unforeseen shock had jolted him out of his complacency.
The bank had emerged not only unscathed from the chaos of the economic crisis, but was reinforced and enjoying the warm glow of success as the INI Banking Group went about developing its interests in Russia and Asia. In July 2011, banking shares plunged, then in August they hit depths unexplored since the Lehman disaster. More than sixty billion pounds were wiped off the value of UK companies in the worst one-day stock market crash since 2008 with fears of a new credit crunch as banks struggle to raise funds.
Amongst the hardest hit was RBS, plunging eleven percent, with Barclays down by over eleven and Lloyds by nine. The plunge was provoked by the rumour that an unnamed cash strapped eurozone bank had tapped an emergency ECB lending facility for five hundred billion dollars, and amongst other unconfirmed reports was the news that American branches of European banks were repatriating dollars to support their parent companies.
Asian Pacific markets followed the trend with the Nikkei down over two percent, the Kospi over four percent and Australia’s main index nearly three. In New York the stock market gyrated wildly following Standard & Poor’s decision to downgrade the country’s long-term credit rating. Not since 1928 had the market seen such large fluctuations over such a short period of time.
The degree of concern was very real, if the American economist, Nouriel Roubini, was any reference. He tweeted: when banks & deposits arent safe & govs are bankrupt time to buy canned food, spam, guns, ammo, gold bars & rush to your mountain log cabin.
Marc Faber, otherwise known as Doctor Doom, said financial conditions were worse than they were prior to the crisis in 2008. Faber, the Hong Kong based investment manager, publisher of ‘The Gloom Boom & Doom Report’, a monthly musing about the state of global economics and geopolitics, added the political system had become completely dysfunctional.
Fitzwilliams, a hard headed banker, neither pessimist or optimist, saw Faber as a kind of Grinch, who in spite of his all pervading pessimism was right when he said fiscal deficits had exploded and the political system completely dysfunctional.
However, the banker did not panic, he sensed it was one of those summer flash crises that would disappear as fast as it had appeared. Contemplating his annual break he suppressed his unease as market volatility rose like mid-August temperatures, hoping the Arab revolution that was spreading across the southern Mediterranean shores was not a bad portent for things to come.
The price of gold was a sign that seemed to confirm Faber’s point of view as it hit a record high of $1,826 an ounce, rising by more than a fifth in a month, a sure indication that faith in paper money was plunging. It did little for Fitzwilliams bank, after all he couldn’t transform all of t