He picked a two day old copy of The Sunday Times in the small souvenir shop opposite Denny’s Café. Tony Arrowsmith marvelled at how the newspaper could reach Roseau in just two days. Dominica’s small capital was after all a backwater of the world, even if it was a very charming one. He crossed the road to the café, took a seat under the shade of the gnarled tree that bordered its terrace, ordered a coffee and opened the paper to the financial pages.
The lead story covered the ongoing crisis on a familiar, now distant island; another episode in the endless saga of the Celtic Tiger’s downfall. His memories of the Emerald Isle were not all happy and he felt a certain schadenfreude at its predicament, which to him had been inevitable. The Irish government was about to bail out the Bank of Ireland, a private institution which was not to be confused with their central bank, with the help of a group of investors ― on condition they did not try to flip it once things started to improve.
The state of affairs at the Irish Netherlands Bank was somewhat better, Arrowsmith noted, as unpleasant memories of David Castlemain, its former head, flooded back recalling the events of 2000. Eight years had passed since Tony had settled in Dominica with Olga, where he now enjoyed the privileged life of a man of means. Locals saw him as a wealthy investor and indeed he was.
He then turned to the market news. He was worried like so many others. Trying to preserve his fortune had become a full time job in what was now a seriously dysfunctional world economy. Over the last few years he had prudently invested his capital and had seen a very significant increase in his personal wealth. He was a contrarian and had spread his investments wisely: stocks, treasuries, property and cash. As the result of carefully weighed decisions his investments were still in positive territory, the dotcom bubble and its consequences had taught him a number of unforgettable lessons. The first was to very, very, carefully keep up with market news. The second was to reposition his money as soon as a trend appeared. The third was to spread his investments. Lastly he nurtured a solid cash reserve, in a basket of major currencies, which contrary to the idea promoted by markets was a good strategy.
Arrowsmith was now as expert as any individual investor could get in the arcane movements of stock-markets, which were in effect beyond the predication of even the most sophisticated of computers. He concentrated on New York, carefully avoiding Europe where the spreads, in his opinion, between peaks and troughs were too great. He of course knew it was not sufficient to simply follow the movements of the Dow Jones Industrial, an index which consisted of just thirty publicly owned US companies. As any even modestly serious investor, he knew the importance of the interaction of all key indexes, including the S&P500 and the Nasdaq, which were composed of five hundred and three thousand different stocks respectively.
The Dow Jones, the oldest and considered by some as the best market indicator, was the most traded in blue chip stocks, with the twenty percent of the value of all stocks quoted on the NYSE. Standard and Poor’s Composite Index listed middle sized companies and was seen by market specialists as a more dependable indicator of overall market trends than the Dow, the Nasdaq on the other hand concerned relatively less important but nonetheless key businesses.
Whilst Arrowsmith had avoided speculation in Forex markets, he had boosted his cash reserves to take account of the prevailing economic trends: rising unemployment, falling property and commodity prices, with manufacturing, and more especially the automobile industry, in very dire straits.
His greatest concern was that of inflation after governments had reacted to the crisis with massive stimulus packages. The US had pointed the way, quickly followed by Europe and Japan, then China and India. Banks, insurance companies, auto-makers, steel-makers and retailers all cried out for financial aid, and central banks responded with a flood of virtual money.
To Arrowsmith’s mind it had been an almost perfect demonstration of the domino theory. The markets had crashed one after the other, and the world, as usual, turned to Washington. After two months of being presided by a lame duck leader, the US had put their hope in their new president with his fresh team…who would surely do better than Bush.
In his reverie Arrowsmith’s eyes wandered, taking in the white boats anchored out in the turquoise waters of the bay. It was the best season; blue skies with dry, relatively cool, weather. He narrowed his eyes to occlude the intensity of light and the bright colours.
‘Hi man!’
Snapping out of his daydream Arrowsmith looked up to see Hubert, his garagiste.
‘Hi there, sit down, what’ll you have?’
Hubert took a chair.
‘The car’s ready man, you can pick it up whenever you like.’
‘Great.’
Hubert had sold him a second-hand Mercedes. Cars were an expensive luxury in Dominica and there was no reason to throw money away considering the few miles that could be clocked-up each year on the small island's very limited road system.
‘So, surviving the credit crunch,’ asked Hubert with a smile nodding towards the business section of The Sunday Times that Arrowsmith dropped on the seat beside him.
‘Isn’t everybody?’
‘Yeah, mi daughter Karen is telling me business is bad in the UK.’
Arrowsmith smiled to himself, it was rumoured that Hubert’s car import business was a little shady, though few people cared considering his prices were unbeatable. Arrowsmith knew Karen was a stall-holder in Romford Market and Hubert’s son-in-law ran a garage repair and rebuild business in the East End of London. Many of its cars ended up in the Caribbean. A good number of them linked to insurance fraud and perhaps thievery. Hubert was however careful. Dominica was fortunately far from the UK and tracking down a few stolen cars in the Caribbean was a complicated business. Scotland Yard was more concerned with drug trafficking and money laundering than running after a few vehicles of doubtful origin. As far as the local authorities were concerned they turned a deaf ear to the rumours and Hubert helped sooth their peace of mind by ensuring they always had a good deal whenever they traded in their old models.
Back in the UK the governors of the Bank of England were about to decide on yet another cut in interest rates. Little by little their room for manoeuvre was decreasing as they fought a losing battle to ward off recession. Interest rates had reached a three hundred year low. Gordon Brown’s government was desperate and its only remaining option seemed to be quantitative easing, a fashionable euphemism for the printing of money.
For shrewd investors, like Tom Barton and Tony Arrowsmith, the all-important question was to know at what precise moment the market bottomed out, and then reinvest. But invest in what? Property and especially commercial property seemed like bad bets, the same went for stocks. Emerging markets looked highly risky; commodities uncertain and renewable energy sources seemed forgotten. So what was left? Gold? That was the million dollar question. Beyond that anything could happen. Looking back most recessions had not lasted more than a couple of years, those that had lasted longer were linked to war, notably the Great Depression, which was a consequence of the economic disorders created by WWI, only really ending with the start of Hitler’s war.
As to Barton, he did not fear a depression, and a major war seemed very unlikely. Concerning economics, governments seemed sufficiently sane to be able to come to terms with the problems and together find a solution to avoid the worst. Despite that, a long recession seemed to be on the books and for the very first time on a truly planetary scale.
Nevertheless, Barton remember his history and recalled how on a Sarajevo street, one sunny June morning in 1914, the two deadly bullets fired by a nineteen year old nationalist Serb, son of a postman, were the pretext for war. Austria without realizing it set a chain of events in motion that was lead to one of the most terrible armed conflicts in human history.
Whatever happened Barton resigned himself to the role of a simple onlooker, what other choice was there? The best he could do was to look after his own interests, since in his opinion the crisis did not look as though it would stabilise before 2011 or 2012 at the best. As far the UK middle classes were concerned it would be a bloodbath once the recession started to bite. Ominously, forecasters predicted un-employment would reach three million when the UK government slashed budgets and businesses tighten their belts. A great many consumers would be forced to abandon the life styles they had gotten used to, with the most seriously hit forced to make a drastic cut on all non-essentials ― starting with leisure and holidays.
It was bad for the everyday man, but even worse for the high flyers ― relatively speaking. As another tycoon bit the dust, Kennedy was reminded of fortune’s capricious nature. He shuddered as he remembered his own brush with fate and how the press had hounded him ten years earlier in its never-ending search for blood.
The tycoon, Thomas Burke, now figured as another name on a growing list of those who had fallen victim to the Celtic Tiger’s dramatic demise. Fitzwilliams had been a guest of Burke on many occasions. Kennedy, on the other hand, had only met the Irish billionaire and well-known celebrity at business gatherings or social events, never counting him as more than a business acquaintance.
The tycoon, who had headed one of the largest property investment funds in Ireland, Cassel & Powerscourt Holdings, was found dead in his study. A single bullet in the head had ended his life.
Burke had started out modestly, as a sixteen year-old trainee bank clerk in Limerick City, his home town. Three decades, later surfing the wave of Ireland’s fifteen yearlong property boom, he had become one of the country’s best known personalities.
His was the story of an Irish folk hero, a nationally acclaimed celebrity, a model for all ambitious go-getters, jetting around Europe in his personal Gulfstream. He was part of the Celtic Tiger image, a tribute to free enterprise, and when he wasn’t seen rubbing shoulders with world leaders in Davos or Washington, he made the society columns with his elegant wife, hosting fashionable parties at their vast manor on the outskirts of Dublin, or at one or another of their homes in London or Marbella.
Burke’s personal fortune was estimated at more than two billion euros including the shares in his holding company with its multiple property investments in London, Ireland and Spain.
He was a man whose style had been admired by Fitzwilliams, perhaps it was because of their common Anglo-Irish ancestry, but it could have also been his admiration of Burke’s English wife Penelope, an ex-fashion model, a flawlessness example of womanly beauty, often photographed for fashionable magazines with her two blue eyed children in the setting of one of their luxurious homes.
Burke had had everything a man could hope for, with his ideal family he personified Ireland’s astonishing trans-formation, from the fabled Emerald Isle, better known for its folklore, its rolling hills and country lanes, its picturesque villages and its welcoming pubs, to a modern powerhouse of business and finance. A land that had been forcibly shut-off from mainland Europe by England, its destiny thwarted over innumerable generations by the British crown. Then, when destiny smiled upon Eirean’s Isle, elevating it to a land that was said to enjoy one of the world’s highest living standards, it seemed as if at last its dream of wealth and admiration had come to be.
Burke’s untimely death signalled the end of an era, the end of Ireland’s exuberantly lofty dream of becoming another Switzerland, cocking a snoop to England, immune to the hide bound traditions of old Europe.
His wife had found him dead in a pool of blood, slumped over his valuable antique bureau, in a corner of their elegant manor overlooking the Castleknock Golf and Country Club. Foul play was ruled out by the Garda, in spite of the fact Burke had made a good number of enemies in his vertiginous rise to fame and fortune.
Only days before he had been seen relaxed, dining in the company of his wife and friends at an exclusive club nearby to Saint Stephen’s Green in Dublin. He put an end to his life just days after an investigation was opened by a High Court judge into his investment fund, revealing that he, amongst other things, had illegally pledged shares to finance his property projects.
As Kennedy checked the bags his housekeeper had prepared for his Davos trip, his thoughts dwelt for a moment on Burke’s meteoric rise and fall: he had started out with nothing and had ended up with nothing, taking his life in a moment of despair and leaving a family behind him to face the bitter consequences of his failure.