16 November 2005
Two weeks after I was appointed editor
My first meeting with Tony Blair in Downing Street. I’ve been doing some background reading on the Blair years, thanks to a colleague lending me a copy of The Insider, the private diaries of Piers Morgan, the roguish ex-editor of the Daily Mirror and News of the World. Piers appears to have enjoyed considerable sofa time with TB, a mildly incestuous relationship which later soured over the Iraq war. I had resolved to keep my distance from the government, but Downing Street called seeking a meeting within days of my appointment. Now I am sitting opposite Blair, flanked by his bald middle-aged PR flak-catcher Dave Hill.
“Thank you for seeing me, Prime Minister.”
TB: “Call me Tony.”
LB: “That’s OK, Prime Minister.”
TB: (persistent) “Call me Tony . . . I mean, we do know each other.”
I remind the PM we’ve only met once before, in the summer of 1998 at the UK ambassador’s residence in Brussels. Blair looks a tad deflated.
I ask the PM about the government’s defeat in Parliament a few days ago, when MPs voted down proposals to allow terrorist suspects to be held for 90 days without charge.
Labour holds a 66-seat majority. This was the government’s first Commons defeat. What went wrong? Blair says after eight years in power the Labour party has become “ungovernable”.
TB: “There are three camps. The hard left and disaffected; New Labour; and the rest who are simply confused.”
LB: “So where would you put Gordon Brown?”
TB: “He’s New Labour, I think. At least, he says he is. You better ask him.”
No worries, Prime Minister, I’ll be sure to do so at the first opportunity.
Blair turns to the FT. How much do I intend to change things? My first reaction: none of your goddamn business.
My second response: play for time. I tell him the FT has a consensual culture. Any new editor needs to tread carefully.
“In that case,” says the architect of New Labour and three-time general election winner, “you won’t get anything done.”
Blair was dead wrong on invading Iraq, but on the FT and change he’s dead right.
Wall St — as credit markets tightened and the system creaked
First stop is Dick Fuld at Lehman Brothers. The Gorilla of Wall Street is wearing a starched white shirt without a suit jacket and is giving me the Big Stare. (I had the nerve to ask him about his balance sheet and his bank’s exposure to mortgage-backed securities and other “counterparties” like hedge funds.)
“I’ve got $100bn of collateral to deploy,” says Fuld, jabbing his finger towards my face, “we’re whipping hedge funds like dogs.”
In Davos this year, at a lunch in a hotel room with walls covered with mink-like fur, Fuld promised he was going to “take some money off the table”. Rough translation: I’m going to be more responsible. Lehman has been a huge investor in real estate, betting that prices would continue to rise. They were then engaged in bigger, riskier trading games off this real estate base. This is a new version of the Greater Fool Theory, which states that people can make money by buying securities, whether or not they are overvalued, by selling them for a profit at a later date. The gamble is that there will always be a bigger fool willing to pay a higher price. Fuld is no fool but he’s gotten greedy. Now he wants help from the Federal Reserve, through lower interest rates.
“The Fed is way behind the curve,” he tells me. As a parting shot, I asked Fuld how he squared his own prospective $100m-plus remuneration package with Lehman’s expected loss in the second quarter. He gave me a mouthful. I never saw him again.
Early breakfast next day with John Mack, the embattled CEO of Morgan Stanley. He confirms — as I suspected — that things are a lot worse than everyone’s letting on.
Speaking in the lilting tones of his native North Carolina, Mack says the peak of the credit boom last summer was “like getting high”; now the downer’s arrived. “We’re dealing with 10 LTCMs,” he says, an ominous reference to Long Term Capital Management, the super-leveraged Greenwich-based hedge fund which had to be bailed out by Wall Street banks exactly a decade ago.
At Goldman, Lloyd Blankfein, the one-time precious-metals trader, is hoping for the best but planning for the worst. The son of a postal clerk, Blankfein grew up in the Brooklyn housing projects and went to a roughhouse state school. His smarts took him to Harvard and Harvard Law School.
Lloyd has always offered an oblique perspective on life, musing in an ironic tone and often drawing on historical analogies. He likes to remind colleagues: history is current. Today, he’s turned to the Bible to explain what’s going on in the financial markets. “It’s like three days of rain before the Great Flood. It’s bad, but it could get a lot worse.”
What he means but does not say is that there is no way people could guess on Day Three what actually happened on Day Forty. They were preoccupied with that day’s downpour; after 37 more days of rain Noah would discover the world had been wiped out. Unlike Lehman, Goldman was aggressively hedging at both the short and long ends of the market. I missed that story and the bigger picture.
Berlin, June 2008
Angela Merkel’s manner is sachlich — businesslike, with an attention to facts not opinions. Tim Geithner, US Treasury secretary, once said privately that Merkel was the only leader during the financial crisis who was “numerate”.
Her message carries an unmistakable moral authority: it is time to challenge the dominance of “Anglo-Saxon” thinking and the wholesale deregulation of finance. The banks don’t seem to know what product they’re selling or how to value it. Then her political point: “When things go wrong, suddenly the state is back in favour.”
We turn to America. Merkel is impressed, if puzzled, by Barack Obama’s rock star status. “Who is he? What does he stand for?” She is wary of his Republican opponent Senator John McCain who is “worryingly Cold War”.
The bigger point, she says, is that Hillary Clinton’s defeat shows that the US political landscape is shifting, profoundly.
A prescient remark which pointed to American voters’ rejection of the establishment candidate. This would be true in 2008 with the Obama victory, but even truer with the election of Donald Trump.
After 45 minutes, the conversation is over. Merkel agrees, slightly reluctantly, to a photo-opportunity with the editor. An aide encourages Merkel to engage in small talk. “I have nothing to say,” she responds. Then, as the cameras flash, she asks how Gordon Brown is doing.
LB: “He’s struggling because of the economy.”
AM: “Dann kommt Cameron. Then [David] Cameron’s coming [to power].”
Unprompted, Merkel lambasts Cameron’s decision to withdraw the Conservative party from the centre-right European People’s party in the European parliament. Team Cameron have insisted to me this was a sop to Eurosceptics, but Merkel says it gives succour to people who want to “tear down” Europe.
Her parting shot: she will have little to do with Cameron for now, apart from matters like environmental policy.
Cameron argued that to remain inside a federalist EPP grouping in the European parliament would have been hypocrisy. He did not grasp the importance of the centre-right “family”. Merkel would later tell me that the EPP decision marked the beginning of the end of the Conservative party’s support for EU membership. Yet Cameron and George Osborne continued to believe that Merkel would help them out of scrapes, including the biggest scrape of all: the Brexit referendum.
In 2009, the FT’s reporting from Dubai incurred the wrath of the authorities, prompting an unusual intervention by telephone from Prince Andrew, then the UK’s trade envoy, to my office.
HRH the Duke of York: “Your man in Dubai, Simon Carr, is causing a lot of trouble.”
LB: “You mean Simeon Kerr.”
HRH: “Yes, Simon Kerr . . . Look, I’m just passing on a message . . . your man is causing a lot of problems.”
LB: “Have you read any of Simeon’s articles from Dubai?”
HRH: “No. Of course not.”
LB: “Well, I’ve read every word that Simeon Kerr has written about Dubai and I don’t see a problem . .. ”
The conversation ended shortly thereafter.
1 February 2009
After weeks of low-key diplomacy, I’ve landed an interview with China’s premier Wen Jiabao via Madame Fu Ying, Beijing’s ambassador in London. Madame Fu is a silky operator with a cast-iron grip who served as an interpreter to Deng Xiaoping, the great reformist Chinese leader. Her role fits into Beijing’s charm offensive, a decade-long effort to play down the threat associated with China’s rise.
The interview is due to take place in the Mandarin Oriental hotel in Knightsbridge. Over lunch, Madame Fu sketched a portrait of Wen, 66, the trained geologist turned politician. He is apparently “a very nice man” who loves to read Adam Smith’s Theory of Moral Sentiments and quote ancient Chinese poetry. He arrives on time, a sprightly, dapper figure who greets me with a friendly smile. He has been up since dawn and even jogged around Hyde Park. “I want to make clear here that I will be most sincere in all my answers, but I may not tell you everything,” says Wen, pointing an index finger at us.
Wen’s public image at home is that of a self-effacing, frugal man (though stories would soon emerge that his son, Winston, had made a fortune as China liberalised its economy). Today, he’s modestly dressed in a dark suit, white shirt and greyish tie. His message is that the Chinese government is spending untold billions on infrastructure and tax cuts to boost the domestic economy. China is doing its bit to revive demand; now other countries must respond too.
My response is that people have been telling Beijing for 50 years that only capitalism will save China and now — hey presto — China must save capitalism. The premier demurs. I try another angle. Does he accept that, while the crisis was made in America, China also indirectly contributed because of its excessive savings? Wen, stiffening, talks about “confusing right and wrong when people who have been overspending blame those who lent them the money”. He cites a famous proverb in China about Zhu Bajie, a fictitious character in the 16th-century Chinese fable Journey to the West. Zhu always blames others who try to help him.
When the young interpreter translates the character of Zhu Bajie as a “pig”, a senior Chinese official stands up and says flatly, “Wrong translation.” The interpreter flushes with embarrassment. A brief pause, and Wen continues.
At the end of the interview, I try to show off by quoting a passage from The Theory of Moral Sentiments and Wen smiles approvingly. After a final formal handshake, he leaves for meetings with Tony Blair and David Cameron, who’ve been waiting patiently in the wings. Suddenly Madame Fu appears out of nowhere, tugging my sleeve and remonstrating, “No pig, no pig.” For a moment, I am baffled. Then it dawns on me: Premier Wen appears to have implied America is “a pig”. Maybe not a greedy pig. But, still, a pig. This could spell a major diplomatic incident. My initial response is to play for time. But Madame Fu is insistent, “Please, no pig!”
Back at the office, the Chinese embassy has already made several calls, warning that pigs must not appear in tomorrow’s newspaper. I hate being muscled. My response is we need to read the transcript and check out exactly who this character Zhu Bajie is. After intensive research, translation and discussion, I reach a judgment: Zhu was in fact a self-righteous individual who magically assumed many identities, including a pig. So, while we will keep the reference to Zhu in our interview, pigs will not fly in the FT. On this day or any other day.
16 June 2013
The Russian ambassador Alexander Yakovenko called yesterday to ask if I would join a small group for dinner with Vladimir Putin at the embassy. I assumed it was a hoax. Apparently not. Russia’s strongman, back in office as president, is interested in meeting “experts” ahead of this week’s Group of Eight meeting in Northern Ireland.
I am placed to Putin’s right, next to Sergei Lavrov, the lugubrious longtime Russian foreign minister. Caviar and vodka are served. Putin opens with a bland statement in Russian before zeroing in approvingly on Stephen King, HSBC’s chief economist, and his newly published book, When the Money Runs Out: The End of Western Affluence. Putin ignores everyone except King, who is purring loudly.
After 15 frustrating minutes, Lavrov turns to me. “Speak! This is a hard country . . .”
After catching Putin’s eye, I intervene in German in a bid to impress the former KGB agent once stationed in Communist Dresden: “Mr President, what you must understand about Europe is that we are all German these days. All European countries are adjusting their economies on German terms: Spain, Italy, Greece, Portugal — even the Baltic states . . . ”
VP: “Why do you mention the Baltic states?”
I start to reply but the conversation quickly moves on to the eurozone sovereign debt crisis and the transatlantic relationship and energy. Putin declares at one point that he is delighted to speak freely without journalists present. This could be a calculated insult to me and John Micklethwait, editor of The Economist; more likely a rare oversight.
Mickle asks Putin about America’s shale-gas revolution and its impact on world energy prices, especially Russia’s oil and gas output.
VP: “Shale gas is temporary phenomenon.”
Guests nod approvingly.
Putin raises a glass of red wine. “This is colour of water in North Dakota.”
Dinner ends after precisely two hours. Putin thanks his guests and rises from the table, only to spot a piano in the corner of the room. “I’ve been practising playing the piano,” he says, casually. Would the guests like to hear him play? Well, who’s brave enough to say no? Putin sits down and plays “Chopsticks” in a high octave. “St Petersburg!” he pronounces.
Then he plays “Chopsticks” in a low octave. “Moscow!” he explains. Putin rises to our clapping, marches to the exit and then turns, ostentatiously summoning Bob Dudley, chief executive of BP, for a tête-à-tête in the foyer.
Putin’s musical bagatelle remains a source of fascination. Was it a subtle way to destabilise a powerful audience or a signal that even the most ruthless ruler can succumb to moments of sentimentality? Putin’s poker face gave nothing away. Eight months later, he gave the order for Russia to annex Crimea.
28 February 2014
Breakfast with Sir Jeremy Heywood at the Cinnamon Club. The cabinet secretary is relatively relaxed about the upcoming referendum in Scotland. A majority vote against independence looks assured, bolstered by the Scottish Labour party which should be solidly No. (“They’re tribal on the Clyde.”) We turn to Europe, where Cameron is under pressure from Ukip led by Nigel Farage and from malcontents in his own party.
Heywood insists people are too negative about Britain’s standing in the EU. We’ve chalked up wins on the proposed European banking union which will protect the City of London. There’s a reasonable deal on the EU budget as well as agreement on carbon emission limits by 2030. Heywood is more worried about the erosion in Britain’s “political/military” position. Libya was reasonably stable after the allied intervention led by Cameron and Sarkozy toppled Gaddafi; now “it’s a mess.” The House of Commons vote last year against military action in Syria was “a blow”. The UK is absent from negotiations on the Iran nuclear deal, absent from international oversight of Syria’s pledge to destroy its chemical-weapons stockpile, and missing in action in diplomacy to end Russian aggression in eastern Ukraine.
This is a comprehensive indictment of Cameron’s foreign policy. Heywood, who is usually guarded, confides he is also worried about developments at home, especially the impact of George Osborne’s austerity programme. The squeeze on public spending under way since 2010 will be “very hard to maintain” as the economy improves. Welfare cuts — £20bn is apparently under discussion — are “just not possible on this scale”. The problem lies partly in Cameron’s commitment to protect education, foreign aid and health services from cuts. This so-called ringfencing means that choices are limited and other spending departments bear a disproportionate level of cuts. Heywood says the impact on the criminal justice system and legal aid is a “huge worry”.
As for the Conservative party, Heywood is dismissive. “They’re out of control. They’ve got no discipline.”
During my editorship, I conversed with Heywood roughly once a year over lunch and we chatted privately at social occasions. These were candid exchanges. He used me as a sounding board. I gained a (fairly) neutral insight into the affairs of government. Aside from our last lunch, a few months before he succumbed to cancer, this was the frankest, at times most damning assessment of the coalition government.
20 March 2014
I’ve caused a kerfuffle among judges of the FT’s annual Boldness in Business awards, sponsored by ArcelorMittal, the giant steel group. I’ve proposed Farage to deliver the keynote speech at the gala dinner at the Royal Institute of British Architects near Regent’s Park, where we recognise bold businesses from around the world. At least two judges are threatening to boycott the event on the grounds that Farage is a racist. I have little in common with him apart from the fact that we attended the same school, Dulwich College, in south-east London. We did not overlap, and we have no social history. My sole criterion is that he is a force in British politics and our audience of businessmen and women will find him interesting and entertaining. At any rate, the award is about boldness and this is a bold choice as speaker.
The argument pertained to my own editorial judgment, but it also foreshadowed the debate about “de-platforming” speakers because of their controversial views. Farage was not a proto-fascist, even if some Ukip members were unsavoury. That night Farage connected to his audience, sticking it to pro-Europeans like me who, he said, were on the wrong side of history. I was slow to grasp his everyman appeal.
My dealings with Britain’s retailers were invariably colourful, none more so than with Sir Philip Green, the pugnacious billionaire owner of Topshop, Miss Selfridge and two superyachts parked off the coast of Monaco, his weekend retreat and home for his wife, Tina, and two children.
In 2016, Green called me to complain about a story, effing and blinding as if I were one of his minions. We rapidly got into a shouting match which ended with an improbable overture from the one-time king of retail.
PG: “Wotcha want?”
LB: “I’m sorry. I don’t understand.”
PG: “Wotcha want? A cake?”
LB: (flummoxed) “OK, I’ll have a cake.”
PG: “What kinda cake?”
LB: (guessing wildly) “An almond cake.”
The following week, Green strode into the FT newsroom bearing an almond cake. It was a peace offering of sorts. Hostilities resumed shortly thereafter.
Extracted from ‘The Powerful and the Damned: Private Diaries in Turbulent Times’ by Lionel Barber, published by WH Allen on November 5, £25. Copyright © Lionel Barber 2020
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