“For me, Russia is exciting, or the Middle East, but America is an anachronism.” Wealthy friend Fred, who runs a family office, disagreed. “London’s finished,” he proclaimed. “The infrastructure cannot cope with the open border policy. Sell all your British assets and move to New York. I have.”
Many other cities are swelling in stature: Beijing, Bangalore, Mumbai and Shanghai. Yet it sometimes seems as if London and New York are involved in a brutal boxing match to be the global financial champion. Advocates of London argue that the Sarbanes-Oxley Act has driven business away from New York and that American fondness for litigation and the zeal of its regulators are unappealing to big firms.
According to Dealogic, this year to date, the volume of foreign initial public offerings raised on the London Stock Exchange has been nearly four times that raised on the New York Stock Exchange. John Thornton, chairman of the Brookings Institute and a former president of Goldman Sachs, and Glenn Hubbard, dean of Columbia Business School, are leading a committee to examine the competitiveness of US public capital markets. Mayor Bloomberg and democratic senator Charles Schumer are also worried that New York’s dominance is threatened.
But after spending a week in the States, I feel they have nothing to fear. Compared with Manhattan, cities like London, Paris or Milan are villages. And don’t even mention Frankfurt. Wealth (and the hunger for wealth) in New York is palpable. It rises with the steam from the subway vents and is as much a part of the culture as bagel and lox. The American dream is that anyone can cross the bridge from pauper to prince.
And there are many Wall Street stories to prove this. Lloyd Blankfein’s father was a postal clerk. Stan O’Neal is the grandson of a former slave. If you go downtown, as I did, and see the limos lined up outside Merrill Lynch’s headquarters, next to the gaping hole where the World Trade Centre used to be, you would realise how resilient New York is. It can never be counted out.
And talking of wealth and the city, I stayed at the imposing Four Seasons hotel – now one of the playthings of Prince Alwaleed bin Talal and his new business partner, Bill Gates – on East 57th street with my friend, Spike. The hotel was designed by IM Pei and is a monument to modernity. We had dinner at the hotel’s fashionable restaurant, L’Atelier de Joël Robuchon. The Kobe beef and creamy mashed potatoes were sensational but other dishes were less remarkable. Increasingly, I find myself alienated by the march of globalisation, especially culinary globalisation. French chef Robuchon opened his original Atelier in Paris in 2003. It was the talk of the town. Parisians were infatuated by the perfect, tiny concoctions and the equality of perching on a bar-stool in front of an open kitchen. The wonderful thing about the original Atelier, nestled in the chic seventh arrondissement, is its quintessential Gallic spirit. Pallid clones in New York, Las Vegas and (since September) London are unpalatable. The mystique is dissipated.
The Hamptons
On Sunday, I went to visit my friend Nancy in the Hamptons. Nancy told me to take the Jitney bus. “It stops right outside your hotel on 59th and Lexington,” she said. “I’ll leave a coupon for you at the front desk.” Spike was unimpressed: “It’s cognitive dissonance,” he snorted. “You stay at the best hotel in New York and insist on taking a bus!” “Nonsense,” said Nancy when she met me at the bus stop in Quogue. “Very nice people take the Jitney. Lauren Bacall, Jack Nicholson and Alan Alda, for example.” Long Island is the place where moneyed New Yorkers party during the sticky summer months. Calvin Klein recently bought a home in Southampton for $27 million. And Cal’s close neighbour is legendary hedge fund manager, Stanley Druckenmiller. Stan allegedly made a sizeable donation to provide showers and lavatories for inhabitants of a nearby Indian reservation. Seth Waugh, the handsome head of Deutsche Bank in the Americas, has a home in Quogue, as does Citigroup’s chief financial officer, Sallie Krawcheck.
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| Some say that when Chuck Prince and Sallie Krawchek appear on the podium together at investor presentations, it’s like witnessing a husband and wife chat show |
The costs
Citigroup, America’s largest banking group, reported mediocre third-quarter results in mid-October. Net income was down by 23%, year on year. “Results from our capital markets-related businesses fell short of my expectations,” admonished chairman and chief executive, Charles Prince. Some say that when Chuck and Sallie appear on the podium together at investor presentations, it’s like witnessing a husband and wife chat show. And the dynamic duo have much to chat about because the hereditary Prince is on the warpath.
Devoted readers will recall that when visiting Paris in March, I stumbled across former Citi chairman, Sandy Weill, deep in conversation with Prince Alwaleed bin Talal (him again). The prince, who is Citi’s largest shareholder, was doing a lot of hand waving. Sandy was silent. At the time I wondered what they were discussing.
In July, all was revealed when the prince went public with his criticisms because “a friend has to talk openly.” Alwaleed called for draconian measures to curb spiralling costs at Citigroup. And Sallie is listening. She told the Wall Street Journal: “Citigroup is putting extra effort into reining in expenses, with cost-cutting ranging from urging employees to make fewer colour photocopies and having fewer fancy lunches to consolidating different units' technology systems.”
I am reminded of an anecdote I heard about a banking chief who was trained in the Citi stable. The chief was spotted by a competitor at an extremely expensive London restaurant. An acerbic exchange occurred and, when accused of extravagance, Chief claimed his client was paying for dinner. Is Chief a cheapskate or a virtuous paragon? What do you think?
