Costa Concordia: a floating RBS with a sudden liquidity problem | Michael White
The comparisons between failed banks and sinking boats are striking
Do you know what the overnight graphics and pictures of the Costa Concordia’s top-heavy hull reminded me of? One of those fancy credit default swaps that helped to wreck much of the western banking system.
Dangerously over-engineered to make someone more money, it was self-evidently risky – as marine engineers have been warning, unheeded – and likely to fall over as soon as it hits the unexpected. For Bear Sterns or Royal Bank of Scotland, we can now read Costa Concordia.
I mention the comparison because the Sunday papers were quick to deploy another one, the over-worked Titantic analogy whose deckchairs are used to describe everything from a lost football match to a spot of political difficulty.
Much more sinister in our present uncertain times, the Titanic is used to invoke the overweening arrogance of imperial Europe – classical Greek hubris – which foreshadowed the outbreak of the first world war two years later. It was the European civil war that ruined a civilisation. Are we about to ruin what’s left of it by fumbling the eurozone crisis?
In this context Michael Gove’s plea for a new Diamond Jubilee royal yacht – “a gift from the nation” to the Queen, according to Patrick Wintour’s entertaining account of the education secretary’s leaked letter – is an enjoyably frivolous sideshow in what we are being told is already a renewed recession.
He’s a nice chap, Gove, but as some of the ministerial colleagues admit, occasionally a bit mad, as journalists-turned-politicians often are. Cabinet meetings must be dull when he’s away.
It turns out that Gove has the Daily Mail on his side which, in coalition terms, is a bit like the US Sixth Fleet sailing to the rescue. The Mail’s resourceful royal biographer, Robert Hardman, was on the airwaves this morning saying that all sorts of rich types – here and around the Commonwealth – are prepared to write off some of their tax bill by chipping in.
Build it in a UK yard – on the Clyde perhaps, to annoy Alex Salmond – and present it as a bit of Keynsian pump-priming, who knows it may gain traction as part of what the first minister calls Plan McB.
At least we can be confident that the doughty monarch will live long enough to see in completed, however long the construction over-run, though I sometimes have my private doubts about Charlie Windsor’s blood pressure. Do the medics check it regularly?
I digress. In nautical terms, the comparison between the two stricken liners is absurd, of course. The Titanic struck the famous iceberg on 15 April 1912, off Newfoundland and 450 miles off New York, at night, not 300 yards off the Italian shore in the Med. Six have died in the Costa Concordia accident. In 1912, 1,517 lost their lives.
It did so without most of the sophisticated navigating equipment that is now routine, even in yachts, let alone in 951ft gin palaces like the Costa cruise fleet.
GPS satellite technology allowed Costa Concordia’s hapless Italian master, Francesco Schettino, to know exactly where he was to within a few feet. Except that, as with the sat-navs in our cars, it does not protect any of us from computer error (my new sat-nav is always telling me to go the wrong way), technical failure (the rumoured electrical failure seems unlikely) and the magnificent capacity of over-confident human beings to screw up.
We will find out in due course. My money is on human error. One allegation is that Captain Schettino was allegedly seen in the bar with a glamorous companion before the ship struck the submerged rocks – rocks which weren’t on his maps and (says the captain) could be the product of underwater volcanic activity.
But the Costa seems to have been too close to the shore – its rocks and shallow water – possibly to show off to friends on the cliffs, according to one daft theory.
My late father was a Cornish master mariner who captained cargo vessels across the seven seas for 25 years and liked nothing better in his old age that enjoying a good shipwreck caused by what he always said was poor seamanship, preferably by foreign skippers.
It was a small family tragedy that he died the very day the Torrey Canyon finally broke its back – 25 March 1967 – on the rocks off the Scillies. But he had enjoyed the drama while he – and it – lasted. The ship’s captain was an Italian then too, a bonus point for Dad.
Of course, a captain is not supposed to be on the bridge of his ship all the time. But as my old Dad never tired of saying, he is “Master under God” and therefore responsible for its safety – that is true in the Royal Navy even when a captain has his admiral on board.
So Schettino is in big trouble – even if CDS-style design faults are now revealed, especially if he was, as seems to be the case, not the last man to leave the ship.
Captain Smith went down with the Titanic after what was a steering error on the bridge – covered up for 90 years for commercial reasons, according to Louise Patten‘s recent research.
As Gwyn Topham and Andrew Linington’s report suggests, alarm bells have been ringing about cruise ship design for years: you must have seen how weird they now look – skyscrapers of the seas, the Costa Concordia weighing 114,500 tonnes – roughly the same size and length of a Nimitz class US aircraft carrier, the largest warships in history. Obviously the Costa fleet has less firepower except in the drinks department: US warships are dry.
On Radio 4′s indispensable Today programme this morning, the man from Nautilus International, the maritime professionals union, said some cruise ship designers have been extrapolating the rules of construction for years, packing on more cabins, especially cabins with outside portholes – to please the paying customers – for years.
The Costa Concordia is – was – 177 feet tall, eight feet more than Nelson’s Column but had a below-water level draught of just 26ft.
It can survive in Caribbean storms, arctic winter storms and the Bay of Biscay, protested a spokesman for the cruise industry, and is safe in deep water channels. Ah yes, but that’s not where she was at 9.45pm on Friday night.
Not all such ships are built like this. “The Queen Mary 2 is a very different ship, not a hotel turned on its side. It’s a ship in every sense of the word,” said the Nautilus man with a hint of pride.
Yet even the QM2 lost power off Barcelona in September 2010. As with all ultra-sophisticated systems that do the work for us much of the time, we seem to be helplessly inexperienced when things go wrong.
Perhaps it was ever thus. My brother, a Cornish marine engineer, reminds me that when the Amoco Cadiz ran aground (oh dear, another Italian master) off Brittany in 1978 – the largest oil spillage to date at the time – the board of inquiry could not establish what course was being steered between 7.26 and the steerage breakdown at 9.46.
She did not run aground under power, but none of the officers seemed to know where she was when the crisis broke – though the pre-GPS positioning system was pretty good.
“Familiarity breeds contempt,” he tells me: they knew the coast and THOUGHT they knew what they were doing. So it is likely to prove this time: people not paying proper attention.
That takes us effortlessly back to credit derivative swaps and the banking community’s over-confidence that it knew where it was and what it was doing.
Michael Lewis’s The Big Short is an astonishing glimpse into that greedy and arrogant world that takes your breath away. The financial edifice constructed since deregulation – hey, who needs lifeboats now we’re so smart? – simply wasn’t fit to cope with unforeseen rocks.
You might say that the banks and the boat each suffered from an acute liquidity crisis: suddenly there wasn’t enough cash or water to keep them upright.
In Europe and the US economic ship has been shipping water since reckless seamanship drove it on to the rocks/iceberg in the crisis of 2007-8. The banking captains were mostly fired, some jailed in the US – not in Europe – and the salvage teams are making a poor job of floating us all off.
Crew and passengers have been hysterical, angry or stoical, according to circumstance and national character. If the ship sinks who will be saved?
I will end on an ambiguous backward-looking note. Three days after the Titanic disaster, Winston Churchill, by then First Lord of the Admiralty, wrote to his wife, Clemmie, about how the sinking reflected well on the “great traditions of the sea towards women and children that reflects nothing but honour on our civilisation…” This was Downton Abbey civilisation remember, the series starts with the news.
He pours passing scorn on Sir Bruce Ismay, chairman of the White Star Line (and the man blamed for not wanting to slow the ship down in pursuit of a record Atlantic crossing) who got into a boat when “he should have gone down with the ship and crew”.
He wonders if the suffragettes who made his life a misery as home secretary will be less “bitter in their sex antagonism and think men so base and vile” – another topical line there! – because so many women and children were saved.
Two days later he is back on the theme – “It fascinates me. It shows that in spite of all the inequalities and artificialities of our modern life, at the bottom, tested to its foundations, our civilisation is humane, Christian and absolutely democratic. How differently Imperial Rome or Ancient Greece would have settled the problem.
“The swells and potentates would have gone off with their concubines & pet slaves & soldier guards, & then the sailors would have had their chance, headed by the captain.
“As for the rest whoever could bribe the crew the most would have had the preference – and the rest could go to hell. But such ethics can neither build Titanics with science nor lose them with honour.”
Forgive the lengthy quotations from an age of social conflict, plutocracy and gross inequality – far worse than our own – which stood, unknowing, on the brink of disaster. But there’s plenty there to ponder. Romantic twaddle or just romantic?