Show Hide image

Catastrophe averted?

The leaders of the rich countries went to Washington to save the world from sliding into deep recess

Vincent Cable

Shadow chancellor, Liberal Democrats

By the low standards of economic summitry, the G20 meeting rated quite high. There was a predictable, no doubt pre-written, communiqué, full of the usual banalities. And the meeting suffered from the absence of the world's most important politician, who hasn't yet taken up office. But, these necessary caveats aside, there were important achievements.

The first is that the meeting took place at all. The ludicrous pretence of the G8 (or G7) that the old western powers should set the global economic agenda has been punctured for good. On a purchasing power parity basis, China has the second-biggest economy in the world and India the fourth. It has been clear for some time that China is lender of last resort to the global system (by, in effect, underwriting US government paper) and the main source of global incremental demand (and commodity price inflation). The Chinese self-parody as the pupil sitting meekly at the feet of a dominant, but erring, master defies belief. It is obviously right that China, India and the other main non-G7 countries should be at the top table.

The second achievement was the clear realisation that unless governments hang together they will hang separately. Enough has been learned from interwar history for us to understand the follies of beggar-my-neighbour economics. Perhaps a warning shock was being sent across the bows of the incoming Obama administration not to reinvent the protectionist tariffs of the 1930s in a new guise, directed at China or Mexico in particular, or aiming to salvage the US auto industry through public subsidy. But this new-found concern for open markets has not yet communicated itself to EU or Indian or Chinese trade negotiators, who show no enthusiasm for lifting the block on trade liberalisation under the Doha round.

While trade policy is on the back burner, macroeconomic policy co-ordination is not. With a few exceptions - Germany notably - there is recognition of the need for aggressive monetary and fiscal policy and for large-scale intervention to recapitalise banks. These interventions can be and are being undertaken nationally. But governments acting in isolation attract critical attention from capital markets and currency speculators, as Gordon Brown is discovering. Structures like the G20 are the best safeguard against chaotic, unilateral action.

Will Hutton

Economic commentator

It was remarkable to gather so much economic and political power in one room to address a common agenda. That was the good news - along with commitments to co-ordinate fiscal expansion, to expand the lending power of the IMF and World Bank (Japan's $100bn loan to the IMF will increase the Fund's lending capacity by 40 per cent), to boost cross-border supervision, to tackle credit rating agencies, to reassess mad accounting rules and require member countries to attack the bonus culture in the financial services industry. A year ago such an agreement would have been inconceivable.

The bad news is that much of this is shutting the stable door after the horse has bolted. Four things have to be recognised: that the world has profound imbalances between high-saving, high-surplus areas in Asia and the Gulf and low-saving, structural deficit countries in the transatlantic economy (Germany excepted); that a system of floating exchange rates and private banks can no longer take the weight of recycling those savings; that unless the system is de-risked and the burden of adjustment is placed on deficit and surplus countries alike, the global system faces breakdown; and finally, that the business model used by the banks to recycle surpluses - securitisation and hedging in the $360trn global derivatives market - is broken.

In plain English, China must accept that its currency must appreciate; Britain and America, that they cannot run their economies on foreign savings; and all players that there has to be a system of semi-fixed exchange rates between the yen, the euro and the dollar.

One tough reality is that, for all their new economic weight, China, Brazil, Russia and India do not have fully convertible currencies - nor do they want to accept the discipline involved in having convertible currencies.

Ann Pettifor

Fellow, New Economics Foundation

Over the past decade, the Group of Eight leaders turned their exclusive annual meetings into jamborees. Rock concerts, protesters and celebrities added populist glitz. However, the real purpose of the meetings - international co-operation and co-ordination - was ducked. At last year's G8 Summit in Heiligendamm, Germany, George W Bush and Gordon Brown vetoed Angela Merkel's agenda item for co-operation over tighter international regulation and financial oversight of capital markets. That task, they argued then, could safely be delegated to "the invisible hand". Now that the fantastic, self-regulating machinery of free markets has proved grossly malfunctional, it is good to hear talk of enhanced co-operation and regulation.

But, in places, the joint statement issued by the 20 world leaders borders on the delusional. The phrase "We must . . . ensure . . . that a global crisis, such as this one, does not happen again" implies that they are avoiding the next war when they are still losing this one.

Even more questionable is the call for continued "economic growth". In a world of finite resources on a planet with limited capacity to absorb toxic emissions, and with bushfires encircling Los Angeles, we would have hoped that world leaders had some awareness of the threat of climate change and of the limits to economic growth. But no. The gravest threat to global security - our rapacious attitude to the earth's resources - is once again whipped up with talk of "market principles, open trade and economic growth".

Jesse Norman

Senior fellow at Policy Exchange

One might have thought the G20 summit a good moment for some straight talk from the Prime Minister. Instead, the political wind machine was cranked up to full blast. The summit would be a second Bretton Woods. Gordon Brown would forge a new global consensus on co-ordinated intervention to stimulate growth (while, of course, leading reforms to prevent the banking crisis from ever recurring). Luckily virtually none of this was true, or the summit would have been a hopeless failure. With fiscal measures already widely adopted, the G20 hardly needed Brown's leadership. No surprise that he returned empty-handed.

Labour has moved from despondency to a manic desperation to remain in office. The result is that the ever-fragile concept of truth in politics has wholly been cast aside. Thus the humiliating bank nationalisation has been dressed up as an act of far-seeing economic statesmanship. And a sensible warning from the shadow chancellor that current economic policy puts sterling at risk has been condemned for breaching an irrelevant semi-convention dating from the time of fixed exchange rates.

Alex Brummer

City editor, Daily Mail

There is a golden rule of international financial meetings. The larger the "G" number, in other words the more countries involved, the less likely it is that any worthwhile or binding decisions will be taken. So while it was wholly encouraging that the G20 summit brought a number of emerging market leaders to the top table of finance, including China, Brazil and Russia, there was never any real prospect of the event becoming the new Bretton Woods.

Furthermore, the summit took place in the final days of the lame duck administration of George Bush. Once it became clear Barack Obama was going nowhere near the confab, the event became even more of an irrelevance.

European leaders may like to blame Wall Street and Anglo-Saxon capitalism for the credit crunch and the recession now spreading through the Group of Seven like wildfire, but there is no hope of concerted international action without the new White House and Federal Reserve on board.

Almost all that was agreed could have been decided before the leaders left home. The commitment to reviving the Doha trade round is pure motherhood and apple pie. The prairie populists on Capitol Hill are unlikely to be enthusiastic.

At the core of the proposals was the commitment to use fiscal measures, tax cuts and public spending to kick-start global economies. But despite Gordon Brown's enthusiastic embrace of a new Keynesian big-spending approach - as advocated by Nobel prize-winner Paul Krugman - he neatly forgot to mention that such big-spending ways were only for those countries with a "policy framework conducive to fiscal sustainability". The UK with its ballooning budget deficit, which could hit £100bn or more next year, is clearly in no such position.

It is hard to fathom in what way the G20 was "historic", as the Prime Minister claimed in the Commons. There is little original in a bunch of old ideas designed to remove risk from the financial system and control executive pay. That is what regulators should have done before the banks ploughed into the iceberg.

James Buchan

Author and financial commentator

What is the Financial Stability Forum? What is "mitigating against pro-cyclicality in regulatory policy"? What, if anything, has the G20 summit in Washington on the weekend of the 15 November achieved?

Nothing very much, is the answer to all three questions. In the twilight of a discredited US administration, and with President-elect Barack Obama absent, the meeting was never likely to achieve a great deal or generate excitement in the US. Yet the final declaration, drafted with suspicious ease by the delegations on Saturday night, has something for everybody but not enough of anything to scare the financial horses.

Nicolas Sarkozy, the French president whose idea the whole thing was, gained some support for more institutional government of trade and finance, but no super-gendarme international of the type that has been directing financial traffic in the French imagination since the 17th century. As Jean-Pierre Robin wrote in the Figaro: "Those with fantasies of supranational supervision will need to change therapist." The US, jealous of its commercial sovereignty even when it is going about without its shirt, put paid to those Gallic dreams and also gained some platitudes about free trade.

The new commercial powers, not only Brazil, Russia, India and mainland China but also rich oil producers such as Saudi Arabia, received diplomatic recognition of their deep pockets. "The world's geopolitical structure has a new dimension," the Brazilian president, Luiz Inácio Lula da Silva, said. "There is no logic to making any political and economic decisions without the G20 members - developing countries must be part of the solution to the global financial crisis."

I suspect the winner is Gordon Brown. The next meeting will be held under his presidency in London in April. The Washington ragbag of proposals to reform or tinker with the current system, such as reminding us about the Financial Stability Form and mitigating against that regrettable pro-cyclicality in regulatory policy, appeals to his technical vanity and plays to his technical strengths.

Paul Mason

Economics editor, Newsnight

There was a sense in Washington, despite the throbbing engines and bulletproof glass, of powerlessness. The communiqué was stronger on the causes of the crisis than on co-ordinated solutions. Policymakers are right to stay focused on the near-term dangers: these are country-level debt default, the rising cost of borrowing for non-financial companies, rapid job losses and - via feedback - further destabilisation of the banking system. We are moving into the phase of fiscal stimulus but there are powerful technical arguments that say without "quantitative easing" - that is, printing money to stimulate demand - it doesn't work. The same people who told me it would come to recapitalisation, that the TARP (troubled assets relief programme) would not work, are now saying: nationalise the banks and print money.

Despite the urgency of the focus on near-term dangers, what was obvious at G20 was the lack of vision as to the future growth model of capitalism. The problem was seen as a failure of regulation; the solution a pretty weak brew of re-regulation that will get diluted even more as the lobbyists begin to have influence. But the problem is more fundamental: the growth model based on high debt instead of high wages has failed and will be hard to revive.

Peter Mandelson

Secretary of State for Business

We have been caught in a global whirlwind of extraordinary force.

It has brought with it a fear that has gripped the world economy and taken hold here at home. We are seeing it every day, with fear among consumers that is depressing demand; fear among banks that is inhibiting them from lending; fear among small- and medium-sized businesses that banks are just about to cut off their credit lines. The choice facing us and governments around the world is this: do we act decisively to counter and overcome this fear, or do we become paralysed by it and fail to act?

The government has already shown its willingness to take the bolder course as the first mover in setting about stabilising the banks. What is needed now is action to stimulate the demand essential for recovery. The UK economy, like economies in the rest of the world, needs a shot of adrenalin.

The Bank of England has already made a significant cut to interest rates. This monetary stimulus now needs to be matched by a fiscal stimulus. And because this is a global crisis this is best done if the benefit of the measures taken nationally is maximised by the same measures being taken around the world. That was the message from the international conference in Washington, as governments recognised the need to take the action necessary to stimulate their economies.

People will say, "But you are resorting to borrowing in order to deliver the stimulus that's needed." My answer to that is, what is the alternative? We certainly haven't heard one from the Conservatives.

David Cameron and George Osborne, trapped by their desire to oppose everything the government does, refuse to accept the scale of the challenge the world's economies now face and the prescribed international action. Their stance appears to be, if the rest of the world disagrees with us, it is because the rest of the world is wrong. The result is incoherence and an Opposition at sixes and sevens. One minute this is "do all it takes" and the next it is - as we heard this week - leave the recession to "take its course".

Sitting on our hands watching houses repossessed and businesses go to the wall is certainly not the approach being urged on me by people I have been speaking to up and down the country. They want their government to act to stimulate demand in the economy here and now. With all due prudence, that is what we are going to do.

Diane Coyle

Author and economist

The G20 meeting confirmed a robust and rapid response (by past standards) to recession, even in the US operating under a rump free-market administration. Policymakers around the world have been shaken to see the financial system at the brink of collapse - on their watch.

Yet it is difficult to predict how severe the recession will be. Bank lending to businesses and individuals is virtually frozen. In many (but not all) areas of the economy, activity has come to a halt. The last financial boom and bust, ending in 2001, had surprisingly little impact on jobs and growth, as the financial bubble had become increasingly untethered from anything real. Today's vicious circle of evaporating liquidity is much more serious, but lower interest rates and bigger government deficits will help. The underlying trends are easier to outline. Some challenges are clearly unaltered, such as climate change and our ageing society.

The technological opportunities are still there, too, in communications, the internet and biotechnology. Globalisation will be less driven by finance in future, but it will not be unwound. It would take a generation to turn back the clock on economic linkages, and the cultural impacts are permanent. In fact, the crisis has underlined our interdependence across national borders.

What has changed is the political economy of globalisation. In the triad of efficiency, fairness and freedom which dominates political choice in democracies, fairness will take priority in the years ahead, and the drive for ever greater productivity gains will retreat. The semi-nationalisation of the banks has started to shift the boundary between public and private domains; we will have to think more carefully about how to govern private choices that have big social spillovers. The G20 did not touch on this profound question of governance.

Iain Macwhirter

Political commentator

The G20 was largely a throat-clearing session and was never going to put in place the foundations of a new international financial system. Progress on the stalled Doha trade talks is encouraging but provides no guarantee that protectionism will not raise its head in the coming economic slump.

It is inevitable that countries faced with financial collapse will try to defend their economies by any means possible. Britain is already far down the road of "beggar my neighbour" economics by the "managed" devaluation of the pound, a crude attempt to boost UK industry by lowering the prices of British exports and creating a de facto tariff wall around imports from abroad. It won't work because Britain does not make much of anything any more except debt, and the world has plenty of that already.

But the collapse of the pound will seriously damage what is left of UK financial services. No one in their right minds would put money into the UK economy now, with the property market collapsing, UK banks insolvent and government borrowing likely to reach £100bn in the next 18 months.

Gordon Brown seems to believe that sterling is like the dollar, and that people will buy our dud pounds whatever the likely losses. However, as we are discovering, sterling is not a reserve currency and unlike the US we cannot force other countries to pay our debts. The future for our battered island is likely to be hyperinflation punctuated by appeals to the International Monetary Fund for emergency aid. Forget about spending our way out of recession - the UK government simply lacks the resources to fund the huge borrowing that would be required. Something will have to give. Brown will have cause to regret being so beastly to the Icelanders.

Richard Reeves

Director of Demos

James Carville, the hardened political aide to Bill Clinton, said that if he was reincarnated he'd want to come back as the bond market: "You can intimidate anybody." Right now it seems odd to think of any financial markets threatening anybody. But it is one of the ironies of the current economic situation that the capital markets still have some serious muscle.

Western governments, faced with recession, need to throw a lot of money at their ailing financial institutions - money that can be raised only by selling Treasury debt, mostly to the capital-rich investors of the Far East. For Gordon Brown, this is likely to become a more difficult sell, as Prudence is given the push and the pound takes a nosedive. Even national exchequers invite sceptical scrutiny in this new, nervous world.

The financial crisis is at heart a loss of faith. The word credit derives from the Latin credo - "I believe". When the Titanic of the financial world - in the shape of Lehman Brothers - was allowed to sink, the bonds of trust stretching around the world were snapped. In an instant, everyone stopped believing in each other.

A number of sensible measures should be on the agenda when the G20 reconvenes next year, including legislation to ensure bonuses in financial services are paid on the basis of five-year performance; new "pro-cyclical" provisioning rules requiring finance houses to increase their store of capital in economic upturns; and tougher, independent regulation of the rating agencies whose doe-eyed assessments of banks built on a mountain of paper helped get us in this mess.

There is, however, no quick technical fix for such a dramatic loss of confidence. Trust can be lost in the blink of a market-trader's eye - but it will take years to rebuild.

TEN THINGS THEY ACHIEVED

  • 1 Created a road map aimed at stabilising the world economy and overhauling the banking system with targets for the end of March 2009
  • 2 Advocated Keynesian big-spending
    “fiscal stimulus”
  • 3 Expanded from a small club making world decisions to recognise the importance of the economies of Brazil, Russia, India and China
  • 4 Agreed to reform international finance institutions, including better transparency and supervision of credit ratings agencies
  • 5 Agreed that the Financial Stability Forum should include emerging economies
  • 6 Banks and hedge funds to hold increased levels of capital and cash
  • 7 Recommended “supervisory colleges” for all major cross-border financial institutions
  • 8 Return to the Doha round – trade ministers to meet in Geneva next month
  • 9 Instructed G20 finance ministers to draw up plans and timeline
  • 10 Agreed to meet again, in London next April

. . . AND FIVE THEY DIDN’T

  • 1 Agree a future growth model for capitalism. Instead they reconfirmed their “shared belief in market principles”
  • 2 Agree detailed plans for regulatory reforms of banking
  • 3 Establish a plan of action for achieving the already endangered Millennium Development Goals
  • 4 Set up an international supervisory body with sufficient power to control global markets
  • 5 Halt the run on sterling, which fell sharply against the euro and dollar

Alyssa McDonald

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

Ason Mceachern
Show Hide image

He gave a total stranger $50,000 in cash: the strange, multi-million dollar empire of Trans-Siberian Orchestra

Kate Mossman meets the man behind one of the world’s wealthiest rock bands.

He calls it “whacking”. It began near his property on 12th Street, Manhattan. He’d get his driver to circle Union Square while he identified a suitable beggar; then he’d jump out, shove a hundred-dollar bill into their hand, jump back in and drive off. Soon, he realised that many of the people he was giving to were schizophrenic and he was scaring them out of their wits. So he started passing the money to his daughter because, he reasoned, they were more likely to accept it from a three-year-old girl. He gradually increased the amount he gave – from a hundred to ten, twenty, fifty thousand dollars in a roll of notes. Paul O’Neill and his daughter would drive around the square and she’d say: “Let’s whack ’em, Dad, let’s whack ’em hard.”

****

One of the biggest bands on the planet ­remains unknown to much of the world. Trans-Siberian Orchestra (TSO) have spent much of the past decade on Billboard’s annual list of top music moneymakers; they now play to a million people a year and have grossed over $500m in concert revenues since they were founded 20 years ago. In 2014 they made almost $52m in 52 days. They tour for seven weeks only, from November to January. To maximise profits, they split into two halves – one band for the west coast of America and the other for the east – and play matinees as well as evening shows.

Their genre? Heavy metal Christmas music. TSO are a glittering chorus line of rock chicks and axe heroes in black tie and tails, suspended on wires or balancing high above the stage on hydraulic platforms playing rock’n’roll mash-ups of “Deck the Halls” and “Dance of the Sugar Plum Fairy”. There are 18 people on stage, 240 staff and 40 trucks to transport them. The show, which looks like Pink Floyd-meets-Meat Loaf’s Bat Out of Hell, employs 18 lasers and 750 pyrotechnics. The band travels with two trailers of generators: they once blew out the electricity grid in Jackson, Mississippi.

TSO’s creator, O’Neill, divides his time between New York City and Florida, where the band began. I speak to someone at a UK rock magazine who once had a phone call with him. “Just don’t get him on to Chur­chill,” he says.

The Morrisound Recording studio in north Tampa was once the nerve centre of Florida’s legendary metal scene, playing host to many of the genre’s nastiest acts, including Sepultura, Cannibal Corpse and Napalm Death. Like most luxury recording spaces, it hit hard times in the past decade; then, in 2015, TSO bought it and turned it into their headquarters, Night Castle. It lies behind high gates and is staffed by polite young engineers with russet beards. Visitors are met with a large food centre stocked with six different kinds of mineral water and a pine-fresh smell not typical of the recording studios of the past.

O’Neill has taken on a slightly mythical status within TSO. The official photographer tells me that you rarely see him because he is “so protected”. When in Tampa, he is accompanied by a 6ft 4in driver-cum-security guard with the physique of a wrestler, whose name is Tracey.

O’Neill emerges grinning from a darkened doorway. He has the little, anthropoid legs of Jeff Beck or Mick Jagger (finished off with heavy biker boots) and the sprung stoop of one who has great nervous energy – a coiled way of moving along, like someone who is ready to help but equally ready to flee.

He sits down, throws one knee over the other and gestures at a large analogue mixing desk, saying, “You don’t see too many of these any more,” in the quick voice of a native New Yorker.

He was born in Flushing, Queens in 1956, one of ten children of second-generation Irish immigrants. His father, who had fought in France, worked for a telecoms company; he put himself through night school and qualified as a history teacher. O’Neill’s siblings are high achievers. He was “always the dumb one”. At seven, he still couldn’t read, so his mother kept him in the house for the summer and “forced phonics down my throat” until he could.

As an adolescent in the early 1970s, he performed at Manhattan folk clubs, though he is not nostalgic about it. He played guitar in productions of Jesus Christ Superstar and Hair – “Well, illegal touring versions,” he qualifies. “Everyone was doing it at the time.” He entered Jimi Hendrix’s ­Electric Lady Studios at 52 West Eighth Street to produce a progressive rock band called Slowburn but failed to translate the baroque melodies in his head into playable music, so he gave up and went to work for the infamous management duo Leber and Krebs, who broke Aerosmith and AC/DC. These were tough times – Sharon Osbourne’s father, the manager Don Arden, would assert his power over rivals and clients by hanging them out of windows. O’Neill worked for Aerosmith as a tour manager and “settler” – meaning, he explains, that he would carry a fee of up to $50,000 in cash in a briefcase that, for security reasons, was handcuffed to his arm.

He has the disconnected synapses suggestive of years of hard living and his soft voice flits between business, American sentimentality and early-20th-century warlords at alarming speed.

“I’ll tell you why Aerosmith don’t play the UK,” he says. “They can’t stand the plumbing. They can’t believe you don’t have the mixer taps. You know Churchill was a fan of American plumbing, too?”

His long chin gives his face a perpetual expression of mischief. When he is not wearing his sunglasses, he keeps his pale, grey eyes shut. He says things like, “The one rule of work is: don’t do anyone any favours, because then they’ve got nothing on you.”

In the mid-1980s he was booked to produce a band called Heaven but was ejected halfway through a project that could have been huge – a heavy metal version of Bob Dylan’s “Knockin’ on Heaven’s Door”, five years before Guns N’ Roses did theirs. He’d also wanted to try out something else with the band – a mash-up of “God Rest Ye Merry, Gentlemen” and “Carol of the Bells”, played on electric guitars.

Joan Jett to Jefferson: O’Neill with his treasure collection (large “Mr Livy” on the left). Photo: Bob Carey

It wasn’t your average business proposal: “six rock operas, a trilogy about Christmas and one or two regular albums”. O’Neill put it to the Atlantic Records mogul ­Ahmet Ertegun in the mid-1990s and claims to have been written a blank cheque. “Christmas is the holy grail,” he tells me. “Dickens wrote five books about Christmas. So I said, ‘Then it’s too big for one album, too.’”

On TSO’s first Christmas album, Christmas Eve and Other Stories, a young man wanders into a bar and learns the magic of Christmas from a mysterious old man; it has sold 3.4 million copies. Then there’s The Christmas Attic, in which a child explores an attic on Christmas Eve; The Lost Christmas Eve; and the DVD The Ghosts of Christmas Eve. Sleeve notes include short stories written by O’Neill. A few years ago, he even produced a 50-page novella called Merry Christmas Rabbi, which featured Nazis. Atlantic wouldn’t let him turn it into an album “because they were too freaked by it. Now it’s on Amazon for, like, a buck 99.”

His plan was to create a modern-day Nutcracker, something whole families would come to see, year after year. 
“I think we were in the right place at the right time,” he says. “Even Grandma has been to Woodstock. It made it a lot easier for us to jump the generational wall. That’s what I wanted to do with the Beethoven and Mozart, too. People treat the symphonies like they’re museum pieces but I think they scream out for electric guitars. The record industry acts as if people only like one kind of music. In truth, they like variation. Which is why we have hamburgers and chicken nuggets.”

Symphonic rock was not a new idea. Emerson, Lake and Palmer threw Bach, Mussorgsky and Grieg into their prog concoctions forty years ago. “I worship Greg Lake,” O’Neill says. “Greg is the Obi-Wan Kenobi – he is the Socrates of prog rock.” Both Lake and Jon Anderson of Yes have joined TSO on stage, as have the Who’s Roger Daltrey and Aerosmith’s Steven Tyler.

I call Lake at his home in Guildford to find out what it was like. His version of the band’s inception is different from O’Neill’s. “They are the most peculiar operation,” he says. He is 68 and sounds a bit like Ray Winstone. “I heard they came up with the idea of doing a prog-rock Christmas show and took it to the promoters, who told them it was a dumb idea. They have a friend in Cleveland, a small-time promoter, and they basically bullied him into doing it. And they got away with it. The more I talk to them, the more I realise that they don’t really understand what the phenomenon is. On paper, it looks like a bad idea. A prog-rock Christmas show? Stop it. But it’s like a cult.”

Backstage at Long Island, before the TSO show, Lake’s new iPhone disappeared from his dressing room. He told a security guard, and ten minutes later the device turned up next to the urinals. O’Neill had gathered the entire crew and told them no one would receive their Christmas bonus if the phone was not surrendered. “That’s Paul for you,” Lake says. “He is like the Mafia.”

Back at the studio, O’Neill plays me a YouTube clip of one of his west coast singers, John Brink, doing a TSO showstopper called “Back to Reason”, a ballad about a father searching for his son. By the end of the song, Brink is crying.

I ask where he sourced the tenor.

“Les Mis!” he says brightly. “I always go to Broadway shows to steal!”

Though TSO might sound like a racket, they could be making even more money. Tickets are capped at about $75. “There is enough money for everybody,” O’Neill says. “You don’t have to gouge every last penny out of people.” With a $20m production, they have to sell out every night. When he started out, he could see Led Zeppelin at Madison Square Garden for $7.50, he says. “And here’s the sad thing – nowadays, the first 20 rows are empty because the only people who can afford them are corporations, and they’re in the bar the whole time, making business deals.”

He says that Florida was destined to be the birthplace of his group because it is the home of both heavy metal and Disney World. “I worship Walt Disney,” he says. “He decided he was going to build an amusement park so clean that if you lost your three-year-old, you wouldn’t worry. And you would just pay one price and all the rides were free. TSO is an ideal, too – charge the fans the lowest price and make them feel emotions they have never felt before.

“Aaaaanyway,” he says, spinning on his chair, “time for more swag. It’s all about the swag.”

He heaves the four-disc vinyl version of TSO’s 2009 concept album, Night Castle, on to his lap. While Yes had their in-house artist, Roger Dean, TSO have Greg Hildebrandt. “He did the most iconic painting of the 20th century,” O’Neill explains – “the original Star Wars poster.”

He opens a glossy tour programme. “I said to Greg, ‘I want multiple pictures of Beethoven.’ And then I said, ‘I need you to Churchill him up a bit.’” He shows me a sorrowful, white-haired Beethoven, thickset like a Disney character and bulldog-ish around the jaws, crouching over the body of a fallen woman. His index finger flies over the images. “Here’s the condemned banker who cooked the books. Here’s the carousel from Coney Island, all broken. And here’s my daughter, Ireland, on her unicorn. And here’s the castle – I’m gonna to build that, one of these days.” I ask him whether the fans know what all these symbols mean.

“That is one of the things we need to do,” he says. “I need to explain this to the fans!”

****

Cut to a café in Tufnell Park, north London, on a cold February day. Anna Phoebe lives nearby with her children and husband, the BBC presenter Gavin Esler. She studied social policy and government at the London School of Economics. She was also a member of TSO for six years, from 2004 to 2010, eventually becoming the lead violinist.

Phoebe had played violin at university. On graduating, she went to New York for an audition where a woman in dark glasses said, “There’s someone I want you to meet.” She was 22 years old when she joined TSO and suddenly found herself performing to 20,000 people a day, executing knee slides while cranking out rock versions of “Ode to Joy”. “You’re playing the same size stages as Springsteen or Bon Jovi and you’re paid as a rock star, too,” she says.

The fee for the three-month TSO ­season covered her living costs for the rest of the year; it bought her a flat in Berlin and ­financed two solo albums. “We’d be given $5,000-worth of Bloomingdale’s vouchers at the start of every tour. Paul would say, ‘If you’re gonna be a rock star, kitten, you’ve gotta look like a rock star.’”

She explains that part of the business model was signing merchandise and meeting fans: between 700 and 1,000 people each night, after every show, and double that on matinee days. She mentioned in a blog that she liked banana bread; at a gig soon after, a fan turned up with several slices of the cake strapped to his torso (“I’ve been trying to get this into the venue for, like, three days,” he said). She received other gifts from followers: an ice sculpture carved in her image and CDs of TSO fans reading the Bible.

Middle America is the band’s heartland; they don’t often play college towns. In 2004 an electrical engineer from Mason, Ohio, programmed 16,000 Christmas lights on his house and had them flashing to TSO’s song “Wizards in Winter”; when a video of this was put online, it became an internet sensation. Two years ago, 16 households in Yucaipa, California, synchronised an entire neighbourhood to the song, filming it from above with a flying drone.

“I learned more about America in that signing line than anywhere else,” Phoebe says. “The people we were playing to, they were Sarah Palin voters at the time. The poorer the state, the bigger the audience and the more men in military uniforms. This was the height of the Iraq War. They’re saying, ‘Can you draw a star for my son? He’s 17 years old and he’s passed away in Iraq.’”

She says that O’Neill is “kind of insane, smart, extremely kind – and in a very privileged position to be like that and be able to follow it through”. There are musical directors, Al Pitrelli and Bob Kinkel, to make his unplayable melodies a reality, and a business manager, Adam Lind, “to take his 20 ideas and home in on the one that is going to make money – or not lose money”.

Once, in the studio garden, she saw what she thought was a crumpled bag of rubbish and realised it was a bundle of hundred-dollar bills that O’Neill had dropped by accident. At Christmas, the whole band would be given money in an envelope and were told to give it away within 24 hours to  a member of the public. “It’s quite an addictive feeling. It makes you feel like Mother Teresa,” Phoebe says.
“He has created a world, and whether he sees an idealised version of himself, or what the world should be, or what the people around him should be, I don’t think anyone really knows exactly what is going on in his head.”

****

When O’Neill and I finish going through Hildebrandt’s artwork, it is dinner time. We move out to the car park, surrounded by staff, and he heads over to a BMW i8, which can go from 0 to 60 miles per hour in 4.4 seconds and retails for $150,000. It resembles the Batmobile. Its doors peel upwards and O’Neill, as bendy and black as the machine itself, deposits himself in it, then changes his mind and joins me and Tracey in an armoured SUV.

“Have you got the baby?”
he says.

“Don’t worry, I’ve got the baby,” Tracey says. The baby is a large, black briefcase. It is too full to close and weighs at least 45lb. He tells me it contains the only copy of a forthcoming TSO project, Running in the Passions of the Fairy Tale Moon – the music and the full libretto.

“I still handwrite everything,” he says. “I can barely master email. I learned to text two months ago.”

Our car is overtaken by the Batmobile, driven by one of the young engineers. O’Neill will follow us back in it. “I know how to get home from the studio but not from the restaurant,” he explains. “I’m sorry. You’re thinking, ‘I’ve come to America to interview a retard.’”

We arrive at our destination and he takes the baby from the car. Its huge weight makes him lean to one side, like a thin tree in the wind. We enter a dark, nondescript restaurant in the basement of a hotel. He whispers something to the hostess that ends with: “It’s non-negotiable.” He ­orders a large steak that remains pretty much untouched and asks for an extra salt cellar, which he lines up next to the other one. He does not remove his sunglasses. He listens to everyone else talk and asks me how my bacon cheeseburger is, adding shyly, “I have bacon flavour toothpaste and bacon floss.”

He is less than comfortable. I cannot believe that he fears being recognised when few know what he looks like. I wonder whether the baby causes his anxiety – whether carrying the next multimillion-pound project in his hand at all times sends him back four decades to the briefcase handcuffed to his arm. He hesitates, grinning, then leans over and takes my wrist, plunging it into the left-hand side of his leather jacket and pressing my fingers around the thick, bobbly grip of a Glock semi-automatic pistol.

****

It was summer 1986 in Los Angeles. O’Neill’s friend Ray Gillen was standing in for Glenn Hughes as the lead singer of Black Sabbath, after Hughes had injured his throat in a fistfight. It was early morning and the Rainbow Bar had chucked out, so O’Neill got his Ferrari and the two of them went to the 24-hour Tower Records store on Sunset Strip. They bought a tape of Andrew Lloyd Webber’s Phantom of the Opera, which had just opened in London, and drove around until 6am listening to “The Music of the Night”, saying: “He’s God, we suck, he’s God, we suck.”

The idea of a rock band as a stage musical may be a desperately unromantic proposition but it has taken root among a generation of rock stars trying to ensure that people play their music way beyond its creators’ natural lifespan. O’Neill whispers that Queen came to see TSO shortly before they launched their West End musical We Will Rock You in 2002. Then came Rock of Ages, in which young musicians acted out the glory days of the Sunset Strip in a plot based on the narrative of the Journey song “Don’t Stop Believin’”, which in turn has enjoyed a second life through the TV show Glee.

Journey now tour not with their original singer, who had hip problems, but with a Filipino fan they found on YouTube. Yes recruited a younger Canadian vocalist, Benoît David, to take the place of Anderson, another singer known for reaching notes that others cannot reach. Singers are always the first to go, says O’Neill, who has little attachment to individual rock stars. “The human voice is just these thin Kleenex tissue muscles; they’re not designed to scream on top of amps five nights a week. It’s not a matter of if you are going to destroy these guys’ instrument but when. That’s why we have multiple lead singers – to allow the vocalists to rest. TSO can go into their eighties.”

There’s an old-school heavy metal band scattered among the TSO chorus line, whose story is a litany of all that can go wrong in rock’n’roll.

Two brothers, Jon and Criss Oliva, had grown up playing Kiss and Alice Cooper covers in the car parks around Clearwater, north of Tampa. Jon had a voice that could do Robert Plant one minute and Freddie Mercury the next: “I call it the Mel Blanc gift,” says O’Neill. “You know, the guy who does all the sounds in Looney Tunes?”

They called themselves Savatage and, with O’Neill as producer, they conquered MTV in 1987 with a video filmed in an underground cavern featuring a dwarf (“Hall of the Mountain King”). But demons crushed the band. Jon wrote most of their second album in rehab. In October 1993, Criss was killed by a drunk driver on the way to a Livestock Festival in Zephyrhills, Florida, and Savatage went into a state of suspended animation.

“I knew we needed something to justify a band with no original members left,” says O’Neill, with no sense at all of how strange that sounds. “I didn’t want to see all those albums disappear. It’s not about getting caught up in the person or the individual.”

In 1996 Savatage’s “Christmas Eve/Sarajevo 12/24” – O’Neill’s longed-for mashup of Christmas carols – was picked up by a New York radio station and metal band morphed into TSO. Their name comes from an unfinished rock opera about the Romanovs – just one of fifty Broadway musicals O’Neill claims to have conceived.

“Look, this band doesn’t make sense on paper,” he concludes. “When I started out with Savatage, I thought it would be like the Eagles. I thought I’d be living off the royalties by now. I did not foresee the collapse of the record industry. I had to find a way to make it work. I worry about the next Steven Tyler or Janis Joplin – where are they going to go? What a thousand generations took to build, a single generation can lose. I’m sure Washington and Alexander Hamilton worried about the future, too.”

Last July, TSO played the Wacken Open Air festival in Germany – a heartland for them, because of all the Beethoven. After dark, the site was hit by a storm, knocking down the sound system. While the stage was being repaired, O’Neill wandered around the camp, talking to punters, possibly in a cloak, like Henry V before Agincourt. He found two young men of 19 who turned out to be Sunni Muslims from Iraq. About 90 feet away, he talked to two men from Iran who were Shia Muslims.

“During those three days of that festival,” he says, “I can’t imagine those four young men didn’t bump into each other. And God forbid, two years from now, they end up in two different militias and they recognise each other, I’d bet everything I have that not only would they not pull the trigger; they would un-chamber their weapons and say, ‘Hey, weren’t we together at a TSO ­concert?’ It’s hard to hate – let alone kill – somebody that you went to a concert with.”

****

The next day, O’Neill is jumpy. We’re travelling to one of his properties to look at his treasure collection. He shows me CCTV footage filmed from the main entrance of the band’s former studio in Tampa. On the noiseless laptop screen, in broad daylight, the stockinged head of a robber slides into the frame; he gets to work on the studio doors with a pair of bolt-cutters. “Three pairs of lady’s pantyhose,” says O’Neill in horror, pointing at the robber’s disguise. “We were inside the whole time – I had my Glock and I didn’t want to use it but I would have.” When the burglar realises that the band is home, he beats a speedy retreat.

O’Neill has had problems with aggressive fans, too, which he passes over with a shudder. “I hate evil,” he says, more than once. TSO’s product manager Thomas Ayad, of Universal Music Group, was killed in the Bataclan terror attack last year. Today, as if to mirror O’Neill’s increased anxiety, there is not one overstuffed briefcase but three.

Sitting next to me in the back of the car, he tosses a small box from hand to hand. He opens it to reveal a Fabergé egg containing a microfilm edition of 50 pages of the original King James Bible that was sent up in the Apollo 14 space mission. He says that he lets kids hold it, so they can feel history in their hands. It’s not clear which kids he means.

We enter his property. I hear sighing and turn to find O’Neill splayed against a wall, throwing the five-point handle of a vault’s combination lock from left to right as if wrestling with the wheel of a mighty ship. In the close confines of a walk-in safe, he pulls items from the shelves: first editions of proceedings from the trial of Thomas Paine from 1793, and Churchill’s two-volume biography of his father, signed. He shows me signed first editions of Dickens’s Christmas Books and two original anonymous prints of The Ballad of Reading Gaol by Oscar Wilde, after whom O’Neill’s daughter, Ireland Wilde, is named. (Wilde means as much to him as Churchill.) Then he gets out a picture book that Joan Jett gave him. A note says: “Dear Paul. I hope you enjoy this reflection into the past and thanks for being a big part of mine.”

“Here’s Louis XV borrowing a tonne of money in 1732,” he says, presenting me with a piece of parchment, “and Benjamin Franklin building some forts.” There’s a letter from Nelson from before the Battle of Trafalgar (“I wrote a rock opera about him”) and a handwritten fragment of a speech by Reagan (“I love Ronald Reagan”). There are dozens of letters from Thomas Edison to his engineer, detailing every stage of the invention of the phonograph. He has the whole set, apart from one he gave to Steven Tyler.

He shifts a painting out of the way – a colourful scene of some rabbits, painted by Jon Anderson for his daughter – and pulls out the pièce de résistance: a gorgeous first edition of Leaves from the Journal of Our Life in the Highlands, signed “To Lord Kitchener of Khartoum” by Queen Victoria. “Can you get any more historic?” he asks. “Kitchener went to Khartoum two days too late and saw Chinese Gordon’s head on a spear.”

Finally, with embarrassment, he shows me a letter from George Washington to Thomas Jefferson, dated 1779. It has been badly crumpled in storage. “Maybe one of these big heavy books will help?” He reaches for a giant edition of Livy and flattens the letter under it. “Mister Livy, can you please help out poor George?”

He drifts out of the room. “There’s other stuff I want but I’ve got to stop because I’m losing track of it,” he says. “My daughter says, ‘Dad, don’t die and leave me with all this stuff. It’s like King Tut’s tomb.’”

He wanders out on to the patio, where the sun beats down so strongly that he must be melting in his leathers. He pulls himself up to perch on a little stucco balcony, legs swinging, and for a moment he epitomises the contradiction at the heart of rock’n’roll wealth: the baby boomers who bought the lifestyles of the landed aristocracy but insist on looking like pickled versions of the boys they were when they first picked up a guitar.

I ask him whether he’s glad that his days with Aerosmith are over. His liver shut down in the 1970s; he broke one of his vertebrae wrestling with bouncers. On the one hand, these stories are badges of honour; on the other, there is relief in his voice.

“Cocaine is Russian roulette,” he says. “One person can walk away from it and another can’t. I never thought I would live this long. My mother told me I wouldn’t live past 30. I was always falling through roofs. I still feel like I’m 19. I’m 60. How did this happen?”

I ask him if he is happy. He says, “Solon said to Croesus, ‘Don’t judge your life a success or a failure until the very end.’”


****

Despite O’Neill’s obsession with the British empire (“Churchill understood India better than Gandhi did”), his band is cagey about plans to play in the UK. TSO first performed in London at the Hammersmith Apollo in 2011, to an audience of about 2,000, with just six trucks of gear. The boiler was broken, the auditorium was freezing and everyone kept their coat on. Ask O’Neill if he is coming back any time soon and he gives a small sigh.

“I think he’d settle for nothing smaller than the O2 Arena,” says Anna Phoebe, “but, for a start, they’d have to get rid of all the narration in the show because British people do not like being told what to think.”

O’Neill’s characters are simplified figures – Tiny Tims or Little Match Girls, or the ­brazier-hugging idiots savants of 1980s Christmas movies. At the age of 16, working as a busboy in Hell’s Kitchen, he received a hundred-dollar bill as a tip from a stranger and never looked back.

“They’re selling the American dream and yet ‘the American dream’ no longer exists,” says Phoebe. “Even Barack Obama said it – what your father earns is more of an indicator of your future wealth than anything else. TSO sell the romanticised version – you can be poor, you can work hard, you can get yourself out of where you came from – and we don’t relate to that. But he enjoys a challenge. His brain will probably work overtime to overcome this problem.”

“I don’t necessarily think it will work over here,” Greg Lake says. “I don’t necessarily think they’d be doing themselves any favours. What is it, the money? They’re not going to sell 100,000 tickets!”

I ask Lake whether he can see a future in which young stage-school kids play the hits of long-dead bands, giving them eternal life.

“I’ve seen a Japanese ‘version’ of Emerson, Lake and Palmer, believe it or not,” he says. “I felt quite ill. Fact is, who is going to interpret the classical music of today – which is rock music – when the original players are gone?

“It’s hard to imagine what sort of currency rock music will have in a hundred years’ time. I’ve played some biblical shows – 600,000 people in one go – and that era won’t be easily forgotten. I’ve never seen that many people in one place. You wouldn’t. Other than in a war.”

Two days after we spoke, Lake’s bandmate Keith Emerson committed suicide after a period of depression connected with a degenerative disease that was affecting his playing. Before he hung up, Lake had told me about the last time he saw O’Neill: he presented Lake with a gift, one volume of the multi-volume memoirs of Winston Churchill, and told him he had put a bookmark in it.

“I opened it up and it’s a thousand-dollar bill,” Lake said. “Tell him he can ‘whack’ me whenever he wants.”

****

The sun goes down on Tampa as we barrel along Interstate 4. O’Neill takes his shades off in the evening light. He says he wears them because he is afraid of going blind. His father has lost his sight and blindness has affected nine members of his family. He is tired, and when he is tired, he speaks in military history.

Is the age of the rock’n’roll hero over?

“It’s all about the idea and real heroes grasp that. Washington didn’t want to be king. He had an idea, which was America.”

Who will he hand his project on to?

“Some kid who hasn’t been born yet. Abraham Lincoln came out of nowhere. He had ten days of schooling in his whole life. I had the ultimate gift in life, which was low expectations. I just feel lucky that it’s happened and I just hope that no one catches on that I’m getting away with murder.”

He is fed up with talking about the band but is too polite to say so. “Thank God for Britain,” he says instead. Congress is a mess. Obamacare? Please. Trump is a moron.

He sings a couple of bars of “Rule, Britannia!” soft and high.

“Seriously, it’s like the last days of Rome here,” he says. “But I think it will pull together. I believe in happy endings.”

Kate Mossman is the New Statesman's arts editor and pop critic.

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue