When my trust fund imploded, I headed to Monte Carlo, where people still have money.

Notes from different corners of the world.
Feb. 12 2009 6:53 AM

The Meaning of Monaco

When one's trust fund implodes, there's no better place to run than a gathering of the still-rich in Monte Carlo.

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In fact, Albert did not seem in the least flamboyant or out of control—he appeared to be shy and somewhat awkward. He delivered a mumbled welcoming speech in a flat American accent. The person next to me whispered that Albert had been a camp counselor for many summers at Lake Winnipesaukee. "Your highness," I said, when he took my hand, then I involuntarily added something like a curtsey. He exchanged a few words with Ian about London nightclubs and—this was several weeks before he became a household word—a New Yorker named Madoff. ("So the prince knew Madoff," I marveled to Ian after Bernie's larceny was revealed. "Well, he would, wouldn't he," Ian replied, unimpressed.)

When Albert acceded to the throne after his father died in 2005, he announced that he wanted to rid Monaco of its reputation as a "pariah state" of money launderers and crooks by making its banking more transparent. This conference was part of that effort to emphasize the legitimate and positive aspects of Monaco's role in the international finance community. And yet I had the feeling something else was being said at levels my ears could not necessarily register.

It was a lot of boring banker talk—two days of PowerPoint presentations about capital flow and tax treatments and exchange limitations—yet it was hard not to ask the question: With the world's financial system collapsing, what, exactly, were these men in their very good suits doing here? So I asked it.

"Well, not everyone loses their money in bad times," said a tight-lipped Londoner, sitting next to me at luncheon.

"How so?" I pressed, thinking about my own devastated accounts.

"They went into cash. Or have been in cash."

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"And they would have been that smart, whereas the rest of us were so dumb, because …?"

Mr. Cryptic elaborated, with what seemed like a little braggadocio: "There are people who maintain high levels of liquidity, because their main mission, after having gotten their money, is not to lose it." That either sounded like a definition of prudence or of a sub-rosa world of Bernies. If there was one Bernie, there ought to be more—many, many more—with cash to stash. To the point: Where was Bernie's dough?

Indeed, it was obviously more and more of an awkward predicament to have money now when nobody else had it. Escaping, on the second day, to lunch with Ian and a few other Brionis at La Chèvre d'Or in the village of Eze way up in the hills, it was hard to believe in the apocalypse looking over the Cote D'Azur. But everybody agreed that the apocalypse was real—and good news for Monte Carlo.

The point of Monaco, and its sister tax havens, was to be a sanctuary for the rich in a world where the rich needed to hide from the nonrich—from hungry tax and other legal authorities. But just as being rich had become a common and banal state, so had Monte Carlo. Except now, once more, with everybody going broke, rich might become an exclusive condition.