Monthly Archives: April 2008

John Gapper

I have never seen Arnold Schwarzenegger, the governor of California, in person so I took the opportunity to do so this lunchtime at the Milken Institute Global Conference. I have to say that I was impressed.

Mr Schwarzenegger was talking about his push to build infrastructure such as roads, rail links and schools in California. He has also linked up with Ed Rendell, governor of Pennsylvania, and Michael Bloomberg, mayor of New York to spread that message across the US.

I expected him to be amusing and unusual but he surprised me with his fluency in talking about the topic and his charm. Maybe it helped that he was in a room full of business people (and financiers with an interest in the subject) who were on his side.

I also liked his lack of tact. At one point, eulogising about why his state was “the greatest place in the world” he compared it to other states. “People are not dying to go to Iowa,” he said. I can only imagine the apology he will have to make for that. Read more

John Gapper


My FT column this week is about Michael Milken and his defence at the Milken Institute Global Conference of high-yield finance in the wake of the subprime mortgage crisis. I think he gets some things wrong but is correct about one big thing. Read more

John Gapper

Amid all the financial confusion, one things seems clear enough: the days of the $10bn plus leveraged buyout are gone for now.

Even when the backlog of unsyndicated high-yield loans held by banks is cleared – which now looks like will happen fairly quickly – they are not going to be rushing back to the private equity funds to offer new multi-billion facilities.

The reason for that is not simply that they have been burned by the events of the past year. More concretely, they can no longer package up mezzanine and secured debt for buyouts and transform it into collateralised loan obligations (CLOs).

This was the unanimous conclusion of a panel on private equity this morning at the Milken Institute Global Conference, which included Leon Black of Apollo Advisers and Thomas Lee of the eponymous private equity group.

 Read more

John Gapper

If Warren Buffett does team up with Mars to buy Wrigley for more than $22bn, it will be not only a quintessential Buffett deal but a reminder of where value lies in a downturn.

Mr Buffett has a sweet tooth, not only personally (he is known for his devotion to Cherry Coke) but as an investor. Berkshire Hathaway’s 8 per cent stake in Coca-Cola is among his longstanding stakes in big consumer brands. Read more

John Gapper

Having been travelling recently (I have just shifted from London, via New York and Washington, to Los Angeles for the Milken Institute Global Conference) I am sensitive to things that help or hinder the voyager.

In this context, I am struck by the fact that the wheel-along suitcase is one of the great consumer product inventions of recent years. I would go so far as to place it alongside the upside-down tomato sauce bottle as a transformative variation of an existing product. Read more

John Gapper

I am back in London again to pick up a prize and continue my ongoing comparison of my native city with the one where I live – New York.

As always, when arriving at London Bridge station this morning, I was reminded of T. S. Eliot’s lines from The Wasteland:

A crowd flowed over London Bridge, so many,
I had not thought death had undone so many.
Sighs, short and infrequent, were exhaled,
And each man fixed his eyes before his feet.
Flowed up the hill and down King William Street,
To where Saint Mary Woolnoth kept the hours
With a dead sound on the final stroke of nine.

Eliot once worked in Lloyds Bank as a clerk. I recall that Sir Jeremy Morse, the former chairman of the bank, had tears in his eyes when he recited those lines from memory in a valedictory speech.

Anyway, this morning they were as true as ever as I pushed through the crowds to board the Jubilee Line. A sign proclaimed that the line service was good but, as Bill Clinton might have said, that depends on the meaning of the word “good”. Read more

John Gapper

I hesitate to say this because he has built a vast global media empire and I have not but I think Rupert Murdoch is wrong about the Wall Street Journal.

The resignation under pressure of Marcus Brauchli as its managing editor this week brought to the surface underlying tensions between Mr Murdoch and Mr Brauchli over the editorial direction of the paper.

I agree with some of the changes that Mr Murdoch wants to bring to the paper but in one big respect – his wish to compete more directly with the New York Times – he is misguided. Read more

John Gapper


For this week’s column in the FT, I have gone down memory lane to the origins of the disastrous UBS foray into credit derivatives and subprime mortgages. You can read it here and comment below.