Monthly Archives: September 2008

John Gapper

My column in the FT this week is on Hank Paulson, the bail-out of Fannie and Freddie, and the dangers of endless intervention. It starts like this:

I do not know what plans Hank Paulson, the US Treasury secretary, has for the weekend. Bird-watching, perhaps. Whatever they are, may I suggest that he sticks to them? 

John Gapper

US supermarket chains are following their German and British counterparts in discovering the joys of small stores in cities. Both the New York Times and the FT have stories today about Wal-Mart and others following the example of Tesco’s neighbourhood stores.

There are good reasons why the neighbourhood grocery chain, which has been pioneered by Aldi’s US chain Trader Joe’s as well as Tesco’s Fresh & Easy chain in California, could pay off for US supermarkets.

As the Times article points out, there is an awful lot of pointless variety in the typical US supermarket, driven by the tendency of branded food companies to make 57 varieties of everything. 

John Gapper

Speaking as (free) customer of 23 and Me, the genetic testing company co-founded by Anne Wojcicki, the wife of Sergey Brin, the Google co-founder, I can see why it has just slashed its prices.

The New York Times reports this morning that 23 and Me is cutting the price for people who want to spit into a laboratory tube, send it off in the mail, and receive some genetic information about themselves.

Instead of $999 per test, the test price is now $399. Linda Avey, Ms Wojcicki’s co-founder, says that the privately-owned Silicon Valley company wants to entice more people to give it a shot, which would allow more interesting research applications:

“It’s all about numbers and having as many people enrolled as possible.”

Some readers may recall that I was offered a free genetic test while at the World Economic Forum earlier this year, along with my colleague Gideon Rachman. So I have some insight into whether it is worth doing. 

John Gapper

Hank Paulson’s effort to prop up Fannie Mae and Freddie Mac has various beneficiaries but few gain more than foreign investors.

One effect of the way the quasi-nationalisation is structured is that US institutions may well suffer more than foreign ones. In brief, it is good for overseas central banks and sovereign wealth funds but bad for US regional banks.

The exuberance in non-US markets this morning is a reflection of that fact. The government has had to step in to reassure foreign investors who have become huge buyers of agency debt, but has treated US equity holders harshly. 

John Gapper

Lucy Kellaway has another take on business people and their families.

It seems that smokeless tobacco, of which I approve, is now all the rage

John Gapper

The US government’s near- nationalisation of Fannie Mae and Freddie Mac leaves various questions unresolved. Hank Paulson, the Treasury secretary, recognised the biggest of these in his speech on the rescue on Sunday: whether they should become public or private entities in future.

“Government support needs to be either explicit or non-existent, and structured to resolve the conflict between public and private purposes. And policymakers must address the issue of systemic risk.”

He is right that a choice has to be made. Fannie was originally established in 1938 to buy and hold mortgages insured by the federal government through the Federal Housing Administration. The idea was to provide government backing so that low income families could afford to buy homes. 

John Gapper

blogbranson.jpg

There are some assignments in in this job that can plausibly be described as work but feel more like a pleasant day out. I spent this morning, for example, sailing around New York harbour with Richard Branson, the founder of the Virgin Group, and his 26-year-old daughter Holly.

There were, admittedly, a few other people on the boat with us. In fact, there was a bevy of reporters and photographers to report on the launch of Sir Richard’s latest publicity stunt attempt to break a world record.

After taking a break from crossing oceans at high speed in boats (including one time when he sank) and attempting to circumnavigate the world in a balloon, he has returned to the fray. He and a crew that includes Ms Branson and her 23-year-old brother Sam will next week attempt to cross the Atlantic in a single-hulled sailing yacht in record time.

I must admit that I spent most of my time on board the 99-foot Teamorigin yacht taking in the New York sunshine and chatting to Ms Branson, a pleasant young woman who has just graduated from medical school in London and is taking a year off to learn about the Virgin business before resuming her training as a doctor. 

John Gapper

They do things differently in Mountain View.