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February 19, 2008

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer...02/19/2008

Russia’s Astounding Barter Deal With Iraq

Wanting to help Russian companies win contracts with Iraq, Russia has agreed to a most unique barter arrangement. In exchange for launching promising joint projects in the oil and gas and electric-power sectors, Russia has told the Iraq government, “we will write off 93% of what you owe us, or $11.7 billion of your $12.9 billion debt.”

Nearly Everybody Has Shopped Online—Worldwide

According to the latest Nielsen Global Online Survey on internet shopping habits, more than 85% of the world's online population has used the internet to make a purchase. That’s a 40% increase in the past two years. 

When the Nielsen Company conducted its first global survey into internet shopping trends two years ago, approximately 10% of the world's population (627 million) had shopped online. Within two years, this number has increased by approximately 40% to 875 million.

U.S. Small Business Owners Pessimistic

According to a report on CNBC TV (cable business network) the small business sector in the United States is at its lowest level since January 1991, after its biggest decline ever in the most recent survey conducted by National Federation of Independent Business (NFIB). The report indicated there is little hiring or business investment taking place, which is a sure indicator of a downturn in the economy.

Donnelley Happy With Business.com Purchase

R.H. Donnelley’s yellow pages directory online business acquired Business.com in the 4th quarter of 2007 for $345 million...besting the New York Times and Dow Jones for the acquisition. And they’re convinced that Business.com will prove to be an important business partner for them, as the small business community expands its navigating of online marketing.

Yahoo’s Lost Deal

Microsoft’s pursuit of Yahoo and the potential buyout of $41 billion seems staggering. But just a few years ago, in 2001 Yahoo had an opportunity to buy Google. It occurred when Google’s co-founders Sergey Grin and Larry Page dined with former Yahoo CEO Terry Semel and discussed a deal. The Google co-founders wanted $3 billion to sell and Yahoo’s Semel felt the price was tool high. Google today is worth $162 billion!

Speculators Walking Away Which Is Bad News

According to Wachovia and Bank of America, as well as Fitch Ratings, half of the homes listed for sale in Las Vegas are vacant. Most of the homes were bought by investors/speculators. No longer an appreciating asset, they have little attachment to the homes now.

Walk-aways could lead to an insidious process, putting more downward pressure on prices, and in turn giving more homeowners an incentive to pack their bags and leave their keys in the mailbox for the bank.

Goldman Sachs Chief Economist Jan Hatizus estimates that by the end of 2008 some 30% of all outstanding mortgages (or 15 million U.S. homes) will be attached to negative equity—mortgages will be more than the homes they finance.

Current U.S. Listing Information...

Velocity Trade Exchange
2007 Yanceyville St., Box 72
Greensboro, NC 27405
Ph: (336) 379-5066
Fax: (888) 375-3019
E-mail: info@velocitytradeexhange.com
www.velocitytradeexchange.com

All back issues of "From the Desk...” can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a “box” at the end of the newsletter for your convenience. See you next week. . .)


Looking Back. . .
Do You Remember This February 1982 Announcement?

Barterers Beware:

In February 1982 the Internal Revenue Service filed suit in U.S. District Court to obtain the exchange and membership records of Barter Systems, Inc., a Lubbock (TX) affiliate of a nationwide clearinghouse for trading goods and services.

The Dallas IRS is specifically seeking the names and social security numbers of the group’s members—in connection with exchanges that occurred in 1979 and 1980—for the purpose of collecting unpaid taxes.


Second Annual NATE Owners-Retreat

Date: April 28 & 29, 2008

Focus: The future of your barter exchange

Location: The Chateau Elan Resort & Spa, Braselton, GA  (Outside of Atlanta)

Host: The Barter Company

For more information & registration go to  www.nate.org.


Stimulus Package No Path To Economic Recovery

Statement of John Berlau, Director, Center for Entrepreneurship (CEI)

Last week President Bush signed a $168 billion economic stimulus package. Unfortunately for long-term economic prospects, Congress has failed to enact the more prudent fiscal policy of making permanent the 2001 and 2003 cuts in income, capital gains, and dividend tax.

It is far from clear we are facing a recession, but we are facing an uncertainty about the economy that is making the market nervous. And part of what is making the market nervous is, ironically, politicians’ urge to do “something,” anything, to save it.

Commerce Department figures released yesterday showed stronger than expected growth in retail sales for January. There has also been some surprisingly strong 4th quarter earnings reports from companies such as IBM. The Federal Reserve's “Beige Book” of industry data notes that in some sectors such as hotels, health care, consulting and engineering, demand has actually been “robust.”

Yet there are still things that concern the market, and many of those concerns stem from Washington. The market is concerned about inflation and an unstable dollar, as Bernanke has basically said that he will lower interest rates at will. And it is concerned about the tax cuts expiring — in 2011 by law, and possibly sooner, depending on things like election results.

This uncertainty constrains investment. And that’s why it would be so much better to reduce this uncertainty by an action such as making the tax cut permanent than a Keynsian temporary stimulus that has been shown again and again to be flawed. The late Milton Friedman’s “permanent income” hypothesis demonstrably shows that people do not spend money from a one-time stimuli from the government — in fact if they perceive bad times, they are likely to hoard any extra money they get. Whether or not they spend money is related to expectations about their future income.

That’s why he argued that during a recession, the best thing the government could do was raise income expectations by changing incentives through policies such as permanent tax cuts. As he told Radio Australia in the late 1990s, “Cut taxes in order to increase incentives, but there is no need for the government to increase spending.”

Permanent tax and regulatory relief are the best cures for economic doldrums. If the federal government is not going to do that, it should follow the medical oath, and first do no harm.

(CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government. For more information visit www.cei.org.)


Stunning Online Growth For Magazines & Newspapers

The top 320 magazine web sites received on average 67.5 million unique visitors per month during the fourth quarter of 2007—an 8.1% jump from the same period in 2006, according to data collected by Nielsen Online and compiled by the Magazine Publishers of America. That's a faster rate of growth than the Internet overall, where the total U.S. online population rose 2.4% year-over-year.

These figures mean that magazine web sites reached almost 42% of the total U.S. online population of about 160 million in the fourth quarter, an increase of 7.1% over last year's reach. These users generated 434.4 million visits in the fourth quarter—up 12.3%. While time spent increased 5.5%, to an average 1.78 billion minutes per month, implying an average visit duration of just over four minutes.

In terms of unique visitors per month, magazine web sites bested newspapers, where the total unique audience for newspaper sites increased 9% in the fourth quarter to an average 62.8 million per month.

These figures, also collected by Nielsen Online, show that 39% of all active web users visited newspaper sites during the fourth quarter, yielding over 3 billion impressions—up 7.3% from the fourth quarter of 2006.


Why Frequent Flyer Miles Are Profitable...And What You Must Do To Play Their Game

Editor’s Note: One of the best stories we’ve ever read on frequent flyer miles (FFM) was written by Peter Greenberg, Travel Editor for Today. We have reprinted it from MSNBC.MSN.com, titled, “Why Frequent Flyer Plans Keep You Grounded.” Greenberg says 120 million Americans have FF miles. And there are 92 FFM programs.

The average active member earns 11,364 miles per year. And there are 9.7 trillion unredeemed miles in current liability among all FFM programs. (Approximately 15 trillion FF miles have been issued, at 2-cents per mile that is a $300 billion currency.) Frequent flyer miles are the second biggest currency in the world, after the U.S. dollar.

What does an award cost an airline? With airlines carrying unredeemed mileage on the books as a liability, the airlines then estimate that when they do actually redeem miles they do so with the valuation of 40-cents for every 1,000 miles. So, redeeming a 25,000-mile award costs the airline about $10! (Note: With the recent rise in fuel the price might reach $15.)

For the airlines, the mileage programs have become one of their few profitable divisions—that’s right, profitable. How could that be when airlines sell miles to thousands of marketing partners—florists, grocers, gas stations, restaurants, banks—so that you can “earn” those miles when you make purchases? But here’s the rub: Since the airlines also manage and control redemption of those miles—without any oversight, regulation or control—they build in a huge profit.

And while the airlines claim that more miles were redeemed last year than before, the actual redemption percentage, that is, the percentage of eligible miles that were really redeemed by the airlines last year hovered at slightly below 10%. That’s an amazingly profitable margin! And for consumers, that’s an amazingly painful experience.

Now that I’ve given you all the bad news, how then do you go about redeeming your awards and beating the airline mileage game?

Airlines will argue that their members are happy with their programs and their ability to redeem those miles. Really? Dig a little deeper and you’ll find that what the airlines are not telling you is that the airlines are playing a game, which they are allowed to do under deregulation. Since these programs aren’t regulated, no airline is required to provide any seat free of charge in these programs. This is similar to the way airlines are allowed to advertise a discount fare without revealing how many seats are actually available at that fare.

And the game? Almost all mileage programs of the major carriers get you to enroll by strongly inferring in all of their advertisements and promotional materials that as soon as you get to the first redemption level—25,000 miles—you’ll be sitting on a beach with a pina colada.

But the reality is that airlines often double the ante. In almost all cases, when you call to redeem those 25,000 miles for a free coach domestic ticket, or 35,000 for a free coach ticket to Hawaii, the airline informs you that no seats are available at that level, but the airline magically does have your seat for double that amount—50,000 or 70,000 miles! It’s a clever but painful way for airlines to dispose of their mileage liabilities. And that’s only if they want to release any seats at all. So what can you do? The answer, it seems, is be creative in a number of ways:

  • Alternate airports. Don’t just look for award seats to Los Angeles airport, for example, but also to Burbank, Ontario or Long Beach as well.

  • Alternate routings. Don’t just think point-to-point trips or non-stop flights. Seats might not be available on non-stop flights, so make a stop in Chicago en route to San Francisco from Miami. (In my search for Hawaii flights, throw out the map entirely. On one routing offered to us to redeem our miles to Hawaii, United told me the only way they could get me there was Los Angeles to Denver to Chicago to Honolulu!)

And if all else fails, then look to the airline’s mileage partners. Let’s say you want to redeem your miles on a flight from Los Angeles to Frankfurt on United, but there aren’t any seats available, try flying United to Chicago and then Lufthansa to Germany (a United mileage partner). Los Angeles to Hong Kong? If there aren’t any seats on American Airlines, try one of its partners, Cathay Pacific or Qantas through Sydney.

In many cases, you may need to book as much as 320 days in advance to get those seats. Some airlines, like Continental, offer a feature on their web sites that allows you to check mileage seat availability up to 11 months ahead. That’s the good news. The bad news: you have the luxury of being disappointed online!

And if all else fails, and the reservation agent tells you there are no seats available on any flight on any route to any nearby airport on your primary or any partner airline, it’s time to speak to a supervisor. Why? The key reminder here is that loyalty programs are worthless if they don’t reward you...for your loyalty! In almost all cases, supervisors have the discretionary power to override computer blocks and release mileage seats.


Hotel General Managers

Work With Audio/Visual Vendor On Barter

Collect cash, as usual, from the guest accounts staying at your facility that require the use of professional AV services. And rather than shouldering your ongoing employee costs, or your current vendor’s cash agreement for AV services, here’s a much better alternative:

Work with a proven national vendor (a sterling 25-year track record) who will provide all of the AV services for your hotel on a 100% TRADE BASIS! (Payment to be in the form of trade dollars.)

Your hotel’s annual AV billings must be a minimum of $200,000, and this offer is available only in the continental United States.

For a confidential introduction contact Bob Meyer via e-mail: bmeyer@barternews.com.

Attention Trade Exchange Owners:

If your member hotel(s) have a minimum of 10,000 sq. feet of meeting space and annual billings of at least $200,000 for AV services this is a great opportunity to earn substantial cash service fees on the hundreds of thousands of trade dollars your hotel member will be paying the vendor. Contact Bob Meyer at the above e-mail.


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At the top right of the page, just under where you sign up for the Tuesday Report you will see a little Google box. It is where you can (1) type in the name of a subject, company, or person. Then (2) click the button www.barternews.com to search the site, followed by (3) hitting the search button.


The Growth and Use of Secondary Capital (New Money) Creates Unprecedented Wealth In Today’s New Age Of Possibility

There are many forms of secondary capital—which can be defined as any financial instrument that measures and communicates value in a common language. Would you like to see and learn more about the many forms of secondary capital?

 We have 70 free, informative and inspiring, articles for you in our “Secondary Capital Section.” Check it out... www.barternews.com/secondary_capital.htm.

Get New Money-Making Ideas And Valuable Contacts!

You can obtain useful, informative ideas and contacts in every available back-issue of BarterNews.


Every barter company in the world is listed on our web site, click through to our Global List of Barter Companies.


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