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June 30,  2009

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer...06/30/2009

Bartercard�s Incredible Sales Staff

The world�s largest trade exchange, with 65,000 members, is Bartercard. Launched 18 years ago by Australia�s entrepreneurial Wayne Sharpe, the company focused on setting up a superior barter training and operational system. The diligence has paid off.

In an industry that sees a turnover of sales people, Bartercard can boast of their top seven sales people. They have sold 8,000 new members between them, all paid. The record for a single month of personal sales is 43 members. And eleven other sales people have signed up 35 in a month.

Bartercard�s best are: Rod Bryan 1,259 sign-ups; Kevin Dienoff 1,165; Steve Mills 1,248; Paul Marcello 1,023; Michael Tynne 1,157; Mac Mackie 1,129; Rose Lawlar 1,022.

Value of World�s Millionaires Assets Slid 20%

The ranks of the world�s millionaires shrank at the fastest rate in 2008, with North America suffering the biggest wealth loss worldwide, according to a survey by Capgemini and Merrill Lynch & Co.

The global slump in property and equity markets last year cut the number of millionaires by 15% to 8.6 million, wiping out two years of increases, the firms said in their 13th annual World Wealth Report. (The value of the world�s millionaires� assets slid 20% to $32.8 trillion, after a 9.4% increase the previous year, the survey said.)

Surprisingly, the U.S. wealthy fared better than many of their overseas counterparts. While the nation�s millionaire population fell 19%, the U.K. had a 26% drop, Russia fell 29%, India dropped 32%, and Australia and Canada both topped 23%. (Those least affected included Brazil with a 9% drop, and China with a 12% drop.)

Vancouver�s Commercial Real Estate Booming

Having had the good fortune to spend time in one of the most beautiful cities in the world, it�s good to see Vancouver (BC) is doing so well with its commercial real estate (office buildings, shopping centers and other properties). Because of the low vacancy rates (4.2%), prices are holding up in Vancouver, versus most cities in the U.S. where average prices are down 25% to 35% in most locations.

Companies Plan To Operate With Less Employees

Consulting firm Watson Wyatt Worldwide conducted a new survey of 179 companies and reports that 52% of those surveyed expect to employ fewer people three to five years from now than they did before the recession began. And 73% expect employees to shoulder more of the cost of health care than prior to the recession.

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. . .)

Hyundai Motor America Barters 1,300 Cars

According to Automotive News, Hyundai Motor America traded 1,300 brand-new Tiburon coupes to corporate barter company Active International. The deal included very little cash, with the bulk of the invoice price consisting of advertising credits that Hyundai will use in its media buying plan.

Hyundai made Active International promise (agree to) that the cars wouldn�t be resold to Hyundai dealers or to undercut Hyundai�s own marketing programs�for example, by reselling cars to a used-car superstore that could offer them for less than Hyundai dealers� deeply discounted prices.

Active International did $1.4 billion in corporate trade business in 2008.

Attention Trade Exchange Owners. . .It�s GROW OR GO!

The magic bullet for growth is sales, always has been and always will be...yet the industry�s overall growth is anemic. Why? Maybe it�s because we�re not providing on-going education about our unique way of doing business. Knowledge is always a pre-requisite to taking sustained action.

And for those newcomers, the lifeblood of an exchange, awareness of and understanding about the value of trading is even more important.

If you expect prospects to come aboard and your members to be more active traders, but you are perplexed when the results are less than you desire...there�s a good reason. You must continually educate and motivate every month--month after month after month!

Such action is necessary because, let�s face it, more cash business, not trade, is of paramount importance to your members. You must break through this �cash only� focus and redirect their thinking toward barter. Although most exchanges don�t see the importance of doing so, many industry leaders are taking action and so can you.

As the owner of your own operation, there is an easy and inexpensive solution for moving forward...look into using The Competitive Edge newsletter. It�s a camera-ready, 4-page, professionally written, informational marketing tool...available in PDF format as well as print. So regardless of how you reach your prospects and clients, you will have the necessary vehicle.

Written especially for you, the busy trade exchange owner, I am certain it will be the best investment you ever make.

For more information about The Competitive Edge, and how it can benefit you click here.

New Tax Breaks For Small-Business Owners

(This information is provided by active members of the American Institute of Certified Public Accountants.)

Situation: Your client has a small business and is considering some capital expenditures this year but is wondering about the tax implications.

Solution: The American Recovery and Reinvestment Act contains several provisions designed to encourage small-business owners to invest in their companies. Some of these provisions are available only for a limited time.

Faster recovery of certain investments in business property: Small businesses that invest in new property or equipment will have the opportunity to increase the expensing or depreciation of the purchases in 2009. There are two options to increase deductions related to capital expenditures.

Increased limit on Section 179 expense: Businesses can elect to expense, rather than depreciate, the cost of machinery, equipment, vehicles and other tangible property placed in service in 2009. The maximum deduction is $250,000, and the cost of property in excess of this amount may be depreciated over the life of the property. In 2010, the Section 179 cap will drop to $133,000 (indexed for inflation). After 2010, the cap returns to the prior limit of $25,000.

The Section 179 deduction cannot exceed taxable income. If the deduction is limited, it may be carried over to future years. However, it phases out for capital expenditures above $800,000 and limits the tax break to smaller businesses. The phase out level on capital expenditures also decreases after 2009.

Bonus depreciation allowed in 2009: A small business may deduct up to 50% of the cost of �qualified property� purchased and placed in service in 2009 (2010 for certain longer-lived property). Qualified property is almost any capital expenditure other than buildings.

The Section 179 expense and the bonus depreciation may be used together. However, the basis for depreciating the property must first be reduced by the Section 179 expense.

Extended NOL carry-back period: Normally, a net operating loss may be carried back two years and carried forward 20 years to offset taxable income. For NOLs created after December 31, 2007, the act provides a five-year carry-back period. Therefore, if the business paid taxes in the prior five years, the NOL may be carried back to the fifth prior year and each succeeding year to offset income and refund taxes.

This provision applies to most types of businesses, as well as individuals, provided that gross income did not average more than $15 million in the three years leading up to the NOL. To claim the refund, eligible businesses must file Form 1139 by September 15. Eligible individuals must file by October 15 using Form 1045.

Shortened period for taxing S-corporation built-in gains: Corporations which elect S-corporation status are not taxed at the corporate level. Instead, the income, deductions and credits are reported by the shareholders.

If a C-corporation elects S-corporation status, any gain inherent in property owned by the corporation at the time of the election and sold within 10 years of the election will be taxed at the maximum corporate rate (currently 35%). A provision of the act reduces the 10-year period to seven years in 2009 and 2010. This provision will benefit corporations that became S-corporations (or acquired property from a C-corporation) between 1999 and 2003.

Breaks for individuals who own small businesses: An individual may exclude 75% of the gain from qualified small-business stock acquired after February 17 of this year and before January 1, 2011. To qualify, the stock must be held at least five years and acquired at the original issue date. This provision will benefit individuals after February 17, 2014, upon satisfying the five-year holding period. Certain limitations apply to the exclusion, which is normally 50% of the gain.

A taxpayer who receives more than half of his or her income from a small business may reduce the required 2009 estimated tax payments. Normally, estimated tax payments must equal or exceed the smaller of 90% of the current year tax or 110% of the prior-year tax. In 2009, taxpayers who qualify only make estimated payments based on the lesser of 90% of the 2008 tax or 90% of the 2009 tax. This provision benefits taxpayers with 2009 income greater than 2008.


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Hoteliers Must Expand Thinking

If you are reading the papers these days you�re probably amazed at the problems and foreclosures within the hotel industry. Hoteliers of every size and description are failing, because over-leveraged hotels are not generating enough cash flow to cover their expenses.

In the first five months of this year, U.S. hotel occupancy declined to 53%, the lowest total since Smith Travel Research began tracking the figures in 1987. Revenue per available room, on average, has declined to $52.78 so far this year, the lowest tally since 2004.

BarterNews published an excellent study by the CPA of a Los Angeles-based hotel chain (5 properties) which showed that the property would generate an average of $24 per room in cash business when they traded their rooms. The author of the article even suggested that �giving the rooms away� would be financially better than letting them sit empty.

Inasmuch as an occupancy rate of 62% to 65% is usually the breakeven point for a hotel, today�s challenging times (53% occupancy) call for some expanded thinking. Embracing barter with a greater emphasis would be a good start.

Money-Making Reports Available From BarterNews

The Myths Of Paper Money

By Benjamin Gisin

There are two popular myths about paper money. The first is that government prints so much paper money that it causes inflation. Secondly is that there is nothing backing the paper money. These myths are so prevalent they have taken on a mantra of reality. These myths are often associated with interests wanting to sell gold.

These myths are usually put forward as the cause of inflation and economic ills. They draw attention away from how the monetary system works, resulting in the wrong medicine recommendation for our economic woes. The monetary system is a process of indebtedness that curtails the economy by saturating it with debt and then being unable to find enough qualified borrowers to keep the economy going with more debt.

Paper money is a complex process that is a small piece of the larger money process of indebtedness. The purpose of paper money is to provide bank checking and savings account holders the option to convert what is in their bank account to paper money. Paper money has nothing to do with government printing to finance its operations or cause inflation.

The following explanation of the paper money process will provide some insight:

         The Bureau of Engraving and Printing, which is a division of the United States Treasury, prints all denominations of paper money upon order from the Federal Reserve Bank (Fed). The Fed is a private banking corporation created by law with responsibilities to report its operations to the government. The Fed pays the Bureau of Engraving and Printing for the cost of printing the paper money.

         The Fed puts the printed money in its vaults and awaits orders from banks who need paper money to cash checks or for ATM machines. Paper money is a debt of the Fed.

         The Fed must create the reserves that banks use to buy the paper money from the Fed. This is done by the Fed buying, on the open market, U.S. Treasury and other debt securities. When the Fed buys securities, it credits the reserve account of the bank where the securities dealer has his account. It is this debt the Fed has to banks that banks use to purchase the paper money from the Fed at face value.

         The Fed collateralizes the cash it ships to banks with the same basket of securities it purchased to create the reserves.

         What the Fed owes banks in terms of reserves, is transferred to what the Fed owes in the form of cash at the bank.

         When a customer cashes a check or makes an ATM withdrawal, the bank lowers what it owes the customer�s checking/savings account in exchange for the paper money which is an obligation of the Fed.

For the person unfamiliar with banking process, these six points of explanation can be confusing. The bottom line is that paper money is issued by banks (not government). The issuance of paper money is offset by the simultaneous extinguishing of checking/savings account money. The more paper money in circulation, the less money is in circulation via checks and debit cards.

So the use of one form of money (paper money) extinguishes another form of money (checking and savings deposits). Primarily, it is the banks� creation of checking and savings account money, and further secondary lending of that money, that causes inflation and increases the amount and speed of money in circulation.

As of 3/31/09 (source: FDIC) the U.S. banking system was obligated for $8,954 billion in customer deposits. As of 4/2/09 (source: Federal Reserve) there was $865 billion of paper money in circulation. When you deposit paper money in a bank, your bank account goes up by the same amount as the paper money that is now out of circulation and vice versa.

All paper money issued by the Federal Reserve is collateralized (backed) by some type of security. In recent months, the Fed purchased securities representing bonds collateralized by residential homes. Some of these bonds now collateralize some of the paper money in circulation (source: Federal Reserve).

The printing, issuance, and collateralization of paper money have little to do with financial and economic meltdown. The nation�s economic woes are the result of a financial system based entirely on complex processes of indebtedness. The money products of these processes (bank accounts and paper money) make an inferior means of exchange by virtue of saturating the economy with debt, barriers to access in that someone must qualify for credit and their use as savings, rather than circulating media.

For more information and discovering what options are emerging, subscribe to Peaceful Economics newsletter. Annual subscription $21.95, for 6 issues. Phone (208) 523-2717, or send check to PO Box 3662, Idaho Falls, Idaho 83403.

For speaking engagements, radio interviews or comments phone (208) 523-2717, or e-mail

Benjamin Gisin is a veteran banker and former senior agricultural approval officer for one of the nation�s largest agricultural banks. Since 1998, he consults businesses and agricultural producers facing credit challenges. He writes and lectures extensively on the evolution of money, economics and food security.


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