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The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

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November 16, 1999

In this week's report. . .

  • Insurance companies lessen risks through barter
  • Industry association happenings from NATE and IRTA
  • $15 billion exchanged in outsourcing services
  • The $300 billion business-to-business marketplace that competes with the barter industry
  • Creating change and embracing barter
  • Bartering "here and there" around the world

Barter's Many Facets Continue To Reinforce The Obvious

Versatile Business Tool Enables Major
Industries To Function More Efficiently By Sharing Risks

Taking a page from movie superstar George Lucas' book, the insurance industry provides itself with yet another venue...and they do it by bartering catastrophe risks among themselves.

Lucas, the genius behind Star Wars, bartered to reduce his risks by trading a percentage share of his profits. He bartered 1% of the profits in Star Wars for 1% in John Milius' surfing film Big Wednesday. Although Big Wednesday proved to be a big bust, Milius' share of Star Wars netted him more than $500,000. Lucas, of course, made less money on the deal...but it could have gone the other way.

Insurance companies are confronted with a different type of risk than a movie producer, one that can be prohibitively expensive. Namely management of catastrophe risks...ranging from hurricanes and earthquakes to riots and other events.

By forming the Catastrophe Risk Exchange (CATEX), insurance brokerages and self-insured entities are able to barter units of their disaster risk by region and peril.

In effect, because insurers are increasingly being barred by regulators from dropping lines of coverage, or from leaving unprofitable states, the industry has embraced barter. This way they are now able to dilute risk-concentration in one geographic area, by trading a portion of it for risks insured against a different peril in another part of the globe.


Industry Happenings...News About IRTA And NATE

International Reciprocal Trade Association (IRTA)

  • The North American chapter is going on a mission to be more interactive with its members. Each board member was assigned specific companies to interact with.
  • IRTA is putting out a request and proposal to vendors for the handling of the marketing and technical support of the Universal Currency program.
  • Board member Graham Norris has requested a leave of absence until his situation with the SEC has been cleared up.
  • The next Global Board of Directors meeting is scheduled for February 17 and will be held in Queensland, Australia. The meeting will take place at a luxurious resort, and will be available on a 100% trade basis for any trade exchange owner (worldwide) who wishes to attend. The meeting will be similar to the first-ever IRTA European Worldwide Barter Conference held last April in Karlsruhe, Germany.
  • The European chapter of IRTA has scheduled a meeting this spring for their conference. It will be held in Moscow this coming May.

National Association of Trade Exchanges (NATE)

  • NATE's quarterly Board of Director's meeting was held in Seattle October 22-25. Elaborate plans were made for their upcoming NATE 2000 Convention at the Monte Carlo in Las Vegas, scheduled for the week-end of March 2-5.
  • A look at NATE's future, as well as the upcoming convention will be reported in a NATE cover story, which will be the BarterNews' first issue of the new millennium, to be published in January.
  • Director Chris Haddawy, who recently sold his company to BarterTrust.com, resigned his position on the NATE board and Alan Wolfson, owner of TradeSource in Florida, was introduced as the new member of the board. The board members were all impressed with Wolfson's no nonsense, forward thinking attitude.
  • Jerry Howell, NATE's president-elect is working "fast and furiously" on the next issue of the NATE Update. He promises that it will be the best issue ever published. Anyone who's read his creative newsletter will understand his statement is no idle boast!

Major Firms Exchange $15 Billion In Outsourcing Services

Electronic Data Systems and MCI WorldCom concluded a giant trade agreement recently. The huge deal included trading employees, assets, and outsourcing services valued at between $15 billion and $17 billion.

EDS will run MCI's computer operations and manage its software development. In return MCI will pick up EDS's global network.


Business-To-Business Auctioneer
Eyes Significant Market Share
Of $300 Billion Yearly Marketplace

DoveBid, formerly Dove Brothers, is one of the world's leading business-to-business auctioneers and capital asset sale advisors. Now they're the industry's first company to offer integrated online and on-site services.

As of November, DoveBid customers around the world will be able to acquire, or sell, literally thousands of capital assets by participating in DoveBid's on-site auctions, or by handling the desired transaction over the web.

"We expect DoveBid.com's virtual exchange to facilitate the transfer of tens of millions of dollars' worth of capital assets in 1999 alone," stated CEO Ross Dove. "These are assets that were previously destined to sit in storage, because the after market distribution mechanism was so inefficient."


How Do You Handle Change?
Do You Move With Initiative, Imagination & Urgency?

There's four ways to handle change. You can cope with...adapt to...or exploit change. Or you can actually create change on purpose. People who actively embrace barter are on level four. Being proactive, not reactive. They trade because it provides their company with a competitive advantage in the changing marketplace.


Here And There...

  • India, a nation of one billion people, will have big business opportunities as the number of computers and use of the internet expands. One young entrepreneur who's getting in on the ground level is 21-year-old Manish Vij. The MBA student borrowed 50,000 rupees ($1,152) from his father to start kabadibazaar.com (Hindi for junk bazaar), which will promote the bartering of second-hand goods.
  • The revolution continues as venture-capital funding reaches record heights. In the third quarter of 1999 a record $8.6 billion was poured into start-up companies, a 14% increase over the previous quarter. The money was parceled out in 751 different transactions, with internet start-ups getting $5.4 billion of the money for 442 deals. The average round of financing jumped from $7 million to $11.5 million in that same quarter.
  • U.S. Federal Reserve Chairman, Alan Greenspan, recently noted that stocks might be coming less risky. He reasoned that new technology has made the management of business more stable and predictable, from shortening production lead times to lessening the need for inventory build-ups. Greater certainty means less risk. "Dramatic improvements in information technology...have altered our approach to risk," he asserted. That, in turn, may well have "permanently raised the prices of collateral that underlies all financial assets."

Coming soon. . .

  • Los Angeles barter economy poised for growth
  • Bartering "here and there" around the world
  • Warrants bartered for loan restructuring
  • Is a web currency evolving?
  • New business and consumer web sites for trading

 

We welcome your comments, questions, and observations.
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