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December 19, 2006

We wish you all a joyous holiday season and a wondrous New Year!

PLEASE NOTE:

There will be no Tuesday Report on December 26, 2006.

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer...12/19/06

IMS Flying High!

International Monetary Systems had record revenue and trade transactions for November. Trade volume totaled more than $11 million in sales. (IMS only reports one side of the barter transactions. Most barter companies report both sides.) That $11 million figure was an increase of 80%, compared to $6,100,000 for the same period last year.

Gross revenue billed was nearly $1.2 million, versus $696,000 for November of last year...a 72% increase. And 195 new clients were enrolled in the IMS barter network last month, the second highest total in the company’s history.

For more information on IMS: www.internationalmonetary.com.

The New York Times Article On Trade Exchanges Inaccurate

On Sunday, December 10, an article titled, “Taxing Virtual Economies” discussed taxing online video games in which players work, play and increasingly earn real money...income that some argue should be taxed.

In the article one paragraph jumped out at us...as reprinted below:

Taxing virtual economies actually has a precedent. In the ‘70s, the IRS cracked down on so-called barter clubs, an estimated $200 million economy in which club members earned “trade dollars” in a virtual currency, either by selling goods or performing services. In 1980, the IRS ruled that such transactions could be taxed, even though no actual money was involved. The clubs quickly dried up.

The IRS ruling for barter transactions did not occur in 1980. It was in 1982 that the Tax Equity & Fiscal Responsibility Act (TEFRA) was enacted. Furthermore, the commercial barter industry worked with the IRS in the formation of this Act to provide a legitimacy to the industry.

Under TEFRA trade exchanges (commercial barter clubs) were considered third party record keepers...the same as banks, credit card companies, and stock brokers. And they provide 1099s to the government on their clients’ transactions. 

Additionally, the notation that “the clubs quickly dried up” is incorrect as well. The industry is alive and well, with hundreds of trade exchanges in the U.S., and an additional 400 or so exchanges operating world wide.

National Venture Capital Association Says Immigration Major Source Of Vitality

A new study from the National Venture Capital Association titled, “American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness,” points out some little known facts about the vitality that immigrant entrepreneurs bring to our shores.

According to the report, over the past 15 years, immigrants have started 25% of U.S. public companies that were venture-backed. These businesses employ 220,000 local people, and have a current market capitalization that exceeds $500 billion. Further evidence indicates that foreign professionals in certain fields, such as computer science and biotechnology, create jobs and wealth. And, thus, are important contributions to our economy.

Intel Corporation’s Venture-Capital Arm Reaches $1 Billion In 2006

The Santa Clara (CA) chip-maker has long been among the most active venture-capital investors, and has crossed the billion dollar threshold for annual investments for the third time in 2006. (In 1999 the firm’s VC division invested $1.2 billion, and in 2000 $1.3 billion.)

About 56% of the dollars Intel Capital invested this year went to companies based outside of the United States. Recent investments in Vietnam, China, and Germany reflect the company’s continued focus on firms that are experiencing rapid growth in technology adoption in other countries.

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. . .)

Money’s Not The Only Medium Of Exchange

In a ground-breaking legal memoir titled “Alchemy of Race and Rights” (Harvard University Press 1992), Columbia Law School Professor Patricia Williams talks about lessons learned in her community’s local barter circle.

“Once upon a time some neighbors of mine included me in their circle of barter. They were in the habit of exchanging eggs and driving lessons, hand-knit sweaters and computer programming, plumbing and calligraphy.

“I accepted the generosity of their inclusion with gratitude. At first, I felt that, as a lawyer, I had nothing to contribute. What I came to realize with time, however, was that my value to the group was not calculated by the physical items I brought to it.

“These people included me because they wanted me to be part of their circle, they valued my participation apart from the material things I could offer. So I gave of myself to them, and they gave me fruit cakes and dandelion wine and smoked salmon, and in their giving, their goods became provisions.

“Cradled in this community whose currency was a relational ethic, my stock in myself soared. My value depended on the glorious intangibility, the eloquent invisibility of my just being part of the collective, and in direct response I grew spacious and happy and gentle.”

If you look past the smoked salmon and the dandelion wine, you will find the phrase “currency (of) relational ethic.” Williams is talking about the intangible value of relations as a means of exchange rather than, or in addition to, the numeric value of money. We all benefit when we remind ourselves that money is simply one medium of exchange, and certainly not the only one.

Mutual Exploration Creates New Business Opportunities

Interest-based negotiations flourish whenever parties are able to identify tangible goods or services as well as the intangible benefits such as recognition, respect and apologies, that might be available to enhance a monetary exchange.

An example of this occurred when AT&T was in a 1999 fight with Comcast corporation for the acquisition of MediaOne Group. All parties were at impasse until AT&T offered to provide Comcast with surplus AT&T cable systems that would fill Comcast’s critical need for additional subscribers—2 million to be exact. In exchange, Comcast withdrew its $48 billion bid for MediaOne, leaving AT&T as the only potential purchaser in the field.

Interest-based negotiations such as this deal go beyond evaluating the strength of the parties’ “positions” by engaging them in a mutual exploration and assessment of everyone’s needs and resources—a process that can create new business opportunities or relationships that increase the value of Business A without decreasing the value of Business B.


China Has Growing Monetary Concern

By Israel Rivers, President, Barter of America

We thank Mr. Rivers for sending us the following story on virtual economies:

At a fundamental level, all money is virtual. (If it’s no longer tied to a precious physical product like gold, that is—but then, what currency is, nowadays?) At root, its worth depends on the value a group invests in it...whether it’s made of paper, metal, or binary code. That fairly abstract principle is becoming more apparent to people, and ironically, it has taken the growing popularity of online worlds to make it a practical reality.

And a genuine concern for the Chinese government, which now fears that the QQ is deflating the official yuan. QQ is the virtual currency created by Tencent, China’s largest instant messaging platform, based in Shenzen. Originally, Tencent sold QQ as a fun way for customers to purchase online games, greeting cards, and so on.

As the service became more popular, many started treating it as an alternative to the yuan...using it to, for example, bet in gambling games and purchase online sex (IM a QQ-girl). The expanding trade in QQ is so worrisome to Chinese officials they’re issuing warnings against its unauthorized use.

“The QQ coin is challenging the status of the renminbi [yuan] as the only legitimate currency in China,” the Asia Times quotes public prosecutor Yang Tao.

As with China’s virtual gold farms, it’s easy to see this as a future international trend in the making. All three next generation consoles—Xbox 360, Nintendo Wii, and Sony PS3—include microcurrency systems and, like the QQ, are designed for purchasing games and other products from their online networks.

But with tens of millions of players who find value in these virtual currencies, what’s to stop them from using it for purchasing other goods and services from each other? And given the volatility of real money, should they be stopped?


Hotel General Managers

Here’s The Easiest $100,000 You’ll Ever
Bring To The Bottomline!

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 hotel rooms and/or 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. (Please type in AV Services On Trade in the subject line of your e-mail.)

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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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.

Trade Exchange Owners...
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