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

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December 31, 2002

Written by Bob Meyer, Editor of BarterNews

Travel & Advertising Outlook For New Year...
Barter Inventory Expected To Expand

The National Business Travel Association, a group of 2,400 travel managers, has a message for the marketplace: "Don't expect a big boost in business-travel spending in 2003."

Thirty-four percent said travel budgets would be flat, and another 38% plan to decrease their travel budgets by as much as 8%. Twenty-eight percent expect to increase budgets up to 8%.

Airfares are expected to be increased, to offset the hike 66% of travel managers say they will use more low-fare carriers in 2003 than last year. The report predicted little change in the hotel market.

Looming War Will Affect Advertising

The last war with Iraq saw television and radio ad spending falling 4%, during 1991. Couple the possible war around the corner with the past dreary Christmas shopping season, which portends a slowdown in consumer spending, and the advertising outlooks isn't bright. Additionally, there's no big events this year, i.e. Olympic Games or national elections, in which to stimulate advertising.

Interstate Bartering Of Wine Moving Closer To Reality

The day of being able to freely sell or barter wine interstate is closer at hand after a U.S. District Court judge recently ruled that a New York state law prohibiting out-of-state wineries from shipping to New York consumers is unconstitutional.

The New York law, similar to laws in 29 other states, requires that imported liquors be distributed only through licensed wholesalers and retailers to ensure accountability and responsibility, and that taxes are paid. Judge Richard Berman said the law interferes with interstate commerce.

"That the New York direct shipping ban on out-of-state wine burdens interstate commerce and is discriminatory on its face is clear from the very wording, let along the impact of the exemptions favoring in-state wineries," he said, adding that the law "constitutes a cut and dry example of direct discrimination against interstate commerce."

The judge also found the law discriminatory because New York lets in-state wineries ship directly to New York consumers, and rejected arguments by the state that the law is needed to regulate liquor sales and keep alcohol away from minors.

The decision is similar to rulings this year in Florida, North Carolina and Virginia. In addition, a Justice Department appropriations bill, signed into law Nov. 2 by President Bush, permits people physically visiting an out-of-state winery to have wine shipped to them at home.

Barter. . .The Silent Financier

Audible Inc. sells books you cannot read, thousands of them. They offer downloadable audio versions of books, magazines, radio shows and newspaper summaries that can be listened to at a computer, burned onto a CD, or stored on a portable device for playing later.

Among Audible's 5,900 titles are many of the most popular books, with 12 of the 20 hardcover titles and 17 of the 30 paperbacks on The New York Times' best seller list.

The company's third-quarter sales of content were $3 million, more than double the figure in the same period a year ago. It's just a tiny slice of the U.S. audio book market estimated at $400 million, nearly all of it in tapes.

To get the company started, in addition to securing funding from various investors, the company did a $20 million barter deal, trading a piece of the company to Amazon and Microsoft. Such transactions often go unreported so people don't see the significance of such barter arrangements, but they are very important to new, under capitalized companies.

Public Enemy No. 1, Deflation

For two decades, the Federal Reserve has single-mindedly focused on one thing: whipping inflation. (The U.S. central bank's other responsibilities are promoting growth and full employment.)

But it was obsessed with the threat posed by rising prices. Until last month, as the economy stumbled into what Fed Chairman Alan Greenspan has euphemistically called a "soft spot" that some worried might turn into a reprise of last year's recession, when it changed its focus.

And so the central bank has done an about face, with deflation as the new enemy. As suggested in late November when Ben Bernanke, one of the Federal Reserve's seven governors, raised the prospect that the government could get the Fed's blessing to print money to keep deflation at bay.

"The U.S. government has a technology, called a printing press--or, today, its electronic equivalent--that allows it to produce as many U.S. dollars as it wishes at essentially no cost," Bernanke said.

"By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services. This is equivalent to raising the prices in dollars of those goods and services.

"We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

Bottomline strategy of Bernanke's statement: His very declaration of the Fed's power to print money, and willingness to do so, if necessary, actually makes the potential need to do so fall precipitously.

Get New Money-Making Ideas, and Valuable Contacts!

You can obtain these ideas and contacts in every every available back-issue of BarterNews.

Here And There. . .
  • One of the oldest cities in North America, St. John's, Newfoundland, now has a trade exchange--it's the first ever to be located in this province of Canada. Although the people of Newfoundland, in the 15th and 16 centuries, were big barterers, trading cod fish for everything they required.

    The new owner, Michael Jackson of Interact Barter Exchange, believes his city has the most prolific "underground" barter economy in all of North America. Jackson along with his partner Mark Lamswood report they are being welcomed with open arms by the business community.

    Newfoundland was a refuge for thousands of stranded airline passengers on September 11th. Many of those passengers have returned to visit, and subsequently Newfoundland's tourism industry has replaced the Cod Fishery as its largest economic activity.

  • According to Vault Inc. only 56% of companies held holiday celebrations this year, compared with 79% in 2000. And companies that went ahead with parties trimmed their budgets by as much as 75%.

  • Venture capitalists are increasingly looking to 2004 before a recovery, as they continue to cope with the excesses of the "dot-com" boom. Bottomline: more pressure on general partners, as they steer through the wreckage of failing firms and ruined portfolios.

    The value of the start-up companies in which they've invested--hoping for an IPO or merger payday down the road--could continue to fall, the flow of new money into the industry could dwindle further and the average returns for the VC business could stay negative. Deloitte & Touche does not see a turnaround for the next three years.

  • ExchangeMall and Bentley Communications Corporation (OTCBB:BTLY) have announced the signing of a Letter of Intent, with Bentley to acquire ExchangeMall and Bartercard USA in a stock swap. (Bentley currently trades at 2 cents a share.)

  • Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) to sign up!

  • The government of France is taking steps to aid entrepreneurship in a bid to get their sluggish economy moving. France's center-right government has proposed reducing obstacles to starting up new businesses. Their cabinet passed a bill aimed at cutting the time needed to create a new business from several months to just 24 hours.

  • New Zealand's beauty brings movie makers... The "Lord of the Rings" trilogy has been a boon to the New Zealand economy. The three films cost more than $310 million, and most of that was spent in the country where 20,000 locals were employed. (It's also triggered a boom in tourism.)

    New Zealand has some fine trade exchanges. For more information on barter companies in New Zealand, see our worldwide barter company listings on our home page.

  • China's lawmakers have begun drafting legislation that will provide protection for private investments, further advancing the country's shift away from communist planning and toward a market economy. China drew nearly $50 billion in foreign capital in 2002, the largest sum ever and more even than the U.S., long the world's largest recipient of foreign investment.

  • In Russia, it's reported that the people want foreign cars. But with a new Russian car costing $4,170 on average and a new import $20,000, the Russian products will continue to dominate the market--the major reason being the average wage in Russia is about $140 a month.

  • Consumer confidence has fallen throughout much of Asia in recent months, dragged down by concerns about war with Iraq...deepening economic gloom and terrorism in the region. Consumers have scaled back expectations for global economic recovery, believing growth won't pick up until the first half of 2004.

  • PricewaterhouseCoopers says U.S. occupancy rates for hotels in 2002 averaged just below 60%, down from 64% in 2000, and will remain flat through 2003. Hotel construction will be about 61,000 rooms this year, which should help the industry recover in the long run. (In a good year 160,000 rooms are added.)

  • One area that is not hurting is Utah's hotel industry. Even though the city boosted its hotel-room inventory by 64% since it was awarded the 2002 Winter Games. Revenue per available room has risen a stunning 30.1%! (The national average is negative 3.6%)

    The key for all this success was the massive international exposure, when 3 billion people tuned in to watch the Games, the most ever for the Winter Olympics.
We welcome your comments, questions, and observations.
? Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.