World Scene

Off to China…Again!

Reprinted from our sister blog at www.reversemergerblog.com:

I just arrived in China for my third visit this year. I remain a strong believer in the enormous opportunity for successful, growing Chinese companies to access capital and seek a path to liquidity with a trading stock in the US. Obviously I’m not the only one. Most reverse merger players have either been to China or set up shop there. Some go nearly every month. To show how things have changed, the second edition of my book, coming out in December (you can pre-order on Amazon now- hint hint), has a full chapter on China, whereas the first edition from 2006 only described it somewhat briefly as a relatively new but growing trend.

This trip I am making several speeches and visiting with clients and other contacts. It is definitely worth the grueling trip. I have met some talented, dedicated, goal-oriented entrepreneurs and dealmakers who are truly incredible and I enjoy working and cooperating with them. And the friendships developed are a very nice secondary benefit. It is an amazing and unique place.

I am also hearing some serious talk about other countries beginning to push deals to go public in the US, and I expect that in the coming months we will all see that begin to develop. The world gets smaller and smaller. See you when I’m back - I’ll try to write from there but have a crazy busy schedule! Later guys.

Is Wall Street Evil?

Pres. Obama is in New York right now for a couple of fundraisers. Last night in front of an audience that included some folks in the world of finance, he chided them to join him in his effort to implement financial industry reform rather than fight his efforts to do so, as many have been doing.

Ever since the first bailouts of Wall Street firms with billions of dollars in loans, the world of finance has been in the sights of the Obama administration. The alleged greed of these folks is a big part of what caused all the problems we are now facing, in particular with regard to predatory lending practices convincing people to buy houses with mortgages they could not afford whose interest rates reset to much higher levels. Ignore that it all started with the Clinton administration’s effort to dramatically lower the lending standards at Fannie and Freddie back in 1998, and that the Bush administration continued to support and fan this. It’s just this idea that everyone should have a home went a little too far.

But yes, some people took advantage. Yes some lenders were predatory. But does this mean that the head of Goldman Sachs shouldn’t have a nice pay package? It’s a bit of a stretch I think. There is, of course, a much broader question of executive compensation in general in the US, which is dramatically higher, as a percentage of profit, than in just about any other country.

But the market forces are what they are. It takes what it takes to get great talent to join a company at a senior level. Would it be better if execs took a hit when things are bad more than they usually do? Probably. But how to fix that? The good old democratic way. If shareholders think a board is not exercising proper judgment in pay packages, it can simply throw the board out. Is that not easy? It’s not. But it can be done.

Why just pick Wall Street? Aren’t there a bunch of bad people in a lot of industries (real estate, construction, entertainment just to name a few)? But don’t those same industries have lots of good people? For most people business is about making money, and that is the core of our capitalist system. Let’s hope the regulators don’t tweak it too much.

California Dreamin’

For those of us old enough to remember (I am almost not quite), one of the greatest rock songs ever, “California’ Dreamin,” was written by the Mamas and the Papas in 1963 and released in 1965 (well I was in kindergarten). The classic has been covered a million times by the Beach Boys and many others.

John and Michelle Phillips of the group were living in NY at the time and thinking about the sunshine here in LA, where I am now for business meetings the next few days.

Some things about California stay the same. It is still the source of many new trends, including my perennial favorite cobb salad. Little kids with their yoga instructors on Muscle Beach. Apparently it’s all the rage here to like some obscure band called the Beatles. A “doctor” has set up his “office” right on Venice Beach where you can get a card entitling you to medical marijuana for a year as long as you have (or claim you have) certain medical issues (anxiety will do it). Fires and small tremors seem to remain a sometimes frustrating way of life. And the sun still loves to shine.

But times are tough. And they seem tougher here than in most. Real estate has fallen apart (though some signs of life have commenced). There is a sense of everything toned down conspicuous consumption wise. The infrastructure, from my non-scientific observation, is in bad shape. The government is running on a shoe-string. There is talk of legalizing marijuana mainly to raise taxes.

Will they make it? Yes. While New York wakes up a little faster thanks to reinvigorated Wall Street firms, when will private equity, venture capital, and the entertainment businesses, all central to the Cah-lee-fawnia (as Gov. Schwarzenneger loves to call it) economy, wake up? It’s slow for all. The film business is not bad though. It seems like Haagen Dazs we have continued to allow ourselves small luxuries like going to the movies. Or maybe we just need the escape. Maybe both.

My next trip is back to China in November, where things will certainly be in contrast to here in CA. I have a number of clients and important contacts here, so I’m pulling for the left coast. And not too shabby Dodgers and Angels!

Yes Mr. O, the Olympics Are Important

As you may have noticed here, I try to provide a balanced view of the issues of the day. Apparently the right wing have gone all a-twitter (can we even use that word anymore?) because the President is taking 18 hours to go to Copenhagen to pitch Chicago for the 2016 Olympics. His wife, “the closer,” has been there already charming the folks with her bare arms.

We are competing against Rio di Janiero (there has never been an Olympics in South America) and other cities. The conservatives say he should not waste his time on this and that there are bigger problems to solve. The President says, look, I’m going to sleep on the plane, land and give a speech. He does have that nice bedroom on his jumbo. Whether some of his wife’s hometown supporters exerted some pressure on Obama given their history, etc., does not matter. There are big problems in Chicago, but one can say that about probably any major US city.

Why does this matter to the economy? The last few Olympics held in the States all made money. But they have also engendered American pride. And the President can walk and chew gum at the same time. Yes some have rightly criticized him for trying to do too many big things at once. But this is a relatively small thing, and I can’t blame him for giving back to the city that literally made him. So let’s support him and hope we can get the Olympics back. Go BO!

Thoughts as the UN Traffic Recedes

Those of us who live or work in Manhattan secretly dread it. UN Week. Every year around this time an amazing thing happens as the leaders of virtually every world country descend on the Big Apple. The good, the bad, the ugly, everyone from the residents of the axis of evil to mild-mannered Luxembourg, from the snappiest of three-piece suits to the silkiest of robes and turbans. And of course the US President. Amazing yes, but the traffic. As my grandmother, rest her soul, used to say, “Oy!” I give the NYPD tremendous credit for how they handle it. They set up special lanes for the motorcades that have semi-minimal impact as they go through. But there are times you just sit there. For 45 minutes. For the President to pass through. Mr. Obama apologized to the residents of New York for the difficulties. Whatever your political leanings, this guy likes New York, and that’s good and bad. He’s been here for several days. George Bush? He would jet in and out same day. It was a big deal for the guy to stay over. But enough about traffic.

The intractable Mideast crisis was center stage this week, as it usually is during UN Week. Qaddafi annoying everyone by talking 90 minutes instead of his alloted 15, having the nerve to interfere with lunch. Some called it rambling and eccentric, others said it was detailed and in-depth.  Iranian President Mahmoud Ahmadinejad slightly softening his rhetoric and deciding not to mention his repeated assertion that the Holocaust did not happen and, oh yeah, Israel should be wiped off the map if at all possible, and oh yeah, we’re building nukes whether the rest of you guys like it or not. Israeli Prime Minister Netanyahu telling the delegates they should be ashamed for letting the other two guys in at all.

Where the Mideast problem goes a big chunk of the world economy goes. It’s mostly, well maybe almost all, about oil, for those of you who’ve been living under a rock. And yes, kind of a little about religion and ideology. A bunch of US Presidents have tried and failed to solve it, despite a few notable breakthroughs.  The moderate Arab states secretly are OK with Israel existing if both sides would just leave each other alone. But they do it secretly cause their whole oil cartel would fall apart if they upset the radical Arab states. And the moderates also know that any violence or nuking by the radicals also would destroy their trillion dollar enterprise because we would stop doing business with them and, well, maybe nuke them back.

So the good news is that no one has nuked each other, and the violence so far has been mostly limited to Israel and the Palestinians, not counting Iraq and Afghanistan for this purpose, although one can argue there is a connection. I am not an expert on this scene, I admit. But it seems to me that if Israel and Hamas can acknowledge each other’s right to exist in peace, and allow passage so that people of all faiths can visit their sacred sites, can’t that work? Israel should be able to defend its borders, and it’s not at all clear why they are required to give back land they rightfully possess. But if that’s what it takes to have a true, lasting peace, they should do it – the problem of course being once you give the land back, if things don’t work out violence continues and yet the land is gone. Unfortunately the Palestinians benefit in a way from the continued violence. Their Arab patrons keep giving them money and they can control their people more forcefully “in time of war.” Israel really does not benefit. Maybe we are close. Unfortunately I don’t think so, and the instability damages not only our psyche, but our ability to conduct commerce.

New Name for a Changing Economy

It’s finally happened. When we started what was then known as Crisis Post, our hope from the beginning was to outgrow our name when the economy began to rebound. Frankly, in March 2009 when we started, it seemed like we would be Crisis Post for quite awhile indeed.

Well, I am pleased and relieved to officially change the name of my humble blog to Rebound Post.  Don’t worry, the old crisipost.com URL will still connect here. We will remain your source for information on the economy,  the President and his economic policies, Wall Street, scammers, reverse mergers and other alternatives to traditional IPOs, the legal industry, the world scene and just plain musings- now focused more on thoughts connected to the now recovering economy and stock market. I know it seems like an eclectic and disjointed set of topics. I pretty much don’t care as it is a list of things I am interested in and enjoy writing about. I hope you find some (or all!) areas of our focus that will strike you as kinda interesting.

As you may have discerned from my posts, I am a diehard optimist. Gets me in trouble sometimes as I too often believe good things are around the corner. In the last year that optimism has been tested for sure. In this process I would say I’ve evolved into more of a rational optimist. Hoping for good things always but realizing more than ever the reality that there are times that just ain’t so great after all.

I have appreciated all your support, your emails and welcome those who came from our sister blog, www.reversemergerblog.com. If you have any interest in considering a sponsorship of our site, with banner ads, etc., of course let me know!

Now let’s go economy……

Let Us Not Forget…

I thought I would share with my faithful blogees an email that I sent yesterday to my employees and firm alumni.

All: As the bus taking us to the Ellis Island dinner for a conference last night passed the World Trade Center site, so many thoughts brought back the unspeakable tragedy which befell us now 8 years ago. I’ve forwarded an always updated version of this each year to our staff and alumni who were with us then as we approach the 9/11 anniversary so we will never forget that horrible day and the week that followed…

I was driving my then 11-year old daughter (now a sophomore in college!) and her friend to school on a sunny Tuesday morning when it came over the radio. We thought it was a joke on the top 40 station. “A small plane has hit the World Trade Center.” When we realized it was real, I said, well that’s downtown, my office is midtown, I should be able to still head in. I dropped off my daughter and found myself right next to JFK Airport when they reported the second plane hitting. At that moment, all traffic on this normally busy thoroughfare came to a dead halt. As I sat there very confused about what was happening (although immediately a radio commentator said “we’re being attacked”), I remembered the ’93 Trade Center bombing and immediately called the office and closed it, telling everyone to get home and get safe. After 20 minutes of inability to move, I turned around and went home, worried about my daughter at that point. Her school closed and she came home about an hour later.

The staff first gathered at the restaurant next door to our then office on West 44th Street to watch the TV and then realized they needed to scatter. My assistant at the time walked home to Queens over the 59^th St. bridge. One attorney was worried about his Dad, thinking he was downtown (he was not). Another’s wife, a lawyer who worked downtown, came up out of the subway down there and saw everything (she managed to turn around and get out). Another associate walked up to the upper west side to his mother’s and did not get home to Jersey until the next day. My family and I were worried about my brother-in-law next door to the Trade Center at World Financial Center (we did not hear from him until 2pm telling us he was in the hospital treated for smoke inhalation, he got home around 1 am that night after thinking he was not going to make it as the building fell very close to him).

I spent the day watching the TV and emailing basically every person I knew to see if they were OK (it took 3 scary days to find one friend who was out of the country). The next day, with all bridges and tunnels closed, almost all of us made it in anyway. There was no point, as our phones had gone out. We sent an email to everyone we could with our cell phone numbers and such, but no one was calling. We all went for a very long liquid lunch and then went home. That afternoon I reached an old friend who worked at Marsh & McClennan on the 107^th floor. Thankfully he was in Florida at a conference. He could barely speak. He told me he supervised a team of 12 people, and had ordered all of them to come in early that day, and they were all gone. Another friend was fine – he was supposed to have breakfast at Windows on the World on Tuesday but at 11pm the night before his client suggested they switch it to lunch.

Then Thursday, more people on the streets, but by noon there were over 100 bomb threats in the city and rumors the trains might shut down, stranding everyone in the city. Still no phones. We closed again and said we’d stay closed until Monday. I remember literally running from the office to Penn Station with an associate, stopping only for a moment to pay $2 for a small American flag which still sits in my office. Good thing we stayed closed because hundreds more bomb threats on Friday.

I spent Friday at home wondering what to do. Our phone provider said they had no idea when the phones would be back. Their transformer was at the Trade Center. It wasn’t like you could just call Verizon and ask them to come put new lines in. A law firm without phones is helpless. The city was a mess.

Around noon on Friday just for fun I called the office, and miraculously the phone lines suddenly were working. On Monday we all came back, still shaken up but determined. Clients started calling. That deal we were working on before this, let’s get it done. It took a month or so but then things were back to humming as always.

I allowed employees to volunteer down at the site during work time if they wanted to. I offered space in our suite to attorneys whose offices had been destroyed or inaccessible. We did all we could. But we could not bring back the thousands who perished, including so many who died trying to save others.

If Osama is indeed still with us you can bet he’s determined to do it again. I hope you will take a little time tomorrow, both to remember the bravery of those who died and those who risked illness to work on the Pile for months, and to remember our need to stay vigilant and resolute in our desire to rid the world of this horrific evil. And also, to remember the wonderful things that happened as the city and our nation came together in those difficult days. I worry that a rapidly growing population of kids, including my 7-year old son, either know nothing about the tragedy or will learn about it as part of history- let’s make sure they really understand what we faced.

I will remember two that I knew who did not make it that day, Dave Weiss of Cantor Fitzgerald and Neil Levin, head of the Port Authority.

Good Job, Pres. Clinton, Now Let’s Keep the Pressure Up on N. Korea

President Clinton’s “humanitarian” mission to suffer through pictures with North Korean leader Kim Jong Il was a great success. He got pardons for accidental border crossers Laura Lin and Euna Lee who were convicted of crimes against the state and sentenced to 12 years of hard labor. They should be arriving back in DC any minute. This is of course great news for the Lins, the Lees, our country and the Clintons. As has been revealed, the outcome was basically ordained – Clinton would not have gone there unless they had committed in advance to release the women. But, in fairness to Bill, Mr. Kim could have changed his mind at the last minute, so there was some risk in going there. Our relationship with the North Koreans doesn’t exactly generate interest in sitting down to tea. While he was not there as an official representative, let’s face it. He’s married to the Secretary of State. He is the former President. And Mrs. Clinton made clear this morning on TV that he basically coordinated this with the White House.

But now what? Will the Iranians expect the same treatment for the US citizens they have imprisoned, again, for accidentally crossing the border? Will Mr. Kim use his pictures with Clinton to further solidify his hold on power, showing his countrymen how he can make US Presidents come to him? But there was good too. Clinton got to be able to assess Kim’s health, as it has been reported he is very ill. And maybe he had a message from Obama (this was denied, although the North Korean press said he did). And you can pretty much bet your karaoke collection that Kim had a message to send to Obama. Was anything offered in return (maybe the pictures alone were enough)? Will this help N. Korea return to the six party talks trying to bring an end to their nuclear ambitions? And most importantly here, can it help bring more stability to the region so that trade and economic growth are possible?

As always I ask great questions to which I do not have answers. I am all for these attempts to free folks. One only needs to see the movie Midnight Express and you are pretty much changed forever as to what foreign prisons can be like. Let’s just make very sure, as Mrs. Clinton was working hard to do this morning, that they are not interpreted as having any impact on our resolve to remain tough in reigning in the potential harm that can be done by countries that could become our enemy. But we give this one to the Clintons, and indirectly to B. Obama.

Global Online Population To Hit 2.2 Billion By 2013

The number of people online around the world will grow more than 45 percent to 2.2 billion users over the next five years, according to a new report by Forrester Research.  Asia remains the biggest global Internet growth engine: 43 percent of the world’s online population will reside in Asia by 2013, with 17 percent of the global online population in China. Growth rates in the US, Western Europe, and the major industrialized nations in Asia Pacific such as Australia, Japan, and South Korea will slow to between 1 percent and 3 percent.

“While per capita online spending is likely to remain highest in North America, Western Europe, and the developed markets of Asia throughout the next five years, the shifting online population and growing spending power among Asian consumers means that Asian markets will represent a far greater percentage of the total in 2013 than they do today,” said Forrester Research Senior Analyst Zia Daniell Wigder. “Multinational organizations must understand the dynamics of the shifting global online population to ensure that they are positioned to take advantage of emerging international opportunities.”

The Internet user base is increasing in every area of the world. Regional highlights include:

• North America. Online penetration in the US is set to rise from 73 percent to 82 percent over the next five years, representing about a 3 percent annual growth rate. By 2013, US online penetration will be on par with the most highly penetrated markets of Europe and Asia, such as the Netherlands, the UK, Japan, and South Korea.
• Europe. Europe’s Internet growth will be fueled by the continent’s emerging markets. Internet usage in Russia and Turkey will grow by almost 8 percent annually, while growth in Spain’s online population will increase by an average of more than 5 percent each year.
• Asia. China’s online population (already the largest in the world) will rise by nearly 11 percent each year over the next half decade. Other Asian countries with substantial online growth rates include India, Indonesia, Pakistan, and the Philippines. By contrast, growth rates in some of the more mature markets such as Japan and South Korea will rise by less than 2 percent each year.
• Latin America. Brazil is currently the fourth largest market in the world in terms of number of Internet users, but despite a 7 percent annual growth rate over the next five years, it will drop to the No. 5 position in 2010 when it is surpassed by India.
• Africa and the Middle East. The countries of the Middle East and Africa currently represent just 8 percent of the global online population but over the next five years will see some of the highest growth rates in the world, around 13 percent. Egypt, Iran, and Nigeria are among the countries with the highest growth rates in the region.

Countries With The Most Internet Users: 2008

1. US

2. China

3. Japan

4. Brazil

5. Germany

Countries With The Most Internet Users: 2013

1. China

2. US

3. India

4. Japan

5. Brazil

Asian IT Executives Remain Optimistic

IT professionals in the Emerging Asian countries of China, India, and Vietnam are the most optimistic about IT budgets this year, with 19 percent of respondents expecting to increase their tech spending in 2009, followed by Latin American IT professionals at 12 percent, according to a new survey by Forrester Research. The survey of more than 1,400 IT executives and technology decision-makers located in Asia Pacific, Latin America, Middle East, and Africa is Forrester’s inaugural study of businesses’ technology adoption plans and priorities across all of these regions. The study Enterprise Global Technology Adoption Survey, Asia Pacific, Latin America, Middle East, And Africa, Q1 2009 is part of Forrester’s Business Data Services (BDS) series, which provides an extensive data set for B2B Market Research professionals’ go-to-market strategy assessments.

IT budget plans differ significantly across industries in Emerging Asia, with the largest increases being in the public sector (34 percent) and utilities and telecoms (24 percent) and the smallest increase in the manufacturing sector (9 percent). Top-line overviews of full survey responses are available to Forrester RoleView™ clients in the report “The State Of Global Business Technology Adoption: 2009.” Subscribers to Forrester’s Business Data Services receive unlimited data support, including custom segmentation from a dedicated data advisor. Other key highlights of the survey include:

• Asia Pacific and MEA/Russia are the current bright spots for SaaS. Of the firms surveyed, 18 percent in Asia Pacific and 14 percent in the Middle East/Africa/Russia have implemented or are implementing software-as-a-service (SaaS) projects. Interest in considering or piloting SaaS projects is highest in the Emerging Asia region.
• Cloud computing activity is low globally. While Latin America has the highest percentage of firms (14 percent) that have already implemented cloud computing or pay-per-use hosting of virtual servers, 40 percent of firms in the region are not interested, and an additional 23 percent of firms are not familiar with the technology or don’t know if they are interested. Other regions reported similar results; Asia Pacific took the top spot, with 52 percent of firms not interested.
• Latin America is a hotbed of activity around unified communications. Overall, 88 percent of Latin American firms responded that they have an existing implementation or interest in unified communications.
• Product localization preferences are mixed. The strongest preferences for IT products in local languages are in Latin America (52 percent) and Emerging Asia (39 percent). However, respondents were split in Emerging Asia, with a high percentage (41 percentage) also reporting a strong preference for products in English.

“When expanding into new geographic markets, it’s critical that technology vendors adapt their approach to local conditions and requirements and not presume global or even regional uniformity among businesses,” said Jennifer Bélissent, Ph.D., senior analyst for Forrester. “For example, although this survey shows that interest in cloud computing is very low in most emerging markets, that suggests more education on the technology and its benefits are needed in order to spur demand. Tech vendors need to research their target markets carefully and as specifically as possible in order to appropriately adapt marketing and sales strategies to meet customer pain points.”

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