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The Biz Roundup
Must-reads for December 3

Let’s do something original and lead with Detroit since every one else seems to be ignoring it. :: “The U.A.W. president, Ron Gettelfinger, said the union would suspend its jobs bank, which requires carmakers to keep paying laid-off employees, and would consider changes to its labor contracts. The union has also agreed, Mr. Gettelfinger said, to delay the payments that the automakers must make to a new retiree health care fund called a Voluntary Employee Beneficiary Association, or VEBA.” (The New York Times) “Consider” changes to its labor contracts? Sounds like a rock-solid concession to me.

Unless the total collapse of the world economy counts. :: The Financial Times just says no to Detroit and leads with the world economy’s slide into the abyss. “”Financial markets are braced for large interest rate cuts across Europe on Thursday amid mounting evidence of a sharp slowdown in the leading global economies.” (The Financial Times) Here’s a riddle. What’s it called when the rates dip below 0%? Here’s a clue: it’s a seven letter word beginning with “b” and ending with “t.” And the first word that has popped into your head, potty brain, is wrong because that word has eight letters. Sheesh.

And speaking of the bad numbers, here’s one that should factor into all your planning decisions this year. :: “”The Institute of Supply Management said that its monthly survey of business conditions in the non-manufacturing sector recorded a reading of 37.3 per cent in November – down 7.1 percentage points from the month before – where a reading of 50 indicates expansion. That was the lowest reading since the survey began in 1997, the biggest month-to-month drop and worse than the 42 per cent reading economists had expected. Of the 18 industries surveyed, one reported growth: healthcare.” (The Financial Times) No funny quips here; this is serious news for businesses large and small from start-ups to grown-ups.

While Detroit and the banks (and homeowners and homebuilders and the whole service economy) are all going to crap, does anybody really care that the news is going out of business, too? :: “”The Star Tribune asked its unions Tuesday for another $20 million in annual cost savings beginning in January in a bid to have lenders forgive some of nearly $400 million in long-term debt. . . . Broadcasters have not been spared the decline in revenue and audience. Some stations have resorted to laying off reporters and notable personalities.” (Minneapolis Star-Tribune) If we lose Detroit, we can always buy a Lexus. Whatta we got when we ain’t got news? Pink and Drudge and Huffington? Andrew Sullivan with his 100 posts per day on gay marriage? Is that the “wisdom” of the marketplace?

Venture capital is still there for start-ups! The bad news: it’s much harder to get. The good news: it’s only going to the really, really, really, really good startups at a hefty business valuation discount! :: “Now companies should be prepared to discuss the minimum amount of money they need to validate their business models. Once the concept is proven, Levensohn says, larger follow-on investments can help it scale” (Business Week) Ah, so, someone grew a brain, no? Throw good money after good money, hmm. But be prepared for low, low valuations. You know the Long Island shoppers trampling workers to death to get their mitts on Walmart door-burners? VCs are in the same mindset.

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