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The Biz Roundup January 7

So who we going to borrow those trillion dollar deficits from now? Bernie Madoff?

On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s.

“All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.

(“China is losing its taste for debt from the U.S.,” New York Times) We all know that China needs money for its own economic stimulus plan, but you think the 0% interest rates on Treasuries might be dampening their enthusiasm a bit?

If you think you’ve got the next great social networking idea, keep it clean. Really, get your head out of the gutter or Wall Street will do it for you.

. . . not one major US or European bank has agreed to handle the planned $460 million initial public offering of nudie magazine Penthouse’s parent company . . . Its new owners expanded the brand into the social networking arena, culminating in the $500m acquisition of the operator of websites like and Christian-themed Big Church . . . Friendfinder Networks, as the new group is called, booked $244m in revenues last year

(“X-Rated IPO,”, January 6)Penthouse runs both AdultFriendFinder and “Christian-themed Big Church”? Doesn’t that compromise their smut family values somehow? Anyway, AdultFriendFinder is arguably the most lucrative and best-managed social network in the world. It actually makes money from its members and boasts, get this, 2.5% of all daily Internet traffic. Sounds like just about the only good investment left in this our winter of discontent. When exactly did Wall Street get clean? Does having a conscience have something to do with Richard Fuld losing his job?

Maybe we should start outsourcing corporate fraud to India.

The head of one of India’s biggest outsourcing groups has confessed to fixing the company’s books in a $1bn fraud described as the country’s “Enron”.

B. Ramalinga Raju, chairman and chief executive of Satyam Computer Services, resigned on Wednesday after admitting he had manipulated the accounts for “several” years to show hugely inflated profits and fictitious assets

(“$1bn fraud at India IT group,” Financial Times, January 7) Do you have the feeling that we’ve somehow been living the economic version of The Truman Show for the last ten years? Satyam was the million-pound elephant in Indian computer-services outsourcing and the mess this creates for Satyam clients will take months to unravel.

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One Response to “The Biz Roundup January 7”

  1. Dave So says:

    The Royal Bank of Scotland had losses of 24Billion UK pounds and Fred Goodwin still gets 650k pension every year. That is just unbelievable! They should strip him of his pension.


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