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Moody’s warns US of credit rating fears

February 4, 2010 by Robert Tillman

Here is a article from Financial Times.

“Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.

In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

Steven Hess, senior credit officer at Moody’s, said the deficits projected in the budget outlook presented by the Obama administration outlook this week did not stabilise debt levels in relation to gross domestic product.

“Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note.

This week, the White House forecast a $1,565bn budget deficit for 2010, which represents 10.6 per cent of gross domestic product and is the highest such ratio of debt to GDP since the second world war.

While the budget gap is forecast to fall to about 4 per cent by 2013, it is based in part on economic growth not falling below government expectations, Congress agreeing to tax rises and a spending freeze on non-security discretionary spending.

Crucially, projections of the overall debt-to-GDP ratio for the US are seen rising from 53 per cent in 2009 to 73 per cent in 2015 and 77 per cent by 2020.

Moody’s, however, says this understates the overall US debt level.”

Read the full article here.

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Silicon Valley faces fierce global competition in cleantech

February 3, 2010 by Steven R. Gerbsman

Here is a Cleantech article from Mercury News.

“In other tech revolutions of recent decades, Silicon Valley became the uncontested global leader. The region’s ability to innovate its way to the top in cleantech, though, is far from guaranteed. Competition is fierce and global, with trillions of dollars at stake.

One of the valley’s greatest challenges comes from here. China’s drive to be a dominant power in the emerging global cleantech industry was on display one recent morning on the campus of the nation’s third-largest solar-panel maker, Trina Solar. New assembly-line employees, in an exercise designed to instill discipline, marched military-style around the grid-like campus, chanting responses to a drill leader dressed in army fatigues.

But China’s ambitions in cleantech reach far beyond piecing together solar panels. The central government has committed more than $100 billion a year to green technology research. It also has put in place incentives to create markets for everything from electric cars to rooftop solar water heaters to jump-start homegrown cleantech companies.

Provincial and local governments also are investing heavily in cleantech. Leaders in Jiangsu Province, where Trina Solar is located, are placing big bets on the solar industry, inspired by the municipal government of Wuxi. That Jiangsu Province city financially backed Suntech Power, now a global solar leader.

“China is moving very aggressively,” U.S. Energy Secretary Steven Chu said during a visit to Google’s Mountain View headquarters last fall. “They want to be a leader in this new industrial revolution.”

A group of valley tech executives, including former Intel CEO Andy Grove, recently sent a letter to Chu urging the energy secretary to “sound the alarm bell to make America aware — clearly and unequivocally — of how rapidly other nations, particularly China, are moving on clean energy.

“Unless we move quickly and commit substantial resources on a sustained basis, we risk becoming an energy also-ran, and risk developing a new dependency,” said the letter, also signed by Michael Splinter, CEO of Applied Materials, and John Doerr, a partner at venture capital firm Kleiner, Perkins, Caufield & Byers.

They urge the government to provide financial assistance to clean energy industries, including incentives for replacing polluting power plants with renewable sources of energy.

U.S. is lagging

Currently, only five of the world’s top 30 companies in the solar, wind and next-generation battery markets are based in the United States, according to John Denniston, also a partner with Kleiner.

U.S. government incentives — such as tax breaks and a regulation requiring utilities to buy power from solar and wind energy companies — were slowly eliminated in the 1980s after helping California become a global cleantech leader, said Ryan Wiser, a scientist at Lawrence Berkeley National Laboratory. Around the same time, Denmark, Germany and Spain — whose governments adopted policies and incentives to jump-start cleantech enterprises — were emerging as global leaders.”

Read the full article here.

Posted in Board Of Intellectual Capital, cleantech, Gerbsman Partners, Investments, Market research, Strategy, Technology, Venture Capital | Tagged , , , , , , , , , , , , , | Leave a Comment »

Atlas 2009 Year End Hotel Survey . . . and what it means

February 2, 2010 by Steven R. Gerbsman

Hotel Lawyers with grim reports from the field. If lenders are looking for some encouraging news on their distressed hotel asset sales prospects, they are not going to get it anytime soon. That is what the Atlas 2009 Year End Hotel Survey shows, but it does offer some valuable tips for dealing with continued distress in 2010.

This was written by James R. Butler, Esq., Partner at Jeffer, Mangels, Butler and author of www.HotelLawBlog.com and hotel lawyer. We’ve done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. Who’s your hotel lawyer?

Here is an executive summary.

Atlas Hotel Survey 2009 Year End Summary

Atlas Hospitality Group specializes in the sale of California hotels. It was founded by Alan X. Reay in 1997. Since its inception, Atlas has sold more hotels in the state than any other brokerage firm. Their annual survey of hotel transactions covers only California hotel deals, but we believe it is reflective of consistent national trends.

The 2009 annual survey has just been released, and it showed dismal results for 2009:

  • The number of California hotel sales dropped to a new low, plunging 52% from 2008 and 73% from 2007.
  • The dollar volume dropped 75% from 2008 and 85% from 2007.
  • The median price per room declined 30% from 2008 and 38% from 2007.
  • The median price per room in Southern California dropped 40%.
  • The median price per room in Northern California declined 24%.
  • Los Angeles County, down 82%, had the steepest median price per room drop.
  • Los Angeles County had the biggest drop in transactions, down 90%.

Sadly, the year end results validate the predictions made by Atlas in early 2009, except that the number of hotel sales were down 51% (as opposed to the predicted 10-20% decline), and median prices per room declined 30% (against a forecast 20-40% fall).

What is happening?

I asked Alan Reay, President and founder of Atlas Hospitality Group, what he thought was causing the record low number of hotel transactions his survey reported. Alan attributes the dearth of transactions to 2 factors:

  • Sellers are not pricing properties to market.
  • Lenders continue to delay definitive action to realize on their collateral, whether by foreclosing, appointing a receiver to sell the property, or selling REO.

Alan says that even though the number of foreclosed hotels now equals 73% of the entire number of 2009 sales transactions, the vast majority of these have not been resold by lenders.

Alan says unequivocally that the restraint on sales is not liquidity or lack of buyers. It is due to lenders and other potential sellers holding back and waiting, or pricing the properties unrealistically.

What will 2010 bring for hotel sales?

Given the success in predicting what happened in 2009, what does Alan Reay predict for 2010? Here are the highlights:

  • Sales activity will increase dramatically from the 2009 record low; we expect to see 150-175 transactions.
  • Dollar volume will also increase, almost double 2009’s number.
  • Prices will decline 10-20%.
  • The sale of hotel loans will rise substantially.
  • Lender sales will account for over 50% of transactions.

Click here to download a copy of the Atlas 2009 Year End Summary, and if you would like to speak directly with Alan Reay about the Atlas Surveys or get a copy of them, he can be reached at (949) 622-3409, alan@atlashospitality.com or www.atlashospitality.com. You are also welcome to contact me at jbutler@jmbm.com.

What do the hotel lawyers at JMBM’s Global Hospitality Group® advise?

Do the math yourself! Run a present value analysis of likely cash flows on 3 alternate scenarios. Decide whether you have the stamina and capital for a long haul if you intend to hold. Or decide that you are a gambler.

Be realistic. And if you are going to be a seller, then sell quickly. Many experts see values continuing to decline until at least 2011 or, more likely 2012. Some think values recover peak levels by 2014 and others think recovery to 2007 levels is TWO real estate cycles from now (given that a typical hotel cycle lasts 7 to 8 years, this could possibly be 10 to 16 years, i.e. 2019 to 2025).

We would be happy to help you evaluate your options and develop the best plan from here.
This was written by Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. We’ve done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. Who’s your hotel lawyer?

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Roubini Sees ‘Dismal’ Growth as Summers Rues ‘Human Recession’

February 1, 2010 by Robert Tillman

Here is an article from Bloomberg worth reading.

“Nouriel Roubini, the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.”

Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that that emergency measures to rescue banks and fight the recession may be withdrawn too soon.

“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.”

Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010.

Roubini, who chairs New York-based Roubini Global Economics LLC, has become famous for his pessimistic projections. In 2007, he correctly predicted a “hard landing” for the world economy. He said last year that the global recession would shrink through 2009, only for growth to resume in the middle of the year.

He says now that while the world’s largest economy won’t relapse into recession, U.S. unemployment will rise from the current 10 percent amid “mediocre” growth.

‘Feel Like Recession’

“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said in the interview.

Also speaking in Davos, Summers, director of the White House National Economic Council, said that the statistical recovery won’t mask a “human recession.”

The U.S. expansion in the October-December period resulted from manufacturers cranking up assembly lines and companies increasing investment in equipment and software. The rebuilding of stocks contributed 3.4 percentage points to gross domestic product, the most in two decades.

The rebound followed the Federal Reserve’s decision to cut its benchmark interest rate to near zero in December 2008 and President Barack Obama’s $787 billion stimulus package. The jobless rate has the central bank promising to keep borrowing costs low and Obama making new proposals to create jobs.

‘Pretty Attractive’

Carlyle Group LP co-founder David Rubinstein countered Roubini’s concerns. He said that even after a rally in global stocks that drove the MSCI World Index up more than 60 percent from March 2009, it’s a “pretty attractive” time to invest.

“There are a lot of great opportunities we see in the United States and abroad,” Rubenstein told a Jan. 27 panel. “Sometimes generals fight the last war, economists fight the last recession.”

Policy makers may be undermining their effort to spur hiring by attacking banks, Blackstone Group LP Chief Executive Officer Steven Schwarzman said in a Jan. 28 interview in Davos. One in four of chief executive officers worldwide surveyed by PricewaterhouseCoopers LLP for the Davos conference already plans to cut jobs this year.

“Financial institutions will feel under siege and they will retreat,” Schwarzman said. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.”

Read the full article here.

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Conan’s American Dream- a post from Fox News- Nancy Colasurdo – “hope for the future”

January 27, 2010 by Steven R. Gerbsman

Conan’s American Dream

Game Plan with Nancy Colasurdo

I have never watched Conan O’Brien or Jay Leno. I caught David Letterman a few times back in the ’90s. No Jimmy, either Kimmel or Fallon, graces my TV after midnight. I’m more likely to be watching a Seinfeld rerun at that hour.

So what I’m about to write has nothing to do with allegiances or who’s to blame for the talk show debacle that unfolded over at General Electric’s (GE: 16.1, -0.24, -1.47%) NBC.

But as a life coach I am compelled to pause for a moment and reflect on the parting words of Conan O’Brien on his last show. After reading an article about it I became intrigued, so I watched the clip online and here’s my takeaway: The next time I have a client who wants to know what it means to have perspective, like big-picture, healthy, adult perspective, I’ll tell him to view that clip.

“I have had more good fortune than anybody I know,” O’Brien said. “And if our next gig is doing a show in a 7-Eleven parking lot, we’ll find a way to make it fun. We really will. I have no problems.”

Now the folks who see life only through a painstakingly practical or cynical lens just shrug that comment off and point to his millions of dollars. But I would argue that when people who don’t need to work another day in their lives for financial reasons choose to continue pursuing their passions and using their gifts, we get to see who they really are. This is the stuff of role models.

Back in 1931, a book called The Epic of America by James Truslow Adams introduced us to the term, the American Dream. It reads, “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement … It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Since then, as each decade has passed, the American Dream has become more and more focused on our accumulation of material goods and has even become equated with home ownership in these challenging economic times. I confess sometimes that blows my mind. That’s our collective American Dream? A house in the suburbs? It brings to mind the film American Beauty in which nothing was as it seemed – the lovely house held within it complete dysfunction, the girl who portrayed herself as promiscuous was actually a virgin, the homophobe was in fact gay. The dream was a facade.

Wanting to own a home or whatever else materially defines our American Dream is only part of it, isn’t it? What happened to the “fuller” life described by Adams? It is lost on so many of our citizens. We are so politically polarized we’ve lost perspective on the fact that our nation would be greater if we all lived our own lives meaningfully and thoughtfully. We’ve come to gravitate to the ‘us vs. them’ way of thinking. It’s natural to do so in sports, but in our day-to-day lives as citizens?

As the NBC talk show situation heated up, taking sides became the thing. It was a feeding frenzy. We even had celebrities coming down on one side or the other. On his last show, after thanking his fans for making a tough situation “joyous and inspirational” and emphasizing again and again that he wasn’t joking, O’Brien addressed the flap.

“All I ask is one thing,” O’Brien said, “and I’m asking this particularly of young people that watch. Please do not be cynical. I hate cynicism. For the record, it’s my least favorite quality. It doesn’t lead anywhere. Nobody in life gets exactly what they thought they were going to get. But if you work really hard, and you’re kind, amazing things will happen. I’m telling you, amazing things will happen.”

Yes, it allows you to live your American Dream, if only for a fraction of the time you’d hoped. I don’t know Conan O’Brien even a little, but just from his graceful exit I would confidently bet that the next phase of his American Dream is right around the corner. And it will eclipse his expectations in unforeseen ways.

That might be worth tuning in to see.

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