JP Morgan Chase, UBS, Deutsche Bank, Depfa, and a handful of individuals will stand trial in Italy for aggravated fraud. The banks are accused of adjusting interest rates on derivatives deals with the city of Milan, causing the city government to lose about 100 million euros. The BBC reports:

In the case of Milan, the four banks are accused of misleading the city authorities when they agreed a derivatives deal on a 1.68bn euro ($2.31bn; £1.51bn) loan in 2005. The deal adjusted the interest payments on the loan – a move which Milan says leaves it facing a 100m euros loss.

JP Morgan denied employees involved had acted inappropriately, while Deutsche and UBS also denied any wrongdoing. Depfa was not available for comment.

Alphaville’s Joseph Cotterill has describes Depfa, in case you weren’t aware:

Depfa, for the uninitiated, is a Dublin-based German-Irish bank owned by Hypo Real Estate, which was itself nationalised by Berlin a year ago.

Milan also wants an extra 239 million euros in liabilities from the banks, according to Reuters, which reports on a possible Italian derivatives epidemic:

Almost 500 small and large Italian cities are facing mark-to-market losses of 2.5 billion euros on the contracts, according to the Bank of Italy. Analysts say that figure will balloon when interest rates go up. Most of the contracts involved switching fixed rates on loans to variable ones with banks.

When rates are low, as they were when many contracts were agreed, local authorities using a variable rate could find their costs shrinking. However, when rates rose, officials would find themselves owing more money. Milan has argued, as have many other local administrations, that the contracts were murky, carried hidden costs and banks had failed to explain them.

Court cases aside, Milan still wants in on derivatives, according to Reuters. The city council is now looking for a fixed-rate derivatives contract.

Governments and banks are both playing the same game: You didn’t make me rich, now I’m going to try to screw you. Italy is, what, Round 3? Round 4? Will anyone ever end up on top of this game?

Because of its losses and “the increasingly competitive industry conditions,” the company sees “substantial doubt about our ability to continue as a going concern,” according to the company’s filing. Blockbuster said if its operating results don’t improve and if it is unable to refinance or restructure its debt, it “could require us to pursue a restructuring of our indebtedness or file for protection under the U.S. Bankruptcy Code.”

Last month, Movie Gallery Inc., which also owns Hollywood Video, filed for Chapter 11 bankruptcy protection. It is liquidating at least 760 stores.

Carl Icahn and Goldman Sachs respectively own 10.8% and 9.9% of the company, according to the article.

Blockbuster hasn’t exactly been competitive during the past decade or so. Still, it will be sad to see the neighborhood video store go.

The government will give companies a 6.2% Social Security tax break for every new hire, thanks to a new $18 billion jobs bill that Congress approved yesterday. Each worker must have been unemployed for at least 60 days to qualify. Bloomberg has more details:

The Senate voted today 68-29 to send the legislation to President Barack Obama for his signature. It would also expand federal subsidies for municipal bonds, increase highway spending and offer small businesses more power to write off the cost of investments.

The measure…would transfer almost $20 billion in tax revenue into the government’s highway trust fund while expanding subsidies for bonds financing school construction and energy related projects.

That 60 days of unemployment caveat would sway companies away from choosing more qualified, but more recently unemployed candidates. I don’t think that kind of minor detail matters in an election year, though.

Impress your friends this year with one of the 25 St. Patrick’s Day toasts and Irish sayings below. If you rattle off one quote per beer, this entire post should get you through the night:

1. If you’re enough lucky to be Irish, you’re lucky enough! –Irish saying

2. Many an opportunity is lost because a man is out looking for four-leaf clovers. -Unknown

3. Here’s to a long life and a merry one.
A quick death and an easy one
A pretty girl and an honest one
A cold beer – and another one!
-St. Patrick’s Day Toast

4. It is better to spend money like there’s no tomorrow than to spend tonight like there’s no money! -Irish toast

5. An Irishman is never drunk as long as he can hold onto one blade of grass to keep from falling off the earth. -Irish saying

6. There are only two kinds of people in the world, The Irish and those who wish they were. -Irish saying

7. Irish diplomacy is the ability to tell a man to go to hell so that he looks forward to making the trip. –Irish saying

8. An Irishman has an abiding sense of tragedy which sustains him through temporary periods of joy. –Irish saying

9. The Irish forgive their great men when they are safely buried. –Irish saying

10. Anyone acquainted with Ireland knows that the morning of St. Patrick’s Day consists of the night of the seventeenth of March flavored strongly with the morning of the eighteenth. –Uknown

11. May your blessings outnumber
The shamrocks that grow,
And may trouble avoid you
Wherever you go.
- Irish blessing

12. Never iron a four-leaf clover, because you don’t want to press your luck. -Unknown

13. A best friend is like a four leaf clover: hard to find and lucky to have. -Unknown

14. The list of Irish saints is past counting; but in it all no other figure is so human, friendly, and lovable as St. Patrick – who was an Irishman only by adoption. -Stephen Gwynn

15. St. Patrick… one of the few saints whose feast day presents the opportunity to get determinedly whacked and make a fool of oneself all under the guise of acting Irish. –Charles M. Madigan

16. May misfortune follow you the rest of your life, but never catch up. –Irish saying

17. May your home always be too small to hold your friends. –Irish toast

18. May your glass be ever full.
May the roof over your head be always strong.
And may you be in heaven half an hour before the devil knows you’re dead.
—Irish prayer

19. May you never forget what is worth remembering or remember what is best forgotten. –Irish blessing

20. In Heaven there is no beer that’s why we drink it here! –Irish saying

21. May God bless and keep in good health your enemies’ enemies. –Irish blessing

22. May the saddest day of your future be no worse than the happiest day of your past. –Irish saying

23. Here’s to you and yours and to mine and ours. And if mine and ours ever come across to you and yours, I hope you and yours will do as much for mine and ours as mine and ours have done for you and yours! –Irish toast

24. May you live as long as you want and never want as long as you live. –Irish saying

25. Drink is the curse of the land. It makes you fight with your neighbor. It makes you shoot at your landlord-and it makes you miss him. -Irish saying

Source: Failblog

Even though the King of Pop has passed, Sony awarded the Michael Jackson estate the biggest recording contract in history. The deal will award the Jackson estate a guaranteed $200 million, though the contract may net as much as $250 million. In return, Sony will release 10 Jackson albums–a mix of new and old songs–over a period of 7 years. The Wall Street Journal has the story:

The dollar amount is especially striking against the backdrop of the music industry as a whole, in which U.S. album sales have plunged 52% in a decade. Superstar deals worth tens of millions of dollars per album were rare even at the peak of the CD-sales boom in the late 1990s. Yet it also underscores that the biggest acts are becoming even more essential to record labels, as individual fans purchase fewer albums each year.

The estate is likely to pay off about $125 million in debt by the end of this year, including $35 million owed to AEG Live, the promoter that was to stage a series of concerts by Mr. Jackson in London. The estate is likely to refinance another $325 million backed by Mr. Jackson’s two biggest assets: Sony/ATV Music Publishing, his venture with Sony that owns copyrights to 251 Beatles songs; and his 2,600-acre Neverland Valley Ranch outside Santa Barbara, Calif.

Could Michael Jackson have made this much money while he was still alive, given his tendency to accumulate debt? The King’s death sounds like a windfall for Sony, as sad as that is.

Tiger Woods is returning to golf. One month after his public apology, Woods has announced he will compete at the Augusta National Golf Club’s Masters tournament this April. The Augusta site has Woods’ official statement:

“The Masters is where I won my first major and I view this tournament with great respect. After a long and necessary time away from the game, I feel like I’m ready to start my season at Augusta.

“I have undergone almost two months of inpatient therapy and I am continuing my treatment. Although I’m returning to competition, I still have a lot of work to do in my personal life.”

Tiger Woods is returning to golf before salvaging or remaking his image, proving that he’s an athlete first, then a public figure. The New York Daily News quotes CBS president Sean McManus on what Woods’ return will mean for the media:

CBS News and Sports president Sean McManus can practically taste the ratings.

“It is hard to overestimate how much interest there will be,” McManus said. “Tiger Woods is the most famous, most recognized, most accomplished athlete in the world, and his celebrity and prominence is even larger than it was. When you look at the fact that he gave a very simple press statement with no questions and every broadcast and cable news network in America carried it with great interest, I think that is an indication that whatever he does has enormous interest. And whatever he does on the golf course for the first time since Thanksgiving will be of interest to almost every man and women in this country.”

Woods has also reportedly hired spin whiz and former Bush secretary Ari Fleischer to manage his new image. New York Magazine comments:

Fleischer worked with Mark McGwire after it was revealed that the baseball star had used steroids, and he’s helping Woods plan a strategy on how to rejoin the tour at the Arnold Palmer Invitational in Florida at the end of the month. “They were in his living room this week going over a strategy for how to handle Bay Hill in two weeks,” a spy told the Post.

Luckily for Tiger, the sports press is even more soft on its stars than the White House press corps is on the press secretary.

It’s early for Tiger to be making a PR comeback, judging by the size of his scandal. He needs to do more for his image than just play more excellent golf games. My guess is that people will be wary of Woods for some time to come, until it’s clear what he is (A reborn family man? A playboy?). Time to get a move on, Ari.

Few subjects are as plagued by myths and falsehoods as starting a small business. Everywhere you turn, someone is making sweeping proclamations about small businesses – the difficulty of starting one, the risks involved, the odds of failure or what you “have to do” in order to make it. And unlike in some fields, myths about small business are not simply harmless old wives tales. Rather than leaving you to fend for yourself against business dogma, Business Pundit assembled – and debunked – this list of 12 pervasive myths about running a small enterprise.

“It Takes Money to Make Money”

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Like many of the myths we will examine, there is a grain of truth to this one. In other words, you probably cannot get up and running in any type of business without at least some up-front expenditures. That being said, “some” is a very loose term and varies widely depending on the type of small business you are looking to start. Starting a restaurant, for instance, is the epitome of a capital-intensive business. Day one cannot even begin until you have rented or acquired a building, hired a staff, purchased inventory and equipment, furnished the restaurant, and the like. No matter how you slice it, a substantial sum must be spent to start such a business. Other businesses, meanwhile, are far less capital intensive. Self-publishing is one such business. Harvard MBA and how-to author John T. Reed, for instance, writes that you can even refrain from publishing a single book until you secure an order from a customer. Reed actually goes so far as to say that “if someone gave me $100,000 and forced me to spend it on my publishing business, I would not know what to do with it.”

“You’re Sunk Without a Business Plan”

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Here, again, a grain of truth obscures a much larger point. Without question, it’s smart to have an overall strategy in mind before diving headlong into a business of any kind. That is to say, you should have some idea of the segment of customers you feel best suited to serve, and a general sense of what you bring to the table. But this is not what most people mean when they admonish others to have a business plan. More often, what is meant is that you should have a lengthy document spelling out in precise detail exactly how your business will advance from one stage to the next. “What’s wrong with that”, you might ask. The problem is that detailed plans work best when you are pursuing a fixed goal – such as losing weight or sticking to a budget. In these cases, a known sequence of steps has been proven time and time again to accomplish the goal. The goal in business, however, is meeting consumer demand – which is often a moving target. As evidence, look at all the businesses (like Google) that are now doing something radically different from their original plan. Instead of feeling like you must religiously adhere to a plan, resolve to be open-minded and react to opportunities as you see them emerge.

“It Takes a Great Idea”

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Perhaps the most pernicious myth of all is that business success (small, medium or large) depends on having a great idea. It is difficult to exaggerate how many books, articles and speakers have declared the monumental importance of starting out with an amazing idea. So universal is the appeal of “the great idea” that many now believe it is impossible to succeed with ordinary, proven business models like cleaning carpets or delivering pizza. In fact, there is very little truth to this at all. What counts far more than the idea you start out with is the speed and effectiveness with which you execute. At the time of the VCR’s emergence, for instance, many experts felt that Beta-Max was superior technologically for any number of defensible reasons. None of that matters, however, because most people have owned or used a VCR, but few have any personal experience with Beta-Max at all. The takeaway here is that the idea (no matter how groundbreaking) is always subservient to firm, relentless execution. Furthermore, it matters more that you are satisfying a genuine consumer demand than whether you are implementing the idea you personally wanted to implement.

“50% (or However Many) of Small Businesses Fail”

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We see such statistics reported constantly, painting a gloomy picture for any prospective small business owner. In light of such foreboding data, who but the most doggedly determined among us will even bother to try? Well, here’s the truth about this one. There is arguably no such thing as the rate of “small businesses” that fail. The phrase “small business” is scandalously vague, encompassing such wholly different and unrelated fields as restaurant operation, self-publishing, plumbing and web design. Given the endless and critical differences among these and other businesses (the types of customers being served, the prices being charged, the market forces that affect demand, etc.) it means practically nothing to proclaim that “small businesses”, categorically, have a set failure rate that you specifically should be swayed by. Far more important to your own decision making should be the unique factors relevant to your market, your customers and your products and services. If data is available on success or failure rates in your industry, these are far more meaningful than any generic statements about “small businesses.” BusinessWeek concurs, having concluded that the results of studies into small business failure rates are “often contradictory or vague.” Rather than getting preoccupied with broad failure rates, resolve to study in-depth the factors that determine success or failure in your line of work, so you can address the pertinent risks ahead of time and reduce your unique odds of failure.

“You Can Delegate All The Unpleasant Stuff”

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After years or decades of toiling under The Man’s thumb, small business owners are sometimes enamored with the idea of delegating unpleasant tasks to subordinates. If you have ever uttered the sentence “oh, I’ll just hire people to do that” in a dismissive tone of voice, you have fallen victim to this myth before. By now, however, you might be painfully aware of how far short it falls of the truth. The truth is that in most businesses, you will need to be a generalist who has at least some working knowledge of all the tasks needed to run the show. No, we don’t mean that you need to be an accounting expert to hire an accountant. However, if you literally know nothing about keeping the books, how can you know whether the accountant you hire is competent and ethical – or setting you up as his own miniature Enron? Beyond that, it is not always easy to simply “hire someone to do” whatever you need done. Good people are hard to come by, and generally expect to be compensated at market rates. In the early days, you may find yourself operating as a jack of all trades to keep costs down. Once and if you grow, it will then become feasible to hire some help in managing the expansion. In either case, abandon at once the notion that you can hire the functions you need and then wash your hands of them forever.

“I Call All The Shots”

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Hands down, the biggest draw of starting a small business is unshackling yourself from the control and oversight of a boss. And certainly, running your own company will accomplish this. Nonetheless, the whole truth in this case is, once again, messier and less appealing than we are at first led to believe. While you wont have a pointy-haired middle manager hawking over your shoulder about TPS reports, nor will you be able to just sit around and “do whatever.” In fact, it might be more accurate to say that you will have a boss (albeit an indirect one) – your competitors. In his essay How To Make Wealth, venture capitalist Paul Graham says that your competitors decide how hard you’ll have to work, “and they pretty much all make the same decision: as hard as you possibly can.” In other words, you can only run a relaxed ship insofar as the other pizza shops or financial planners or plumbers do the same. If they ramp up their efforts or capacity, chances are you will be forced by the market to do the same if you want to remain in business. Essentially, a boss provides in corporate America the discipline and structure that you must create for yourself as a small business owner.

“It Takes X Years for Small Businesses to Turn a Profit”

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Yet another in a long line of sweeping statements about “small businesses” is how long they take to turn a profit. We often hear discouraging estimates that it can take as long as 2-10 years for a small business to start putting money in the owner’s pocket. By now, however, you should know that such statements are too vague to mean anything. To use the restaurant example again, this is a business that you should probably expect to take its time in producing a profit. The likelihood there is that you had to take out a substantial loan to acquire your property, finance equipment, and the like. So now, the restaurant must not only cover the costs of operation, but also service one or more loans for years. A web design business, on the other hand, could theoretically be profitable on day one by charging the first client more than it costs to design their website. Ditto for a financial planner or other consultant. In short, the truth eludes generic estimates and depends largely on the nature of the business you are in.

“I’ll Have More Freedom to Live My Life”

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Once more, whether this hoped-for scenario actually pans out is largely a function the business you are in and how much time you devote to it up front. Early on, you will almost certainly not have more freedom. This goes down to the root differences between having a job and running a business. Many jobs, for all the disparaging remarks that can be made about them, permit you to invest little of your concern into it and mentally depart from it completely at the end of the day. A business, conversely, often demands your constant attention. Whereas a problem outside your job description can be dismissed as “somebody else’s problem”, when it’s your business, every unresolved problem is your problem. It is not enough to simply explain why there is a problem or prove to a higher-up that you did not cause it – all that will matter is swiftly resolving it. Furthermore, you will come to see your company (for better or for worse) as an extension of yourself, rather than something you passively do for money. None of this is to say that you will not ultimately have more freedom as a result of running your business. However, to expect a ton of it in the early days would be an exercise in self-delusion.

“Now I Can Write Everything Off”

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While it’s true that business owners can write off far more than employees can, there is great risk in taking this too far. Entrepreneur.com quotes New York-based CPA Philip C. Roventini admonishing small business owners to always ask, before attempting a write-off: “is this something I would have bought anyway if I were not in business?” Keeping this standard in mind, you probably will not get away with deducting 100% of your car payments, nor gas and repairs. Rather, your deductions must be limited to those things (or aspects of things) which pertain strictly to the operation of your business. In other words, you can write off the portion of auto expenses that you can document as being essential to your operations. Keeping good records is also critical. Basically, if you cannot document it and cite a clear connection between the write-off and the operation of your small business, your attempt at a write-off could trigger audits, fines or worse. Be mindful of the saying, “pigs get fed, but hogs get slaughtered.”

“If I Build It, They Will Come”

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If this is your approach to customer acquisition, you are setting yourself up for disappointment. Very simply, customers today have an endless array of choices – for everything. Where to shop, eat, rent a movie, take a vacation, you name it, there are a myriad of options to pick from. For our purposes, that means that simply “building it” is most certainly not going to bring anyone through your doors (or onto your website.) In order to succeed as a business owner, you will need to actively and ambitiously market yourself to consumers. Some businesses (like restaurants) often thrive on word of mouth promotion. That’s fine as far as it goes, but even this strategy depends on running your business in such a way as to be attractive to a specific segment of customers, and perhaps encouraging them to tell their friends. No matter what type of small business you choose to start, it will rarely – if ever – be sufficient to open up shop and idly wait for orders to start pouring in. Instead, consider your number one task after opening to be spreading the word as far and wide among your target market as often as possible.

“I Can Pay Myself Whatever I Want”

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There is no faster way than running a small business to forget the notion that salaries are just arbitrary numbers plucked out of thin air. While it’s true that having equity in a profitable business typically offers higher income potential than selling your time (which is what most jobs amount to), it is not true that you can pay yourself “whatever you want”, either. What you take out as income will be subject to input from various factors, such as product sales, your costs and whether you plan on expanding. Many small business owners, for instance, re-invest early profits back into the company to fuel its growth. Then again, others don’t, preferring instead to taste the fruits of their labor as early as possible. Neither approach is necessarily right or wrong, but it’s important to be aware that your income (even though it can certainly be high and rewarding) is not unlimited. You will be limited by the constraints of your business in how much salary you can take out, both in the beginning and throughout the life of the company.

“Small Business Success Requires Bold Risk-Taking”

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There is a romanticized stereotype of the entrepreneur as a “swashbuckling risk taker” (to quote Forbes) who throws caution to the wind, risking life and limb to get his or her doors open. However, detailed studies of specific entrepreneurs often show that far from embracing heedless risk-taking, they are actually masters at managing risk and insulating themselves from it whenever possible. While he admittedly isn’t a small business owner by anyone’s definition, the textbook example is Bill Gates. Tim Ferris, author of the Four Hour Work Week, has an excellent chronicle on his blog called Do You Really Know Bill Gates? The Myth of Entrepreneur As Risk Taker. In our opinion, this is required reading anyone who believes that major risk taking is needed to succeed in small business. In it, you will learn that Gates systematically and purposely protected himself from just about every risk that confronted him, being careful not to expose himself to any unnecessary threats. In short, the lesson here is to assess what risks you face and confront them head-on, rather than believing that you’re doing what “real” entrepreneurs do by taking them no matter what.

Facebook will likely let users create QR (Quick Response) codes for their profiles. QR codes are like personal bar codes, but they hold more information. When a mobile phone camera reads a QR code, it converts the QR code’s content (text, links, photos, and other media) into a readable format. TechCrunch has the scoop on Facebook’s experiment:

…we’ve gotten a number of tips in our inbox in the past 10 minutes so it’s safe to assume it’s not a hoax or anything: Facebook appears to have started enabling users to generate custom two-dimensional QR codes.

“We’re always testing various features on the site, but we have nothing more to share at this time.”

While status updates may not be the most fascinating use of QR codes, Facebook’s move does reflect a bigger trend. PCWorld has more on their overall use:

The QR Codes are just a simple bridge from the Internet to the “Outernet,” a concept that seems to be on many people’s minds here (at SXSW, where the article was written). They allow you to get Internet content about something that you are close to or looking at in the real world.

And don’t be surprised if you start seeing QR Codes as standard on business cards everywhere.