Leasing News

than a purchase. The current address and phone numbers are: Alliance Funding Group, Inc 2099 S State College Blvd, Ste 301 Anaheim, CA 92806 (714) 704-1440 (714) 704-1448 fx

“Hope this helps.”

Charles Wright Alliance Funding Group, Inc

(801) 733-5125 (800) 856-9026 fax

www.alliancefunds.com

“ Alliance Funding Group merged and then unmerged.

AFG (La Habra) was always owned by Brij Patel, now based in Anaheim CA.

Grown to 50+ employees, 4 offices nationwide and still expanding. Still

large on small ticket leasing. GE Cap's 2nd largest broker. 3rd move in 6

months - new space 15,000 square feet to accommodate newly "acquired" sales

people from Saddleback, American Express, and expansion of New Medical

Funding Division etc. Expected to be 100+ by the end of 2003.

AFG solicited me and opened the Medical Funding Division. We offer a full array

of financial services and products to the dental, veterinary, and medical

industry, for new startup practices, practice acquisitions, practice note

refi's, unsecured working capital (up to $150K), accounts receivable

factoring, SBA and commercial real estate loans. My title is National Sales

Manager - Medical Funding Division. The address and phone numbers provided

by Charles Wright are correct.

AFG solicited me and opened the Medical Funding Division. We offer a full array

of financial services and products to the dental, veterinary, and medical

industry, for new startup practices, practice acquisitions, practice note

refi's, unsecured working capital (up to $150K), accounts receivable

factoring, SBA and commercial real estate loans.

The address and phone numbers provided by Charles Wright are correct.

Happy New Year

Evan Barker

National Sales Manager

--Medical Funding Division

EBarker@AllianceFunds.com

(Thank you for correcting “The List.” We solicit any corrections, additions, or clarifications. Editor

Here is a direct link to the up-dated “The List”

http://www.leasingnews.org/list.htm

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Picture from the past---1995—Michael A. Disch

1995-Michael A. Disch, Managing Director, DVI Inc.

Vendor Finance Group

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Terry Waggoner remembers Bob Jacobson

Last edition the picture from the past was our old poker playing

ex-Union Bank/Interlease/JacobsonLeasing/Tri-Continential Bank/

Amembal Trainer Bob Jacobson

http://www.leasingnews.org/#past

from Terry Waggoner:

“.......before he left the leasing business to join

Hewlett-Packard, where he is today, a supervisor in the engineering

department, I am led to believe.........>

“Talk about a blast from the past! As you know, I was with TriCon and its

future parents from '77 to '95 and was VP-Western Sales from '79 to '86.

“Accordingly, I knew Mr. Jacobson very well and do know that at some point,

he did calm down considerably. I've lost touch with him as well, but my wife

is an Enterprise Account Manager with HP and Jake is not in the

International Address Book......... but........ that's Bob. ;~}>

“Best to You and Yours,”

Terry Waggoner

tvwagg@hotmail.com

Camarillo, CA.

http://two.leasingnews.org/temporary/jacobson_bob.html

This is not a current ad, this is from June 1991 -Courtesy from WAEL Newsline-

Making Money in Leasing

with

Bob Jacobson

in conjunction with

A&H

This five one-day seminar series is designed specially for small to medium size lessors and brokers. Learn to document, package, fund and use your HP in ways that will cut costs and/or increase profits. Receive checklists, computer programs and documents all designed with one goal in mind: Making you more money in leasing.

Courses:

	Understanding the Time Value of Money Making Money Using the Financial Calculator Making Money Understanding Documentation Making Money Packaging Financials Professionally Making Money Obtaining and Keeping Funding Sources

Seminar Dates:

	Irvine, Ca	June 10 - 15
	San Francisco	June 17 - 22
	Los Angeles	July 15 - 20
	New York	July 29 - Aug. 2

To Register, Call (801) 484-8555
or Fax (801) 484-4871
for detailed brochure

Amembal, Halladay & Isom
P.O. Box 520808
Salt Lake City, UT 84152-0808
Telephone (801) 484-8555/Fax (801) 484-4871

This is not a current ad, this is from June 1991 -Courtesy from WAEL Newsline-

---------------------------------------------------------------------

Please send to a friend of Bob’s, and maybe we can smoke him

out for a pithy comment.

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Major business and economic events scheduled for this week: .

January 6

MONDAY

Welcome Back to Work Day

January 7

TUESDAY

-- Commerce Department reports on factory orders for November.

-- Macworld Expo opens at San Francisco's Moscone Center, runs through Friday.

January 8

WEDNESDAY

-- Federal Reserve reports on consumer credit for November.

January 9

THURSDAY

--Looking forward to the weekend

--Alexa Leasing Website Report

January 10

FRIDAY

-- Labor Department reports on December employment. .

--Ten Days in to January Blues

Source: Associated Press

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Fed's Minehan: Moderate recovery on track

BY KATHIE O'DONNELL

Reuters

HARTFORD, Connecticut - Boston Federal Reserve President Cathy Minehan on Friday urged patience with the slow U.S. recovery and said she expects the economy to keep growing at a moderate pace in the new year.

In the first comments by a top Fed official in the new year, Minehan stressed the long-term resilience of the U.S. economy despite uncertainty about a possible war with Iraq, which was holding back growth.

Businesses are likely to resume a normal pattern of hiring and investment once that uncertainty lifts, she said.

Minehan is not a voting member of the Fed's interest-rate setting committee this year, but she participates in policy discussions.

"It looks to me as if the recovery is well positioned to continue, moderately but steadily. We just need to have some patience," Minehan told the Connecticut Business and Industry Association.

"I believe one key to assessing prospects for the U.S. economy in 2003 is never to underestimate the resilience of the U.S. economy," she said.

Minehan said consumer spending should continue to be "reasonably solid."

Although economic growth in the fourth quarter of 2002 was likely to be "very slow," it should pick up to a 3 percent to 3.5 percent pace by the end of 2003, she said.

Most economists believe the economy slowed to a rate of 1 percent to 2 percent in the last three months of 2002 as consumer spending eased and manufacturing activity stalled.

Minehan's comments were in line with other Fed policymakers who have said recently that uncertainty about Iraq has cast a pall over economic activity that will take some time to clear. The Fed holds its next policy meeting Jan. 28-29 and is widely expected to leave interest rates steady.

MORE NORMAL SPENDING

With consumer spending unlikely to exceed last year's solid pace, economists have stressed the need for businesses to start investing again to return the recovery to a solid path.

Minehan said that business plans to improve efficiency and deal with excess capacity are proceeding apace and should provide the foundation for investment growth in 2003.

During last year's recovery, companies were rebuilding profitability and learning to cope with modest demand growth and were "abnormally reluctant" to hire and invest, she said.

However, "as some of the uncertainty surrounding potential geopolitical disruptions lifts, as I hope it will, I expect businesses to resume a more normal pattern of hiring and capital spending," Minehan said.

Data on new orders for non-defense capital goods, while volatile, also suggest modest growth for the future.

On the consumer side, the Boston Fed president said household incomes were growing and consumer spending is "still hanging in there," adding that some of the doom and gloom about holiday retail sales may reflect unrealistic expectations.

"The fundamentals suggest a moderate expansion of consumption in 2003," she said, citing more stable stock markets, high levels of housing wealth and increases in incomes.

Although fiscal stimulus from the federal government was supporting the economy -- and President Bush is due to unveil a new economic package on Tuesday -- Minehan did say that the potential drag from large local and state budget deficits was a concern.

Addressing another fear of financial markets, Minehan downplayed worries about deflation, or widespread falling prices.

"I expect that growth over the next couple of years or so will be such that we will see a continued pattern of very low but positive rates of inflation," she said.

As evidence that deflation is not in the cards, Minehan noted that although prices for many manufactured goods have fallen, prices for services have been rising by 3 percent or more for years.

Indeed, Minehan raised a concern over the pace of some price increases. "In fact, rising prices for things like medical services and insurance are worrisome as they could be a drag on the current rate of economic growth," she said.

The Fed cut the benchmark federal funds rate to 1.25 percent in November to help the economy through its soft patch and is expected to hold it steady for the next several months as it waits for more solid growth.

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Commercial paper supply in U.S. drops to 3-year low

By Jonathan Stempel

ABS Net

NEW YORK, - The amount of unsecured short-term debt sold by U.S. companies has sunk to a 3-year low, the Federal Reserve reports.

The supply of so-called commercial paper ended 2002 at $1.322 trillion, down 8 percent from $1.439 trillion a year ago, and the lowest month-end total since October 1999, Fed data show. Companies often fund day-to-day operations with commercial paper, which matures within 270 days.

The decline resulted in part from falling credit quality and companies' migration to other capital markets. Ford Motor Co.'s <F.N> finance arm, for example, is selling more asset-backed debt, and General Electric Co.'s <GE.N> finance arm is selling more long-term debt.

While the drop reflects tighter capital markets, analysts said it suggests neither a credit crunch nor a worrying extension of 2002's capital spending slowdown.

"A lot of the balance sheet remaking that companies undertook to combat perceived liquidity problems has already taken place," said Deborah Cunningham, a senior portfolio manager responsible for $130 billion of short-term debt at Federated Investors in Pittsburgh.

"What I'm hearing from corporate treasurers is that they are anticipating an increase in their short-term debt outstanding in the first quarter of 2003, as their balance sheets and the economic outlook improve," she added.

Last month, credit rating agency Standard & Poor's said demand for commercial paper should "rebound gradually" as the economy, business inventories and capacity utilization grow, and as worries about accounting and trading practices ebb.

RATINGS DECLINE

Companies with the highest, "Tier-1" ratings find it easiest to sell commercial paper. Those with "Tier-2" ratings have more difficulty because the potential investor pool is smaller. Companies with lower ratings, and even some "Tier-2" companies, generally cannot sell commercial paper.

Henry Shilling, senior vice president in the managed funds group at Moody's Investors Service, said money market mutual fund asset managers have in the last year shown "greater selectivity" in buying commercial paper -- either purchasing less overall, or favoring asset-backed paper.

"Tier-2" supply fell 27 percent to $72.2 billion in November from $98.3 billion in December 2001, and 49 percent from a July 2000 peak of $141.1 billion, Fed data show.

Qwest Communications International Inc. <Q.N> and Tyco International Ltd. <TYC.N>, among others, stopped selling commercial paper as their credit ratings fell.

Last year more than 30 companies lost their "Tier-1" ratings from either Moody's or S&P.

Even such "Tier-1" issuers as GE and Verizon Communications Inc. <VZ.N> sold less commercial paper under pressure from investors and rating agencies to diversify funding sources.

Thirty-day "Tier-1" paper yields an average 1.28 percent, and 30-day "Tier-2" nonfinancial paper yields 1.67 percent.

NON-FINANCIAL SUPPLY FALLS

The Fed also said the supply of commercial paper from nonfinancial companies ended 2002 at $135 billion, down from $210.5 billion a year ago and $351.9 billion in August 2000.

John Atkins, a corporate analyst for market research firm Ideaglobal in New York, said that drop suggests a corporate spending rebound might not come before July. Still, he said no crunch is imminent, just limited demand for selected credits.

"If and when capital spending enjoys a resurgence, there will be easy access to the market among at least those companies most likely to significantly raise spending targets, which by and large would be the most credit-worthy companies," Atkins said. More mergers might also boost issuance, he said.

Federated's Cunningham said the short-term debt market may shrink if the economy stops growing or slips into recession. The market's current size is a "modest positive" for capital spending, she said.

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Poll respondents despondent about 2003 tech spending

(San Francisco, Boston, Austin all report the blues, here is the fourth

largest technology city report)

By Andrew Dietderich

Nearly 64 percent of metro Detroit technology workers expect tech spending to decrease or be flat in 2003, according to an unscientific Michigan.CrainTech.com poll.

The poll asked voters what they expected for tech spending.

Of the 172 respondents, 95 or about 55 percent voted that it would decrease, while 15 or about 9 percent said it would be flat.

However, 52 or 30 percent said spending would rebound early in the year, while 10 people or 6 percent said it would rebound in the latter half of the year.

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Atlanta No. 4 in job losses

By MICHAEL E. KANELL

The Atlanta Journal-Constitution

New government figures peg metro Atlanta's recent job losses as the nation's fourth- worst -- an improvement from the city's ranking a year ago, when it was second- worst.

The fastest-growing large city for a decade, Atlanta hit the wall in 2001, bleeding jobs from three sectors that had paced its rapid growth: transportation, tourism and telecommunications.

More than 85,000 jobs have been lost since the crest of that boom, with the first wave coming in cuts from airlines, hotels and technology companies.

And the bad news has lingered. About 30,000 jobs disappeared in the 12 months up to November, the Bureau of Labor Statistics said Friday. Many were second-round cuts in core industries. But the worst recent damage was done in construction and retail, echoes of pain in the growth sectors.

"What you are seeing is the ripple effect," said Rajeev Dhawan, director of the forecasting center at Georgia State University. "And it's going to be a while before we see the end of this problem."

The only metro areas hit worse than Atlanta were Chicago, which lost 55,700 jobs; New York, down 42,500; and the Seattle area, shrinking by 30,500 jobs. A year ago, only New York -- which had lost 82,500 jobs -- had worse job losses than the 48,300 sliced from Atlanta payrolls.

The region's rebound is largely dependent on factors far beyond Georgia's borders. And while optimists see a slow but steady improvement in the national economy, the recovery is fragile.

With war worries and credit card debt dogging many households, consumer spending is not expected to grow rapidly. With profits still anemic and the future uncertain, companies, too, are reluctant to commit.

But assuming the nation's problems with Iraq and North Korea are resolved quickly, Atlanta should add 25,000 jobs by the end of this year, Dhawan said. That still would be less than half the jobs added during each of the boom years in the late 1990s. Still, the economic engine should be accelerating by year's end, he said.

"Don't pop the champagne yet; not until 2004 -- if all things go fine."

There is a lot that might not go well. For instance, consumers, who represent more than two-thirds of the economy, could be shaken by a decaying job market. They might spend even less. More layoffs also might undercut the housing market, which has been crucial to the economy.

That particular threat has a trial run this month, since post-holiday layoffs typically throw thousands out of work.

An average of more than 50,000 jobs across the state are axed every January. Last year, 55,800 positions were slashed, more than half from retail, said Michael Wald, regional economist for the Bureau of Labor Statistics.

"January is always a bad month," Wald said. "But since we didn't hire as many people in 2002, does that mean that in January there won't be as many laid off? We don't know that."

Troubled sector

Two years of cost-cutting has already taken a toll on wholesale and retail trade. The sector has been shaved back to the level of 1998: about 381,500 jobs. That trimming reflects the increasingly cautious consumer along with thinning profit margins.

And even when retail is at its most lucrative -- during the run-up to the holidays -- hiring has become increasingly anemic.

As the holiday buying season cranked into gear in November, a mere 4,600 retail jobs were added -- exactly half the number added a year earlier.

Back in 1996 -- before the opening of several massive malls and when Atlanta was several hundred thousand people smaller -- retail payrolls swelled by nearly 11,000 jobs as the holiday season cranked up. This year, many retailers went into the holidays with hiring held to a minimum, figuring on sluggish sales and hoping to keep costs low, Wald said.

"Despite their expectation for a mediocre Christmas, it was worse than they expected," he said. "They still got whacked."

The news, however, has not been uniformly bad.

Without job growth in sectors like services, the picture would be far worse. Wholesale and retail trade dropped 28,700 jobs. Construction lost 15,600 jobs.

But in 2001, construction had peaked with 125,000 jobs as both housing and office- building boomed. Roughly 6,000 jobs were slashed in the month after the Sept. 11 terror attacks, and the sector's slide has yet to stop.

"Generally, jobs drop in the winter and pick up again toward summer, but this time you didn't get that," Wald said.

By November, construction was down to 103,400 jobs, Wald said. "I wouldn't say it has bottomed out yet. We will see."

Favored for relocations

Metro Atlanta added more than 680,000 jobs during the decade before the bubble burst in 2001. And despite the pounding it has taken in the past two years, Atlanta is still ahead of the pack, argued Hans Gant, senior vice president at the Metro Atlanta Chamber of Commerce.

"The people who make site-selection decisions still rank Atlanta as one of the best places to relocate or expand," he said. "We had 28 or 29 companies relocate to metro Atlanta [last year]. I think we are beginning to see the turnaround, and we are encouraged by what we have seen since last summer."

Of course, that depends on many factors beyond local control. For example, the recession has meant declining revenues for local and state governments, most of which are legally forbidden from running deficits like the federal government does.

State and local agencies without enough money must either cut programs and people or raise taxes. Both hurt the region's economy -- which in turn could mean less tax revenues. Government accounts for 281,700 jobs in metro Atlanta, more than 10 percent of jobs locally.

During the past year, Georgia's local and state governments added 4,800 jobs, Wald said. But many now face revenue shortfalls.

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Odds and Ends----

TIC bankers, inc. is TIC Capital Inc, dba TIC Bankers, inc., 23411

summerfield, Suite 10-L, Alsio VIejo, CA 92656. Tamer Qursha, CFO @

from: Chris Simpson

CreditLease, Inc.

Chris@creditleaseonline.com

found in CA Secretary of State

TIC CAPITAL, INC.

Number: C2335349 Date Filed: 3/9/2001 Status: active

Jurisdiction: California

Mailing Address

23411 SUMMERFIELD STE 10-L

ALISO VIEJO, CA 92656

Agent for Service of Process

SUZANNE QURSHA

23411 SUMMERFIELD STE 10-L

ALISO VIEJO, CA 92656

Readers with experience with this company are encouraged to contact kitmenkin@leasingnews. org

Hal Horowitz

Somewhere back around the Spring of ’89 (or so), I chaired the WAEL

conference in Las Vegas. One of our key speakers was Frank Abignale, now

famed in DreamWorks, Catch Me If You Can staring Leonardo DiCaprio and Tom

Hanks. I don’t remember what we paid him, somewhere around $8,000 to

$10,000 for an hour to speak on fraud prevention. Instead, he spoke on his

exploits and the fun he had as a criminal and how he enjoyed getting away

with it. His book is listed as “uproarious” and according to the screen, he

is making millions as a consultant for several major companies. My opinion?

He’s still scamming them.

At the end of the movie a tag line reads that he’s still friends with the FBI agent, Carl Hanratti, who dogged him over the years ala Inspector Javier. In his hour of bragging to WAEL, he never mentioned this character, whom I believe was made to look like a buffoon for the sake of the movie.

As the person who wrote the book, had a part in the

movie and was on the set regularly, I ask, Frank, is this any way to treat a

friend? Only if the bucks are worth it, it seems. There is no question

that Frank Abignale is a very charismatic and engaging person. He’s

enjoyable to listen to and I’ve no doubt he is intelligent. The movie would

have been fun if Tom Hanks’ character hadn’t been made to look so stupid,

and probably even more so, if it had been a work of fiction. Unfortunately,

Frank Abignale was a crook who scammed banks for millions of dollars,

flaunted his actions in the face of police in several countries, and is

still making money off of those exploits, from his book, from the movie,

from the reprint of his book, and from his speaking engagements.

As one of many who have tried to take an active role in the leasing industry

in the area of fraud prevention, when we see how well a successful fraud is

rewarded, is there any question why those who continue the fight are

destined to lose? For every fraud that is apparently thwarted, someone else

wakes up that day with a new, a higher tech, a more devious or a more

stealth approach to scam individuals and institutions. Still I have to ask,

is the face of this reason enough to give up the fight and let the forgers,

frauds, scammers and cheats win? My answer would be no. That just wasn’t

how the West was won.

My New Years wish for the leasing industry and all of the friends and

associates I’ve enjoyed working with over my years as a part of it is

survival, revival, good health and clean deals.

By the way, Abignale’s fee range is now $20,000 to $25,000; see

http://www.brooksinternational.com/frank_abagnale.htm.

Tuesday, December 31, 2002: "America is best described by one word,

freedom." John F. Kennedy

Best wishes for a healthy, happy and prosperous 2003.

Hal T. Horowitz

Vice President, Financial Placements

Wingate Dunross, Inc.

30851 Agoura Road, Suite 301

Agoura, CA 91301

Phone: 818-597-3200 ext. 212

Fax: 818-597-3201

Cell: 818-730-0645

Email: halh@wingate-dunross.com

Website: http://www.wingate-dunross.com/

My mission is to collaborate with my clients, to further their success by

identifying professionals of uncommon ability to whom they might not

otherwise have access and who will in turn make a valuable contribution.

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January 26-28 Westin La Paloma Tucson, Arizona

2003 Equipment Management

Conference & Exhibition

Equipment Leasing Association

Theme: Economic Recovery: Oasis or Mirage?

What You'll Learn:

What's Ahead for Residual Values and Remarketing of Assets in 2003

Implications for the Industry of Accounting Rule Changes

What's Hot and What's Not in Selected Equipment Markets

Impact of the economy on asset values worldwide

Multiple sessions for the seasoned and newly hired equipment manager

Test Your Skills at the "Live" Inspection of Construction Equipment

Everyone You Need to Talk To Under One Roof: Access to Appraisers, Remarketers, Auctioneers at the World Class Exhibition

For nearly 20 years, the #1 Event for Asset Managers, Remarketers and Providers of a variety of asset management services.

Who Should Attend?

Equipment management professionals, including senior managers and their staff; service providers to the industry.

http://www.elaonline.com/events/2003/equipmgmt/

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please send to a friend as we are trying to build our readership.

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########## ########################################

Willis Lease Finance Prepays Loans Generating $4.1 Million Pretax Gain; Expands Credit Facility by $50 Million

SAUSALITO, Calif.----Willis Lease Finance Corporation (Nasdaq:WLFC), a leading lessor of commercial jet engines, announced it has prepaid a $35.0 million credit facility, generating a pretax gain of approximately $4.1 million in the fourth quarter of 2002 to be reported as other income on the company's financial statements. An offer of a substantial discount for early payoff is not uncommon when a lender implements changes to financial or market strategies. "The opportunity to prepay this loan facility made sense for us and for our lender," said Charles F. Willis, President and CEO.

In addition, Barclays Bank PLC (NYSE:BCS) is providing a $50 million addition to the company's existing $200 million revolving warehouse credit facility. "The $50 million increase to our warehouse credit line provides additional capital to fund growth in our portfolio. In a period when many banks have reduced their lending commitments, we are particularly pleased in the confidence Barclays is showing in our business," said Willis.

"While we have not completed our analysis of the fourth quarter, portfolio utilization continues to hold firm or show improvement across most engine types. There are some older engine types, however, where demand is sluggish, and market values are not as strong as before. As part of our normal quarterly review, we may make adjustments to the valuation of a few of our older engines," Willis added.

Willis Lease Finance

Willis Lease Finance Corporation leases spare commercial aircraft engines, rotable parts and aircraft to commercial airlines, aircraft engine manufacturers and overhaul/repair facilities. These leasing activities are integrated with the purchase and resale of used and refurbished commercial aircraft engines.

CONTACT:

Willis Lease Finance

Donald A. Nunemaker, 415/331-5281

############### ##############################################

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California Ups and Downs Ripple in the West---Hawaii-Nevada

By JOHN M. BRODER

New York Times

OS ANGELES, Calif., Jan. 5 — Rafael Pineda barely feels California's economic pain.

Mr. Pineda, 18, whose family emigrated from Mexico 11 years ago, has a job as a cashier at Bed Bath and Beyond in fast-growing San Bernardino County. He attends community college and sees a boundless future in the ministry or teaching.

"California is where you can make a name for yourself and make money and be successful in any area you want," he said during a lunch break recently. "I know the state has some problems now, but it can turn around in an instant."

About 350 miles north in the San Francisco Bay

Area where tens of thousands of refugees from the dot-com collapse have yet to pick up the pieces, the mood is decidedly darker. Just ask Jerrold Kaplan, an Internet pioneer who said he made and then lost most of $500 million when the dot-com bubble burst.

"I like to joke that I used to be retired," he said mordantly. "Now I'm just unemployed. It's very relaxing." He has been out of work since 2001.

Mr. Pineda and Mr. Kaplan are in many ways emblematic. For California's is a tale of two economies.

Southern California, particularly the counties south and east of Los Angeles, is faring relatively well, with unemployment below the national average, personal income growth outpacing the nation and military contractors riding a wave of Pentagon and domestic security spending. The film industry set box-office records last year, and consumers took advantage of low interest rates to invest in new homes and automobiles.

But the San Francisco Bay Area remains mired in a technology slump, with skilled and formerly wealthy workers fleeing to find jobs elsewhere and analysts worried that it could be years before the next new thing revitalizes Silicon Valley.

"It's like two separate countries," said Sung Won Sohn, chief economist for Wells Fargo bank.

"For the time being," he said, "California will lag the U.S. economy, primarily because it's being dragged down by the Bay Area."

Viewed as a whole, California, which accounts for roughly one-seventh of the nation's total output, reflects the wobbly national economic picture.

Employers are investing little and hiring less, waiting for the promised recovery that always seems to be six months away. Consumers, who propped up the economy through much of last year, are cooling off their credit cards. And the state's government, facing a $35 billion budget hole, is preparing to lay off thousands of workers, drastically cut spending and raise taxes.

As a result, Californians' fabled optimism has taken a sharp blow.

In early 2001, before the technology crash and the terrorist attacks, 70 percent of California residents said the state was enjoying good economic times. Eighteen months later, that view had turned upside down, with just 20 percent of Californians describing the state as prospering, according to a survey last fall by the Field Institute.

Ring of Gold

The brightest spot in the state economy is the ring of fast-growing counties around Los Angeles where Mr. Pineda lives — San Bernardino, Riverside, Orange and San Diego. Unemployment in these counties ranges from 4 to 5.5 percent, kept low by an expansion in retail and business services, along with the growth of biotechnology companies and a burst of spending on Pentagon research and development. The statewide unemployment rate is 6.4 percent.

But in Silicon Valley the news is bleak.

The technology industries in the Bay Area continue to shed jobs, with employment falling by 87,000 people last year. An estimated 40,000 people have left Silicon Valley in the past year in search of work elsewhere. Unemployment in precincts once seen as a model of the new, technological future, has jumped from less than 2 percent in 2000 to nearly 7 percent at the end of this year. In some areas, it is much worse.

"In my neighborhood, I would personally estimate that there's probably 40 percent unemployment among senior executives," said Mr. Kaplan, 50, who lives in Hillsborough, a wealthy enclave south of San Francisco. He has been out of work since his latest company, Egghead.com, crashed in 2001.

He tries to make light of the problems in his neighborhood, noting that there is a lot of managerial talent on the sidelines of his daughters' soccer league.

"One of the rituals of the league is that each team has a big banner with the names of the kids," Mr. Kaplan said. "These things have gotten distinctly better because the parents have so much time on their hands. They've become wonderful hand-embroidered pieces of folk art."

His black humor does little to disguise the fact that the economic indicators for San Francisco and the area southward to San Jose are almost unrelievedly grim.

Housing prices have fallen, in some cases by as much as 25 percent over the past two years, but the median home price in the Bay Area is still $540,000. That leaves housing unaffordable to all but about 18 percent of residents. By contrast, 43 percent of working families in Riverside and San Bernardino Counties can afford an average home there, which costs less than $200,000.

Another measure of the Bay Area's distress is the acres of empty office space.

In early 2000, at the height of the technology boom, the vacancy rate was less than 2 percent, according to the Federal Reserve Bank of San Francisco. Today, the figure is approaching 20 percent. The value of commercial construction permits statewide fell 22.5 percent from October 2001 to October 2002.

No one knows when — or if — the turnaround will begin. "The Bay Area is waiting patiently for that tech bounce-back that may never come," said Edward Leamer, director of the Anderson Forecast at the University of California at Los Angeles. "It has priced itself out of virtually any other economic function."

He noted that technology operates in decade-long cycles and that the current slump could last until an innovation comes along to spark another boom — perhaps in biotechnology or wireless communications. The personal computer, software and the Internet are now mature technologies, unlikely to reignite the region.

Spinoff Affects Neighbors

California's huge economy — it is the fifth or sixth largest in the world, either just ahead of or just behind France, depending on the exchange rate — exerts a strong gravitational pull on neighboring states.

Arizona, Nevada and Hawaii all are heavily dependent on tourism and on California's market for their manufactured goods. When California suffers, they traditionally tend to suffer as well.

This time, however, California's troubles have had some benefits for Arizona, which offers potential employers lower wages, ample land, fewer taxes and less government regulation. And California's 35 million consumers are an easy drive away.

Officials from Arizona's Department of Commerce have actively sought to lure California businesses to locate or expand in Arizona, with some success. Michele Pino, director of economic development for the state, said 31 companies had moved operations from California to Arizona in the past three years.

One of those companies is Catalytica Energy Systems, a developer of low- emissions gas turbines for producing electrical power. The company is based in Mountain View, Calif., north of San Jose in the heart of Silicon Valley. But when company officials decided to expand from research into production, they looked outside of California.

"The economic climate has changed a great deal in California," Megan Meloni, manager of investor relations for the company, said. "When we decided to move into commercial manufacturing, Phoenix offered a more cost-effective way to do that."

Mr. Schwer described Nevada as "muddling through" and hoping for a rebound in the second half of 2003. The only parts of the Nevada economy showing healthy growth are business and personal services and health care, which is not surprising because the state has become one of the nation's hottest retirement havens.

The greatest risks to Nevada's economy, Mr. Schwer said, are war with Iraq or another terrorist strike. "As we saw last year and during the first gulf war, that sets off a cocooning effect," he said. "People are afraid to travel and decide to stay home. We're still way off in foreign visitors."

Nevada also has serious state budget problems,with a deficit amounting to 10 percent of its annual spending. In the 1980's, Nevada cut homeowners' taxes and raised the state sales tax, making the state dependent on consumption by residents and visitors. That revenue has plunged over the last year and officials are looking for ways to come up with $800 million to balance the state budget over the next two years, Mr. Schwer said.

The Hawaiian Response

Hawaii, because of its heavy dependence on tourism, presents a particular challenge. The state has suffered a nearly decade-long slump, largely because of the protracted recession in Japan, whose free-spending tourists enriched Hawaii throughout the 1980's. As the tourists from Asia and the Americas have vacationed closer to home, residents of Hawaii have fled the islands in large numbers looking for work elsewhere.

Linda Lingle, the newly elected Republican governor of Hawaii, is trying to diversify the islands' economy and lure the refugees back.

Officially, unemployment in Hawaii is 4 percent. But Ms. Lingle said that number masked a deep economic malaise.

"More than 100,000 people left Hawaii in the 1990's for the mainland," she said in a telephone interview from Honolulu. "Many of the people who are still here are no longer looking for jobs, so they don't show up in the unemployment numbers."

Tourism generates a quarter of the state's income, but it is highly dependent on conditions across the water. Like Nevada, Hawaii experienced a steep drop in tourist arrivals after the Sept. 11 terrorist attacks. The visitors are only now starting to come back, according to state statistics. The hotel occupancy rate fell from 76 percent in 2000 to 70 percent in 2001 and it is not expected to be much better in 2002. During the boom years in Japanese tourism in the mid-1980's, occupancy rates reached 80 percent and above.

But Ms. Lingle said the state had to diversify or forever be subjected to these sharp swings. She said that the island's unique environment offered opportunities to expand in biotechnology, pharmaceuticals, astronomy, ocean sciences, filmmaking and renewable energy. She plans to ask the Legislature to approve tax credits and money to finance a new marine science center to induce businesses to expand in Hawaii.

She also hopes to loosen state regulation and to dismantle a culture of political cronyism — a legacy of 40 years of Democratic rule — which she said had put a stranglehold on growth.

"Hawaii has a reputation as a place where you have to know someone to get things done," she said. "We have to convince people we're changing and actually make those changes."

The Business of War

While the possibility of war poses a threat to tourism-based economies like those of Hawaii and Nevada, it could benefit California's military and aerospace contractors.

The region's military complex suffered enormously a decade ago when the cold war ended, losing 137,000 high-paying jobs in California alone. The cuts caused a slump that lasted through the first half of the 1990's.

But the biggest defense buildup since the Reagan administration has given the weapons business new life. Projects such as the missile defense shield and the Joint Strike Fighter are expected to create jobs and pour billions of dollars into Northrop Grumman, Lockheed Martin, Honeywell, Boeing and scores of subcontractors.

"This spending could not have come to Southern California at a more opportune time," Mr. Sohn, the Wells Fargo economist, wrote recently. "Technology companies that were part of the dot-come boom are now switching gears to try and get a piece of the growing national defense pie."

Another staple of the California economy, agriculture, has been blessed and cursed with several good growing seasons. Production is up, but prices are falling for many commodity crops. Bulk wine grapes, for example, are selling for $65 a ton in the spot market, compared with more than $200 two years ago. The glut means great bargains at the supermarket for consumers, but growers are suffering.

"There is a blessed overabundance," Karen Ross, president of the California Association of Winegrape Growers, said.

The new facility, in Gilbert, Ariz., went on line in early 2001, employing 34 people. Catalytica's headquarters and engineering departments remained in Mountain View.

Over all, Arizona has fared slightly better than the rest of the nation in the current slowdown, but only marginally. Statewide unemployment was 5.8 percent in November, compared with the national rate of 6 percent, but electronics and aerospace are adding jobs.

Construction is soft because of overbuilding in the late 1990's; the office vacancy rate in Phoenix is higher than in San Francisco.

Nevada is recovering from a downturn in tourism that hit immediately after Sept. 11, 2001. Business travel remains soft. Tourism and gambling revenues are still down, but the number of visitors has been growing slowly as the fears of terrorism diminish.

"One reason for that is we get a significant amount of visitor traffic by car," said Keith Schwer, director of the University of Nevada at Las Vegas's center for business and economic research.

Ms. Ross said lower prices for grapes allowed California wineries to compete on more favorable terms with Australia, Chile and South Africa for low-shelf wine buyers, those looking for bottles in the $6 to $10 range.

The motion picture industry set a box office record last year, selling more than $9 billion worth of tickets. Television is enjoying a modest rebound in advertising revenue. Theme parks are struggling to attract visitors, but attendance is up compared with the immediate post-9/11 period.

One business that seems utterly immune to the vagaries of the broader economy is pornography, which is centered in the San Fernando Valley. It may be semi-subterranean, but it generates an estimated $4 billion to $10 billion a year and employs thousands of workers, rain or shine.

"Adult entertainment is doing well, from all we've heard," an economist at the Los Angeles Economic Development Corporation, Jack Kyser, said. "You can't really measure it because state employment data captures only about a half to a quarter of people employed in the industry. So many of the people involved in that business are independent contractors."

Budget.com

One of the great uncertainties in California as the new year begins is how state officials will address a budget shortfall of $35 billion over the next 18 months. The state has used most of the one-time gimmicks available to it — like borrowing against payments under the nationwide settlement with tobacco companies — and is now being forced to measure virtually every state operation for deep cuts.

California's fiscal distress is largely related to the steep drop in revenues from taxes on capital gains and stock options from the technology boom. The state's take from such taxes plunged from $17 billion in 2000 to less than $5 billion last year.

Mr. Kaplan, the Internet pioneer, said that at the peak of his earnings in the late 1990's he was paying the state more than $5 million a year in taxes. Now the state won't get a penny from him.

"My adjusted gross income this year is negative," he said. "I will pay no taxes, and rightfully so."

Businesses and consumers are bracing for tax increases to make up part of the shortfall, and some economists say they fear that higher taxes will make it harder for California, which already has a reputation as antibusiness, to attract new employers.

Yet despite all of the problems, millions still consider California a golden land. The state's population continues to grow at a rate of 1.5 percent a year through boom and bust, and entrepreneurs still fantasize about striking it rich in the mother lode of American markets. McDonald's was inspired by a hamburger stand in San Bernardino. Hewlett-Packard was born in a garage in Palo Alto.

Siua Taufa, 50, who moved here 25 years ago from the Pacific island of Tonga, is a supervisor in an Ontario distribution center for a women's clothing chain. His dream is to start a warehousing operation of his own, taking advantage of the rapid growth of the so-called Inland Empire east of Los Angeles and the area's close proximity to Mexico.

"I'm doing everything I can to survive, but I'm optimistic," Mr. Taufa said.

When asked if he thought California would soon emerge from its current slowdown, he looked briefly at his wife, Nandy, and said, "That's a very hard question to answer, but we're hoping for the best."

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Top Stories of the Year 2002: Capital Stream Corporate Take Over

One of the top stories concerned the major changes at Capital Stream. Perhaps

one of the most widely distributed equipment leasing software was System 1

distributed in March, 1995, promoted by John Kruse, with special promotions

to leasing associations where the single program was sold only for one year

maintenance fee. Later John brought the program to a new level with Capital

Advantage, and then Jim Buckles took over the maintenance of System 1

as the company had gone to a one time 130 employees.

In the summer of 2002, John Kruse wrote Leasing News:

I wanted to write and give you a heads-up regarding a staff reduction here

at CapitalStream. News travels fast and I wanted to make sure you have

accurate information.

Like many successful large and small companies, CapitalStream is taking

precautionary measures because we don't see an immediate resolution to the

economic downturn. We still remain financially healthy, and believe that

reducing our capacity is a prudent business decision. Our sales pipeline

continues to grow in spite of the economic uncertainty that virtually

everyone is experiencing in today's market.

This reduction, in no way, will limit CapitalStream's ability to grow and

provide exceptional service to its current and future customers. Our staff

will continue to service our existing customers, build on our technology and

secure new customers.

Sincerely,

John Kruse

VP of Account Development

Summer, 2002

here is the top story from October 31, 2002

http://two.leasingnews.org/imanges_uael_wael/John.jpg

CapitalStream Corporate Take-Over

by Christopher Menkin

“What is John Kruse's position as I had him as vice-president of

business development.”

From: Karen Thorsen <KarenT@CapitalStream.com>

Subject: RE: confirmation

Date: Wed, 30 Oct 2002 13:07:09 -0800

“John Kruse, Sales Representative.”

second e-mail

“Kevin Riegelsberger is President & CEO

“David Orren is Executive Vice President of Sales & Marketing,

“Kaveh Majoob is Vice-President of Development,

“Mike Pennell is Vice President of Marketing

“Jeff Dirks is Executive Vice President, Business Development

“thanks for checking!”

Karen Robert Thorsen

PR/Marketing Manager, CapitalStream

206-548-1703

www.capitalstream.com

All these management people worked with Kevin Riegelsberger at

Platinum/Epicor. There has not been any founders at WiredCapital since March 2001 when Riegelsberger joined the company. Ex-WiredCapital founders have told Leasing News they are not happy about the stock situation.

Stock options is the question of the hour. In essence they eliminated all the common stock. Leasing News was told that was true for both CapitalStream as well as WiredCapital and that post the acquisition then they would issue the remaining employees CapitalStream stock. It is not know if the company has awarded the stock to the employees. It is not known what happened to the preferred stock. This is a privately held company.

October 11, a press release from CapitalStream “...announced that it has acquired WiredCapital, a provider of enterprise automation software solutions for the Commercial Finance Industry, based in Orange County, California. The combined companies will continue operating under the CapitalStream name. Along with the acquisition, CapitalStream has raised an additional $10 million total in equity financing.”

John Kruse is one of the originals of System1 which later became CapitalStream.

The company started from developing a leasing tracking system for Jim McCommon, McCommon Leasing, Bellevue, Washington. One of the original beta users of the system was American Leasing, Santa Clara, California. The program became very popular with both brokers, discounters, and lessors and at one time was planned to go “seamless” with then Nation’s Credit under Jim Merrilees in Oregon over the internet. This evolved into an internet system with scoring of credits and processing of lease transactions, at one time, utilizing the “back-end” capabilities of LeasePlus Accounting software. (For the record, John Kruse has made no comments “on” or “off the record,” and we were told not available for comment—to go through marketing). Mr. Kruse was the Top Gun Conference Chairman at the United Association of Equipment Leasing Association in San Diego, serves as a director on the board and is very popular in the leasing industry, extremely well known and highly regarded.)

“When we were first told as employees of the potential deal they called it a

Merger, with Capital Stream being the surviving name because we were

better known in the industry, “ an ex-CapitalStream employee told Leasing News.

“ People at WiredCapital were not told they were being acquired till the week of the press release. In fact, several had planned to attend the Equipment Leasing

Association Conference in San Francisco. They were surprised. They also lost

their founder stock options and other benefits, I am told.”

In its “hey day,” the Seattle based company had 130 employees, then announced

in 2001 a reduction to 90 employees; 2002, when the Stephen Campbell left the

company, it was reported to be 60 employees “as product had been developed. and

major cuts were made in the “sales force” and direction due to an effort

to go after major corporate accounts, rather than the “small” and “middle”

market place in the banking, finance, and leasing industry.

According to John Kruse, then vice-president of business development, CapitalStream, had 56 employees and WiredCapital 23 employees, many, so taking away 26 employees leaves 53. There have been further reduction in employees, it is reported.

Thirty of the employees were reported to be “engineers” needed to write and maintain the software to service customer accounts.

The press release claimed CapitalStream was purchasing WiredCapital for

$10 million. Interesting there is no mention of "leasing" rather only "financial institutions" this being because they are targeting beyond leasing, as it was identified early in that leasing was too small of a space. The idea being that leasing would be the spring board into the other sectors of a bank or financial institution.

"Our market research indicates that the industry has tried to solve this problem through internal systems development because a truly viable solution provider

had not yet emerged,” Riegelsberg stated in the first press release.” With the recent funding and acquisition, CapitalStream is now perfectly positioned as the leader in financial front office automation with a proven track record

of success at some of the most respected brands in banking and

finance."

In a telephone interview, Riegelsberger said the purpose of the two

software programs was to provide “solutions for businesses.” He said

both programs could exist for the same company in different divisions

as they served “different needs.”

He was not able to elaborate. In trying to describe the difference

between the two software approaches, Leasing News described the difference

as WiredCaptail appearing to have been designed from a mid to high ticket perspective, while CapitalStream was really a small ticket product. For instance their product does not even have the concept of a repeat customer in it. WiredCapital tracks master credit lines, and allows for a single customer to have multiple Master Leases, as well as if that customer is a guarantor to a different customer, it is all being tracked to the single exposure customer. Things like that were built in from the very beginning.

CapitalStream's desktop product (Centerpoint) offered those things, but

instead of porting that to the web, CapitalStream started over and wrote

"FinanceCenter" which did not yet incorporate Master Lease or a Customer

entity. Those enhancements were under construction and Mr. Reiselsberger

said he was not aware of this and referred any questions regarding this to “marketing.”. An engineer who was working on the program told Leasing News the missing Customer Entity and Master Finance agreement were, indeed, on the top of the list of "what's stopping CapitalStream from getting more big deals."

It is true CapitalStream had major clients such as division of Textron, Bank of the

West, and WiredCapital’s latest customer was Arrow Capital of San Jose, California.

Reiselberger said his main focus was “bandwidth of the company from the investors viewpoint.”

He added that he would insure customers would either have a hosted program or

a licensed program or both, depending on the needs of the company, and it would

be possible to migrate from one to the other. He concluded that the description of

now being able to service small customer needs to large customer needs would

be accurate as to the reason for the “merger” of both software programs.

He confirmed the company would continue to be a “front control” and would

not venture into financial accounting, “back end,” which his former company

presently offers. They do not have a leasing accounting program, he stated,

or any accounting program to merge with CapitalStream or Wired Capital.

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49er-Giants Game—Unbelievable!!! None of us sat down during the fourth

quarter. I think the most exciting professional football game I have ever

seen in person.

Kit Menkin