Briac

* Does Cadbury's rejection of Kraft give private equity an opening to get in on the deal? Seems unlikely, but the WSJ does offhandedly suggest that perhaps PE's role could be as a partner to Hershey's. * Emotions run high in the battle for control of PAI Partners. * Fred Wilson picks up on Obama's school speech: Why you should wear your failures as a badge of honor. * Morning Call: U.S. futures point lower, London falls early, European shares inch higher, the Nikkei slides 0.8% and Chinese shares keep rising. * Daniel Finkelstein: The Beatles were a triumph of capitalism. * Larry Cheng of Fidelity Ventures updates his Global VC blog directory (including rankings by #of RSS subs) * McGraw Hill says that 93 parties have asked for info on BusinessWeek. Private equity firms are, of course, included. No word on if some of them just wanted pro rata subscription refunds if the mag shuts down.

Earlier today I chatted with Brian Rich, managing partner and co-founder of growth equity firm Catalyst Investors. We talked media deals, SaaS and PIPEs:

* Clare Baldwin goes to Idaho to find Dick Fuld, for his first in-depth interview since Lehman Brothers collapsed. His greeting? "You don't have a gun; that's good." * The accounting rule formerly known as FAS 157. * Morning Call: U.S. futures point higher, London rises early, European shares keep climbing, the Nikkei edges up and both Hong Kong and China close higher. * Conventional wisdom says that Skype's buyers have a tacit agreement to settle with the JoltID guys (aka Skype's original founders). If so, is it insider trading of friendliness? * Michael Moore's valentine to capitalism opens in Venice... * ... Meanwhile, Oliver Stone returns to Wall Street.

Kai-Fu Lee, who last week resigned as president of Google China, has launched Innovation Works, an incubator for Chinese IT startups. It has been funded with $115 million, including from lead investor WI Harper Group and individual backers like Steve Chen (co-founder of YouTube), Terry Gou (chairman of Foxconn), Liu Chuanzhi (chairman of Legend Group) and Yu Minhong (chairman of New Oriental). I spoke to Lee on Friday, and what follows is a transcript (we had agreed to embargo the news until this evening): peHUB: Innovation Works sounds much like a Chinese version of Idealab or Y Combinator. Are those fair comprisons, and are there other such programs already in China? Lee: There are similar programs in China, and at least one public company based on similar ideas. But I think our model is different, for several reasons: First, I think we are specifically targeting the spaces in which this idea works. These are the spaces were you can move quickly: Cloud computing, ecommerce and mobile Internet. Second, I think that I bring a unique ability to draw talent. I’ve hired thousands of people at [Google and Microsoft], and many joined because of me. When I joined Google, for example, it was basically an unknown brand in China. The first people joined because of my brand, not because of the company’s brand.

* Dan Gross: Look out for the cupcake bubble * How to kill a startup: Hire executives instead of entrepreneurs. * Pay gap narrows between early and later-stage VCs, while big buyout firm compensation takes a dive. * Morning Call: U.S. futures point higher ahead of jobs data, London rises early, European shares back on the upswing, the Nikkei hits a 5-week low and Hong Kong shares rally. * Paul Krugman: How did economists get it so wrong? * Fox Business Network officially jumps the shark, agreeing to simulcast Imus during the day's most important hours. * BusinessWeek: Headhunters are in surprising agreement as to which companies they avoid when looking for executive talent.

* Mark Suster: Should startup founders be allowed to take money off the table? * Simon Johnson: Is modern finance like electricity or junk food? * Morning Call: OECD says global recession ending faster than expected (and that recovery could be stronger), U.S. futures signal rebound, London opens steady, European shares gain, the Nikkei falls as yen hits exporters and Chinese shares soar 4.8%. * Adrian Slywotzky: Where have you gone, Bell Labs? * Felix Salmon has Ben Stein to kick around again. * Mark Gimein: Skype could have been Facebook. Is it too late?

* Cash4Gold is suing an ex-employee who earlier this year revealed some alleged improprieties on a website called ComplaintsBoard. Now, the VC-backed pawn shop has expanded its lawsuit to include both ComplaintsBoard and a website called Consumerist, which picked up the original post. In a bit of irony, Consumerist's post about the lawsuit is currently the #2 story on Digg, which sits alongside Cash4Gold in the Highland Capital Partners portfolio... * Has Utah created a smarter work week? * The New Establishment 100: Mike Moritz is on, Henry Kravis and Steve Schwarzman fall off. * Morning Call: U.S. futures point lower, London falls early, European shares keep dropping, the Nikkei closes down 2.4% and Chinese shares extend gains. * Steve Syre on EMC co-founder Richard Egan, who died last Friday. * A premature list of the year's best business books. * Maria Bartiromo doesn't quite seem to understand Medicare. * Jeremy Liew of Lightspeed Venture Partners: More pressure to limit behavioral targeting threatens startup media companies.

* Hank Paulson apparently gave Vanity Fair's Todd Purdum regular interviews throughout his term as Treasury Secretary. Here is the six-page result. * MC Hammer was at the Harvard Faculty Club yesterday, extolling the virtues of social media. * William Cohan on Chris Flowers: Checkmate for a Wall Street wizard? * Big Deals: PE/VC firms buying Skype, KKR kicking TCW's tires. * Morning Call: U.S. futures point lower, London deflates, European shares dragged down by banks, the Nikkei edges higher and China and Hong Kong steady after recent slide. * Leo Hindery (and others) on buying American: "The governments of most major developed countries support their own industries and, in these economic times, it only makes sense for Washington to do likewise."

* Alan Patricof and Eric Dinallo take to the NYT Op-Ed page, arguing against proposed rules that would require VC firms to register with the SEC. I agree, in general, but also have a nitpick about the P4 lead: "Venture-capital funds deal solely with privately purchased equity securities in start-up companies, which are not traded in public markets." Not only do some of these companies, if successful, ultimately create public securities that VC firms hold, but more and more VC firms are making investments in already public companies. Just last week, for example, Tallwood Venture Capital agreed to acquire what could become a 45% stake in Ikanos Communications. Again, not saying this negates the authors' larger point, but I do wonder if Patricof/Dinallo would argue a firm like Tallwood should indeed be required to register... * Bloomberg: Leverage rising on Wall Street at fastest pace since the credit squeeze began two years ago. * Morning Call: U.S. futures point lower as commodities retreat, European shares drop, the Nikkei slips on strong yen and Chinese shares dive 6.7 percent. * Non-profits test out analytics software for social investing. * Deloitte: Emerging markets private equity is down around 60% between Q3 07 and Q1 09. Around 47% of investors expect the pace to pick back up, while 40% expect a further decrease. * Dave Shepard of VC-backed Sequoia Communications, which shut down earlier this month: “I think the venture-backed model for semiconductor startups is broken. The complexity of these chips has just gotten so high, it just takes so much money to fund a startup nowadays, that to the VCs, it’s just not worth it.”

* USA Today has an exhaustive list of private equity firm contributions to elected officials. * Must-read for bosses: What alienates top performers. * Last week you were able to ask Tim Geithner a question via Digg. This week you can apparently ask Barney Frank a questions via Bravo TV's website. * Morning Call: U.S. futures point higher, London rises on revised Q2 GDP, European shares advance, the Nikkei edges up and Hong Kong shares drop. * Jabil Systems is laying off more than 300 workers via a plant closure in Billerica, Mass., but is a case study in how to help ease the pain. * Theo Francis: The FDIC's cushion is bigger than it looks. * TechCrunch reports that an investor group is forming to make a bid for Skype, including original backer Index Ventures and newbie venture firm Andreessen Horowitz. The last time these rumors came up was back in April, when Skype's co-founders reportedly teamed up with firms like Warburg Pincus, KKR, Elevation Partners and Providence Equity Partners. eBay quickly nixed that talk by announcing plans for a Skype IPO in the first half of 2010, so we'll see how they respond this time (perhaps with an S-1?).