Mish's Global Economic Trend Analysis

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• Smallest Yield Curve Gap Between US and Japan in 19 Years; What's it Mean?; Curve Comparison US, Japan, Germany, UK; Idiocy of Central Bankers
• Defense Industry Bribes and Legislative Whores
• Global Recession Warning
• BNP Paribas leveraged 27:1; Société Générale Leveraged 50:1; Sorry State of Affairs of U.S. Banks; Global Financial System is Bankrupt

Smallest Yield Curve Gap Between US and Japan in 19 Years; What's it Mean?; Curve Comparison US, Japan, Germany, UK; Idiocy of Central Bankers Posted: 15 Aug 2011 09:53 PM PDT Curve Watchers Anonymous notes amazingly low yields across the entire yield curve for the US, Japan, Germany, and the UK. Here is a chart I put together this evening. Yield Curve Comparison US, Japan, Germany, UK as of 2011-08-15 Data from Bloomberg Government Bonds as of 2011-08-15. Mighty European Recession on the Way Note the inversion in the German yield curve. Typically this means a recession is on the way, but the results may be skewed by all the EU bailout concerns. Regardless, other data points especially falling industrial production also suggest Europe is headed for a recession. The austerity measures in Italy, Greece, Ireland, Spain, and Portugal will turn the recession into a mighty one. Spain and Greece are clearly in recession now, the rest of Europe will soon follow (if it is not in recession already). Elsewhere curves are flat as a pancake everywhere for three years. With both US and Japan flirting with zero for that three-year duration. Smallest Yield Curve Gap Between US and Japan in 19 Years Please consider Smallest Yield Gap in 19 Years Adds to Yen Struggle for Bank of Japan The Bank of Japan, struggling to keep the strengthening yen from derailing efforts to repair the world's third-largest economy, is facing a new challenge -- the shrinking yield gap between two-year sovereigns and Treasuries. The extra yield two-year Treasuries offer over similar- maturity Japanese notes fell today to the least since 1992. BOJ Governor Masaaki Shirakawa said on Aug. 4 there's a "relatively high" correlation between that rate gap and the dollar-yen rate, as falling yield premiums in the U.S. damp dollar-buying demand from Japanese investors. The central bank may need to lengthen the maturity of bonds in its asset purchase program to stop the yen's appreciation, according to Mizuho Securities Co. The BOJ, whose policy rate is already near zero, bolstered stimulus by 10 trillion yen ($130 billion) on Aug. 4, the same day Japan intervened in the currency market for the first time since March. The difference between the U.S. and Japanese two-year yields narrowed to a 19-year low of 3.7 basis points today. US Back in Deflation For Japan and the US, these are deflationary curves. This is 1 of 14 signs the US is once again in deflation. Please see Yes Virginia, U.S. Back in Deflation; Inflation Scare Ends; Hyperinflationists Wrong Twice Over for additional details. That said, this talk of the Bank of Japan going further out on the yield curve to suppress yields at the long end of the curve is sheer madness. Japan has been pursuing such policies for 20 years and has nothing to show for it. Worse yet, its fiscal policies fighting deflation has landed Japan the largest debt-to-GDP ratio in the world (of any major country). Bernanke has not learned a thing from this. Bernanke wants Keynesian fiscal policies in Congress while he follows the Bank of Japan on monetary policy. It's sheer idiocy doing the same thing over and over hoping for a better result. Turning Japanese Barry Ritholtz has this interesting chart of SPX vs MSCI Japan Index (10 Year Lag) The past does not predict the future. However, please remain open to the possibility the US is following the footsteps of Japan in more ways than one. Here is the table of values that make up the lead yield-curve chart. US, Japan, Germany, UK Yield Curve Data Points Duration U.S. Japan Germany UK 3-Month 0.00 0.10 1.12 0.51 6-Month 0.07 0.10 0.81 0.63 12-Month 0.10 0.12 0.68 0.57 2-Year 0.19 0.15 0.71 0.67 3-Year 0.34 0.19 0.84 0.70 5-Year 0.99 0.35 1.39 1.32 7-Year 1.59 0.61 1.86 1.83 10-Year 2.30 1.04 2.33 2.54 30-Year 3.77 2.00 3.18 3.95 These data points are a sign of enormous global weakness. Those banking on a huge second-half recovery are doing more wishing than thinking. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Defense Industry Bribes and Legislative Whores Posted: 15 Aug 2011 01:06 PM PDT In case you ever wondered how it is that Republicans do not want deficits and Democrats do not want deficits, yet we have massive and growing deficits, the following two articles will explain the reasons nicely. Special Interests Gave Millions to Budget Panel The Boston Globe reports Special interests gave millions to budget panel The 12 lawmakers appointed to a new congressional supercommittee charged with tackling the nation's fiscal problems have received millions in contributions from special interests with a direct stake in potential cuts to federal programs, an Associated Press analysis of federal campaign data has found. The newly appointed members -- six Democrats and six Republicans -- have received more than $3 million total during the past five years in donations from political committees with ties to defense contractors, health care providers and labor unions. That money went to their re-election campaigns, according to AP's review. The congressional committee, created as part of the debt limit and deficit reduction agreement enacted last week, is charged with cutting more than $1 trillion from the budget during the coming decade. If the committee doesn't decide on cuts by late November -- or if Congress votes down the committee's recommendations -- spending triggers would automatically cut billions of dollars from politically delicate areas like Medicare and the Pentagon. The committee's co-chairs -- Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Texas -- each received support from lobbyists and political committees, including those with ties to defense contractors and health care lobbyists. Hensarling's re-election committee, for instance, received about $11,000 from Lockheed Martin and $8,500 from Northrop Grumman. Companies like Lockheed rely heavily on government contracts: More than 80 percent of Lockheed's net sales during the first six months of 2011 came from the U.S. government, according to Securities and Exchange Commission records. And in SEC filings two weeks ago, Northrop expressed concern of a "material adverse effect" on its finances had the debt ceiling not been raised. 'Doomsday' Defense Cuts Loom Large for Select 12 Yahoo!Finance reports 'Doomsday' defense cuts loom large for select 12 For the dozen lawmakers tasked with producing a deficit-cutting plan, the threatened "doomsday" defense cuts hit close to home. The six Republicans and six Democrats represent states where the biggest military contractors -- Lockheed Martin, General Dynamics Corp., Raytheon Co. and Boeing Co. -- build missiles, aircraft, jet fighters and tanks while employing tens of thousands of workers. The potential for $500 billion more in defense cuts could force the Pentagon to cancel or scale back multibillion-dollar weapons programs. That could translate into significant layoffs in a fragile economy, generate millions less in tax revenues for local governments and upend lucrative company contracts with foreign nations. The cuts could hammer Everett, Wash., where some of the 30,000 Boeing employees are working on giant airborne refueling tankers for the Air Force, or Amarillo, Texas, where 1,100 Bell Helicopter Textron workers assemble the fuselage, wings, engines and transmissions for the V-22 Osprey tilt-rotor aircraft. Billions in defense cuts would be a blow to the hundreds working on upgrades to the Abrams tank for General Dynamics in Lima, Ohio, or the employees of BAE Systems in Pennsylvania. For committee members such as Sens. Patty Murray, D-Wash., Rob Portman, R-Ohio, and Pat Toomey, R-Pa., the threat of Pentagon cuts is an incentive to come up with $1.5 trillion in savings over a decade. Failure would have brutal implications for hundreds of thousands workers back home and raise the potential of political peril for the committee's 12. "I think we all have very good reasons to try to prevent" the automatic cuts, Toomey told reporters last week when pressed about the impact on Pennsylvania's defense industry. "That is not the optimal outcome here, the much better outcome would be a successful product from this committee." The panel has until Thanksgiving to come up with recommendations. If they deadlock or if Congress rejects their proposal, $1.2 trillion in automatic, across-the-board cuts kick in. Up to $500 billion would hit the Pentagon. Those cuts, starting in 2013, would be in addition to the $350 billion, 10-year reduction already dictated by the debt-limit bill approved by Congress and signed into law by President Barack Obama this month. Not surprisingly, Defense Secretary Leon Panetta has described the automatic cuts as the "doomsday mechanism." He's warned that the prospect of nearly $1 trillion in reductions over a decade would seriously undermine the military's ability to protect the United States. For the Pentagon, "we're talking about cuts of such magnitude that everything is reduced to some degree," said Loren Thompson, a defense analyst at the Lexington Institute, a think tank. "At that rate, you're eliminating the next generation of weapons." Next Generation of Weapons Not Needed A defense analyst at the Lexington Institute, a think tank bemoans "At that rate, you're eliminating the next generation of weapons." My reply is "I sure hope so". For the most part, we do not need a next generation of weapons. The US spends $trillions on "next generation" silliness and most of it does not work or is unneeded. How much did we waste of SDI (Star Defense Initiative) only to be thwarted by a group of knife-wielding terrorists? How many more submarines does the US need? Tanks? Missiles? Anything? Bribes and Whores Defense contractors bribe member of the Senate and House to pass their legislation. Any representative not supportive of defensive industry bribes is labeled "weak on defense". Those supportive of aggressive US militarism receive hundreds of millions of campaign contributions. That is the way the game is played. Moreover, Republican hypocrites who warn about spending do not have the courage to pass tax hikes to support this idiocy. The legislative whores from both parties play the game because it means jobs for their district. No one gives a flying **** about whether any of this spending makes any sense for the nation. Instead they bemoan "brutal implications for hundreds of thousands workers back home", workers who should never have been hired in the first place, to build weapons that are not needed, to fight an enemy that is imaginary. The War in Vietnam and the most recent war in Iraq is proof enough of the madness. Neither was justified. Idiots like Secretary of Defense Robert McNamara formulated the "Domino Theory" to justify the war. Neither Vietnam nor Iraq was a threat to the US in any way shape or form. We have had absurdly stupid wars and continuation of stupid war policy under presidents Johnson, Nixon, Bush, and Obama. Clearly this is not a Republican vs. Democrat issue. This is a "Defense Industry Bribes and Legislative Whores" issues. Campaign Finance Reform Badly Needed Worse yet, the policy does not pertain just to defense. In tit-for-tat trading, Republicans and Democrats trade favors for pet projects, bloating up the budget for all kinds of reasons. The situation is so out of line that I have sarcastically proposed on several occasions "Instead of electing Congressional representatives, we should eliminate Congress and let lobbyists write our bills. They do no anyway, so lets cut out the middleman". Lobbyists are the only group who knew what was in the health-care bill rammed through by Democrats. Recall House Speaker Nancy Pelosi's statement: "We have to pass the health care bill so that you can find out what is in it". It is pointless to expect change as long as lobbyists write legislation that our legislators never bother to read. Clearly, something needs to be done about campaign finance reform. Speaking of which, have you ever noticed how challengers bemoan lack of campaign finance reform as a campaign issue, yet as soon as they are elected, nothing happens? The reason is simple: Payouts and campaign contributions eventually makes whores out of the most of them. Is it any wonder public approval of Congress is at an all-time low? Many representatives will point out they genuinely believe in the policies they vote for. For some it is likely true. It is how they got elected in the first place (with help of donations of course). Others fail to understand the role bribery and payoffs have on their beliefs over time. Addendum: My friend BC writes .... Consider this. As a share of the private GDP (total GDP less government spending, including personal transfers, such as Social Security, Medicare, Medicaid, unemployment insurance, food stamps, etc.), government spending, oil consumption, and household interest payments account for an equivalent of 75-80% of private GDP!!! Of the equivalent 56% of private GDP attributable to government spending, 10% of private GDP is for never-ending imperial wars!!! In simple terms, it costs us 75-80% of the output of the non-government sector to pay for imperial government and war so we can import and consume oil for car and truck transport, which in turn allows us to borrow more money than we can ever afford to pay back to buy import oil and goods. And we have been conditioned to believe for 30-40 years that this is a reasonable arrangement and sustainable indefinitely. We are insane. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Global Recession Warning Posted: 15 Aug 2011 11:59 AM PDT Daiwa Capital Markets economist Kevin Lai says Hong Kong Recession Risk Is Global Warning Of nine economists in a Bloomberg News survey, Lai came closest to predicting a 0.5 percent contraction in the city's economy in the second quarter. Only two of the analysts expected gross domestic product to decline from the previous three months. The government released the data Aug. 12. "Global demand is really weak and we expect the U.S. and Europe will see a sharp slowdown, or near-zero growth, next year," Lai said in a phone interview in the city today. "A recession is a reality for Hong Kong." An 11 percent decline in Hong Kong's merchandise exports in the second quarter from the previous three months highlights the weakness, Lai said. In a note, he described the economy as the world's "most externally-driven" and said that a slump has "grave implications." The world economy is "entering a new danger zone" and international policy makers need to take steps to restore confidence, World Bank President Robert Zoellick said yesterday in Sydney. A U.S. debt-rating downgrade and a widening European debt crisis triggered a global rout of equities. Some economists define a global recession as a slowdown in combined global growth under 2%. That is a near-given. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

BNP Paribas leveraged 27:1; Société Générale Leveraged 50:1; Sorry State of Affairs of U.S. Banks; Global Financial System is Bankrupt Posted: 15 Aug 2011 09:44 AM PDT BNP Paribas leveraged 27:1 Jean-Pierre Chevallier reports on his Business économiste monétariste béhavioriste blog, that BNP Paribas leveraged: 27!. The real leverage of BNP Paribas is … 27.2! Indeed, the French bank counts in its equity item 2: Undated Super Subordinated Notes eligible as Tier 1 capital which are actually a form of liabilities related interests subject to some conditions. Chevallier posts a series of graphs taken from consolidated financial statements to support his claim. Société Générale Leveraged 50:1 Yesterday Chevallier reported Société Générale leveraged: 50! The real leverage of Société Générale is… 50! Indeed, the French bank counts in its equity item 2: Equity instruments and associated reserves which are actually different forms of liabilities related interests subject to some conditions. Equity published in item 1: Sub-total equity, Group share should be reduced by Equity instruments and associated reserves (item 2) to determine the true equity at fair value (item 3) i.e. 22,535 billion of euros. Total liabilities are equal to total assets (item 4) less the true equity at fair value (item 3): 1,135.473 billion of euros. So, the leverage is the ratio of total liabilities on equity: 50.4 i.e. a Tier ratio at 2.0%. Société Générale did not respect the rules of prudential borrowing as they were defined by Alan Greenspan. As above, Chevallier posts a series of graphs taken from consolidated financial statements to support his claim. Blaming the Shorts What did officials do in the wake of share price collapse? You should know the answer, blame the shorts: France Selectively Bans Short-Selling of 11 Banks; Spain Bans Shorting and Derivatives Based Shorting;Why the Bans Will Fail Shorts did not play games with tier-1 capital, banks did. Shorts did not leverage 50-1, banks did. Officials blame the shorts. Moreover, Société Générale had the gall to "deny all rumors" as noted in European Banks Hammered; Societe Generale "Denies All Rumors"; French Bank Option Prices Soar; Credit Default Swaps on France Under Attack Are they denying this excess leverage? Apparently. Without stating what the rumors were, they denied all of them. This prompted me to say "Societe Generale did not even say what they were denying. The bank simply denied everything. Whatever the rumors are, I assure you at least some of them are true. This denial sounds just like Lehman's denial to me." More than anything else, excessive leverage sunk Lehman. Excuses for various things got so silly, I asked Do These Idiots Realize How Stupid They Sound? Things matter When They Matter Things don't matter until they do. In the past few weeks the market decided these things finally mattered. Everyone should realize that nearly every bank is playing games with tier1 capital, still hiding assets off the books in SIVs, and not marking commercial and residential real estate loans to market. Sorry State of Affairs of US Banks For a look at the sorry state of affairs of US banks, please consider July 18, 2011: Bank of America Clobbered on $50 Billion Capital Shortfall Related to Mortgage Losses August 10, 2011: Bank of America CEO Discusses Letting Countrywide Financial Go Bankrupt as Separate Legal Entity; Conference Call Shows Signs of Delusion The Fed, SEC, and FDIC all turn a blind eye to leverage that is still excessive, to assets still not marked-to-market, and to assets still hidden off the books in SIVs and by other means. They do this to support share prices. Share prices of US and French banks, shows the market has had enough of this practice. Time is up, more capital needs to be raised. Banks should have done so when share prices were up and they could have easily., Now they will do so when prices are down. Global Financial System is Bankrupt The entire global financial system is bankrupt. There is no way for these loans to be paid back, and the Fed and Central bankers in general are at the end of the line as to what monetary policy can do. Please don't tell me that central banks will "print their way out of it". No they won't, but they will likely try. Simple Facts of the Matter Central banks can print money but not capital. Central banks can initiate "swaps" but swaps are temporary. Of the money central banks do print, they cannot give away, they can only lend it. Right now, there are no takers of printed money as evidenced by excess reserves deposited at the Fed. Those excess reserves will not eventually flood the system with cash, spawning off a 10-1 multiplier as many think. Reserves have little to do with lending. In practice, the major constraints to lending are insufficient capital and willingness of credit worthy borrowers to seek loans. For further discussion and numerous details and rebuttals of widely believed fallacies, please consider Fictional Reserve Lending And The Myth Of Excess Reserves Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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London Looters and Their Celebrity Lootalikes Posted: 15 Aug 2011 12:25 PM PDT With the UK government and press issuing photofits of the culprits, celebs hide in fear. Not content with fame and fortume these celebrities have taken to the streets to steal sneakers, cell phones and set fire to cop cars.

Angry Birds Are Like Your Sex Life Posted: 15 Aug 2011 12:07 PM PDT Idan Schneider of C-Section Comics shared this funny cartoon with us, showing how your favorite game is like your other favorite game.

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SEOmoz Daily SEO Blog

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Throw Away Your Form Letters (or Five Principles to Better Outreach Link Building) Posted: 15 Aug 2011 04:15 AM PDT Posted by iPullRank This post was originally in YOUmoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc. I'm sitting on an air mattress in my new unfurnished Brooklyn apartment listening to the sounds of the city out of the window after a long day of client meetings. At one point I was thinking "Man I wish I bought that ugly sofa from Ikea so I'd have something to sit on" and next thing I knew I was considering the Tao of Outreach Link Building. I know, I know. Outreach link building is hard. It takes time. You send 1000 emails and end up with seven links but I believe that's largely because most search marketers approach link building the wrong way. In fact I'm going to declare right now that link building should be the easiest and most fun part of SEO. Yep, I said it but wait, let me finish before you head to the comments to tell me why I'm wrong. First, let me say that I love where we are moving with link building as a community especially with the stuff the King of Link Building, Justin Briggs, has been giving us lately. In fact what I have to offer for your consideration is very much an expansion on Dan Deceuster's new perspective on link building. There is often a lot of talk about who to target and how to find them but there isn't much about how you get their attention, sustain it, close the deal and maintain the relationship. With the exception of what Justin spoke about in his Link building webinar, most recommendations revolve around building form letters and tailoring them a little more depending on the target. In my experience, this is the least effective method to engage in outreach link building. The following are five principles that I have identified and streamlined to improve my link building success rate from about 20% to around 80%. Talk to People Like People (Throw Out Your Form Letters) Search Marketers tend to think of link building as obtaining a link from a website. Truly link building is speaking to a person and convincing them to take a real world action that is beneficial to you. Link building is cast as a very impersonal process where we use the various methods to identify link targets, write a form letter and fire away expecting that the return on these outreach emails will be so low that it doesn't make sense to spend time on them. Honestly, even just reading that back makes me think of how counterintuitive the process is. Everyone reading this post has been subject to some sort of Email, Twitter, Myspace, Facebook spam. Hell, even Barack Obama and his friends have been spamming me for five years now (ok I opted-in but wasn't my vote enough – stop spamming me!). Think for a second, how do you react to spam? You erase it or ignore it of course. Even as an owner of various sites people often contact me asking me for links or offering me SEO services and such – with form letters that never get opened. Here's one I received since I started writing this post: Certainly not a link building request but I imagine it's not far off from how many Search Marketers are writing their link request form letters. If this is up for debate I challenge you to go on a dating site like Match.com and copy and paste the same form letter to 50 women. I guarantee a low rate of response and the girls that do respond aren't going to be the ones you wish responded. People can usually sense a form letter immediately. Dare I say it? No, I'll let my homey Link from Legend of Zelda tell you. I myself had failed many times using the same approach to link building (not with women, of course). Then one day I realized that the link building strategies I was taught are counterintuitive to everything I've learned as someone who has had to network across various fields whether it be my Search career, in music as a performer and booking agent or as a generally (somewhat) social person. Be warned, my approach requires a genuine interest in people. Here goes: Opening– Linkbuilders are typically very heavy handed and send an email that basically says "hey I have this site will you link to me because of x,y,z?" The only thing that I attempt to accomplish with my first email is an engaged response. I never bring up the idea of wanting something from this person until later in the email or tweet thread; the same way I wouldn't walk up to a girl and say "you're hot, let's have sex because I'm cute, I drive a luxury car and I have an apartment in a cool part of Brooklyn!" I keep my opening correspondence short, engaging and contextual to something that person has tweeted about or written on their site/blog. Quite simply people love to know their work has been enjoyed, viewed, absorbed so actually take the time to read it and strike up a conversation about something you truly find interesting. As marketers we are taught to optimize one message that appeals to many people; there is simply no place for that in effective outreach link building. In the following example I'm building links for the official Transformers 3 movie site (not that this would ever happen because those sites are always powered by Paid Media). The Old Way of Link Building: Subject: Transformersmovie.com Link Request Hello, I am contacting you to request a link to Transformersmovie.com from your site. We have trailers, downloads, exclusive video and a gallery. Visitors can also find information on movie times and buy tickets online. I see that your blog talks about Transformers and I think visitors of your site will find this content very useful. Please link to http://www.transformersmovie.com using the anchor text "Transformers" or use the following code: <A href=”http://www.transformersmovie.com”>Transformers</a>. Please contact me if you have any questions. Thank you for your time and careful consideration. Transformers Web Team www.transformersmovie.com While I don't doubt that some Link Builders have some very spiffy form letters much better than this, most of the time they still come across just as sterile as the above. The New Way of Relationship Building: Subject: Power Rangers, Are You Serious?! Hey Zelda, I just read your awesome post where you compared Voltron and Power Rangers to Optimus Prime and crew. Not sure if I agree that the Power Rangers could have taken out Megatron in the first film. I mean honestly, they had trouble with giant bears on their own show! Truthfully, I think Voltron would make short work of all of them. Speaking of Voltron have you ever seen this hilarious live action spoof? http://www.youtube.com/watch?v=YtwX0nuqPO0 Anyway I'm curious to know what you think of the new Transformers film. Give me a shout when you get a chance! -Link Link of Hyrule Transformers Web Outreach Team mike@transformersmovie.com www.transformersmovie.com& Option two is clearly stronger and was even more fun to write. Creating context allows me to hit more touch points to elicit a response. Also the engagement is all about opinion and sharing thus framing the conversation as just that – a conversation rather than a link request. Sustaining – Sustaining is all about keeping the conversation going, building a rapport with this person and offering something of value. Most people will be tempted to jump the gun at this stage and just ask for the link right when the person responds. This is not the way to go because then your original correspondence appears to be a thinly-veiled link request, which it of course is but that is the mindset we are trying to eliminate. In this stage it is good to have some content to share that this person may be interested in. It could be related to the site you're trying to get a link for or it could not, the important point is that you demonstrate that you are worthwhile resource of some sort whether it be for entertainment or educational purposes. Not only does this build trust but establishes context. This phase can continue as long as it takes for you to actually develop a relationship. In fact let's just rename link building "relationship building." Continuing with our robot cartoon blogger example: Hey Link, LOL Link, that video was hilarious and thanks for reading my post but there is noooo way that Voltron could take out the combined power of the MegaZord!! I'm not even sure Voltron could take out the GoBots! I haven't actually seen the film yet. Do you actually work on the Transformers site? Best, Princess Zelda   Princess Zelda, The GoBots? Zelda, you're killing me! The GoBots were a cheap rip off of the Transformers they should not be typed in the same email as Voltron! I bet you preferred Silverhawks over Thundercats too, didn't you? HA! Anyway, yep I sure do work with the Transformers web team. Do you have any interest in seeing the film? -Link Link of Hyrule Transformers Web Outreach Team mike@transformersmovie.com www.transformersmovie.com Hey Link, LOL, you just keep making me laugh. Silverhawks?! I didn't think anyone remembered that cartoon. It was pure redux of Thundercats just as bird people! I definitely do want to see the new Transformers film! Can you hook a princess up? Best, Princess Zelda Notice how the suggestion of value causes the link target to become further engaged and it sets up the link request as a natural progression in this case in exchange for tickets.   Closing – The key thing in this phase is to only pull the trigger on asking for a link after context and value are established. The link request then becomes an aside to the correspondence rather than the entire correspondence. At the end of our sustain phase Zelda, our Robot Cartoon Blogger, has taken the bait realizing that the link builder potentially has something of value to her and then puts the link builder in a position to close the link deal. The nature of the conversation puts Zelda in a position where she is comfortable enough to make the request so when the link builder requests the link it is natural for him to ask for something in return. Princess Zelda, Hmmm...well I don't make it a habit to do this, but since you have such good taste in cartoons.... Sure, I can get you two tickets to see the film in your local theater, but in return can you write a review or write another one of your great articles and link back to our site? If that works just shoot me your closest theater and I will send you a Fandango confirmation code for your tickets. Also are you on Twitter? I'd love to keep up with the stuff you are posting on your blog! -Link Link of Hyrule Transformers Web Outreach Team mike@transformersmovie.com www.transformersmovie.com Just like that, we've just built a link just from talking about your favorite cartoons. The challenge and the fun is in finding something that interests both of you and using that information to build a relationship. The less you have to offer in the form of incentives the more sustaining and rapport building you will need to do in order to build the link. Do not think that this method only works with incentives. Value can be established in many ways when building a relationship. A caveat that I should offer here is that it is painfully obvious when this approach does not work because people will not reciprocate the engagement. It might result in a simple "thanks for reading" response in which case you can decide whether you want to do more research to identify a different touch point and try again or to just move on to someone else. As you begin to adopt this process I'd say plow through but soon you will be able to spot a lost cause. Standout in the Inbox How do you feel about spam? Probably the same way you feel about telemarketers. When people can tell by their caller ID that a telemarketer is calling they don't pick up the phone. By that same token if they can tell an email is spam, they avoid it. Never send an email with "Link Request" or something to that effect in the subject; they are doomed to never get opened. You want to take an indirect approach because you don't want the link target to decide before ever seeing what you had to say; this is the Trojan Horse of link building. Trojan Horse in the classic sense not a virus. Let's go back to the email I mentioned earlier in this post. Here's my inbox on that day:   Notice that this email was the only one out of all the other spam that was opened. It was clear exactly what every other email was however there is some mystery as to what the "let's work together" email was about. It appeared natural and it stood out to me because it looked like someone requesting some sort of collaboration. It has a real name and the subject was in lower case. It resembles the emails I receive from people that want to send me beats or hire me to guest appear on their albums. Obama tricks me into clicking his emails pretty often too. I don't always look at who the emails are from when I get them but most of my friends use short email subjects (like the following) that cause me to click through:   Even when I do look at the Sender name it might be a quick glimpse to make sure it's a person and not a company or something.com. It was my assumption that other people reacted this way when I started to apply these principles and therefore the improvement in response rate is the only thing in the way of science I have to show for this. However what I can show you is an example of a subject fail straight from the inbox of my fellow Philly to Brooklyn SEO transplant John Doherty: 1-800 Contacts clearly runs some sort of CRM software for these types of emails and either someone was asleep at the wheel or they input the fields the wrong way. This could easily happen to you in a program like Link Assistant. Don't be that person. However judging by the format of the sender and subject fields it is highly unlikely that these emails will have an open rate worth talking about. I'm sure there are more comprehensive studies on email optimization but to summarize: Tips for Standing Out in the Inbox: Keep Subjects Short Keep Subjects Natural Do Not Use "Link Request" Send Emails as a Person (Not as a company or a "web team") Include a Natural Salutation (The first line will appear next to the subject) Do Your Research I don't want to encourage you to stalk your targets so...study your targets. Bloggers and webmasters are certainly not the most private people in the world and therefore have shared their thoughts, favorite music, films, travel plans and other endless minutia about themselves online for years – use it to develop your context for the initial email. User data drives models of people for targeting our broad messaging, it only makes sense to use user data to create context for our specific messaging. Don't get caught up in the whole romantic comedy "OMG I manipulated you but it turns out I really love you and I wish I could take it all back" aspect of this. Think of it as a way to increase your odds of relating to someone the same way that a girl in WuTang shirt would make me ask if she was at the Raekwon concert in Prospect Park last weekend (Shout out to John Doherty, Tom Critchlow, Rob Oursey and his wife!). Again, Context is King. Choose something that relates back to the content that the person had written about on their own site. The subject should be something that you can relate to, offer insight on and speak at length. So if I'm doing link building as illustrated in the example I might check Zelda's Facebook, Twitter, and Last.Fm and I might weave a conversation about how Voltron was actually created after Power Rangers contrary to popular belief and the stance of her blog post. Then I might end the email with something to the effect of "wouldn't Radiohead be a great choice for the Voltron soundtrack?" Now we have a conversation that is still in context if only tangentially to the topic at hand. Researching your targets turns link building into a video game – with a strategy guide. Offer Value We tend to think of link building in terms of "what can this site offer me?" rather than "what is it about my site that will be interesting or useful to this webmaster or blogger?" or "what of value can I introduce this person to?" Depending on where you are contacting them from part of offering value can be just in the fact that you have reached out to this person. It's important that if you are working for a client with some sort of reputation in the space that you are building links for that you obtain an email alias on their domain. For example if you are doing link building for SEOmoz then you should have an SEOmoz email address. So if you are following up with a blogger who has written a review about SEOmoz's software offering then they feel as though their voice has been heard by the company. Make sure your signature is reflective of their company's location so they recognize they are speaking with a real person and not something automated. In a lot of cases you may not be link building for someone reputable so it's important that you share something of value with this person. Perhaps you have a link to some content important to the niche that hasn't been seen by too many people – share it with your link target. Maybe an awesome video has just floated around your office and you are actively going back and forth over email -- toss it in there. Maybe you just have an interesting story that you can share with this person or anything. Failing all that it's very important to have any client provided incentives. The bottom line is approaching link building the same way as when you meet one of your friend's friends and your efforts will be more effective. Maintain the Rapport No one likes to be used. Therefore it is important to maintain an active rapport with your new friends otherwise if you only contact them when you need a new link they will be less inclined to help you out. Twitter is the perfect place to maintain this rapport. Follow your newfound friends and encourage them to follow you and be sure to retweet their links and engage with them from time to time so you are in constant contact. What the both of you tweet continues to generate context so even if you faked your way this far (which you won't if you have a genuine interest in people) you can easily start the process again based on their latest tweets. Conclusion Is this scalable? Well, it depends how much information you need to sift through to find a hook for the person you're reaching out to. Once you go through this process enough times it takes little more than the time it takes to uncover a buried email address. However outreach link building isn't the place you need to be looking for scalability to begin with. The benefits of this approach are two-fold. 1. Your link building becomes more effective and while you may not reach out to as many people, you will convert a lot more of the people that you do. 2. You are building a rapport with many people that you can then activate in Social Media as it becomes more of a ranking factor. Link building is viewed as an arduous task that no one really wants to engage in and it really shouldn't be. Link building is really an opportunity to make friends throughout the web and Social Media. Perform your link building as a marksman rather than a drive by shooter and you will see better results. Context is King. Link Building is dead. Long live Relationship Building. Also you'll be happy to know that I now have a bed, a desk, a chair and a dresser. Definitely give me a shout if you're ever in Brooklyn! Oh yes...almost forgot the infographic. Go easy on me, it's my first one! Do you like this post? Yes No

Some Nifty SEO Bookmarklets To Make You More Efficient Posted: 14 Aug 2011 01:58 PM PDT Posted by Tom Critchlow Being a chrome junkie and also a keen productivity evangelist I'm predictably a huge fan of javascript bookmarketls. I use them all day long and over time I've built up a few that I have made myself that I thought I'd share today. What is a javascript bookmarklet? A javascript bookmarklet is a small piece of javascript code that you can execute in your browser by bookmarking a link. I'm shamelessly going to steal Rand's image from his old post on bookmarklets: The Basics - Cached Pages & Site Searches What I'm covering in this blog post are all kinds of weird and wonderful bookmarklets but I want to re-post the basics here for you since these two bookmarklets I literally use 10s of times a day: Quickly run a Google site: search for the site you're on - Site Search Jump to the Google cache version of the URL you're on - Google Cache Rand actually wrote a post that covers a lot of the standard bookmarklets (including the two above) and if you're new to them I strongly suggest you check it out: 30 SEO bookmarklets to save you time Open Site Explorer Bookmarklets Of course you can use the moz toolbar to quickly grab stats and jump to your favorite tools but sometimes I prefer the speed and elegance of a bookmarklet instead so here's a bunch of them that work with the new open site explorer URLs: Open Site Explorer Links OSE for the homepage of the domain you're on OSE for the URL you're on Open Site Explorer Top Pages OSE top pages report for the domain you're on Open Site Explorer Anchor Text Anchor text phrases for the domain you're on Anchor text phrases for the URL you're on (By the way, while I'm mentioning OSE - you do know that CSV downloads are back right? Woop! Good job moz team!) Domain Insights These bookmarklets are designed to give you some insights about the domain you're browsing. Domain name search volume: Google insights search for the domain you're on (minus the TLD) Google Adplanner: Google adplanner stats for the domain you're on SEMrush SEMrush data for the domain you're on MajesticSEO: See the historic link graph for the domain you're on Social Data I've talked about my love of Topsy on here before and it will be no big surprise that I have a Topsy bookmarklet: See what's being tweeted for the domain you're on This gives you quick acces to an OSE-style view of the most tweeted pages on a domain: I've also talked about sharedcount before and it's no surprise I have one for them too: Social share data for the URL you're on Google Analytics Debugging I spend an unhealthy amount of time in Google Analytics and often end up needing to debug how a site is using GA and what's going on with a particular issue. Both of these bookmarklets come in handy for this: Check the cookie of the site you're on: Check site cooke Check the referrer for the page you're on: Check page referrer Technical SEO Stuff Here's a few more technical SEO bookmarklets for some common functions that I find myself using over and over again: Check if the page you're on has a canonical tag and alert you to it: Check the URL canonical tag Check if the page you're on has a meta robots tag and alert you to it: Check the URL meta robots Thanks to Berian Reed I also discovered these awesome bookmarklets: SERPs Damn It This is an awesome bookmarklet that you run on a SERPs page and it will open a new tab with all of the rankings displayed in an easy to copy and paste manner which is perfect if you're looking to quickly gather some data to throw in excel or an email or whatever:   Go check out the bookmarklet and explanatory video here. HTTP Header Checkers Webconfs has a nice header checker that has a bookmarklet associated with it. Here's the bookmarklet and here's the tool. If you'd prefer a bookmarklet that stays in the window - check out this bookmarklet from yoast which gives you something like this: Fun Social Stuff We're entering an age of connected data and I stumbled across the Google social graph API a little while back and instantly fell in love. Using this tool you can quickly and easily see what pages Google has crawled and associated with a particular page. This is best demonstrated visually - if I put my twitter URL into the tool Google tells me that I'm related to these pages: Check out the tool here. When you're doing twitter research and trying to find out who someone is or find out how you might be able to get in touch with someone it's often handy to quickly lookup a twitter handle here and see where else that person lives online so I built a bookmarklet that jumps straight to the google social graph page from a twitter page: Run this on a twitter profile page and find out what they're connected to (note I have this setup for https pages as I always use https pages on twitter, you might need to do some hacking if you have some other setup) Bonus Stuff A lot of people I know swear by Quix which is supposed to be like bookmarklets on steroids. Personally I've never quite gotten my head around it (despite all the keyboard shortcut goodness) but I feel like I'm likely in the minority - if you're a power user be sure to check it out! While creating and testing bookmarklets I found this JS prettifier extremely useful. Let's Hear It For The Community! I'd love to see what the community has built - what bookmarklets have you pimped your browser out with? Leave your best in the comments! Do you like this post? Yes No

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