Central Perk: 7 iul. 2012

sâmbătă, 7 iulie 2012

Mish's Global Economic Trend Analysis

Steve Keen Goes Off the Deep End With a "Debt Jubilee" (Free Money to Consumers) Proposal

Posted: 07 Jul 2012 06:32 PM PDT

Inquiring minds are watching Australian economist Steve Keen correctly debunk Paul Krugman in an interview with Lauren Lyster on Capital Account. Unfortunately, Keen's solution to the debt crisis leaves a lot to be desired.

Position of Keen

"Debt does not just matter at zero-bound conditions, debt matters all the time. The change in debt adds to demand. ... It could take 15 years of deleveraging before it's all over. That's why Krugman is wrong. You can't just cure this with deficit spending, you have to abolish the private debt as well."

So far so good. However, I strongly disagree with Keen's proposal of a "private debt-jubilee" which he defines a quantitative easing for the public.

Essentially Keen wants to print money and give it to the public on the provision they must pay down debt first.

Debt Jubilee Nonsense

Suppose everyone is given a "debt-jubilee". What is to stop consumers from immediately going back into insane levels of debt? More regulation? Government controlled printing presses? Academic formulas from all-knowing economists?

Please! Stop already.

Inflation Genie

I am in general agreement with Keen on numerous things.

For example, I agree 100% with Keen that lending comes first and reserves later. I also agree with Keen that the notion of excess reserves is fatally flawed, and so is the notion of money multipliers.

I scoff, along with Keen, with the idea that excess reserves are going to come pouring back into the economy causing hyperinflation or massive inflation.

For a discussion, please see my December 21, 2009 article Fictional Reserve Lending And The Myth Of Excess Reserves in which I rebut the idea espoused by Robert Murphy that the Inflation Genie is About to Get Out of the Bottle.

The idea was silly then and it is still silly now. I believe events have proven as such.

However, start giving money away as Keen proposes and I would change my tune about inflation in a hurry. Note that QE is essentially a loan but Keen's proposal is an outright gift.

Case For Deflation

Mind you there is absolutely nothing wrong with price deflation.

Who out there does not want the price of oil to drop or the price of food to drop? Who does not want more for their money at the department store? Who does not want the price of a college education to drop?

The answer to that last question is public unions, administrators, and for profit colleges. The answer to the above questions in general is those with first access to money, notably banks (and bank CEOs and executives who get paid to make more and more loans).

Free Market Economy

In a free market, the cost of an education would plunge like a rock. Internet services would spring up all over the place providing quality education. Absolving student debt or any other debts cures no structural problems.

More government and more regulation is not the answer. Nor is more Fed the answer. Nor are models. Nor is giving money away any part of the solution.

Big Fan of Keen

Bear in mind that I am a big admirer of Steve Keen. Steve has taught me a lot. I like his debt model. I just do not like his solution. It cannot and will not work, for reasons that quite frankly should be obvious.

Real Solution

Fractional reserve lending is at the very heart of the debt crisis. That is what enables banks to conjure up credit at will (as long as they are not capital constrained and as long as consumers and businesses want to borrow).

The solution therefore, is not free money and not more government intervention into free markets, but rather sound money and less government interference, coupled with the end of fractional reserve lending.

Yes, it will take time. Attempting to short-circuit the time required with "free money" would be a monstrous mistake, solving zero structural problems.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Merkel's Magic Hat Running Out of Rabbits; 54% of Germans Believe Further Bailouts Pointless; 160 German Economists Denounce Summit Results

Posted: 07 Jul 2012 11:48 AM PDT

A pair of articles translated from German and Spanish further highlights the pressure on German Chancellor Angela Merkel to not give into to further demands by Spain, Italy, and France.

160 German Economists Denounce Summit Results

The San Francisco Gate reports German Economists Denounce Summit Decisions

A group of German economists has denounced decisions made during last week's European Union summit, arguing Thursday that they risk increasing the exposure of taxpayers, retirees and savers to the debts of struggling banks.

In an open letter published by the daily Frankfurter Allgemeine Zeitung, a group of 160 economists wrote that German Chancellor Angela Merkel found herself forced to make "wrong" decisions during the gathering. The economists said they "view the step toward a banking union, which means collective liability for the debts of the banks of the eurosystem, with great concern."

"Banks' debts are nearly three times higher than government debts ... the taxpayers, retirees and savers in the so-far solid countries of Europe must not be made liable for backing these debts, particularly since gigantic losses are foreseeable from financing the southern countries' inflationary economic bubbles," they added.

The economists include Hans-Werner Sinn, the head of the prominent Ifo think-tank and a vocal critic of European leaders' rescue policies. They argued that "banks must be allowed to fail," with creditors who knowingly took investment risks bearing the burden.

Merkel rejected the criticism.

"First of all, this is about better banking supervision, and one can only say that that is urgently necessary," she told reporters.

Disingenuous Response by Merkel

Please note the disingenuous response (if not direct lie) by Merkel who says "this is about better banking supervision".

Of course this is about bailouts. It is also about the need to allow banks to fail. Let that happen, punish the bondholders, and kill fractional reserve lending and the situation will take care of itself.

Merkel also stated "This is absolutely not about any additional liability." That too is disingenuous. The amount of money may not have risen, but the odds of losses have increased.

I happen to believe that Merkel would sell her soul to save the euro but can't. She also cannot step over lines in the sand by the constitutional court. Otherwise she would have caved in far more than she has.

Tempers Flare Over Letter From Economists

Via Google translate from El Confidencial, please consider 160 German economists against aid to Spanish banks

"It's not going to save the euro, but the creditors of the banks." "It is unacceptable that taxpayers, pensioners and savers far the strongest countries in Europe are accountable for the debts and huge losses due to inflationary bubbles of the South." "Politicians think they can limit the huge sums spent to pay these debts and misuse through the future European Banking Supervision Agency. But they will not succeed while the debtor countries have a majority in the Eurozone structural. " Three key ideas of the open letter that 160 economists renowned citizens today directed the Federal Republic not to support the creation of a European Banking Union and, of course, direct aid to Spanish banks.

The initiative is a media bomb. Hot and tempers are already with the feeling that Angela Merkel gave away too much at the last summit to pressure from Mario Monti, Francois Hollande and Mariano Rajoy, what these economists, led by Hans Werner Sinn, director of the IFO Institute Munich, and Walter Krämer, an economist statistician of the city of Dortmund, is a kick in the butt to a foreign minister that the last thing needed now is the opening of a new public debate on aid to weaker members of the Union.

Teachers and economists are not alone. The chairman of the Federal Union of German Industry, Hans-Peter Keitel, has joined the criticism: "Germany has said, has to put back the red lines. There should never be a Salvation Fund Banks".

No Salvation Fund For Banks

There should not be a salvation plan for anyone, especially banks. One of the reasons this mess is so big is the repetitive moral-hazard bailouts of the financial sector by central banks and governments.

54% of Germans Believe Further Bailouts Pointless

Via Google translate from Der Spiegel, please consider Majority of Germans Believe Further Bailouts Pointless

The majority of the German population has resigned from the mammoth task of saving the common currency. 54 percent of respondents believe that Germany should not continue to fight for the euro rescue if billions more are needed. 41 percent call for further engagement in Germany, and five percent are undecided.

Skepticism Extends Through Almost All Political Parties

52 percent of respondents with a preference for the CDU / CSU, see "little sense" is that Germany continues to €-rescue battling, only 45 percent of union supporters have responded to another commitment, three percent is "uncertain". The situation is similar in the SPD of (54/43/3).

Even stronger was the rejection of at supporters of the Left: There were 68 percent believe that it hardly makes sense to continue fighting for the euro rescue, they involve billions more are needed. 28 percent supported the idea , and two percent said "do not know" or gave no information.

The largest euro-friends are apparently supporters of the Greens: 64 percent of supporters of the eco-party took the view that Germany's commitment to the euro should be continued rescue, only 30 percent were against it - six percent gave no details.

For supporters of the FDP, the responses for statistical reasons are not shown separately, they are represented in the survey with a too small number.

Fourth Front Against Merkel

The noose around Merkel's neck gets tighter, even as her own personal popularity is at an all-time high.

For details please see German Central Bank Head Warns Merkel on Repeated Weakening of Positions; Third Front Against Merkel

To that we can add safely add the 4th front - voters, and if you like, a 5th front of 160 economists.

Realistically, there is little more Merkel can do but bluff. Her magic hat has no rabbits left in it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

Cute Pandas Playing on the Slide [Video]
2012 San Diego Big Bay Boom Fireworks Epic Fail
Stairway Cinema in Auckland, New Zealand

Cute Pandas Playing on the Slide [Video]

Posted: 06 Jul 2012 09:15 PM PDT

What's more entertaining than watching a panda playing on a slide? Watching 4 pandas playing on a slide!

2012 San Diego Big Bay Boom Fireworks Epic Fail

Posted: 06 Jul 2012 09:08 PM PDT

A technical malfunction condensed the entire 23 minute long fireworks show into one large explosion when all the devices went off at the same time. Instagram user Ben Baller captured a photo of the 15 second long blast that has racked up more than 10,000 likes.

Via The Atlantic Wire

Stairway Cinema in Auckland, New Zealand

Posted: 06 Jul 2012 08:48 PM PDT

Design collective OH.NO.SUMO created this stairway cinema in Auckland (New Zealand), which turns a busy street corner into an outdoor pop-up cinema. The micro-theater offers space for seven people. The movies can be chosen in advance through social media channels via smartphones and other gadgets.

July Mozscape Update

Posted: 06 Jul 2012 11:44 AM PDT

Posted by randfish

It's time for another Mozscape index update. New data is now available in Open Site Explorer, the Mozbar, our tools and through the API. July's update comes with some good news, and potentially some bad news, too. As you're likely aware, the previous two indices, while huge in size (150B+ URLs each) suffered from a lack of freshness due to the additional processing time required to calculate our link graph and metrics over such phenomenally big numbers of links & pages. Today's index is relatively large by prior standards (~72B URLs, larger than most anything we launched before April 2012). And it's slightly fresher - the link data in the index today was crawled almost entirely in May.

This index was originally scheduled to launch earlier, but ran into troubles, including Amazon's AWS outage and plenty of hardware failures, too. As we've mentioned in the past, SEOmoz is in the process of building a new private hybrid cloud datacenter that will replace AWS for Mozscape and should provide us with much greater reliability. We know how important it is to have regular data updates you can count on, and we're putting people and money to work as fast as possible to get off the unreliability that Amazon's systems have created.

Let's take a look at the full metrics for this index:

78,813,641,094 (78 billion) URLs
674,286,481 (674 million) Subdomains
165,476,769 (165 million) Root Domains
778,554,162,687 (778 billion) Links
Followed vs. Nofollowed
- 2.33% of all links found were nofollowed
- 57.62% of nofollowed links are internal
- 42.38% are external
Rel Canonical - 12.5% of all pages now employ a rel=canonical tag
The average page has 74 links on it
- 63.28 internal links on average
- 10.72 external links on average

And here are the latest correlations between Mozscape metrics and Google's search results:

Page Authority - 0.34
Domain Authority - 0.23
MozRank - 0.19
Linking Root Domains - 0.24
Total Links - 0.2
External Links - 0.24

Because this update is much smaller in total URL size (~50% of the prior, 165 billion URL index), your link count totals will likely be much smaller, even if you've grown your link building efforts. Below is an example of the numbers for various Seattle startups across May's larger index and July's smaller one:

Mozscape Data for Seattle Startups from the May Index Update

Above: May's 165 Billion URL index data

July Mozscape Data

Above: July's smaller, 78 Billion URL index data

Note that, as one might expect, link counts are between 50-75% of their former value. This percentage will be lower for sites that get many links from the far corners of the less-traversed, less-popular pages and sites on the web, and higher for sites with links from more popular/well-linked-to sites and pages.

We're working hard to grow index size in the future back up to 100Billion+ URLs. Our crawlers can already handle vastly more, and it's just the unreliability of Amazon's hardware that holds us back. Our engineers and sysops folks are working around the clock to get there as soon as we can.

We've also done some work recently to update the scoring systems for the Keyword Difficulty/SERPs Analysis Tool. You'll now see a more accurate and usable algorithm applied to results where very fresh pages are ranking, e.g. news, sports, trending topics, etc. Here's an example query that previously would have produced a keyword difficulty score of 1:

Libor Rate Scandal

Libor Rate Scandal was a SERP that until a few days ago, had virtually no traffic and very different results. All of these pages are ones that have been produced in the last day or two, and thus don't have Page Authority scores. However, the Domain Authority is now being used to help calculate KW difficulty, which should seriously help those of you who analyze fresh results.

The next 2-4 Mozscape index updates will continue to be on AWS, but we're now running 3-4 indices in parallel (which costs a fortune, but gives us fallback options if/when Amazon's failures lose an index or massively delay it). In the next 3-4 months, we hope to be operating indices off our new hybrid cloud environment and see much greater reliability, which will enable us to produce larger, fresher and more consistent updates.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Weekly Address: Pushing Congress to Create Jobs, Keep College in Reach for Middle Class

Your Daily Snapshot for
Saturday, July 7, 2012

Weekly Address: Pushing Congress to Create Jobs, Keep College in Reach for Middle Class

President Obama discusses legislation he signed on Friday that does two important things: It keeps thousands of construction works on the job rebuilding our crumbling infrastructure, and it stops interest rates on federal loans from doubling this year for more than seven million students.

Watch the President's weekly address:

President Barack Obama tapes the Weekly Address at the Summer Garden Food Manufacturing plant in Boardman, Ohio, July 6, 2012. (Official White House Photo by Pete Souza)

Weekly Wrap Up

Your quick look at this week on Whitehouse.gov:

A Nation of Immigrants: On July 4, the President started the day with a naturalization ceremony for a group of active duty service members. At the ceremony the President reflected on the importance of immigrants in U.S. history, “Immigrants signed their names to our Declaration and helped win our independence. Immigrants helped lay the railroads and build our cities, calloused hand by calloused hand. Immigrants took up arms to preserve our union, to defeat fascism, and to win a Cold War. Immigrants and their descendants helped pioneer new industries and fuel our Information Age, from Google to the iPhone."

Celebrating America: Later that day, the President addressed a gathering of military families on the South Lawn as they enjoyed festivities for every age. The Fourth of July picnic was also joined by country music star Brad Paisley -- who played until the fireworks began over the National Mall.

Your Voice, Heard: Today, we saw the impact of your voices on another debate in Washington. President Obama signed legislation keeping the interest rate on federal Stafford loans from doubling for 7.4 million students.

West Wing Week: This week, the President traveled to Colorado Springs to survey fire damage and honor responders. He also celebrated Independence Day with a naturalization ceremony at the White House and a picnic for military families on the South Lawn. Watch the video now.

Stay Connected

This email was sent to e0nstar1.blog@gmail.com
Manage Subscriptions for e0nstar1.blog@gmail.com
Sign Up for Updates from the White House
Unsubscribe | Privacy Policy
Please do not reply to this email. Contact the White House

The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

Seth's Blog : Thinking about your shoes

Thinking about your shoes

I woke up early to give a speech a few weeks ago and got dressed in the dark. Bad idea. I ended up wearing two slightly different brown shoes on stage, and I was sure that it was the first and only thing that anyone in the audience would notice. I was wrong.

People spend almost no time thinking about what you wear on your feet. A few hours after the meeting, we have no recollection at all about what tie you wore or how your hair was done.

On the other hand, we'll long be impacted by your big idea, the project you didn't launch and the gift you didn't give.

It's easy to obsess about trivia, mostly because the stakes are so small. What happens if we wonder about what we could to that might change everything instead?