Central Perk: 15 aug. 2014

vineri, 15 august 2014

Mish's Global Economic Trend Analysis

Let's Play "Telephone"!
Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy
France Finance Minister "I Refuse to Raise Taxes to Close any Budget Gaps"; "Rethinking" the USA

Posted: 15 Aug 2014 10:43 PM PDT

Anyone recall the campfire game Telephone?

In the game of Telephone, someone, typically sitting around the campfire, whispers a phrase to the next person who in turn whispers the phrase to the next person until the message is passed to the final person who reports what he heard.

Inevitably, the final result is nothing like what the first person said.

I have a modern day prime example as well as a Mish boy scout example to report. Let's start with the modern day example.

Telephone!

Telephone Part 1: BBC reports "Around a dozen Russian light tanks have been seen heading for the Ukrainian border, as a Russian aid convoy remains parked near the frontier. The BBC saw the tanks early on Friday morning, but there was no confirmation that they were going to Ukraine."

Telephone Part 2: The Guardian reports "a column of 23 armoured personnel carriers, supported by fuel trucks and other logistics vehicles with official Russian military plates, travelling towards the border near the Russian town of Donetsk – about 200km away from Donetsk, Ukraine."

Telephone Part 3: Lithuanian Foreign Ministry Says Russia Invaded Ukraine with 70 Pieces of Military Equipment

Telephone Part 4: Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy

Thanks to reader Sergey for the first three links. I picked up and reported part 4 earlier, doubting the story from the moment I read it.

Mish Telephone Experience

I know full well how bullsheet like this spreads. It all goes back to the game of Telephone. Every listener (in this case writer) has a strong temptation to embellish the story to gain readership. This is how 12 becomes 40, becomes 70.

I learned an early lesson. In boy scouts, I purposely changed a message to something totally unrelated to what I actually heard. I never did it again because a counselor embarked on a binary chop method to figure out where the story went wrong.

Fortunately for me, the counselor stopped two people short.

Regardless, this is precisely how bullsheet spreads, and I now try hard not to be part of it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy

Posted: 15 Aug 2014 01:29 PM PDT

Here's the unbelievable claim of the day: Ukraine Attacks Russian Military Convoy, Says President.

Moscow's stand-off with Kiev intensified dramatically on Friday night after the Ukrainian government said it had blown up a Russian military convoy inside its territory, news that sparked a flurry of diplomatic activity to try to defuse the deepening crisis.

Just hours after a Russian humanitarian aid convoy of 270 white military trucks, some of which were empty, pulled up in the town of Kamensk-Shakhtinsky near Ukraine's border, Kiev said it had launched an artillery strike against a separate column of some two-dozen Russian military vehicles that had crossed into its territory under the cover of darkness.

In a phone call with British prime minister David Cameron on Thursday evening, details of which emerged on Friday, Ukraine's president Petro Poroshenko confirmed a Russian military convoy had entered Ukraine but said most of it had been "eliminated" in an artillery strike.

Russia on Friday night denied Ukraine's claim that it had "destroyed" part of a Russian military convoy on Ukrainian territory. The convoy that allegedly crossed the border into Ukraine did not exist, and such statements based on fantasy and assumptions should not be seriously discussed, the defence ministry said in a statement carried by state media.

The Russian foreign ministry accused Ukraine of threatening to use force against its humanitarian aid mission and of sharply stepping up hostilities "with the apparent aim of cutting off the path the convoy should take from the border to Lugansk under the agreement with Kiev."

Which Side to Believe?

I am willing to change my mind on which side to believe as soon as evidence comes in.

If "some two-dozen Russian military vehicles" were mostly "eliminated", how about some pictures please?

It should be a simple matter to take a few pictures of destroyed equipment and a few more pictures of soldiers in Russian uniforms.

And where is US satellite evidence? For that matter, where precisely did this strike occur?

Destroyed and Captured Equipment

My sources indicate we are soon going to see some images of destroyed and captured equipment of a completely different nature.

I will have a new map of major military operations and a new video out shortly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

France Finance Minister "I Refuse to Raise Taxes to Close any Budget Gaps"; "Rethinking" the USA

Posted: 15 Aug 2014 11:40 AM PDT

Not only is support for sanctions in Europe crumbling, so is support for alleged austerity. I say alleged because there really hasn't been any austerity.

France Rebels Against Austerity

Please consider France Rebels Against Austerity as Europe's Recovery Collapses by Ambrose Evans-Pritchard.

Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.

Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.

Michel Sapin, France's finance minister, sent tremors through European capitals with a defiant warning that his country would no longer try to meet its deficit targets and would not inflict further damage on its economy by tightening into the downturn. "I refuse to raise taxes to close any budget gaps," he said.

Growth is too weak in Europe and inflation is too low. We must therefore stop reinforcing the causes of this depression," he told RTL television.

"We must face the figures in front of us with realism. The truth is that, contrary to the forecasts of the International Monetary Fund and the [European] Commission, growth has broken down, both in France and in Europe."

Cause of the Depression

Sapin's statement "We must therefore stop reinforcing the causes of this depression" is correct.

Unfortunately, both Sapin and Pritchard are clueless about austerity and the cause of France's woes.

Austerity means (or at least should mean), cutting government spending, not hiking taxes to maintain ridiculous levels of government spending. Speaking of which, government spending accounts for a whopping 57% of French GDP.

Depression Hell

France desperately needs to cut government spending and burn thousands (if not tens of thousands) of regulations.

Instead, Pritchard wants the ECB to print more money. Sapin wants France to spend more money. It's a pair made in depression hell.

"Rethinking France"

Yesterday, in Time for a Rethink, I made these statements.

Time for a Rethink

Sapin wants a rethink. I certainly agree. It's time for France to ...

Rethink agricultural subsidies
Rethink high tax rates
Rethink work rules
Rethink countless regulations
Rethink government spending that accounts for 57% of GDP
Rethink Hollande
Rethink socialism

Actually, it's time for France to rethink everything that isn't working. In turn, that means France needs to rethink everything, because as best as I can tell, nothing is working properly.

"Rethinking USA"

Reader "Friendly Guy" complained about the fetid, foul-smelling US and proposed the following.

"Friendly Guy" says the US should ...

Rethink agricultural corn subsidies
Rethink low tax rates
Rethink work rules and the few vacation days employees receive
Rethink countless lack of banking regulations
Rethink government spending that accounts for a large part of GDP
Rethink Obama
Rethink capitalism

Every country should become like the fetid U.S. of A.

"Friendly Guy" is on to something, but in the opposite sense on all but two points 1 and 6, assuming I have his tone correctly. Here is his list with my comments.

The US should ...

Rethink agricultural corn subsidies: Yes, it should eliminate them.
Rethink low tax rates: Yes, it should lower taxes and cut government spending to make it possible.
Rethink work rules and the few vacation days employees receive: Yes, the government should get out of the way of regulations except when it comes to health, safety, fraud, and property rights.
Rethink countless lack of banking regulations: Yes it should eliminate all regulations except those whose only purpose is to prevent fraud. And speaking of fraud, we need to get rid of fractional reserve lending and absurd accounting methods.
Rethink government spending that accounts for a large part of GDP: Yes, we need to reduce government spending to the bone, pass national right-to-work laws, eliminate forced collective bargaining, and scrap Davis Bacon and all prevailing wage laws.
Rethink Obama: Obviously
Rethink capitalism: No. There is nothing to rethink. We should actually try it for a change.

Possibly I have "Friendly Guy's" tone wrong and we are in perfect agreement, but his sarcasm makes me think otherwise.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

The Top 10 Locations Where Billionaires Hang Out

Posted: 15 Aug 2014 02:54 PM PDT

When you're a billionaire you can pretty much do whatever the hell you want. You can go anywhere and see anything. These are the vacation spots where billionaires like to hang out.

Amazing Rescued Cat Transformation

Posted: 15 Aug 2014 10:48 AM PDT

It's always sad to see an unhealthy cat but luckily this cat's story has a very happy ending.

"Mikey Goes to Washington"

Featured

"Mikey Goes to Washington"

Welcome to a special summer edition of West Wing Week -- your guide to everything that's happening at 1600 Pennsylvania Avenue.

This week, the President focused on the developing situations in both Iraq and Ferguson, Missouri. West Wing Week also tagged along for the first few days of one of the White House's newest employees, for the launch of the newly created U.S. Digital Service.

Watch the latest edition of West Wing Week here:

Link Echoes (a.k.a. Link Ghosts): Why Rankings Remain Even After Links Disappear - Whiteboard Friday

Posted: 14 Aug 2014 05:15 PM PDT

Posted by randfish

One of the more interesting phenomena illustrated by Rand's IMEC Lab project is that of "link echoes," sometimes referred to as "link ghosts." The idea is that if we move a page up in rankings by pointing links to it, and then remove those links, the bump in rankings often remains.

In today's Whiteboard Friday, Rand explains what's going on.

One quick note: Rand mentions a bit.ly link in this video that isn't quite accurate; here's the correct one. =)

For reference, here's a still of this week's whiteboard!

Video Transcription

Howdy Moz fans and welcome to another edition of Whiteboard Friday. This week I'm going to talk a little bit about link echoes. This is the reverberation of the effect of a link across Google's link graph and across the rankings, that has an impact even after a link has been removed. In the past, we have also referred to these as link ghosts, but I think link echoes is actually a much better name. I appreciate some folks pointing that out for me.

Let me show you exactly what I'm talking about. So, as you might know, I've been running a number of tests, and those tests have been happening through a project I call IMEC Lab. If you go to http://bit.ly/imeclab, you will find this project ongoing.

We've been performing a number of tests over the last six months. I started with a smaller group. The group has gotten bigger. So we've been able to test some really fascinating things. A number of those have been around tests related to links. I'm going to share one of those tests, because it helps really highlight what's going on with link echoes.

So we had a page point ranking number 31 for a key phrase, a not very competitive keyword search phrase, and the only reason I'm not transparently sharing these, at least not yet, is because we prefer that Google didn't know all of the websites and pages that we're pointing links from. Otherwise, they could potentially mess with the test. We like to keep the test results as clean as possible, and so we're not disclosing these for right now.

Another page, page B ranking number 11 for the same query. So page ranking for query A, that's page A ranking number 31, page B ranking number 11. Of course, our first step . . . well, this was one of the steps in our test was we pointed 22 links from 22 different websites, all the same pages of those sites to both A and B. We were actually trying to test anchor text. So we pointed anchor text exact match links at A, non-match at B. We wanted to see which one would boost it up. Some of the links we put first, some of the links we put second. We tried to control a bunch of variables.

We ran tests like these many times. I think this particular one we repeated four or five different times. In this case, we saw A, the one that was ranking number 31, it moved up to position one. Just 22 links were able to move it, bam. Anchor text links able to move it up to position one. Anchor text links obviously still pretty darn powerful. We could see that in each of our tests.

B we pointed those same 22 links at, that moved up 6 positions. Remember it didn't have the exact match anchor text, so it moved up to position five, still quite impressive.

Then we did something else. We took those links away. We removed all the links, and this is pretty natural. We want to run more tests. We're going to use some of these same sites and pages, so we removed all the links, no longer exist. The next week, they'd all been indexed. What happened?

Well, gosh, page A, that was ranking number 31 and moved up to 1, even after all those pages that were linking to it had been indexed with no link there anymore by Google, didn't move. It stayed in position number one. That's pretty weird. Almost the same thing happened with result B. It moved down one position. It's ranking number six.

Even weirder, this happened over four and a half months ago. We're now in the middle end of July. This was in mid-April, early April. That's a very long time, right? Google's indexed these pages that we're linking many times, never seen the links to them. As far as we can tell, there are no new links pointing to either of those pages. At least we haven't seen them, and none of the link tools out there have seen them. So it's possible, maybe some new links.

Here's where it gets weird. This effect of these link tests, remaining in place long after the link had been removed, happened in every single link test we ran, of which I counted eight where I feel highly confident that there were no confounding variables, feeling really good that we followed a process kind of just like this. The links pointed, the ranking rose. The links disappeared, the ranking stayed high. Eight different consecutive tests every single time. In fact, there wasn't one test where, when we removed the links, the rankings fell back to their original position. Some of them like this one fell a position or two. Almost everything that we moved from page two or three stayed on page one after we linked to it, even after removing the links.

This argues strongly in favor of a phenomenon that some SEOs have speculated about for a good amount of time. I believe one of them is Martin Panayotov -- I might not be pronouncing his name correctly -- and, of course, Moz contributor Michael King, iPullRank. Both of them had commented on a post years ago saying link ghosts, aka link echoes, are real. You guys should look into them. Sorry it took us so long to look into this, but this is fascinating.

Now, there could be a number of explanations behind this link echo phenomenon, the continuing reverberation of a link's effect on a ranking. It could be that maybe that page ends up performing well in Google's analysis of its user and usage data. It ranks well for this relatively unpopular query. It's ranking number one. And you know what? Google's finding that the click-throughs are still pretty high. There's not a lot of pogo sticking back to the results. Maybe they're going, "Hey, this page looks legit. Let's leave it here," even after the links disappear.

It could be that the site or page was bolstered by other factors, other ranking factors that we may not know about. It could be that every one of these eight times when we moved it up, maybe by moving it up through links we inadvertently did something else to it. Maybe that helped it rank higher for other pages, and those other pages generated links each of these times. That's fairly unlikely when you repeat the test this many times, but not impossible.

Or it could be that Google actually has something in their algorithm around link echoes, where they say, "Hey, you know what? After a link has disappeared, that doesn't necessarily mean we should take away the value of that link as a vote forever and ever." In fact, maybe we should, for a long time, perhaps depending on how many links the page has or how uncompetitive the search results are, or something that they say, "You know what? Let's leave some remnant, some echo, a ghost of that link's value in the ranking equation for the site or page." These things are all possible.

What's fascinating about practice to me is that it means that, for a lot of us who worry tremendously about link reclamation, about losing links on sites or pages that may produce things freshly, but then remove them on blogs that don't always stay consistent across time, that we may be getting more value than we think from a link that disappears in the future. Of course, learning more about how Google works, about their operations is just fascinating to me. Google says their mission is to organize the world's information and to make it universally accessible and useful. Well, I think part of Moz's mission and my mission is to organize information about how Google works and make it universally accessible and useful. That's what I hope we're doing with some of these tests, particularly around link ghosts.

So I'm looking forward to some great comments. I'm sure many of you are going to have things that you've observed as well. If you'd like to follow along with this and other tests, I'd suggest checking out . . . you can go to bit.ly/mozmadscience and see the full presentation from my MozCon talk, in which I talk about link ghosts and a number of other tests we've been performing. I'll be sharing a few of those individually here on Whiteboard Friday as well. But link echoes is such a fascinating one, I thought we should bring that out right away.

Thanks everyone. Take care. We'll see you again next week for another edition of Whiteboard Friday.

Video transcription by Speechpad.com

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