Central Perk

joi, 2 decembrie 2010

SEOmoz Daily SEO Blog

Google + Bing Confirm that Twitter/Facebook Influence SEO

Posted: 02 Dec 2010 02:02 AM PST

As of yesterday, both Bing and Google have confirmed (via an excellent interview by Danny Sullivan) that links shared through Twitter and Facebook have a direct impact on rankings (in addition to the positive second-order effects they may have on the link graph). This has long been suspected by SEOs (in fact, many of us posited it was happening as of November of last year following Google + Bing's announcements of partnerships with Twitter), but getting this official confirmation is a substantive step forward.

In addition to that revelation, another piece of critical data came via yesterday's announcement:

Danny Sullivan: If an article is retweeted or referenced much in Twitter, do you count that as a signal outside of finding any non-nofollowed links that may naturally result from it?

Bing: We do look at the social authority of a user. We look at how many people you follow, how many follow you, and this can add a little weight to a listing in regular search results. It carries much more weight in Bing Social Search, where tweets from more authoritative people will flow to the top when best match relevancy is used.

Google: Yes, we do use it as a signal. It is used as a signal in our organic and news rankings. We also use it to enhance our news universal by marking how many people shared an article.

Danny Sullivan: Do you try to calculate the authority of someone who tweets that might be assigned to their Twitter page. Do you try to “know,” if you will, who they are?

Bing: Yes. We do calculate the authority of someone who tweets. For known public figures or publishers, we do associate them with who they are. (For example, query for Danny Sullivan)

Google: Yes we do compute and use author quality. We don’t know who anyone is in real life :-)

Danny Sullivan: Do you calculate whether a link should carry more weight depending on the person who tweets it?

Bing: Yes.

Google: Yes we do use this as a signal, especially in the “Top links” section [of Google Realtime Search]. Author authority is independent of PageRank, but it is currently only used in limited situations in ordinary web search.

We now know that those link sharing activities on Twitter + Facebook are evaluated based on the person/entity sharing them through a score Google calls "Author Authority," and Bing calls "Social Authority."

We can probably predict a lot of the signals the search engines care about when it comes to social sharing; some of my guesses include:

Diversity of Sources - having 50 tweets of a link from one account, like having 50 links from one site, is not nearly as valuable as 50 tweets from 50 unique accounts.
Timing - sharing that occurs when an RSS feed first publishes a story may be valuable in QDF, but tweets/shares of older pieces could be seen as more indicative of lasting value and interest (rather than just sharing what's new).
Surrounding Content - the message(s) accompanying the link may give the engines substantive information about their potential relevance and topic; it could even fill the gap that's left by the lack of anchor text, particularly on Twitter.
Engagement Level - the quantity of clicks, retweets, likes, etc. (if/when measurable) could certainly impact how much weight is given to the link.

We can probably also take a stab at some of the signals Google + Bing use for Author/Social Authority in the context of the sharing/tweeting source:

Quantity of Friends/Followers - like links, it's likely the case that more is better, though there will likely be caveats; low quality bots and inauthentic accounts are likely to be filtered (and may be much easier to spot than spammy links, due to the challenge they find in getting any "legitimate" friends/followers).
Importance of Friends/Followers - the friends/followers you have, like the link sources you have, are also probably playing a role. Earn high "authority" followers and you yourself must be a high authority person.
Analysis of Friends/Followers Ratios - Much like the engines' analysis of the editorial nature of links, consideration of whether a social user is engaging in following/follower behavior purely out of reciprocity vs. true interest and engagement may be part of authority scoring. If you have 100K followers and follow 99K of them, but the engagement between you and your followers is slim, you're likely not as authoritative as an account with 100K followers + 5K following, but those followers are constantly engaged, retweeting, liking, sharing, etc.
Topic Focus / Relevance - The consistency or patterns between your sharing behaviors could also be a consideration, using topic analysis, patterns in the sources of shared/tweeted links, etc. Being an "authority" could even be subject-specific, such that when a prominent SEO tweets links to celebrity news it has less of an impact than when they tweet links to a web marketing resource.
Association Bias - I suspect Google and Bing do a good job of associating social authors with the sites/domains they're "part of" vs. independent from. Sometimes, this might be as easy as looking at the URL associated with the account, other times it could be based on patterns like where you most often tweet/share links to or whether your account is listed on pages from that site. Basically, if @randfish tweets links to *.seomoz.org, that probably means less than when I tweet links to bitlynews or when someone outside the company tweets links to SEOmoz.

These signals represent my opinions only, and while it's very likely that at least some are being used, it's even more likely that there are many more that aren't listed above. Over time, hopefully we'll discover more about the impact of social sharing on web rankings and how we can best combine SEO + social media marketing.

To me, the most exciting part about this is the potential to reduce webspam and return to a more purely editorial model. While people often link to, read and enjoy sources that link out manipulatively, very few of us will be likely to follow a Twitter account, friend someone on Facebook, or "like" something in a social site that's inauthentic, manipulative or spammy. The social graph isn't necessarily cleaner, but the complexity of spam is far lower.

Here's to the evolution of organic marketing - search, social, content, blogs, links - it's all coming together faster than ever before, and that's a very good thing for holisticly minded web marketers.

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Top 10 Must Have SEO Extensions for Google Chrome

Posted: 01 Dec 2010 11:58 PM PST

Posted by pmahler

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.

Every few years I make a browser switch and my web use evolves sometimes for the better, and sometimes for the worse. My particular evolution went something like this: Netscape, IE, KDE Konquerer (switched from Windows98 to Debian - so no more IE), Mozilla Phoenix (early Firefox), IE (what do you know... went back to Windows), Firefox, IE, Firefox, and over the last year Chrome. My latest switch to Google Chrome has had the biggest affect on my daily web usage, particularly from the amazing assortment of extensions. The browser is also light and stylish with cool themes. If you haven't tried it already I highly recommend you do. With Chrome quickly gobbling up market share, it's clear I'm not the only one who's recognizing this.

Ok, enough of this Google fanboy madness... let's talk about some SEO tools. Google Chrome's Extensions, much like Android's Apps, are full of garbage with a few gold nuggets hidden amidst the madness.

1. MozBar

Yes, this is SEOmoz, so you might expect this to be top of the list. However, SEOmoz has done an exceptional job with this tool. Before becoming a Pro Member I used it daily and now that I'm a pro member it's always on it. Note: I'm not just saying this to get my blog post boosted to the main blog (wink wink), but it really is the best tool out there and an essential for tool any aspiring SEO.

2. SEO Site Tools

SEO Site Tools is an all inclusive powerhouse of SEO information. It includes 6 main sections:

External Page Data
Page Elements
Social Media
Page Terms / Tools
Server / Domain Info
Suggestions

Some of the unique features and enhancements include highlighting your domains in Google search, trend data in Google webmaster tools, and Social Media stats in Google Analytics. A close second to MOZbar, this tool is an absolute must.

3. Note AnyWhere

I don't know if I'm the first to break news of this tool. But even if you hate Chrome, this tool makes it all worth it. It's basic, it's simple, but it has already completely changed the way I work. As the name says you can leave a note... that's right, anywhere. On any page, on any site... leave... close your browser and come back 2 days later. I just left a note on my home page with new keywords I want to target and a note on my Fantasy Football page with all the players I need to drop (sorry Randy Moss).

4. Firebug

Get down and dirty with your code or your competitors code. You'll be able to find the tweaks and tags that can boost your rankings. Not for the beginner but an absolute must for the OCD expert.

5. IE Tab

Another holdover from Firefox, IE Tab allows you to browse the web as if you were using IE. I use this extension at least twice a day to confirm page appearance, double check a ranking, or if Chrome is having an issue with loading a page.

6. SEO SERP

I've found this tool to be slightly buggy. However, the usefulness is there and I'm sure they'll iron out the issues soon. Basically what it does is it allows you to check your search rankings per term. Quick and simple, definitely saves time for those of us that occasionally get addicted to checking rank.

7. Goo.gl URL Shortener

Shorten URLs on the fly, add them to history, integrate with social media... do I really need to explain this further? It's a time saver.

8. Screen Capture (by Google)

No more CTRL+ALT+PRTSCN, this simple tool by Google let's you highlight the section of the page you want, highlight the visible area, or highlight the whole page (can't do that with PRTSCN - that I know of). After you select, annotate, highlight, mark it up however you'd like and then email it to that lazy coworker who can't find the broken link or misspelled keyword. It's like slapping them... nicely.

9. Google Reader

Let's face it, there's a lot of information out there for SEO, it's a highly dynamic industry and you need to be on top of your game to stay in it. Google reader is the essential tool

10. Stay Focused

Ever spend 3 hours trying to figure out which who to trade Randy Moss for on Fantasy Football? Nah, me neither... this little tool will help with all that though. Get back to your link building, get back to your analytics, and StayFocused. OK, honesty time... I ended up disabling this tool... but you shouldn't, it's awesome and works better than you think it will.

Well as I'm sure you know by now there's a ton of tools out there, and while Chrome and its extensions are just one of them, I think they're worth a try... and no... I don't work for Google. I'd love to hear your recommendations as well.

Cheers,

Patrick Ahler - www.NinjaWeb.com

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Michael Gray - Graywolf's SEO Blog

How to Optimize an eCommerce Category pages

Posted: 02 Dec 2010 07:56 AM PST

Today’s post is in response to a question that came in via email asking, “How do I optimize a department/category page with a lot of products?” This is a fairly common question, but it has some subtleties and nuances to it. I’ll try to address those issues in this post.

The first aspect is how many is “a lot?” Is it 100, 1,000, or 10,000? If you have category pages with fewer than 200 products on them, you can list them all on one page. Yes I know Google recommends no more than 100 links per page, but as long as you don’t have a crazy number of other links in the sidebar/masthead/footer, you’ll be fine (see how to silo your website, the sidebar). However, sometimes putting that many products on a page isn’t such a great user experience, so you’ll want display less by default and have a” view all” option. If you go that route you want to keep the bot away from the page with less products and on the one with all the products.You’ll need to use a combination of no following the links, the no index/follow meta tag, and the canonical tag to point to the version you want indexed. This can be tricky and there are plenty of ways to shoot yourself in the foot. Make sure you double check your configuration and have a colleague review your work.

make sure you interlink all the paginated pages, or at least as many as possible without creating a bad user experience …

Another option to consider is using Ajax. Yes, you read that right: an SEO recommended Ajax as an optimal solution. What you want to do is serve the bots a flat HTML version with 100 products, but serve then people an Ajax version with 10 or 20 products, then use Ajax to reload/shift/change the products. But wait–isn’t that cloaking? … Yes and no. If you went with a strictly technical definition, yes it is cloaking, but there’s intent to consider here as well. So detect for the flash component, and serve Ajax, JavaScript, or HTML based on its presence (see changing content based on user intent).

However, what do you do if you really do have a lot of products per category, like say 5,000 different kinds of screws or nails? Ideally, you would want to break the category into sub categories of a hopefully more manageable size, and use the solution above. But if that’s still not possible, then you will have to use a paginated solution. If you go this route, list the most important products first to ensure the search engine spiders reach them first. Second make sure you interlink all the paginated pages, or at least as many as possible without creating a bad user experience. The spiders should be able to reach pages 2, 3, 4, and so on from page 1. Search engine spiders should never have to crawl through 1 to get to 2, through 2 to get to 3, and so on.

A few final thoughts. If you want the search engines to index the department pages, you want to give them some editorial qualities like a beauty shot/photo and some editorial non linked text. If you are just serving up a page with product links and nothing else, there isn’t a lot of value for the search engines, so noindex/follow the page with robots. The closer your department pages are to your home page or to internal link hubs (see what is an internal link hub), the better. Pages that are closer to link hubs are more likely to get deeply/completely crawled. If your category pages are 3 or more levels away, it’s unlikely a bot will crawl the 4th level to reach the products.

So what are the takeaways here:

If possible try to show the search engine a category page with all of the products, unless there are a very large number of products
If there is a large number of products you will need to paginate
If you are forced to paginate put the most important products first
Interconnect all the paginated pages, don’t connect them sequentially

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How to Optimize an eCommerce Category pages

Hanukkah, Oh Hanukkah

Your Daily Snapshot for
Thursday, Dec. 2, 2010

Hanukkah, Oh Hanukkah

As the President and First Lady look forward to hosting the traditional Hanukkah celebration at the White House, we invite you to join us for a live stream of the President's remarks, the lighting of the menorah and a performance by saxophonist Joshua Redman.

Learn more and watch live.

Behind-the-Scenes Look: Time-Lapse Of The White House Christmas Tree

Official White House Photographer Lawrence Jackson presents a behind-the-scenes time-lapse of the official White House Christmas Tree in the Blue Room of the White House, showing the work and energy that goes into decorating the White House for the holidays.

Watch the Video.

Seth's Blog : The inevitable decline due to clutter

[You're getting this note because you subscribed to Seth Godin's blog.]

The inevitable decline due to clutter

Digital media expands. It's not like paper, it can get bigger.

As digital marketers seek to increase profits, they almost always make the same mistake. They continue to add more clutter, messaging and offers, because, hey, it's free.

One more link, one more banner, one more side deal on the Groupon page.

Economics tells us that the right thing to do is run the factory until the last item produced is being sold at marginal cost. In other words, keep adding until it doesn't work any more.

In fact, human behavior tells us that this is a more permanent effect than we realize. Once you overload the user, you train them not to pay attention. More clutter isn't free. In fact, more clutter is a permanent shift, a desensitization to all the information, not just the last bit.

And it's hard to go backward.

More is not always better. In fact, more is almost never better.

• Email to a friend •

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miercuri, 1 decembrie 2010

Mish's Global Economic Trend Analysis

Amazon Drops WikiLeaks on Request of Sen. Lieberman; Lie of the Day from Hillary Clinton; How NOT to Stop Leaks; Why we have Leaks
"Sell the News" Bearish Flattening of Yield Curve Continues; Reflections on "Relative Value"
Social Enterprise Survival Tactics and Some Very Uncreative Economic Fix-Its
Barbershops Open in 2013, Market Screams for Haircuts Today; European Crisis Spreads to Core as Belgian Bond Yields Surge; Another "Stress Test" Scam

Amazon Drops WikiLeaks on Request of Sen. Lieberman; Lie of the Day from Hillary Clinton; How NOT to Stop Leaks; Why we have Leaks

Posted: 01 Dec 2010 04:29 PM PST

WikiLeaks just gave Senator Joe Lieberman, Amazon, and the Department of Homeland Security what I consider to be a well deserved finger. Amazon dropped WikiLeaks from its servers but is now back up on servers in Sweden at http://www.wikileaks.org/

Let's tie this all together starting with the Wall Street Journal Report WikiLeaks Site Kicked Off Amazon Servers

Amazon.com Inc. has stopped hosting WikiLeaks from its Web servers, prompting the controversial group to move its website to a European provider.

Wikileaks said in a Twitter message that it had been "ousted" by the Seattle company, which sells Web services and storage in addition to being an online retailer.

In its message, Wikileaks said its money is "now spent to employ people in Europe." The organization recently released a trove of sensitive U.S. State Department documents, and turned to Amazon's Web services after it claimed its servers in Sweden were targeted by computer attacks.

White House Seeks New Ways to Hide Damaging Data

Political HotSheet reports White House Moves to Change Classified Information Procedures in Response to WikiLeaks

President Obama's national security team is coordinating new interagency efforts to review and improve the way the government handles classified information, in the wake of the latest WikiLeaks release of secret information.

The White House announced today that Russell Travers, a deputy director at the National Counterterrorism Center, will lead a comprehensive effort to identify and develop the structural reforms needed to prevent future leaks.

The State Department and Defense Department are also conducting their own security reviews.

Meanwhile, Congress is set to pass whistle-blowing legislation to help government employees report corruption or mismanagement so they do not feel compelled to turn over secret information to outside groups like WikiLeaks. The Senate is expected to pass the bill this week, followed by the House.

Whistle-Blower Bill Gains Steam

The response from the administration is not to crack down on abuses but rather to provide new ways of ignoring abuses.

Just ask yourself, has anyone outside of Bernie Madoff ever been prosecuted, fired, or even reprimanded over fraud, torture, kickbacks, or anything else? Here's the bonus-point followup question: How many times did the SEC fail to act on information that proved Bernie Madoff was a crook?

The answer to those questions help explain this pathetic response: After WikiLeaks, Whistle-Blower Bill Gains Steam

Following the latest baring of U.S. secrets on the Internet, Congress is poised to pass legislation giving employees in the most sensitive government jobs a way to report corruption, waste and mismanagement without turning to outside organizations like WikiLeaks.

President Barack Obama is expected to sign the bill, which supporters say will discourage leaks of classified information. The legislation would allow intelligence agency whistle-blowers to raise concerns within their agencies instead of giving classified materials to WikiLeaks or other outlets, which is illegal.

Without protections spelled out in law, whistle-blowers risk being fired or demoted for informing their chains of command about misconduct, according to Tom Devine, legal director at the Government Accountability Project. That leaves no alternative to anonymous - and potentially damaging - leaks unless whistle-blowers are willing to jeopardize their careers, he said.

Anyone who believes that propaganda has holes in the head. The WhiteHouse is not interested in acting on anything, the WhiteHouse is interested in stopping leaks.

So now we will get legislation that will allow whistle-blowers to submit reports to some undefined administration hack who will promptly throw the whistles into the ashcan.

Lie of the Day from Hillary Clinton

Inquiring minds are reading a statement from Secretary of State Hillary Clinton that WikiLeaks Won't Hurt U.S. Diplomacy

The recent leak of thousands of sensitive U.S. diplomatic cables will have no adverse effect on America's international relations, U.S. Secretary of State Hillary Rodham Clinton declared Wednesday at a security summit.

"I have certainly raised the issue of the leaks in order to assure our colleagues that it will not in any way interfere with American diplomacy or our commitment to continuing important work that is ongoing," Clinton said.

"I have not any had any concerns expressed about whether any nation will not continue to work with and discuss matters of importance to us both going forward," she added.

"I anticipate that there will be a lot of questions that people have every right and reason to ask, and we stand ready to discuss them at any time with our counterparts around the world," Clinton added.

Series of Lies

How's that for a series of lies? If people have every right to ask questions, how the hell can questions be asked if the US government classifies everything it does not want anyone to know?

The US has no interest in discussing waterboarding, torture, the killing of innocent civilians with our allies or anyone else. The US wants to and is going to do everything it can to suppress that information.

If WikiLeaks has damaging information about Bank of America, we should all want to see it. We should all stand up for the rights to make that data public, not sweep it under the rug.

We do not have a Department of Homeland Security, we have a Department of Homeland Insecurity putting on a pathetic parade of pomp with full body scanners and pat downs that will not do a damn thing.

Why We Have Leaks

No one has bothered to tackle the question why we have security problems and leaks.

I will tell you why: The US has troops in 140 countries around the world, we arrogantly go where we have no vested interest going, we support corrupt regimes when it suits our purposes, we follow the asinine creed "the enemy of our enemy is our friend", and we believe we - and we alone - act as the moral authority to be the world's policeman.

When you do that you make enemies. When you make enemies you create security problems.

Instead of addressing WHY we make enemies, we setup sham terrorist organizations like the Department of Homeland Security whose efforts make us less secure.

Running List of Needed Criminal Investigations

Instead of addressing fundamental problems we want to stop leaks.

I will tell you how to stop leaks: Don't do stupid things! Stop trying to be the world's policeman. Prosecute fraud.

I have a running list of things we have ignored in FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats

It's time to update my rolling list of who should be criminally indicted and why.

April 29, 2010: Barofsky Threatens Criminal Charges in AIG Coverup, Goldman Sachs Abacus Deal, TARP Insider Trading; New York Fed Implicated

April 16, 2010: Rant of the Day: No Ethics, No Fiduciary Responsibility, No Separation of Duty; Complete Ethics Overhaul Needed

March 2, 2010: Geithner's Illegal Money-Laundering Scheme Exposed; Harry Markopolos Says "Don't Trust Your Government"

January 31, 2010: 77 Fraud, Money Laundering, Insider Trading, and Tax Evasion Investigations Underway Regarding TARP

January 28, 2010: Secret Deals Involving No One; AIG Coverup Conspiracy Unravels

January 26, 2010: Questions Geithner Cannot Escape

January 07, 2010: Time To Indict Geithner For Securities Fraud

October 20, 2009: Bernanke Guilty of Coercion and Market Manipulation

July 17, 2009: Paulson Admits Coercion; Where are the Indictments?

June 26, 2009: Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl"

April 24, 2009: Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis

How NOT to Stop Leaks

Fools like Lieberman think we can stop leaks by legislation. We can't. We can only stop leaks by fostering an attitude from the top that will prosecute fraud and corruption instead of looking for scapegoats, and instead of pursuing policeman policies that "the end justifies the means"

President Obama is a blatant liar. He promised to release details of US torture of prisoners. He failed to do so. I praise WikiLeaks or anyone else who is willing to disclose the hypocrisy of this president and this administration.

I am not a Republican. I am an independent. I praise WikiLeaks or anyone else who is willing to disclose the hypocrisy of Republicans as well.

I fear for our country and the path it is taking.

We need to elect someone willing to stand up TO the banks, stand up TO our bloated military, stand up TO public unions, and stand FOR less government spending, stand FOR prosecuting fraud wherever it takes, stand FOR smaller government.

President Obama is not that person, nor was President Bush. We need a Ron Paul, or someone like him, willing to do what is needed before we destroy ourselves.

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

"Sell the News" Bearish Flattening of Yield Curve Continues; Reflections on "Relative Value"

Posted: 01 Dec 2010 12:00 PM PST

Curve Watchers Anonymous notes a continuing bearish flattening of the yield curve as shown in the following chart.

click on chart for sharper image

A bearish flattening occurs when the curve tightens with yields generally rising. Conversely, a bullish flattening occurs when the curve tightens with yields generally falling.

Since early November, 5-year treasury yields have risen about 60 basis point, 10-year yields about 45 basis points, and 30-year treasury yields have risen perhaps 5 basis points.

Once again we can see the results in today's action with thanks to Bloomberg.

Buy the Rumor Sell the News

Note the continued unwind of the "sure-thing" treasury bet, with the Fed concentrating its purchases in the 3-to-7-year range hoping to drive down rates, and everyone front-running the trade. That trade is now unwinding.

Clearly this reaction is not what Bernanke wanted at all.

Reflections on "Relative Value"

Check out that .81 yield on 3-year treasuries. On October 18, investors scarfed up $750 million of 3-year Walmart Bonds yielding .75% for the stupid reason they yielded more than treasuries. Now treasuries are yielding more.

This is what happens when investors chase "relative value" instead of asking if there is any real value at all.

The same idea applies to those chasing the stock market at these lofty levels on the basis "stocks are cheap relative to treasuries" or some other nonsensical reason to justify valuations.

There is no value, only unwarranted bullishness.

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

Social Enterprise Survival Tactics and Some Very Uncreative Economic Fix-Its

Posted: 01 Dec 2010 10:09 AM PST

New York Times writer David Segal has rounded up a group of folks offering "creative" solutions to our economic problems. The #1 solution comes from an economic illiterate who proposes to fix the economy by lowering the retirement age. In reality, that is just another fiscally unsustainable way of giving away money.

Please consider Some Very Creative Economic Fix-Its, an article whose primary merit is the opening sentence.

We are not going to shop our way out of this mess.

The article could have ended right there. Indeed, I would have given the article glowing accolades had Segal changed the title to "We Can't Shop Our Way To Prosperity" with a one sentence body "Therefore, we should not even try."

If Segal wanted to add additional body to the article he could have solicited opinions from leading Keynesian clowns and trashed them. Instead he solicited opinions from Keynesian clowns and dreamers calling the ideas "creative".

Segal continues ....

What's needed is a path to sustained growth. That means a strategy for the millions who have lost their jobs in recent years and some hope for the more than 125,000 new entrants to the United States labor market each month.

Got any ideas?

Many academics do, though fair warning: some of their concepts are a little out there, a reflection, perhaps, of the severity of our problems.

"Age and disease will be our next engine of growth," says Teresa Ghilarducci, a professor of economics at the New School. "That's the really good news."

The aging of America presents a different sort of opportunity to James K. Galbraith, a professor at the University of Texas, who opened an interview with this very succinct expression of pessimism:

"We're likely to see a situation that makes people angry and miserable for years."

But Professor Galbraith said he saw a way to alleviate the misery of one large group of Americans: the jobless elderly. Instead of sending them unemployment checks, the government should temporarily allow workers who are, say, 62 years old, to retire with full Social Security benefits. In essence, he said, the government would continue providing these people with assistance, but through retirement benefits instead of unemployment insurance.

Not only would they no longer be forced to compete for jobs they are unlikely to get, they would have 22.5 percent more purchasing power than they would have if forced to wait until 65, the age when full Social Security benefits kick in. Collectively, that added purchasing power would drive demand for a variety of health and home care services — also known as jobs.

Is that creative enough? Hells bells, why not just give everyone money? That would get the economy humming according to most Keynesian clowns. Of course doing so in a size big enough to matter would cause prices to go soaring.

One look at the public pension woes of Greece, Spain, and France should be enough to tell you why Galbraith's idea is absolutely loony. All of those countries are in fiscal trouble and need to increase retirement age. We are in fiscal trouble and Galbraith wants to reduce retirement age.

The big problem with Keynesian clowns is they cannot look ahead (assuming of course they can think at all). They never bother explaining where the money comes from, what happens to prices, interest on the national debt, what jobs (if any) are created by their proposals, or anything else of merit that needs explaining.

The article was supposed to cover "We are not going to shop our way out of this mess" yet the lead "creative" idea is to give give money to those over 62 so we can continue shopping our way out of this mess, even though experiences in Europe as well as common sense should tell you the idea is potty.

However, the article is not entirely worthless because it continues with some common sense statements as follows.

"Growth doesn't come from big federal programs," says John H. Cochrane of the University of Chicago. "The government didn't tell us" to create the vast variety of profitable businesses on the Internet, but "it did tell us to buy houses and look what that got us."

Professor Cochrane and others counseled against a search for quick fixes. Mark A. Calabria of the Cato Institute went further, emphasizing that time was a key ingredient to a recovery.

"I think we also have a bubble in the labor market for state and local government employees," he said, "and over the next two years we might see as many as one million of these employees lose their jobs."

Unfortunately Calabria then blows it by professing an "upside" to 3 or 4 percent inflation:

"If you have a house worth $200,000 and a mortgage of $250,000, inflation is going to raise the nominal value of your home," he said. "But your mortgage will stay the same. For borrowers who are underwater, inflation will get their heads closer to above water" said Calabria.

What if wages do not keep up? What if people retire and cannot keep up with property taxes? Bear in mind property taxes that should have dropped with falling property values but did not. Does inflation guarantee job growth? Does it even guarantee wage growth in an era of global wage arbitrage? What the hell are these people thinking?

David Segal then dives off the deep end asking ...

Is there no technological marvel on the horizon that could create an unexpected bounty in jobs?

How about a cheap technology that our mortal minds can't currently fathom? A decade ago, who could have imagined that more than a million people would pay $1 for a portable phone video game in which you slash watermelons with a Japanese sword? Who, in other words, could have envisioned the Fruit Ninja app?

Is that really a creative idea?

Pardon me for asking the obvious question, but if iPhones and iPads and thousands of Apps and all kinds of technology advancements are not providing a source of robust jobs, are we to believe the next Fruit Ninja app will do so?

Thankfully Gar Alperovitz, a professor at the University of Maryland, addresses that set of questions with a simple, if not overly polite response, "That's a pretty wispy hope."

In a far more fruitful discussion ....

Professor Alperovitz pointed to local co-operatives that are sprouting up around the country. They tend to be employee owned, and get off the ground with private and foundation funding. Many of his favorite examples are found in Cleveland, of all places — like the Evergreen Cooperative Laundry, an employee-owned firm that provides laundry services to hospitals, which started in 2009.

Professor Alperovitz tracks and catalogues enterprises like the cooperative laundry on a Web site, community-wealth.org. He says he sees in these companies the stirrings of a movement animated by the cold reality that neither the government nor private enterprise is on the verge of large-scale hiring.

"If the economy and the government don't have an answer to a problem," he says, "people are forced to try social enterprise."

Perhaps we are entering the era of the self-starter. Prof. Andrew Caplin of New York University thinks so. He begins with the premise that in the coming global economy some people will succeed and others will not, and income inequality will grow.

He says he expects a rise in what he call "artisanal services," like cooks, nutritionists, small-scale farmers.

He sees services emerging that aid the wealthy at the intersection of health and genetic science. He imagines a rise in technology services, too — experts who keep clients current about technology which can advance their interests in business, in the media, on search engines and so on.

Professor Caplin worries that this concept might be caricatured as "cater to the rich." But he suggested that this country could use a lot more non-judgmental thinking about the future of the United States economy.

Survival Mentality

That last block above is likely where we are headed. It depicts survival mentality with growing income inequality. It certainly does not address David Segal's lead premise "What's needed is a path to sustained growth."

Thus, the article does not live up to it's billing. It provides no realistic answers to the premise.

I am sure there are numerous other "creative" ways to spend other people's money, but none of them will be any good either. The cure is time and innovation from private enterprise, not government-mandated socialism or Keynesian claptrap.

Eventually there will be innovation that will create jobs, I suspect on the energy front.

In the meantime, raising taxes to give money away to unproductive members of society will drain money away from private enterprise's need and ability to develop real solutions. That is the second tragedy in Galbraith's absurd proposal.

Social Enterprise Survival Tactics

Ironically, Segal could have gotten two good articles out of one poor one, by explaining why "creative" Fix-Its are doomed, followed by an article on the implications of social enterprise survival tactics.

We have already seen survival network success stories like Craig's List, Groupon, various coupon networks, Facebook, and Monster job advertising, all of those to the detriment of newspaper advertising and mainstream media opportunities, all the the effect of increasing the flow of information and lowering prices, all to the benefit of shoppers.

Groupon is a smashing success as noted in Google to Offer Groupon $5-6 Billion; From Startup to Megabucks in 2 Years; "Grouponicus" Holiday Deals

The success in Groupon is certainly the opposite of what Monetarist clowns like Ben Bernanke want. Groupon gets buyers and sellers together for group bargain prices. People will survive better if prices are lower not higher.

The latest trends towards frugality involve kids from college moving back in with their parents and taxpayer attacks on public union wages and benefits. Those changes all have a common theme of getting the biggest bang for the buck.

With boomers headed into retirement underfunded and overleveraged, most in desperate need of downsizing, social enterprise survival tactics constitute a much needed deflationary force.

We need more for our money not less. For more on this theme, please see Unthinking Economic Parrots and Deflation Fighting Madness

The point being, we are not going to inflate (or shop) our way out of this mess, and Japan shows it is a fool's errand to try. Unfortunately, "creative" ideas keep propping up, not only keep to keep the existing fiscal insanity humming, but to make things cost more on top of it. The math doesn't work.

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

Barbershops Open in 2013, Market Screams for Haircuts Today; European Crisis Spreads to Core as Belgian Bond Yields Surge; Another "Stress Test" Scam

Posted: 01 Dec 2010 12:08 AM PST

Swaps are soaring in Ireland, Portugal, Spain, Greece, and now Belgium. The market has correctly figured out there will be haircuts on senior bank debts. The problem is the ECB wants a free lunch but no haircuts until 2013, hoping of course the need for haircuts goes away in a few years.

Central bankers cannot and will not win this battle of nerves. The market is bigger than the Central bank.

Market Screams For Haircuts Today

In country after country the crisis is spreading because fools at the ECB want to delay haircuts.

Just ask Let's ask Christian Noyer, governor of the Bank of France, or ECB president Jean-Claude Trichet.

Christian Noyer said "As far as I'm concerned, I exclude that there will be haircuts in the future".

Jean-Claude Trichet warned German Chancellor Angela Merkel not to "unsettle bondholders".

No-Scissors Bluff Fails

Unfortunately for the ECB, the market's reaction to the no-scissors bluff of Christian Noyer and Jean-Claude Trichet was to suggest a need for haircuts in Belgium.

As evidence that hair grows best when and where you least want it, please consider European Crisis Spreads to Core as Belgian Bond Yields Surge

Europe's sovereign crisis is spreading to the heart of the 16-nation bloc as investors question Belgium's ability to cut the euro region's third-highest debt load, overshadowing its economic performance.

The extra yield investors demand to hold Belgian 10-year bonds instead of benchmark German bunds of similar maturity widened to 139 basis points at 5.10 p.m. yesterday in Brussels, the most since at least 1993. The cost of insuring Belgian government bonds rose to a record for a second day, according to CMA prices of credit-default swaps.

The European Union's 85 billion-euro ($111 billion) rescue package for Ireland has failed to quell market turmoil as investors shift their focus from peripheral states to countries such as Belgium, whose capital is home to the EU's political institutions. While the country's economy has been among the region's growth drivers this year, inconclusive elections left it without a government, raising concerns on its budget outlook.

"Belgium has moved to the foreground as investors ask themselves 'who's next?' to ask for help," said Carsten Brzeski, an economist at ING Groep NV in Brussels and a former European Commission official.

Europe Debt Fears Hit More Secure Countries

The New York Times reports Europe Debt Fears Hit More Secure Countries

Despite the commitment of 200 billion euros, or $260 billion, in bailout funds to Europe's two most stricken nations — Greece and Ireland — institutional investors were unimpressed with the rescue effort this weekend of Ireland and continued to sell bond holdings in the weaker euro-zone economies.

But what is worse for the European Union and an increasingly stretched International Monetary Fund is that investors have begun to disgorge some of their positions in Belgium, Italy and even Germany.

"We have created more doubts than existed before," said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. "The interest rate now being charged for Ireland is a vote of no confidence for the package and it has obviously been inspired by a notion that we should punish our sinners. If we don't succeed in containing this thing it could lead to a disaster in terms of the euro's survival."

Ireland Will Default

Ireland cannot possibly pay back its debt. It needs to shrink its deficit from 30% of GDP to 3% of GDP while going on a massive austerity program and having to pay back obscene loans at 5.8%.

Because of the austerity program Ireland cannot possibly grow at 5.8%. Heck it highly unlikely to grow at all. It cannot afford the interest, let alone the principal.

The market has figured this out whether the ECB and EU have or not.

Market Won't Wait For Haircuts

With scissors in hand, Minyanville professor Peter Atwater says European Leaders Should Focus on the Banks, Not the Sovereigns

As Bloomberg notes this morning, the bank run has now extended from Ireland to Portugal. Yet again, credit is a coward and is fleeing uncertainty. Depositors, like bondholders, know that the intertwined European government/bank network needs less, not more debt and that someone is ultimately going to get a haircut. And with Ireland already implementing "burden sharing" and the EU suggesting that the barbershops will clearly open in 2013, there is little incentive to stick around to see when that happens.

And that is Europe's problem. The market is saying "when" not "if" any more.

To stop the spreading contagion, European leaders need to stop focusing on the sovereigns and start focusing on the banks. As we have already seen, troubled sovereign nations can be kept alive for an extended period of time, but banks can't.

But rather than growing sovereign double leverage even further -- in which a troubled nation, like Ireland, borrows from the EU to put equity capital into its banks -- if the EU is serious about stopping the growing banking contagion, it is going to have to consider its own pan-European TARP/FDIC program for Europe's largest banks.

And whether Europe has the stomach for that we'll soon find out. But until Europe divorces banking strength from sovereign strength, they will both go down together.

Stress Test Failures

The last European bank stress test back in July showed that 84 out of 91 banks were well capitalized, including the two largest Irish banks. According to the BBC, Irish finance minister Brian Lenihan "welcomed the increased transparency that the EU-wide test had brought to the banking system".

Anyone who could think clearly knew those stress tests were a scam, purposely designed so that nearly any bank could pass. The results are now in, and it took less than 4 month to show just how absurd those stress test findings were. Allied Irish Banks and Bank of Ireland now await bailouts from the EU and IMF.

Another Stress Test Scam Coming Up

Another stress test is planned, but the EU (may or may not) publish the results. Presumably if the reports are good the EU may publish them, but they won't if the results are bad.

In yet another truth-is-stranger-than-fiction moment, the Wall Street Journal reports Fresh Round of 'Stress Tests' Planned for European Banks

As market sentiment toward the euro zone sharply deteriorates, European officials are planning a new round of bank "stress tests" that they say will be more rigorous than the widely discredited exams conducted earlier this year.

But the tests are already subject to bickering between countries. While some European leaders are pushing for next year's tests to be broader and more transparent than last summer's exercise, the agency that will oversee the tests says it might opt not to publicly disclose the results at all.

Straight From the Twilight-Zone

That hair-raising announcement seems like it is straight out of the Twilight-Zone. The EU clearly admitted a need for an honest stress test while simultaneously admitting fear of publishing one.

On that admission, can anyone possibly believe the results of the next test, assuming they even publish it? And what will it say if they don't?

This bizarre state of affairs can hardly inspire confidence. However, it may increase the demand for scissors, not exactly what the EU wants at all.

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

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