luni, 28 mai 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Ponzi Financing in Greece Continues; Greek Banks Receive €18bn Transfer

Posted: 28 May 2012 06:41 PM PDT

Greek banks have been shut off from regular ECB liquidity operations due to lack of sufficient collateral. Today the Banks have that collateral thanks to a disbursement of funds from the EFSF which in turn will be used as collateral for more loans from the ECB.

If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts.

Please consider Greek banks receive €18bn transfer
Greece's four largest banks received a €18bn transfer on Monday as the first instalment of a recapitalisation plan agreed as part of the country's second bailout by the EU and the International Monetary Fund.

The funding, in bonds issued by the European Financial Stability Facility, will help banks reduce their dependence on emergency liquidity assistance, a temporary lifeline provided by the Greek central bank after they were excluded from European Central Bank liquidity operations this month.

The four banks are now expected to regain access to the ECB's liquidity operations, using the bonds as collateral for funding at cheaper rates than under the emergency liquidity arrangement.

Bankers said they hoped the funding would help stem a continuing outflow of deposits since an inconclusive general election on May 6 triggered fears that Greece would soon be forced to leave the eurozone.
Anyone who thinks this will stop outflows has holes in the head. As I see it, it will allow a means of additional outflows.

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


Spanish 10-Year Bond Yield Hits 6.5%, Spread to Germany Hits Record; Prime Minister Repeats Lie "Spain Does Not Need Bailout"; Backdoor Bailout or Ponzi Scheme? More Questions Than Answers

Posted: 28 May 2012 10:54 AM PDT

In the wake of Bankia bailouts to the tune of €19 billion, the second bailout in two weeks, yields of Spanish debt are soaring.



Spread to German Bonds Hits 5.05 Percentage Points

At this rate I expect it will take less than a week before Prime Minister Mariano Rajoy changes his mind about not needing a bailout, but for now please consider another candidate for understatement of the month: Spain funding situation 'very difficult', PM Rajoy says
Spain's prime minister has said it is "very difficult" for the country to get funds.

The premium investors demanded for holding Spain's 10-year bonds over its German equivalent rose to a record 5.05 percentage points.

But Mr Rajoy said the banking system did not need an international bailout.

"There will not be any [European] rescue for the Spanish banking system," he said, but he backed calls for the European rescue fund to be able to lend to banks directly.

Last week Bankia, which was formed from the merger of several struggling regional lenders, requested a 19bn-euro bailout, which was a much bigger amount of help than had been expected.

"We took the bull by the horns because the alternative was collapse," said Prime Minister Mariano Rajoy, adding that Bankia customers' savings were now safer than ever.

Rather than borrowing money on the open markets, potentially at high cost, there are reports that Madrid is considering giving Bankia government bonds. The bank would then use them as collateral for loans from the European Central Bank.

One analyst said this would amount to "an ECB bailout through the back door".

Some are concerned that by doing this, the government is not tackling the problem of the huge amount of bad property loans, estimated at 32bn euros, that Bankia is holding.

"It is not dealing with the problem of bad loans, it is just keeping them going," said Kathleen Brooks, research director at Forex.com. "It risks becoming a zombie bank," she told BBC News.
Backdoor Bailout or Ponzi Scheme?

Is Rajoy's proposal a backdoor bailout or a Ponzi Scheme?

I proposed the latter yesterday morning in Spain's Plans to Recapitalize Bankia Will Put Germany, ECB at Risk; When Does the Ponzi Scheme Collapse?

More Questions Than Answers
 
One thing that will change Rajoy's tune in a hurry is if the ECB says no to the preposterous plan.

Then what?

What kind of interest rate can Spain get on the open market for bonds?

Doesn't the idea of recapitalization with junk bonds seem absurd enough in the first place?

I asked the key question yesterday: When does Germany say it has had enough of these preposterous schemes?

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


Is SEO the Answer for Start-up Marketing?

Is SEO the Answer for Start-up Marketing?


Is SEO the Answer for Start-up Marketing?

Posted: 27 May 2012 01:59 PM PDT

Posted by Benjamin Estes

Lately I’ve seen that a tight relationship between SEO and startups has been something of a foregone conclusion within the SEO industry: “Of course startups should be engaged in SEO!” Perhaps, and perhaps not. In fact, some start-up communities have taken up a stance in direct opposition to this, stigmatizing SEO as manipulative. Personally I’m just a humble consultant who has never started a company of his own, so I think it would be presumptuous of me to arbitrarily declare SEO a high priority for any start-up in any field.

If doing SEO isn’t a foregone conclusion, then, it bears further discussion as a marketing strategy. I want to approach this topic from a different angle. In any successful startup there will be someone with good business sense, someone who can look at the evidence in front of them and make their own decision about what is best for their company. So let me put some premises on the table about what SEO offers the start-up and why start-ups are uniquely positioned to leverage their position for SEO.

What SEO Offers

(Measurable) Audience Embiggening

The end goal of SEO is to increase the number of people arriving at your site through organic search results. There are also other metrics that are intermediate factors helping you accomplish this goal, such as your actual rankings in search results. These are things that you can measure, and report successes in increasing.

In addition, there are two different sets of keywords to look at when assessing the organic search channel—branded and non-branded terms. It's a powerful thing to demonstrate that your branded search traffic is increasing—it suggests that more people are looking for your brand online, which is a Good Thing.

On the other hand, the implications of receiving non-branded search traffic are numerous. Such traffic suggests that a site has increasing visibility for relevant search terms. If the start-up is defining new language, it suggests that users are picking up on that language. If it is increasing its share in an existing space, it suggests that the site may be cutting into the market share of competitors in organic search.

Reinforcement Of Extant Marketing Strategies

Optimization for SEO has the potential to enhance the effect of your other marketing strategies. If you are anticipating driving a lot of social interaction with your site, having your pages and URLs optimized for SEO will ensure that as people share your site you get the most value from that sharing. If you are link building through outreach and maintaining relationships with people in your industry, all of a sudden you have assets through which you can promote social content or editorial or anything else you might be up to.

Makes sense, right?

Why Startups Can Leverage Their Position

Agility

A startup—particularly at the outset of operation—has a great deal more flexibility than a more established competitor in the market. The obvious dichotomy here is between the large, established competitor and the start-up underdog. The start-up clearly has more agility than the established competitor, without a doubt. Consider:

But what about the 18-month old company compared to the 2-month old? If you don’t even have a website live, you’re even more flexible than an 18-month old company with a website up and an investment in a particular architecture or format or strategy for content publication. Oracle might be a giant awkward mess to manage from an SEO perspective, but even Dropbox by now has a more rigid infrastructure and user expectations and a great deal of variables which it must consider. Setting a course at the outset, which includes SEO will ensure that you are well positioned to be successful in organic search when you've achieved the same size and user base.

As part of overall SEO efforts all of the elements in the following (non-exhaustive) list might need to be manipulated:

  • Keyword targeting—which terms you have chosen to represent your products, content, and brand.
  • Site structure—how information on your website is structured and how you present that information to users. Are your products and pages properly differentiated?
  • Content strategy—what information are you going to publish on your site? None? All of it? Who will be responsible for this?

The earlier SEO can be integrated into the business model the better.

Novelty

A startup is bringing something new to the market, something with novelty (though hopefully it has some staying power as well).

In fact, novelty is what linkbait is all about. It’s something new and fresh and interesting—whether it is something explicitly new or a new take on something familiar. A new product, or a new face on an old product.

I mean, check out Y Combinator start-up Matterport. They’ve got a little Star Trek-style scanning device that makes 3D representations of any object or environment. This is some link-worthy content if ever I've seen some. We talk in SEO all the time about content marketing, which can be an expensive or confusing marketing route for a start-up. The thing is, in the early days, if you’ve got an interesting product that is your content. Ignore this at your own risk.

And again this matches up well with efforts you will be making on other fronts. If you've got a really interesting start-up idea, you'll almost certainly have been getting links on TechCrunch or Mashable. If you're minding your SEO on-site, you'll be getting the full benefit these novelty-based links can drive to your site.

Efficacy of Partial Implementation

Practicing SEO is a bit like practicing meditation—full enlightenment is an ongoing journey requiring a lifetime of work, but also a little bit will go a long way. It may be impractical for your business to drop $10,000-$20,000 on a link bait campaign or plan a content strategy that reaches six months out. But if you could manage to do a quick technical audit of your site, even doing that will get you one step closer to success. SEO isn't an all-or-nothing proposition. It is fully capable of scaling with your company.

Next Steps

I think it goes without saying that I think the above premises suggest that SEO is really something that start-ups ought to be engaged in. If you have come to a similar conclusion, I suggest reading this longer essay on the merits of SEO for start-ups. If after that you’re feeling game, checking out the following resources:

These reflect a higher-level look at the problem of SEO in the startup context. Then try to take some first steps, such as:

  • Running through a technical audit checklist for your site, whether it is already live or pending publication.
  • Reading (or having someone on your team read) the SEOmoz Beginner’s Guide to SEO.
  • Benchmarking your current position if your site is live. Which terms are you ranking for, or just tracking words for which you would like to rank. SEOmoz's Pro Campaigns are a great way to get started doing this.
  • Keyword Research—what are your competitors trying to rank for? Have a go with the Google Keyword Tool and see what terms it suggests are related to those you think might be valuable.
  • Get your first ten links. There are a huge number of tactics available to you—this blog itself has an entire category dedicated to link building.

Thanks for reading, and good luck in your entrepreneurial endeavors! Reach me in the comments below or on Twitter.


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Seth's Blog : Thriving in a wet environment

Thriving in a wet environment

If you've ever fixed any kind of machinery, you know that a device that's exposed to the elements is incredibly difficult to maintain. A washing machine or the underside of a car gets grungy, fast.

On the other hand, the dryest, cleanest environment of all is the digital one. Code stays code. If it works today, it's probably going to work tomorrow.

The wettest, weirdest environment is human interaction. Whatever we build gets misunderstood, corroded and chronic, and it happens quickly and in unpredictable ways. That's one reason why the web is so fascinating--it's a collision between the analytic world of code and wet world of people.

No software design survives a collision with the user.



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duminică, 27 mai 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Spain's Plans to Recapitalize Bankia Will Put Germany, ECB at Risk; When Does the Ponzi Scheme Collapse?

Posted: 27 May 2012 08:17 PM PDT

Inquiring minds are interested in the recapitalization plans for the Bankia. Please consider this chain of posts.

ABC News reports Spain's Bankia set for massive bailout.
Spain's fourth-biggest bank Bankia says it is certain of securing the 19 billion euros ($24 billion) in state aid it is seeking in the largest bank bailout in the country's history.

Bankia is considered key to the country's financial system, and a failure would contaminate the entire banking sector.

The plight of Bankia - which holds some 10 per cent of the nation's bank deposits - has added to the concerns over the massive debt crisis gripping Spain and the rest of the eurozone.

Bankia president Jose Ignacio Goirigolzarri has sought to reassure investors and the public about the future of the struggling bank at a press conference called the day after it announced huge losses, and asked for a government rescue.

"I am certain that the Spanish state will obtain the financing so we will receive the 19 billion euros. That's the commitment," said Mr Goirigolzarri, adding that he expected to get the funds in July.
Devil in the Details

Inquiring minds just may be asking "Just where is this money coming from?" That's a good question.

Reuters reports Spain may recapitalize Bankia with government debt.
Spain may recapitalize Bankia with Spanish government bonds in return for shares in the bank which last week asked for rescue funding of 19 billion euros ($24 billion), a government source said on Sunday.

Bankia could use the sovereign paper as collateral to get cash from the European Central Bank, forcing the ECB to get involved with restructuring Spain's banking sector, laid low by lending to property developers in a boom that ended in 2008.

ECB policymakers, who have pumped over 1 trillion euros into Europe's financial system in recent months, are resisting pressure to do more to shore up the euro zone.

"The biggest problem here is that the ECB could object. That's a legal issue, but technically it is possible," said Jose Carlos Diez, economist at Intermoney Valores.
Ponzi Financing

Got That? A Spanish government source says the plan is float what amounts to junk bonds, pawn them off to the ECB and use the proceeds to "recapitalize" Bankia.

Of course the ECB (bankrolled by Germany) is at enormous risk were this preposterous scheme to actually happen.

This is what I want to know: When does Germany say it has had enough of these preposterous schemes?

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


Greece Public Finances Face Collapse as Money Stuffed in Mattresses; Swiss Eye Capital Controls as Money Pours into Switzerland; Understatement of the Month

Posted: 27 May 2012 02:56 PM PDT

Lucas Papademos, the ex-technocrat prime minister of Greece says public finances face collapse.
Greece's public finances could collapse as early as next month, leaving salaries and pensions unpaid unless a stable government emerges from the June 17 election, according to Lucas Papademos, the technocrat prime minister who left office after this month's inconclusive vote.

Mr Papademos warned that conditions were deteriorating faster than expected with cash flow likely to turn negative in early June amid a sharp fall in tax revenues and a loosening of spending controls during two back-to-back election campaigns.

Mounting anxiety that Greece is headed for further political instability and a possible exit from the euro has prompted many Greeks to postpone making tax payments, and has also accelerated outflows of deposits from local banks.

Athens bankers estimate that more than €3bn of cash withdrawn since the May 6 election has been stashed in safe-deposit boxes and under mattresses in case the country is forced to readopt the drachma.

The finance ministry has halted repayment of value-added tax to Greek exporters, and slashed public investment spending by more than 20 per cent in the first four months.

Transfers to the health ministry to pay debts owed to hospital suppliers and pharmacies have been temporarily suspended, obliging patients to pay the full cost of prescription drugs for the first time.

The struggling state electricity utility PPC has received a €250m special payment from the budget to help cover a widening deficit. The utility has been hit by a sharp rise in non-payments of household electricity bills after the finance ministry imposed an extra "solidarity tax" last year that was added to the bills.
Understatement of the Month

"The situation is getting out of hand," said a private sector economist. Really? It seems to me things got out of hand long ago.

Swiss Eye Capital Controls as Money Pours into Switzerland

While some stuff money in mattresses, others pour money into Swiss Francs. In response Swiss eye capital controls.
The Swiss National Bank is considering imposing capital controls on foreign deposits if Greece leaves the euro, as the franc comes under heavy demand from investors seeking a haven in Europe.

The Swiss franc has come under increasing pressure since the Greek elections at the start of the month. Currency traders have reported unusually high levels of franc buying in response to the problems in the eurozone, which has seen the euro slide to its lowest level in nearly two years.

"We're preparing ourselves for turbulent times," Mr Thomas Jordan [head of the Swiss central bank] said in an interview with SonntagsZeitung, a Swiss newspaper.

"The situation has become worse in the past few weeks and the outlook has become much more uncertain. We're seeing a clear upward pressure on the franc," he told the newspaper. "Investors are looking for a safe haven. For many, that includes the franc."
I have said this before numerous times but it is worth repeating: If you have money in Greek, Spanish, or Portuguese banks, get it out now.

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


April New Home Sales: The Hype vs. The Reality

Posted: 27 May 2012 07:51 AM PDT

Check out some of the headlines a few day ago following new home sales reports.

Detroit Free Press: April new-home sales increase 3.3%, pointing to recovery

"Americans bought more new homes last month, the latest evidence that the U.S. housing market could be starting to recover."

Fox Business News: US New-Home Sales Up 3.3% In April; Prices Rise In March

"Sales of newly built homes in the U.S. grew faster than expected in April and home prices posted a solid gain the prior month, adding to the increasing momentum for the long-struggling sector."

New York Times: New-Home Sales Climbed in April, Building Optimism

"The spring home-selling season got off to a strong start in April, the Commerce Department said Wednesday, with rising sales and prices providing evidence that a housing market recovery was gaining some traction."

San Francisco Chronicle: New-home sales rise in April

"Americans bought more new homes last month, the latest evidence that the U.S. housing market could be starting to recover."

The Hype vs. The Reality

After all that hype, let's take a look at the reality. To eliminate seasonal fluctuations, the best comparison is the current month vs. the same month in previous years.

Here is a chart from reader Tim Wallace that shows what I mean.



click on chart for sharper image

Being the ever-optimist, I happen to believe that home sales are in a bottoming process. However, a bottoming process and a "recovery" are not the same thing. A claim that a recovery is underway needs to be backed up with facts, not hype.

There is little evidence of a recovery.

We have heard similar recovery stories (all false), dozens if not hundreds of times. All were based on wishful thinking, gimmicks, temporary fluctuations, and shoddy reporting similar to what you see above.

Supposedly the "recovery gains traction". Pray tell what "recovery" is that?

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


Seth's Blog : Emergency room doctors

Emergency room doctors

It's a mindset, not just a job.

You can pitch them as hard as you like about having them work to persuade their patients to give up smoking (after all, it saves lives in the long run), but I think you'll find that they're a lot more interested in stopping the bleeding.

We need emergency room doctors, no doubt. I just wonder if we have too many of them in your organization. If all we do is reward fast first aid in what people do at work, is it any wonder we don't have enough attention to the strategy and choices that would eliminate the need for all that running around in the first place?

It helps to know how prevalent the "emergency room" culture is before you start training your people on a new long-term strategy.



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