vineri, 6 februarie 2015

Damn Cool Pics

Damn Cool Pics


A Look Inside The World's Most Destructive Sinkholes

Posted: 06 Feb 2015 11:17 AM PST

The craziest thing about sinkholes is that they can happen at any time in any place. Where will you be when a sinkhole strikes?


















These Chuck Norris Facts Might Change Your Life

Posted: 06 Feb 2015 09:50 AM PST

The more you know about Chuck Norris the better.

















This Couple Had The Coolest Star Wars Wedding Ever

Posted: 06 Feb 2015 08:40 AM PST

Jennifer and Joshua wanted to do something special for their wedding day. They wanted to have a Star Wars themed wedding. This idea could have easily been a disaster but they managed to have what looks like the coolest Star Wars themed wedding of all time. The ceremony came complete with Stormtrooper excorts and a Darth Vader father/daughter dance.
















Subdomains vs. Subfolders, Rel Canonical vs. 301, and How to Structure Links for SEO - Whiteboard Friday - Moz Blog

Subdomains vs. Subfolders, Rel Canonical vs. 301, and How to Structure Links for SEO - Whiteboard Friday - Moz Blog
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Subdomains vs. Subfolders, Rel Canonical vs. 301, and How to Structure Links for SEO - Whiteboard Friday

Posted on: Friday 06 February 2015 — 01:18

Posted by randfish

There are some basic questions about SEO that come up really frequently, and it's often easy to assume an answer that isn't exactly right. In today's Whiteboard Friday, Rand tackles three of them:

  1. Should I put subsections of my site on subdomains or in subfolders?
  2. Should I use a rel canonical or a 301 redirect to move content on a separate site over to my main domain?
  3. If I have multiple websites all linking back to my main site, does that help or hurt my SEO?

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

Subdomain vs Subfolders

Video transcription

Howdy, Moz fans, and welcome to another edition of Whiteboard Friday. This week we're going to chat about structuring content, placing content, and placing links, specifically with regards to some things that have come up over and over again in the SEO world, but still seem to be a challenge for many of us who play in the field.

One of the questions that I'm going to start with is around subdomains and subfolders, because this just comes up again and again and again. I think one of the reasons it's emerged in the last few years is, unfortunately, some statements by Googlers themselves -- a statement a few years ago from Matt Cutts, and one, I think last year or two years ago, from John Mueller basically saying, "Hey, Google has gotten much better at identifying and associating content that's on a subdomain with the main domain, and you don't need to worry about placing content on two separate subdomains anymore."

I am sure that Google has actually made strides in this area, but this question still has the same answer that it did years ago. I'll show you some examples.

You're asking, "Should I put my content on a subdomain, or should I put it in a subfolder?" Subdomains can be kind of interesting sometimes because there's a lot less technical hurdles a lot of the time. You don't need to get your engineering staff or development staff involved in putting those on there. From a technical operations perspective, some things might be easier, but from an SEO perspective this can be very dangerous. I'll show you what I mean.

So let's say you've got blog.yoursite.com or you've got www.yoursite.com/blog. Now engines may indeed consider content that's on this separate subdomain to be the same as the content that's on here, and so all of the links, all of the user and usage data signals, all of the ranking signals as an entirety that point here may benefit this site as well as benefiting this subdomain. The keyword there is "may."

I can't tell you how many times we've seen and we've actually tested ourselves by first putting content on a subdomain and then moving it back over to the main domain with Moz. We've done that three times over that past two years. Each time we've seen a considerable boost in rankings and in search traffic, both long tail and head of the demand curve to these, and we're not alone. Many others have seen it, particularly in the startup world, where it's very popular to put blog.yourwebsite.com, and then eventually people move it over to a subfolder, and they see ranking benefits.

But even more telling was a recent example from just a few months ago on the iwantmyname blog. Timo Reitnauer wrote on the iwantmyname blog a piece about how he had moved their content actually from the main domain to a subdomain, which is not usually the way we see things going. But, man, when that happened, ugly, super, super ugly. You can see his traffic graph. He graphed his Google search traffic and showed, from his Google Analytics, a nice snapshot of when they made the move, what happened to their search traffic, how long it took to recover. It actually still hasn't recovered. It's been five or six months now. So very, very frustrating for them, and they're going to move it back over. I think maybe they already have moved it back over.

But this was great in that this piece went to the front of Hacker News. Lots of folks from around the startup and technology worlds commented on it, shared their experiences and opinions as well.

Bottom line is it's really dangerous to put content on a subdomain still. I believe John and I believe Matt when they say that Google has made strides in this direction. The problem is they're not good enough or perfect enough to rely on that factor, and so I'd really urge everyone to keep your content on one single sub and root domain, preferably in subfolders. That's how you're going to maximize your potential SEO benefit. This is one of those technical SEO things that just hasn't changed for many years now.

Next up, a question around rel=canonical, and 301s, especially cross-domain rel=canonical, meaning people are pretty comfortable with the rel=canonical that sits on your own website on your pages and maybe says, "Hey, the print version of this page should actually be considered the same as the web version of this page. Or the mobile version of this page should be considered the same as the regular version." That's fine.

But folks have more questions when it comes to cross-domain rel=canonicals and content that perhaps they own because they own multiple websites, or they have licensing agreements across those, or they have business development or partnerships, those kind of things. So they're wondering, "Hey, I've got content on multiple websites, and I want to move some of that content, or I want engines to interpret it all as coming from my site. Should I put it on the other website and use a 301 to redirect it, or should I use a cross-domain rel=canonical to say the old page is now the new page?"

Well, actually this is one where, from a technical perspective, the engines are doing a pretty darn solid job. Google is doing a very good job. We've seen Bing make strides here with cross-domain rel=canonical. They seem to be doing a pretty good job as well. I haven't tested them as intensely though recently.

Basic story is with the 301, other site.com/a can redirect to your site.com/a, and both visitors and engines, anyone requesting the old page, get the new page. The only difference with the rel=canonical is that when a visitor requests the old page, they're still going to get it. They're still going to get that othersite.com/b. Search engines, however, are going to get the new version of the page, or they're essentially going to consider these to be one and the same.

What we've seen is that, in both of these cases, the ranking signals seem to be passed very similarly, if not perfectly similarly, very similarly. It's hard to detect any difference there. But the rel=canonical can give you an option whereby you say, "Hey, I want to maintain the branding or some unique aspect of something that happens around othersite.com, and so I wish that I could have visitors be able to still go to that page, but have search engines know, hey this is actually just a copied version of this one, and if you're going to rank one of these two, I'd prefer you to rank this one."

That's a great use for the cross-domain rel=canonical. But this is much more a user experience and a branding experience issue than it is a technical SEO one, because both of these work pretty darn well.

Then the last issue I'll cover today are around some of this content and link optimization stuff is: What if you've got multiple websites all linking back to your main site, and you're wondering does that or would that help my SEO? I can't tell you how many folks, surprisingly even folks who are very savvy, who have done lots of other stuff in the technical and web development worlds, are thinking about this from a SEO perspective.

I can understand where it comes from. Basically, you have this understanding that more links is a good thing and that more link diversity is a good thing. So you think to yourself, "Hey, maybe I can capture more links and more link diversity by having more slightly different websites. I want to keep my main site all about one particular topic or one particular niche of that topic, and I want to have these other niche sites that maybe I have some great domain names in my portfolio or some really brandable ones. Maybe I've picked up some old domain names that I've bought, or I've bought entire properties outright. So what I'm going to do is I'm just going to add a site-wide link or many links from these pages all back over to my main site."

What you're hoping is that this will amplify your ranking signals and amplify your opportunity. The opposite is true. In fact, what's happening is you're creating a barrier for the full link equity for brand, user and usage data signals, and any potential social signals. You're creating a barrier that's stopping some of those things from passing fully here.

Let's just imagine that you've got four links over here, and they are all pointing to mysubsite1.com, which you're then thinking, "That's great. That's exactly what I wanted to have happen, and now mysubsite1 is pointing to my main site." You're actually losing most of the link equity, the value, the ranking power that would be passed if only two or three of these links had linked directly over to your main site.

As we talked about with the subdomain/subfolder issue, by collecting all of the ranking signals on one sub and root domain, you create the best possible benefit. This concept of domain authority -- I don't necessarily mean the number in Moz's Mozscape Index -- the concept of domain authority is that basically as a domain becomes more popular, as it inherits all of these ranking signals, could come from links, from visibility, from branding, user and usage data, all the kinds of signals that a domain inherits, it passes those on to all of its different pages. But it doesn't pass them on to other sites.

That's true for each of these as well. They're inheriting signals that they're not fully passing on here. I'd recommend that you 301 redirect all of these and have one main site. It simplifies a bunch of your work and streamlines it. It lets you focus on building this one brand. Branding is so powerful today and online visibility as a whole, not to mention SEO, that this is really a best practice.

I would get rid of those subsites as best you can. There are still reasons sometimes to have a microsite or a different website for branding purposes, or if you're going to sell that site separately, or if it's a completely different team working on it. But from an SEO perspective, everything on one sub and root is really ideal.

All right everyone, look forward to the comments, and we will see you again next week for another edition of Whiteboard Friday. Take care.

Video transcription by Speechpad.com


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Enhanced Reporting Now Available in Moz Local

Posted on: Thursday 05 February 2015 — 12:30

Posted by David-Mihm

As we approach Moz Local's first birthday—just over six weeks away—I'm excited to share with you our second major feature release since launch!

For those of you who are already managing your local search listings through Moz Local, this feature is available as of today for all accounts. For those of you who aren't yet customers, we hope this release provides a few more reasons to sign up (if you're curious to see what it looks like, you can check your local listing for free).

Read on for more detailed information about what we're releasing and why we're so excited about these new features.

local listing reach over time

New Dashboard Metrics

Listing Reach

Obviously local search is an incredibly complex discipline, and one of the hardest things for non-experts to understand (most of your clients and bosses, I'm guessing?) is the dramatic impact that the primary aggregators can have on the health and visibility of your listings. We hope that this metric helps explain the value of the data aggregators via Moz Local.

Listing Reach is our indirect representation of how far the data aggregators have spread your listings across the local ecosystem, based on the number of results returned for exact-match searches of your NAP. For more information about this metric, head on over to our Help Hub.

Percentage accuracy on each site in the Moz Local network

local listing accuracy by partner

While these metrics have always been available at the individual location level (and will continue to be), you can now view them right from your dashboard, and across multiple locations at a time.

New Reporting Features

Metrics across multiple listings

local listing accuracy

Percentage accuracy is not the only metric that's available across multiple listings; average score and aggregate listing reach are also enabled by default for whatever locations are in view on your dashboard.

Labeling of listings

If you're managing multiple clients, or work at a large brand with multiple locations, though, you probably want to pick and choose the ones whose metrics you want to roll-up. You can now add labels to each listing that you manage, for easy slicing and dicing.

sorting and labeling local listings

Our labels work similarly to Gmail, which we hope will make them intuitive to use. Once you add one or more labels, they'll start to appear as presets within your sidebar. Naming conventions are totally flexible, so you can segment your locations however you'd like.

You're just one click away from a roll-up report for all locations with a given label.

Enhanced search operators

To make the job of labeling locations easier for you, we've also added some additional search operators to make your lives easier. The full list of supported operators is below:

  • label
  • store
  • name
  • phone
  • street
  • unit
  • state
  • zip
  • url

You can use these operators to pull up instantly any location you're managing (and of course, view metrics for that specific listing).

Metrics over time

Two metrics are also now visible over time: average score and aggregate listing reach. One of the primary requests we've heard from agency owners and practitioners over the last several months is the need to demonstrate the value of your efforts to your clients, and we hope that graphs like the one below will help you do just that.

average listing score for local

In September 2014, you may notice a stairstep in the shaded area at the bottom of the report, and a corresponding dip in the line graph above.

The shaded area represents total locations under management in a given month. Our goal in showing your metrics over time in the context of the number of managed locations is to explain anomalies in the graph like the dip above. In my specific case, I added a mortgage broker friend's location in September who was just getting started with his Local SEO campaign—meaning his Listing Score was literally 0 prior to starting with Moz Local.

Those of you who phase in clients over time will likely see similar anomalies in your line graphs, so we hope that this representation helps prevent unnecessary panicking :).

Upcoming Enhancements

We're definitely not stopping here.

Later this spring, we'll be rolling out the ability to export metrics from your dashboard for use in your own Excel reports, a PDF report generation feature, and a more streamlined Foursquare validation process, among other improvements. We're growing our engineering team rapidly and will release these as soon as we can!

Check It Out for Yourself

As I said in the intro, this feature is available for all existing customers today, so just head on over to your dashboard. And if you're not yet a customer, we hope you soon will be.

Along with yours truly, fellow Mozzers from our product, engineering and account teams will be available for demos throughout the day on Saturday at #LocalUp, so don't be a stranger. We're looking forward to speaking with many of you in Seattle!


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Seth's Blog : The DoSomething lessons

The DoSomething lessons

DoSomething is a stellar success, a fast-growing non-profit that's engaging with millions of young people around the world. Most organizations can learn something from their recent experiences. Basically, their customers changed. They changed how they consumed media, how they connected with each other and how they acted. If it is happening among teenagers now, it will happen to your audience soon.

Here's some of what they chose to do:

1. In a short-attention span, long-tail world, wide might be better than deep. In a typical year, DoSomething would launch 30 projects for their millions of members to take action on. Each project was refined and designed for maximum engagement. Last year, they rethought their process and launched SEVEN TIMES as many projects--more than 200. With the same staff. 

2. Being present in the moment is a great way to engage with people who live in the moment (teenagers). Because they can invent and launch a project in days instead of weeks or months, it's way more likely that a project will be relevant. More important, they now live almost exclusively in texts, the most urgent permission medium of all.

3. In a short-attention span world, sometimes you have to go deep, especially when it's personal. DoSomething has invested a huge amount of effort and money into building a crisis hotline that works by SMS. The data they've compiled is stunning, but the lives they've saved tell the real story.

4. Change shouldn't be made for change's sake. Change should happen because you care enough to make a difference. 

Most organizations go too slow, study things too much and most of all, work to not matter too much, because mattering is a good way to get noticed and getting noticed might get you in trouble. The upside of working in a fast-changing world is that you regularly get a new chance to reshuffle the deck and start mattering. Here's their new book on a workplace culture that embraces this new posture.

The work non-profits do is too important to be afraid of failure, and their work is too urgent to honor every sacred cow. The same thing might be said for the work each of us do.

       

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joi, 5 februarie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Head-Banging Revisited; Obama’s 'Have-It-All' Budget; Mish Proposal

Posted: 05 Feb 2015 06:14 PM PST

Dead on Arrival

On Sunday, in More Obama Dead-on-Arrival Tax Proposals, a post regarding Obama's proposed corporate tax hikes, I asked a simple question ...

Is there a point to beating your head against a concrete wall? The answer would seem to be "no", yet President Obama continues to do just that with dead-on-arrival proposals. .... If he's attempting to pound some sense into his head, it's clearly not working.

Republican Head Banging

Now it's the Republican's turn at head-banging.


From the Washington Examiner: "The debate sounded like it usually does — with Democrats hammering Republicans trying to strip away the law's insurance subsidies and other benefits, and Republicans contending that the law remains unpopular among the public and has raised insurance costs for some people or cost them hours of employment."

What's the Point?

Obama will veto the legislation, assuming the Senate does not kill it first. That begs the question: Is there a point?

In Praise of Head-Banging

I see the error in my ways. There is a point to it, although it certainly will not pound sense into anyone's head.

In contrast to typical Washington compromise non-solutions, head-banging seldom does much harm. In fact, head-banging provides entertainment value.

In comparison, history suggests legislation nearly always makes matters worse. And it has for decades.

Obama's 'Have-It-All' Budget

What worries me now is this: $4 Trillion Budget Replaces 'Mindless Austerity'.

Politico explains further in Barack Obama's 'Have-It-All' Budget.
President Barack Obama released a $4 trillion budget Monday designed to convince Americans that they can have it all: more tax breaks for the middle class, more spending on government programs, and just enough cuts and tax hikes to keep the nation's deficits under control.

To pay for it, Obama proposed raising a number of taxes on wealthy taxpayers or businesses — some of them already dismissed as nonstarters by the Republican Congress. They include fees on big banks and taxes on companies that do business overseas — plus spending cuts on health programs and other savings — to cover the costs of all the new initiatives.

The budget calls for $1.091 trillion in discretionary spending for fiscal year 2016, $74 billion above the "sequestration" spending caps that Obama wants to eliminate. The additional spending — $38 billion for defense, $37 billion for domestic programs — would produce a $474 billion deficit for next year.
Obama Threatens to Veto Any Bill That Does Not Increase the Budged

A Washington Post article is even more scary: Obama may have new leverage with his $4 trillion budget.
Obama warned that he will veto spending bills that do not do away with the sharp automatic budget cuts, known as "sequestration," also adopted as part of that deal.

"I am not going to accept a budget that locks in sequestration going forward," Obama said in an appearance at the Department of Homeland Security's National Operations Center.
"More Spending" Compromise

Obama will not accept budget cuts and Republicans will not accept tax hikes.

The compromise solution is the same as it's always been: Republicans will get more defense spending and the Democrats will get more social spending.

Neither side is willing to address the real problem: Both social spending and military spending is out of control.

The fake deficit-hawk Republicans will cave in, as they always do. A head-banging result where nothing at all happened would be a better result.

Mish Proposal

I would readily make concessions if I got something significant in return. Here's my bargaining list.

  1. End collective bargaining of public unions
  2. Pass national right-to-work legislation
  3. Scrap prevailing wage laws
  4. Allow states and municipalities to go bankrupt
  5. End all tariffs and subsidies

My proposals would start a genuine recovery enabling cities and states to shed debt obligations in bankruptcy while lowering costs for much needed infrastructure improvements.

President Obama says he is willing to make some "tough choices". Republicans never present him with any. Instead, both parties just spend more and more without fixing any fundamental problems. 

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

Ukraine Floats the Hryvnia: It Sinks, As Expected, Down 45% Today; Carpetbaggers Take Over

Posted: 05 Feb 2015 01:25 PM PST

On February 3, I posted a chart of the "official" exchange rate at 16.24 hryvnias to one US dollar. In reality, the true exchange rate on the black market was on the order of 21.5 hryvnias to the dollar.

See Black Market in Ukrainian Currency Masks True Extent of Decline; Banks Impose 30% Foreign Exchange Fee; Freely Floating Hryvnia Announced.

Rumor had it that Ukraine would float the currency today. That rumor was correct as was my call as to what would happen. This is what I said on February 3:
How Low Will It Go?

From 8 [a valuation just over a year ago] to 21.5 represents a 62.7% decline. And I suspect it won't stop there. Why should it?

A plunge from 8 to 30 would be a 73% decline in just over a year. And that's my initial guess barring some quick monetary rescue by the IMF.

If and when the Ukrainian National Bank does float the currency, other sites will note the "shocking overnight" plunge.

In reality, the plunge has already taken place, over time. The charts just don't show that yet.

Hryvnia One Day Price Action



Chart courtesy of Bloomberg. Click on chart for sharper image.

The decline shown today is 45.13%, but as stated above, that decline really occurred over time, as measured by the black market.

What are those intraday gyrations are all about? I strongly suspect intervention to prevent an even bigger plunge. If so, another collapse is coming up.

In the last year the Hryvnia sunk from 8.29 to the dollar to 24.35 to the dollar. That's a decline of 66%, not far off my 73% projection.

It will get there, and probably more unless the IMF steps in very soon.

Ukraine Floats Currency, It Sinks

Bloomberg reports Ukraine Floats Currency, It Sinks.
In recent months, Ukraine was probably pursuing the most clueless exchange rate policy in Europe. In the run-up to the October parliamentary election, President Petro Poroshenko used his good relationship with National Bank governor Valeria Gontareva to persuade her to keep the exchange rate below 13 hryvnias to the U.S. dollar. In late September, banks were ordered not to sell more than 3,000 hryvnias' worth of foreign currency per day to their customers. At the same time, the National Bank started holding special auctions in which it sold $3 million per day to banks to set a so-called "indicative rate" that they were supposed to follow in transactions with clients.

After the election, even that artificial rate dropped quickly, moving to 16 hryvnias per dollar in a matter of days. The banks, however, only displayed that rate at exchange offices, where citizens could barely buy any foreign currency anyway. Among themselves, they traded at rates that were about 20 percent higher than the official one. For ordinary Ukrainians, there was also a lively black market, where rates were closer to the interbank ones than to the official benchmark.

Today, Gontareva announced the end of indicative auctions, allowing the banks to move to a single, market-determined rate. The result was a collapse of the hryvnia's value.

At a press conference today, Gontareva vehemently denied that she had agreed to an exchange rate of 25 hryvnias to the dollar with the IMF. "It's not even being considered," she said. But at the time of this writing the hryvnia was trading at 24.85 to the dollar.

The National Bank's decision to float the hryvnia will hardly change anything for citizens or businesses -- they just won't have a useless official exchange rate to laugh at. Ukraine saw 25 percent inflation last year; this year, prices will keep rising at a fast clip.

Today, the National Bank said its international reserves had shrunk to $6.4 billion at end of January.

The Ukrainian financial authorities' blundering has worsened the country's already desperate economic situation. The IMF is effectively setting Ukraine's policy now, because it is the country's only reliable source of foreign currency. It needs to focus on preventing Ukrainian politicians from making stupid self-serving decisions like the ones that caused the hryvnia debacle and spawned the black market. The Russian-instigated war in the east is not Ukraine's only problem: When it inevitably ends, bureaucratic incompetence, plaguing the country's transition to a modern economy, will remain behind.
Carpetbaggers Take Over

The last paragraph above says it all. The only thing I disagree with is the reference to the "Russian-instigated" war.

Make no mistake, this was a "US-instigated" war. Russia merely stepped into it, in support of separatists.

The IMF Carpetbaggers have arrived. Total destruction of the country is at hand.

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

Playground Bully Theory vs. Eurozone Gang Rules; The Only (and Ironic) Solution

Posted: 05 Feb 2015 10:50 AM PST

Playground bullies pick on the weak and the feeble. Extortion (lunch money, allowances,  etc.) are common means of avoidance.

But feeding the bully never does any good. It's only when the bullied party takes action (a punch in the nose qualifies but so might complaining to the principal),  does resolution of the problem occur.

It's much harder on a bully facing a gang. Punching a gang leader in the nose could get you killed.

A frequent and unfortunate happening in inner city schools is for the bullied person to seek relief by joining the gang.

I am not talking about Chicago, Detroit, or LA inner-city schools. I am talking about Germany, the ECB, and the gang of 17 vs. Greece.

Who's the Bully?

In the following discussion, some might object to my posing Germany as the bully. They will claim Greece did this on its own.

The reality is both sides are guilty.  Germany knew (or should have known) that Greece was a bad risk.

There is a price to be paid for making bad loans. That price is inevitable default.  When you insist you do not have to pay a reasonable price for mistakes you made or insist that debt be paid back when it can't, you become a bully.

Keeping the Gang In Line

A few days ago I saw this report Eurogroup leaves door open for Syriza to partially renegotiate.

On February 2, the EU Observer reported France, US Support Greece in Debt Battle.

That bit of hope did not last long. Yesterday, French President Francois Hollande warned Greek Prime Minister Alexis Tsipras that "respecting the rules is necessary for all, for France too, and it's not always easy."

Also yesterday, The Financial Times reported Spain Keeps Hawkish Eye on Greece as Southern Solidarity Crumbles.

Gang Solidarity Reached

What happened to the token gestures towards Greece?

Gang leader Germany squashed every overture towards Greece, no matter how slight. Then, having reached solidarity against the outcast, the Mob Enforcer (affectionately known as the ECB) threw down the gauntlet.

For a description of the enforcement process, please see ECB Revokes Greek Bonds as Collateral; ECB vs. Novices; Brass Knuckles.

When it comes to playground bullies there are five possible resolutions.

Five Outcomes

  1. The bullies have a sudden change of heart and voluntarily stop their bullying.
  2. The bullied party perpetually pays the bully's demands. 
  3. The bullied party joins the gang on the gang's terms.
  4. The bullies and the bullied agree to a truce on terms favorable to the bully.
  5. The bullied party finally decides it has had enough.

Those are no other choices.

In practice, number one does not happen until everything else has failed a number of times.

On the playground, choices number 2 or 3 most often win. Choice number 4 goes something like this: "Give me another candy bar and I will be your friend." If the bullied party pays up, The bully soon demands an extra candy bar a week.

Admission of Obvious Truth

The first step in solving a problem is to admit you have one.

In a interview yesterday on Zeit Online, Greek finance minister Yanis Varoufakis admitted the obvious truth: "I'm the Finance Minister of a Bankrupt Country".

It took an amazing amount of time to admit the obvious truth, but the important point is the truth is finally on the table.

Effectively, Greece finally admitted that it has no more funds to pay the bully. That's an important step, and it precludes option number 2, perpetual payment to the bully. It also precludes option number 3 because properly joining the gang requires payment owed to the gang, and Greece does not have those funds. It is bankrupt.

Option 4 is the can-kicking exercise everyone hopes for.

However, Greek Prime Minister Alexis Tsipras and his finance minister Yanis Varoufakis have ruled that out. They do not want a can-kicking truce that does not properly take into consideration one simple fact: Greece is bankrupt.

If Greece is truly serious, there's nothing left but option 5: The bullied party finally decides it has had enough.

Does Option 5 Mean Grexit?

I have been thinking about option 5 quite a bit. What if Greece defaults, but claims it will stay on the euro? Who is going to kick them out of the eurozone gang?

Eurozone Gang Rules

Rules of the eurozone gang are such that once in the gang, no one can kick you out. No one can stop you from leaving, but there is no means to kick someone out.

The ECB can shut off all funding, but as long as Greece maintains a primary account surplus (current account surplus excluding debt service), what is the ECB to do?

Greece does have a primary account surplus (tax receipts are sufficient to pay the bills excluding  debt payments), but if Syriza honors its election promises, that surplus would instantly melt.

Only Solution

A default with the intention of keeping the euro is the only solution, assuming Syriza is truly serious about wanting to stay on the euro.

It will not be easy, but it appears feasible.

Greece would need to institute all kinds of reforms immediately. Syriza would also have to abandon many left-wing proposals and Greece would likely have to agree to pay back the ECB and the IMF in full.

In regards to the bulk of the debt owed, Greece could then ask for and eventually get the debt restructuring conference it wants. The payoff for my proposal would be spectacular.

Spectacular Payoff

  1. Extend-and-pretend solutions for many countries would die on the spot, a much needed event.
  2. Syriza would have to abandon numerous and unrealistic socialist goals.
  3. Unburdened by debt payments, Greece GDP would rise.
  4. Greece could stay on the euro as long as it maintained a primary account surplus.
  5. Hyperinflation would not rear its ugly head as it might if Greece returned to the drachma.
  6. Greek productivity would soar.
  7. Costs would fall and the world would see price-deflation as a good thing, not bad.
  8. Central banks would learn a huge (and badly needed) lesson about sponsoring a proliferation of debt, hoping to meet counterproductive inflation targets.

Ironically, Greece would become more like Germany! Isn't that what everyone claims to want?

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