The artist says, "that sounds like business, and I want nothing to do with it. It will corrupt me and make me think small."
The businessperson says, "art is frightening, unpredictable and won't pay."
Because the artist fears business, she hesitates to think as big as she could, to imagine the impact she might be able to make, to envision the leverage that's available to her.
And because the businessperson fears art, she holds back, looks for a map, follows the existing path and works hard to fit in, never understanding just how vivid her new ideas might be and how powerful her art could make her.
There's often a route, a way to combine the original, human and connected work you want to do with a market-based solution that will enable it to scale. Once you see it, it's easier to call your bluff and make what you're capable of.
Inquiring minds are watching Australian economist Steve Keen correctly debunk Paul Krugman in an interview with Lauren Lyster on Capital Account. Unfortunately, Keen's solution to the debt crisis leaves a lot to be desired.
Position of Keen
"Debt does not just matter at zero-bound conditions, debt matters all the time. The change in debt adds to demand. ... It could take 15 years of deleveraging before it's all over. That's why Krugman is wrong. You can't just cure this with deficit spending, you have to abolish the private debt as well."
So far so good. However, I strongly disagree with Keen's proposal of a "private debt-jubilee" which he defines a quantitative easing for the public.
Essentially Keen wants to print money and give it to the public on the provision they must pay down debt first.
Debt Jubilee Nonsense
Suppose everyone is given a "debt-jubilee". What is to stop consumers from immediately going back into insane levels of debt? More regulation? Government controlled printing presses? Academic formulas from all-knowing economists?
Please! Stop already.
Inflation Genie
I am in general agreement with Keen on numerous things.
For example, I agree 100% with Keen that lending comes first and reserves later. I also agree with Keen that the notion of excess reserves is fatally flawed, and so is the notion of money multipliers.
I scoff, along with Keen, with the idea that excess reserves are going to come pouring back into the economy causing hyperinflation or massive inflation.
The idea was silly then and it is still silly now. I believe events have proven as such.
However, start giving money away as Keen proposes and I would change my tune about inflation in a hurry. Note that QE is essentially a loan but Keen's proposal is an outright gift.
Case For Deflation
Mind you there is absolutely nothing wrong with price deflation.
Who out there does not want the price of oil to drop or the price of food to drop? Who does not want more for their money at the department store? Who does not want the price of a college education to drop?
The answer to that last question is public unions, administrators, and for profit colleges. The answer to the above questions in general is those with first access to money, notably banks (and bank CEOs and executives who get paid to make more and more loans).
Free Market Economy
In a free market, the cost of an education would plunge like a rock. Internet services would spring up all over the place providing quality education. Absolving student debt or any other debts cures no structural problems.
More government and more regulation is not the answer. Nor is more Fed the answer. Nor are models. Nor is giving money away any part of the solution.
Big Fan of Keen
Bear in mind that I am a big admirer of Steve Keen. Steve has taught me a lot. I like his debt model. I just do not like his solution. It cannot and will not work, for reasons that quite frankly should be obvious.
Real Solution
Fractional reserve lending is at the very heart of the debt crisis. That is what enables banks to conjure up credit at will (as long as they are not capital constrained and as long as consumers and businesses want to borrow).
The solution therefore, is not free money and not more government intervention into free markets, but rather sound money and less government interference, coupled with the end of fractional reserve lending.
Yes, it will take time. Attempting to short-circuit the time required with "free money" would be a monstrous mistake, solving zero structural problems.
A pair of articles translated from German and Spanish further highlights the pressure on German Chancellor Angela Merkel to not give into to further demands by Spain, Italy, and France.
A group of German economists has denounced decisions made during last week's European Union summit, arguing Thursday that they risk increasing the exposure of taxpayers, retirees and savers to the debts of struggling banks.
In an open letter published by the daily Frankfurter Allgemeine Zeitung, a group of 160 economists wrote that German Chancellor Angela Merkel found herself forced to make "wrong" decisions during the gathering. The economists said they "view the step toward a banking union, which means collective liability for the debts of the banks of the eurosystem, with great concern."
"Banks' debts are nearly three times higher than government debts ... the taxpayers, retirees and savers in the so-far solid countries of Europe must not be made liable for backing these debts, particularly since gigantic losses are foreseeable from financing the southern countries' inflationary economic bubbles," they added.
The economists include Hans-Werner Sinn, the head of the prominent Ifo think-tank and a vocal critic of European leaders' rescue policies. They argued that "banks must be allowed to fail," with creditors who knowingly took investment risks bearing the burden.
Merkel rejected the criticism.
"First of all, this is about better banking supervision, and one can only say that that is urgently necessary," she told reporters.
Disingenuous Response by Merkel
Please note the disingenuous response (if not direct lie) by Merkel who says "this is about better banking supervision".
Of course this is about bailouts. It is also about the need to allow banks to fail. Let that happen, punish the bondholders, and kill fractional reserve lending and the situation will take care of itself.
Merkel also stated "This is absolutely not about any additional liability." That too is disingenuous. The amount of money may not have risen, but the odds of losses have increased.
I happen to believe that Merkel would sell her soul to save the euro but can't. She also cannot step over lines in the sand by the constitutional court. Otherwise she would have caved in far more than she has.
"It's not going to save the euro, but the creditors of the banks." "It is unacceptable that taxpayers, pensioners and savers far the strongest countries in Europe are accountable for the debts and huge losses due to inflationary bubbles of the South." "Politicians think they can limit the huge sums spent to pay these debts and misuse through the future European Banking Supervision Agency. But they will not succeed while the debtor countries have a majority in the Eurozone structural. " Three key ideas of the open letter that 160 economists renowned citizens today directed the Federal Republic not to support the creation of a European Banking Union and, of course, direct aid to Spanish banks.
The initiative is a media bomb. Hot and tempers are already with the feeling that Angela Merkel gave away too much at the last summit to pressure from Mario Monti, Francois Hollande and Mariano Rajoy, what these economists, led by Hans Werner Sinn, director of the IFO Institute Munich, and Walter Krämer, an economist statistician of the city of Dortmund, is a kick in the butt to a foreign minister that the last thing needed now is the opening of a new public debate on aid to weaker members of the Union.
Teachers and economists are not alone. The chairman of the Federal Union of German Industry, Hans-Peter Keitel, has joined the criticism: "Germany has said, has to put back the red lines. There should never be a Salvation Fund Banks".
No Salvation Fund For Banks
There should not be a salvation plan for anyone, especially banks. One of the reasons this mess is so big is the repetitive moral-hazard bailouts of the financial sector by central banks and governments.
The majority of the German population has resigned from the mammoth task of saving the common currency. 54 percent of respondents believe that Germany should not continue to fight for the euro rescue if billions more are needed. 41 percent call for further engagement in Germany, and five percent are undecided.
Skepticism Extends Through Almost All Political Parties
52 percent of respondents with a preference for the CDU / CSU, see "little sense" is that Germany continues to €-rescue battling, only 45 percent of union supporters have responded to another commitment, three percent is "uncertain". The situation is similar in the SPD of (54/43/3).
Even stronger was the rejection of at supporters of the Left: There were 68 percent believe that it hardly makes sense to continue fighting for the euro rescue, they involve billions more are needed. 28 percent supported the idea , and two percent said "do not know" or gave no information.
The largest euro-friends are apparently supporters of the Greens: 64 percent of supporters of the eco-party took the view that Germany's commitment to the euro should be continued rescue, only 30 percent were against it - six percent gave no details.
For supporters of the FDP, the responses for statistical reasons are not shown separately, they are represented in the survey with a too small number.
Fourth Front Against Merkel
The noose around Merkel's neck gets tighter, even as her own personal popularity is at an all-time high.
A technical malfunction condensed the entire 23 minute long fireworks show into one large explosion when all the devices went off at the same time. Instagram user Ben Baller captured a photo of the 15 second long blast that has racked up more than 10,000 likes.
Design collective OH.NO.SUMO created this stairway cinema in Auckland (New Zealand), which turns a busy street corner into an outdoor pop-up cinema. The micro-theater offers space for seven people. The movies can be chosen in advance through social media channels via smartphones and other gadgets.
It's time for another Mozscape index update. New data is now available in Open Site Explorer, the Mozbar, our tools and through the API. July's update comes with some good news, and potentially some bad news, too. As you're likely aware, the previous two indices, while huge in size (150B+ URLs each) suffered from a lack of freshness due to the additional processing time required to calculate our link graph and metrics over such phenomenally big numbers of links & pages. Today's index is relatively large by prior standards (~72B URLs, larger than most anything we launched before April 2012). And it's slightly fresher - the link data in the index today was crawled almost entirely in May.
This index was originally scheduled to launch earlier, but ran into troubles, including Amazon's AWS outage and plenty of hardware failures, too. As we've mentioned in the past, SEOmoz is in the process of building a new private hybrid cloud datacenter that will replace AWS for Mozscape and should provide us with much greater reliability. We know how important it is to have regular data updates you can count on, and we're putting people and money to work as fast as possible to get off the unreliability that Amazon's systems have created.
Let's take a look at the full metrics for this index:
78,813,641,094 (78 billion) URLs
674,286,481 (674 million) Subdomains
165,476,769 (165 million) Root Domains
778,554,162,687 (778 billion) Links
Followed vs. Nofollowed
2.33% of all links found were nofollowed
57.62% of nofollowed links are internal
42.38% are external
Rel Canonical - 12.5% of all pages now employ a rel=canonical tag
The average page has 74 links on it
63.28 internal links on average
10.72 external links on average
And here are the latest correlations between Mozscape metrics and Google's search results:
Page Authority - 0.34
Domain Authority - 0.23
MozRank - 0.19
Linking Root Domains - 0.24
Total Links - 0.2
External Links - 0.24
Because this update is much smaller in total URL size (~50% of the prior, 165 billion URL index), your link count totals will likely be much smaller, even if you've grown your link building efforts. Below is an example of the numbers for various Seattle startups across May's larger index and July's smaller one:
Above: May's 165 Billion URL index data
Above: July's smaller, 78 Billion URL index data
Note that, as one might expect, link counts are between 50-75% of their former value. This percentage will be lower for sites that get many links from the far corners of the less-traversed, less-popular pages and sites on the web, and higher for sites with links from more popular/well-linked-to sites and pages.
We're working hard to grow index size in the future back up to 100Billion+ URLs. Our crawlers can already handle vastly more, and it's just the unreliability of Amazon's hardware that holds us back. Our engineers and sysops folks are working around the clock to get there as soon as we can.
We've also done some work recently to update the scoring systems for the Keyword Difficulty/SERPs Analysis Tool. You'll now see a more accurate and usable algorithm applied to results where very fresh pages are ranking, e.g. news, sports, trending topics, etc. Here's an example query that previously would have produced a keyword difficulty score of 1:
Libor Rate Scandal was a SERP that until a few days ago, had virtually no traffic and very different results. All of these pages are ones that have been produced in the last day or two, and thus don't have Page Authority scores. However, the Domain Authority is now being used to help calculate KW difficulty, which should seriously help those of you who analyze fresh results.
The next 2-4 Mozscape index updates will continue to be on AWS, but we're now running 3-4 indices in parallel (which costs a fortune, but gives us fallback options if/when Amazon's failures lose an index or massively delay it). In the next 3-4 months, we hope to be operating indices off our new hybrid cloud environment and see much greater reliability, which will enable us to produce larger, fresher and more consistent updates.
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