joi, 13 decembrie 2012

Top 1 SEO Tips for 2013

Top 1 SEO Tips for 2013


Top 1 SEO Tips for 2013

Posted: 12 Dec 2012 06:53 PM PST

Posted by Dr. Pete

If we’ve learned anything in 2012, it’s that Google isn’t letting up on low-value tactics. We’ve had the Penguin update, 13 Panda updates (so many that we needed a new naming scheme), and a crackdown on low-quality Exact Match Domains (EMDs), to name just a few. While I can’t tell you Google’s next move, I can tell you one thing with absolute certainty – there’s more to come. So, how can you protect what you’ve built in 2013?

I was going to write a long list of suggestions, but I realized that they almost all boiled down to just one idea. I’m not going to toy with you – my top tip for 2013 SEO is this:

1. DIVERSIFY

If at any point in 2012 you asked “What’s the best [X] for SEO?” (link-building tactic, tag, directory, etc.), you’re already in trouble. Any single-tactic approach is short-term at best. Real companies, real link profiles, and real marketing are rich with variety.

So, what does that mean, practically? I’m going to cheat a bit and split my one tip into five kinds of diversity that I think are critical to your SEO success in the coming years.

1A. Diversify Anchor Text

Let’s start with an easy one. We’ve all known for a while that overly aggressive inbound link anchor text was pushing the envelope, and the Penguin Update definitely reinforced that message. If every link to your site reads “buy best Viagra cheap Viagra today!”, it might as well read “spam spam spammity spam,” especially if it’s in a sentence like:

If you’re looking for the best price on the new iPad and iPad cases, then buy best Viagra cheap Viagra today! and get a free bag of Acai berries.

It’s not natural, and you know it. What’s the best way to make your anchor text seem “natural?” Stop obsessing over it. Yes, anchor text is a signal, but any solid link profile is going to naturally use relevant text and appear in the context of relevant text. If you want to tweak the text on some of your high-authority links, go for it, but I wouldn’t break out the spreadsheets in 2013.

1B. Diversify Your Links

Are guest posts the one true answer to all of life’s questions or are they a scourge on our fragile earth? To read the SEO blogosphere in 2012, it’s hard to tell. Any link-building tactic can be low quality, if you abuse it. The problem is that someone reads a tip about how guest posts make good links and then they run off and publish the same slapped-together junk on 15,000 sites. Then they wonder why their rankings dropped.

Nothing screams manual link-building like a profile that’s built with only one tactic, especially if that tactic is too easy. At best, you’re eventually going to be doomed to diminishing returns. So, take a hard look at where your links came from in 2012 and consider trying something new next year. Diversify your profile, and you’ll diversify your risk.

1C. Diversify Traffic Sources

There’s an 800-lb. Gorilla in the room, and we’re all writing more SEO blog posts to avoid talking about it. Most of us are far too dependent on Google for traffic. What would you do if something changed overnight? I know some of you will object  – “But ALL my tactics are white-hat and I follow the rules!” Assuming that you understood the rules 100% accurately and really followed them to the letter, what if they changed?

The more I follow the Algorithm, the more I realize that the changing search UI and feature landscape may be even more important than the core algorithm itself. What happens if your competitor suddenly gets site-links, or you’re #8 on a SERP that drops to only 7 results, or everyone gets video snippets and you have no videos, or your niche shifts to paid inclusion and you can’t afford to pay? Even if you’ve followed the rules, your traffic could drop on a moment’s notice.

You need to think beyond Google. I know it’s tough, and it’s going to take time and money, but if you’re dependent on Google for your livelihood, then your livelihood is at serious risk.

1D. Diversify Your Marketing

There’s been a very positive trend this year toward thinking about marketing much more broadly – not as a tactic to trick people into liking you, but as the natural extension of building a better mousetrap. I think this is at the heart of RCS (not to put words in Wil’s mouth) – if you do something amazing and you believe in it, everything you do is marketing. If you build crap and you know it’s crap, then marketing is sleight of hand that you hope to pull on the unsuspecting. You might score twenty bucks by stealing my wallet, but you’re not going to gain a customer for life.

Stop taking shortcuts and make a real resolution in 2013 to think hard about what you do and why it has value. If you understand your value proposition, content and marketing naturally flow out of that. Talk to people outside of the SEO and marketing teams. Find out what your company does that’s unique, exciting, and resonates with customers.

1E. Diversify Your Point Of View

I recently had the pleasure to finally see Michael Dorausch (a chiropractor and well-known figure in the local SEO community) speak. Dr. Mike arrived in Tampa for BlueGlassX and built his presentation from the ground up, using photography to tell stories about the neighborhood and local history. It's hard to explain in a few sentences, but what amazed me was just how many ideas for unique and original content he was able to find in less than 48 hours, just by having a fresh perspective and passion for the subject. I'd like to say I was inspired by the presentation, but to be totally honest, I think the emotion was embarrassment. I was embarrassed that he was able to generate so many ideas so quickly, just by coming at the problem with the right attitude.

In 2013, if you tell me your industry is "boring," be warned - I'm going to smack you. If you're bored by what you do, how do you think your prospects and customers will feel? Step out - have someone give you a tour of your office like you've never been there. Visit your home city like you're a tourist coming there for the first time. Get five regular people to walk through your website and try to buy something (if you don't have five normal friends, use a service like UserTesting.com). The New Year is the perfect time for a fresh perspective.

1F. Happy Birthday, Erica!

Ok, this has nothing to do with the post, but today is Erica McGillivray's birthday. If you don't know Erica, she's our Community Attaché here at SEOmoz. So, diversify your communications today and wish her a happy birthday.


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Why You Shouldn't Ignore Long-Tail Clients (Small Business Owners)

Posted: 12 Dec 2012 04:08 AM PST

Posted by David Mihm

Hopefully most of you have already read the news, but in case you haven’t, I am very excited to be a full-time member of the SEOmoz staff! The announcement came out as I was en route from Blueglass X in Tampa to BIA Kelsey’s ILM West show in Los Angeles. In fact, and I’m still trying to catch up on thanking everyone in my Twitter stream and on the original blog post.

Both conferences were excellent, but if you’ve never attended a BIA Kelsey show, it’s a completely different animal from conferences and seminars in the search industry. The conference contains very few “actionable tips that you can implement on Monday morning,” but that’s not the reason you attend. BIA Kelsey recruits executives from the major digital marketing technology and service providers to small businesses for extended 1:1 or 1:2 discussions with their analysts. By and large, these executives are surprisingly open about challenges they face, and although some sessions turn into sales pitches, the best ones give you real insight into the online marketing pain points and opportunities for small businesses across the country.

So, keeping that background in mind, I want to focus my first SEOmoz post on my #1 and #1a takeaways from the BIA Kelsey show. (There will be plenty of posts from me coming up over the next several months, and Rand’s excellent Whiteboard Friday last week will hopefully satiate you guys on local for the time being.)

Small businesses vs. Search marketing 

I have lived, breathed, eaten, slept, celebrated, and advocated small business internet marketing for the last eight years. But not even I realized until recently:

1) How large the disconnect between the search marketing industry and the small business community is.
1a) The size of the market opportunity for the consultants and agencies who can bridge this disconnect.

One of BIA Kelsey’s forecasts really crystallized this disconnect for me: their annual survey gauging the marketing mindset of the average small business owner. This survey breaks respondents into two categories: “core SMBs” and “plus spenders.” What is incredibly revealing for most people in our industry is the average annual marketing spend of these two groups: $3,000 and $82,600.

Note: these numbers are TOTAL marketing spend. Annually, not monthly. Even the “plus spenders” would have a hard time finding anyone on this list willing to take them on for less than a $5,000/month budget, assuming they were looking for an end-to-end, search-and-social-media monthly arrangement. The level to which this segment is being served by the broader search industry is substantial, but economics dictate that more established agencies tend to go after bigger fish.

On the other side of the spectrum, BIA Kelsey is one of the few companies out there who even considers the plight of the $250/month small business. And if you think $250 sounds like a small monthly budget, wait 'til you hear that these businesses actually spend closer to $100/month on their website and web presence (see slide 8)! This is the reality of operating a small business, though. Advertising costs for small businesses do not come from a corporate marketing budget; they come from family vacation budgets or college savings funds.

Why do I think the market opportunity is so large, then, for agencies who can serve these average businesses? Surely there is no margin in a stable of $250/month clients?

#1 You have virtually no competition for these clients

Jim Moroney of the Dallas Morning News candidly admitted that his newspaper had effectively “priced out” most small business advertisers years ago. His newspaper has a 600,000 subscriber distribution, and for the mom-and-pop dry cleaner or local restaurant serving one small neighborhood in Dallas-Fort Worth, those types of ads do not pencil out economically.

The analogy holds true today even in the digital era. Most small businesses in this $250/month segment are priced out of online advertising. Most of the major Internet yellow pages companies are thinking either of Adwords, display ads (whether they be CPM or CPC), or a combination of the two. There were very few presentations at the show focused on acquiring new customers via inbound marketing. Yet in many categories, $250 will only buy a handful of clicks per month, especially once you consider the Cost-of-Goods-Sold that third-party vendors need to build into their pricing.

The bottom line is that inbound marketing, i.e. “free” traffic, is the only sustainable marketing technique for this large segment of small businesses. No other option has enough margin to sustain a business on the sales side, so traditional advertising companies are simply not targeting this enormous potential customer base. The CEO of YP.com roughly admitted as much -- that his company was simply too big and too slow-moving to be able to compete effectively with a 2-3 person agency -- and I don’t think he’s alone in this admission.

#2 By default, all of your leads for this business segment are going to be high-quality, inbound leads

At $250/month, only companies at the very largest scale (basically, Google, Facebook, and Apple) can sustain a business with a sales force. There is just not enough margin to support feet-on-the-street at this price point. So, at least among the BIA Kelsey audience, everyone is targeting the “plus spenders.” And even if those companies are able to bring on a business at this price point, they usually end up underserving them. Almost every company that has tried serving this segment at scale bemoans the tremendous “churn” rate when these clients cancel their contracts as a result of poor service.

No one is targeting these businesses from a sales perspective, so they’re literally forced to do their own research. Business owners making the effort to seek you out are going to be more engaged in the marketing process, more responsive, and more likely to implement changes or give you buy-in on your recommended tactics.

#3 The upside for these businesses could be huge

Chances are, you are starting from scratch with this segment. If they have a website, it’s probably completely un-optimized, and a few Title Tag and H1 changes will dramatically increase the amount of business they get from the Internet. Maybe only a few have claimed local search listings, or maybe the business only has one inbound link from a local college or community organization.

Unlike more competitive categories in organic search (like e-commerce or travel), success can still be achieved relatively quickly in most local categories. You're going to see a "wow" factor associated with even moderately effective white-hat tactics. And while small business owners have a reputation for “churn” in this industry, as I mentioned above, most of them are incredibly loyal to companies who actually provide value with their services.

So, what can you do to serve business owners at this lower end of the market?

Here are just a few basic tasks that rookie or junior search professionals can perform without requiring any time investment by a senior employee:

  • Improve Title Tags and H1 tags
  • Submit citations (whether in-house or outsourced)
  • Set up Google Alerts
  • Set up a WordPress blog
  • Provide editorial advice for weekly blog post topics and Facebook posts
  • Control blog commenting on the business owner’s behalf
  • Draft review solicitation emails on the business owner’s behalf
  • Track the success of review solicitation campaigns via a spreadsheet
  • Reach out to business and community organizations for locally-relevant links
  • Create hyper-targeted Facebook ad campaigns under $50/month in total spend*
    *In my opinion, Adwords has effectively killed its own small business market opportunity with the increasing number of "not enough search volume" long-tail keywords and ever-higher minimum bid levels.

Let’s assume your agency wants 100% markup on your employees’ or contractors’ time. Let’s also say that a decent hourly rate for a recent liberal arts college graduate is about $17/hour (this works out to a $36,000/year annual salary). This means your agency can afford roughly seven hours per month of marketing on behalf of an average small business owner. Let’s be even more conservative and say that a more senior employee at $100/hour will need to review each account for 30 minutes per month. This still leaves five hours per month, per business for the college grad. Think of the number of tasks in the list above that could be completed in that amount of time!

Helping business owners at the lower end of the marketing spectrum has been a cause for me since I started in the search industry. Beyond the near-moral imperative that I’ve felt personally, I also see incredible economic potential from serving these long-tail customers.

OK, that’s enough out of me for today. I’d love to hear from you guys: how many of you serve clients anywhere near this $250/month price point? What kinds of services do you provide them? What has your experience been like? How many have served them in the past but moved onto clients with bigger budgets? Looking forward to the discussion with you in the comments.


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President Obama Talks Middle-Class Tax Cuts with Mayors and Their Constituents

The White House Your Daily Snapshot for
Thursday, December 13, 2012
 
President Obama Talks Middle-Class Tax Cuts with Mayors and Their Constituents

Yesterday, President Obama held a conference call with a bipartisan group of mayors and community leaders from around the country to discuss preventing an income tax increase on middle-class families.

Several of the mayors asked some of their constituents who had shared what a $2,000 tax increase next year would mean for their families to join the call as well.

Check out some photos and tweets from leaders who listened in from cities and towns nationwide.

President Obama Talks Middle-Class Tax Cuts with Mayors and Their Constituents

In Case You Missed It

Here are some of the top stories from the White House blog:

New Report Shows Volunteering and Civic Involvement at Five-Year High
In the latest version of the Volunteering and Civic Life in America (VCLA) report published yesterday by the Corporation for National and Community Service (CNCS), we see the national rate of volunteering has reached a five-year high.

First Lady Michelle Obama and Toys for Tots Spread Holiday Cheer
First Lady Michelle Obama stopped by a Toys for Tots service project on Monday at the Joint Base Anacostia-Bolling with “boxes and boxes” of gifts that were donated by White House staffers, American CEOs, and even First Daughters Malia and Sasha.

President Obama's Record and Proposals for Cutting Spending
The President has signed $1 trillion in discretionary spending cuts into law through the Budget Control Act, and his budget calls for more than $340 billion in entitlement savings from Medicare and Medicaid, and $250 billion from other mandatory programs.

Today's Schedule

All times are Eastern Standard Time (EST).

9:45 AM: The President and the Vice President receive the Presidential Daily Briefing

1:00 PM: Briefing by Press Secretary Jay Carney WhiteHouse.gov/live

7:40 PM: The President delivers remarks at the Hanukkah Reception; the First Lady attends

WhiteHouse.gov/live Indicates that the event will be live-streamed on WhiteHouse.gov/Live

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Google AdSense Newsletter - December 2012

bubbles
December 2012 Publisher ID ca-pub-1492172262972996

Dear publisher,

With 2013 just around the corner, we're taking a look back at another successful year with over 2 million AdSense publishers globally. It's been a busy twelve months of continuous improvements to the AdSense program, and equally busy is our last newsletter issue for 2012:
  • Learn about the core principles of user experience
  • Watch our new DFP Small Business videos
  • Search for ads by image in the Ad Review Center
  • Apply new controls to the ads on your site
  • Try the new 300x600 ad unit size in AdSense
  • Benefit from enhanced AdSense text ads
We wish you all the best for 2013,

Sophie
On behalf of the global Google AdSense Team


Was this newsletter useful? Share your feedback with us.

Updates

Search for ads by image in the Ad Review Center

To help you review ads even more efficiently in the Ad Review Center , you can now search for ads based on a specific image. Just upload an image, for instance a competitor's logo, and we'll return image ads that contain this image for you to take action on. For more details visit our Help Center.


More control over the ads on your sites

Interested in customizing the blocking settings for different sites you own? Visit the 'Site management' section in your account and build a list of all your sites to apply site-specific actions to. Under 'Allow and block', you'll then be able to block general categories, sensitive categories and advertiser URLs for AdSense for content on a site-by-site basis. Learn more about this new feature in our Help Center.


Launching a larger, brand-friendly ad unit size in AdSense

One of the top requests from publishers in the last year has been to add larger ad sizes to our network, and so we're excited to announce that the popular 300x600 unit is now available in your AdSense account. Because this unit is new to our network, you'll currently see a large number of text ads in these placements. Over time we'll continue to build a wide range of text and display ad inventory eligible to appear in this full slot as well. Read more information in our blog post.


Enhancing text ads on the Google Display Network

You may have noticed that we've recently updated the look and feel of most text ads on publisher sites (see an example below). We've integrated optimizations to font size, spacing, padding, and text layout as well as a new clickable arrow icon - our experiments have shown improved performance as a result of these changes. We'll continue to innovate on new formats in order to drive significantly higher performance for both publishers and advertisers, so stay tuned. For more information on this update, visit our Inside AdSense blog.



User Experience

Learn about the 5 core principles of user experience

Have you thought about user experience and design lately? User experience can make or break your site's success and, with many other sites offering similar services, it's important to differentiate your site in the eyes of your users by providing a better experience. Check out our three-part blog series (part I, part II, part III) to learn about the five core user experience principles.

Also, watch the Hangout on Air recording (only available in English) to hear from an AdSense publisher about his user experience strategy, and follow the AdSense +page to stay informed on additional tips.




DFP Small Business

New videos to help you get started with DFP Small Business

Interested in maximizing the yield from your ad inventory? Already partnering with other ad networks, or are planning to? If so, DFP Small Business, Google's free hosted ad serving solution, might be for you.

We recently hosted a Google+ Hangout series explaining how to use 'Dynamic Allocation' - one of DFP's most powerful features to maximize revenue from every single impression - and how to get started with targeting in DFP. Have a look at the recordings (only available in English) on our AdSense YouTube channel.




More about AdSense:

Inside AdSense Blog

AdSense Google+ Page

AdSense Forum

AdSense on YouTube


© 2012 Google Inc. 1600 Amphitheatre Parkway, Mountain View, CA 94043.

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Seth's Blog : Design like Apple, but name like P&G

 

Design like Apple, but name like P&G

Apple's naming approach is inconsistent, it begs for lawsuits (offensive and defensive) and it shouldn't be the model for your organization. iPhone is a phone, iPad is a pad, iPod is a ... (and owning a letter of the alphabet is i-mpossible).

Procter and Gamble, on the other hand, has been doing it beautifully for a hundred years. Crisco, Tide, Pringles, Bounty, Duracell--these are fanciful names that turn the generic product (and the story we believe about it) into something distinct.

If you can invent an entire category, fabulous, that's an achievement. For the rest of us, resist the temptation to be boring or to be too aggressive. It's your name and you need to live with it.

[More on naming]



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miercuri, 12 decembrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Questions of the Day: What if the BLS is Wrong About its Labor Force and Participation Rate Projections? How Would it Affect the Unemployment Rate?

Posted: 12 Dec 2012 02:08 PM PST

On Monday, my "question of the day" was What will the unemployment rate look like for the rest of the decade?

Click on the above link to see an interactive map that lets you select the rate of job growth up to January of 2020.

The base assumptions for the interactive map regarding the noninstitutional population, the labor force, and the participation rate came from revised BLS projections by Mitra Toossi in January 2012: Labor force projections to 2020: a more slowly growing workforce

Note that the accuracy of the unemployment forecast depends on the accuracy of the assumptions.

What if the BLS is Wrong?

Today we concern ourselves with the question "What if the BLS assumptions are wrong?"

We do have to start somewhere, and the assumption for the charts below is that the BLS is right about the size of the age 16 and older noninstitutional population, but wrong regarding the participation rate and the size of the labor force.

Certainly boomer dynamics are now understood well enough that the age 16 and older noninstitutional population projections are likely to be quite accurate. How fast baby boomers retire or drop out of the labor force is certainly much harder to predict.

Definitions and Notes

  • The participation rate is the ratio of the civilian labor force to the total noninstitutionalized civilian population 16 years of age and over.
  • The noninstitutionalized civilian population consists of civilians not in prison, mental facilities, wards of the state, etc.
  • The labor force consists of those who have a job or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized.
  • There are strict requirements on what constitutes "seeking a job". Reading want-ads or jobs on "Monster" does not count. One actually needs to apply for a job, go on an interview, or send in a resume.
  • Please see Reader Question Regarding "Dropping Out of the Workforce" for an explanation of how the BLS determines someone is actively seeking a job.

As you can see, projecting the population accurately and projecting the labor force accurately are two different things.

Starting with the assumption that Toossi is correct regarding the noninstitutionalized civilian population, I asked Doug Short at Advisor Perspectives if he would plot unemployment rates at various rates of job growth with a participation rate of 62.5 (the base Toossi model), as well as participation rates of 60.0 and 65.0.

The charts below show startling differences as to what happens if the participation rate changes in those small increments.

Model Notes

  • In the following charts CLF stands for Civilian Labor Force. 
  • CNP stands for Civilian Noninstitutional Population.
  • Participation rates assumed to move in a linear fashion towards various 2020 projected targets (65.0, 62.5, 60.0).
  • The  labor force is derived from various projected participation rates and the civilian noninstitutional population.

Unemployment Assuming Participation Rate of 62.5



click on any chart for sharper image

At 125,000 jobs a month (and that is a very optimistic forecast in my opinion), the unemployment rate would slowly sink to 6.3% by 2020.

Unemployment Assuming Participation Rate of 65.0



The current participation rate is 63.6.

A mere rise in the participation rate to 65 would require 200,000 jobs every month non-stop until 2020 to get the unemployment rate to 6.1%. Needless to say, 200,000 jobs a month is not going to happen.

At 125,000 jobs a month, every month, the unemployment rate would rise to 9.9%. Is such a scenario all that unlikely?

Unemployment Assuming Participation Rate of 60.0



Should the participation rate drop to 60, it would only take 50,000 jobs a month to get the unemployment rate down to 6.5%.

How likely is that?

The participation rate was 60.2 in December of 1955. The participation rate dramatically rose starting in the mid-60's as women entered the work force en masse.

Given that people are living and working longer (the latter because they did not sufficiently save for retirement), will the participation rate drop to 60 again?

Consider what I said on May 1, 2008 in Demographics Of Jobless Claims

Ironically, older part-time workers remaining in or reentering the labor force will be cheaper to hire in many cases than younger workers. The reason is Boomers 65 and older will be covered by Medicare (as long as it lasts) and will not require as many benefits as will younger workers, especially those with families. In effect, Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages.

Theoretically the participation rate could drop that low but the economy will likely be horrific if it does. Moreover, should the rate fall that low, it will be at the expense of a massive rise in those on food stamps and other social safety net programs.

Table of Projected Unemployment Rates



Note the peculiarity (and mathematical impossibility) of negative unemployment rates at high levels of job creation coupled with a participation rate of 60.

All things considered, Toossi's revised model showing the participation rate slowly dropping to 62.5 seems reasonable, but a rise to 65 is not out of the question.

At a participation rate of 62.5 it will take about 100,000 jobs a month through 2020 just to hold the unemployment rate steady.

For a look ahead to 2013, please see Small Business Owners' Hiring Intent Plunges to 2008 Lows; Don't Blame Sandy or Fiscal Cliff.

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

"Wine Country" Economic Conference Hosted By Mish
Click on Image to Learn More

Exit Strategy? What Exit Strategy?

Posted: 12 Dec 2012 10:12 AM PST

Today the Federal Reserve issued this Policy Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities.
On December 12, 2012, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase longer-term Treasury securities after the maturity extension program is completed at the end of December 2012, initially at a pace of about $45 billion per month.  The FOMC also directed the Desk to continue purchasing additional agency mortgage-backed securities (MBS) at a pace of about $40 billion per month.  These actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The FOMC also directed the Desk to maintain its existing policy of reinvesting principal payments from the Federal Reserve's holdings of agency debt and agency MBS in agency MBS, and, in January, to resume rolling over maturing Treasury securities into new issues at auction.

Beginning in January, the purchases of longer-term Treasury securities will be distributed across 7 sectors based on the following approximate weights:



Under this distribution, the Desk anticipates that the Treasury securities purchased will have an average duration of approximately 9 years, roughly the same as the net of the duration of the securities purchased and sold under the maturity extension program.  The distribution of Treasury securities purchased could change if market conditions warrant.
Recall when the Fed pretended it was working on an exit strategy to reduce its balance sheet at the appropriate time?

It was a lie then and it's an even bigger, more apparent lie now (which is why you no longer hear Bernanke mentioning it) . The simple fact of the matter is that every Fed asset purchase makes it more difficult to exit.

When interest rates do start to tick up (which could be a while based on Fed statements), interest on the national debt would soar if the Fed unloaded treasuries. Likewise, mortgage rates would soar if the Fed unloaded agencies at a time interest rates were creeping up.

There never was an exit strategy and there never will be one.

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

Mark Carney, Incoming Governor of the Bank of England, Dives Straight Into Monetarist Loony Bin

Posted: 12 Dec 2012 01:56 AM PST

Mark Carney, Bank of Canada governor and surprise pick to replace Mervyn King as incoming governor of the Bank of England, dove straight into the monetarist looney bin today with policy proposals.

The Telegraph reports Mark Carney hints at need for radical action to boost ailing economies
Mr Carney, the current Bank of Canada governor who takes over from Sir Mervyn King next June, said central bankers should consider committing to low interest rates until inflation and unemployment met "precise numerical thresholds", or even changing "the policy framework itself" to stimulate a desperately weak economy.

His words were directed at the Bank of Canada but will be seen as a hint that he will push for radical action in the UK, where the economy has been stagnant for two years. On his appointment, he said that he would be going "where the challenges are greatest".

Addressing the Chartered Financial Analyst Society in Toronto, Mr Carney said that in major slumps: "To achieve a better path for the economy over time, a central bank may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, inflation picks up.

"To 'tie its hands', a central bank could publicly announce precise numerical thresholds for inflation and unemployment that must be met before reducing stimulus."

He added: "If yet further stimulus were required, the policy framework itself would likely have to be changed. For example, adopting a nominal GDP level target could in many respects be more powerful than employing thresholds under flexible inflation targeting."

The proposals would be anathema to Sir Mervyn, who has publicly refused to abandon the inflation target or commit to long-term low rates.
Economic Lunacy

Only arrogant fools think they can overpower markets without causing even more severe problems down the road.

If fiscal and monetary stimulus worked, Japan would be a glowing success today instead of having a debt to GDP ratio approaching 250%.

The US housing bubble is another case in point.

By holding interest rates too low, too long Fed chairman Alan Greenspan bailed out banks then deep in hock with nonperforming loans to South America and dotcom companies going bust. The end result was a housing bubble far bigger than the dotcom tech bubble that preceded it.

Indeed, Fed policy has spawned bubbles of ever increasing amplitude over time. The only beneficiaries of those bubbles have been the banks and the already wealthy.

Carney the "Talented" Speaker

Carney is a  talented speaker, able to speak out of both sides of his mouth at once, each saying opposite things.

In light of Carney's "radical action" statements, please consider Bank of Canada warns of low-rate risk.
The Bank of Canada says low-interest policies that it and other central banks have put in place are adding another layer of risk to the already stressed global financial system.

The Canadian central bank says that the near record level interest rates that have been in place since the 2008-09 recession are taking their toll on insurance companies and pension funds.

Low rates, it adds, are even increasing the appetite of investors to take risks in search of higher returns.

Bank governor Mark Carney has warned about the dangers of low interest rates — which most Canadians consider a good thing — sporadically in the past.
Also consider these December 11, snips from the Globe and Mail.
"Our current guidance indicates that some policy action may be necessary, encouraging a degree of prudence in household borrowing," Mr. Carney said in his speech, echoing the warnings of the Bank of Canada's last policy statements.

As it has said in the past, the biggest domestic threat to financial stability "continues to stem from the elevated level of household indebtedness and stretched valuations in some segments of the housing market."
Nothing like warning about debt and low interest rates, while pledging to keep interest rates low until artificial central planning targets are met.

Carney stated the central bank "would clearly say we are doing so" if it chose to act on consumer debt.

Yep, I don't doubt that. Indeed, I suggest that Carney would notify banks in advance of any major policy moves.

Goldman Sachs Background


Let's back up a bit and look at Carney's background as listed on Wikipedia.
Carney spent thirteen years with Goldman Sachs in its London, Tokyo, New York and Toronto offices. His progressively more senior positions included co-head of sovereign risk; executive director, emerging debt capital markets; and managing director, investment banking. He worked on South Africa's post-apartheid venture into international bond markets, and was involved in Goldman's work with the 1998 Russian financial crisis.

Goldman's role in the Russian crisis was criticized at the time because while the company was advising Russia it was simultaneously betting against the country's ability to repay its debt.
From a Goldman Sachs and JP Morgan standpoint, Carney is the perfect candidate to head the Bank of England. Who could possibly be better than a currency crank promising clear signals, with a background of advising Russia while betting against it?

As a practical matter, however, should Carney actually implement his "radical action" policies, I suggest the UK would quickly be in ruins.

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