miercuri, 5 septembrie 2012

The Ultimate Guide to Content Planning

The Ultimate Guide to Content Planning


The Ultimate Guide to Content Planning

Posted: 04 Sep 2012 02:08 PM PDT

Posted by simonpenson

A transition is in effect. The web is maturing and like any form of media that has gone before it that can mean only one thing: That content is now at the epicentre of audience creation once again.

The introduction of Penguin, as we know, is forcing every online business to re-examine how it ‘does’ online marketing and begin looking for ways to grow reputation, reach and visibility via content rather than the link building practices of old.

As Google turns up the algo to promote great content and social gives us all access to the social graph and the network effect it offers there has never been a better time to get your content game in shape and pull together a killer strategy for your brand.

I recently wrote a piece for another digital marketing site that goes into a little more detail around why content is coming to the fore and so for extra context it is certainly worth a read.

In addition to the above theory one thing we do know is that all forms of media before the web have followed the same basic evolution. It starts with obsession about the technology and the iteration of it to a place where the platform has mass media reach. The end game, and the thing that gives the platform longevity, is the content shared on it. Think print, TV and radio and this is true of all of them. We don't get excited about where a paper is printed any more. Instead its about the content that's printed on it.

The web is next and in this post I want to delve a little deeper into how to structure your own content planning to take advantage of this change and maximise the reach and impact of this change.

How to Plan

Stage one of any great content strategy is the plan. Without it you will fail. Without a clear roadmap of the kinds of content you need to produce, when and for whom you’ll quickly become an also-ran.

The question is how do you first understand what you should be creating and how can you structure your plan to cater for the various personas visiting your site?

Firstly you need to understand exactly WHO your audience is. Many people, especially when they start to become more comfortable with content strategies, often overlook this; and it's key to the whole process.

The point is all men and women are not the same. Obvious, right? Well we can all be guilty of treating our audience as the same person with the same ideals, needs and beliefs. Clearly this isn't the case and so it is important to segment your audience in a way that create two, three or four 'types' - all of which get to your product or service in different ways.

To explain this, and the planning process as a whole, I organised a round table catch up (an evening of beers) with some former colleagues of mine from the world of consumer magazines to pick their brains again on the best way to structure and execute your content plan

Their view, and mine, is always to ‘keep your reader as close to you as possible in every decision you make.’

That process must follow the same basic steps:

  1. Understand your Brand

You cannot begin to talk about personas or content ideas before you truly have your brand values down on paper. Many businesses skip this part but you MUST know exactly what you stand for, your tone of voice, political and social allegiances etc.

To do this you must first map the strengths and weaknesses of your competitors. A simple SWOT analysis works well here as it lets you see easily where you might be able to steal a march and differentiate.

You can then align these strengths and opportunities to your brand values and begin to build a map of what you may want to ‘own’ from a content strategy perspective.

There are lots of tools out there to make this process easier too. SWOT analysis templates are available across the web while Moz's own TAGFEE core values can really help you structure your own mission statement and brand strategy. For those really interested in this area I can whole heartedly recommend spending time reading Michael Porter's work and strategies. His books make for great reading.

With this in place you can then move onto stage two…

  1. Understand your Audience

The plan to understand your reader is twofold; the first part is to create the ‘Typical Reader’. Here you should be specific and a great example may be:


Steve is 24 and drives a 2006 plate Range Rover Sport and he sees this as being the second most important thing in his life, after his fiancée!

He spends his time and money socialising, discussing sport, music and cars. He drinks Budweiser and occasionally a decent whiskey (as he thinks this is cool). He wears Ralph Lauren shirts but can’t afford to stretch his brand tastes further and so goes with generic jeans and shoes. To him brand is as important as the product, and it influences his buying behaviour.


The process of getting to this point is a post in its own right but the key point is to do your research well. Split it down into two specific parts:

1. Quantitative > Surveys via email and social work well for this. Ask general questions about your product or service so you can get a picture of where it sits in their lives and in their buying cycle. This can lead you to stage two, which is...

2. Qualitative > Customer focus groups, either in a pub or working with research companies and utilising controlled environments helps you to add 'colour' to the picture, enabling you to understand tone and emotive pointers etc.

From this you will usually be able to model your 'typical' client or customer, as above. You'll also be able to understand how to break the audience down into personas, each of which have more specific characteristics and ways of getting to, or interacting with what it is you are selling. For a step-by-step of using data to create them I recommend Mike King's excellent Keyword Level Demographics post.

The next step is then to nail your editorial proposition and to do this you must record your key USPs (things like ‘jargon free advice’ and ‘well written by people who understand the culture and fashions of the market’).

This is a relatively straightforward process and should get you to a point where you can easily sum up your editorial/content persona in the form of a famous person.

This is a really useful way of working as by agreeing that as a brand you are ‘John Wayne’, for instance, it becomes much easier to share tone of voice and attitude across a team, either in house or externally.

While this process is really useful to capture your core values we all know that in reality you have many different types of ‘reader’ and so the process of persona mapping is key to really ensuring your content appeals to your chosen audience.

The process of creating personas is a subject all of its own and this post cannot cover the entire process but several pieces here recently including this one and this one can help you segment your audience in a way that will help you when it comes to pulling together your content strategy.

Let’s assume then that you have followed those tips and have three or four tidy personas in place.

At this point you now have a really clear picture of who you are, your tone and editorial stance. You may even have drawn up an editorial guidelines document to steer the entire team in the same direction.

In short you are more prepared than a cub scout but structure is nothing without great ideas….

  1. Brainstorm Ideas

Ideas are the lifeblood of any content strategy. Without creativity your content marketing campaign is dead in the water. The good news though is that there are ways that you can make the whole process a little more structured and easier.

It is at this stage you can let your imagination run wild. If you have a team then a couple of hours in a bar or even just outside can produce a long list of crazy content concepts. Of course you don’t have to worry right now about them being realistic or actionable. The key point is to get them down on paper.

One great technique to use in recording and expanding your idea list is the use of mind maps. Bubbl.us is a great tool to use to help you do this.

Tools can help too and below is our top five for helping us isolate content ideas.

  1. Bottlenose

Bottlenose social search engine

This is a great new tool to highlight trending articles and social commentary based on specific keywords. It’s a social search engine and can really help you create news or hot topic led content.

  1. Spezify

spezify

Does a similar thing to Bottlenose but in a less structured but more visually interesting way.  Creates a tapestry of related tweets, images, music etc.

  1. UberSuggest

A popular tool for expanding on keyword ideas and the concept works well for helping you think more laterally.

  1. Keyword Expander

keyword expander

A really cool tool by Optimal Social it allows you to find relationships between things that people like.  So people that like (insert keyword) also like XXX. This has obvious benefits and can also help with persona creation. Free registration required.

  1. SEOGadget’s Content Ideas Generator

A popular one around these parts and for good reason; it may not be flashy but it does a great job of pulling in content ideas from a number of useful sources into one Google Doc.

Together these and some good old fashion thinking time can produce a great list of ideas, which will then need refining, which brings us onto the next stage.

  1. Segment your content types and flow

The next step is to begin organising the list you have into content types; working out the best way of presenting that concept for maximum reach.

This is where an understanding of content types comes in and the Content Matrix. This simple yet effective infographic by SmartInsight helps you understand the strengths and weaknesses of the different kinds of content you can create, while also giving you a great starting list of ideas.

It is then useful to segment your ideas into a simple table of types such as this:

  1. Create your content plan

I wrote this on the YouMoz blog last year as a introduction to content planning and it contains some useful elements around beginning to structure your editorial calendar, or plan, by using key elements.

The key part of the process though is ensuring you achieve the right flow.

Every great content schedule, whether it’s for TV, radio or any other media has peaks and troughs as you must have the small to appreciate the big stuff.

If you examine the very best musical pieces they are built in the same way and you should think of your content plan in the same way.

Create a planner as you wish. The one we use is shown below and captures the following elements. If you want a copy simply email us at infoatzazzlemedia.co.uk and we’d be glad to send you a copy.

The basics are that you segment as you would with a normal calendar with months and weeks. The key is then how you transplant the ideas you have into it.

Alongside ideas we capture key dates in the calendar. So in our example as a fitness website we might include key exhibition dates, official Get Fit weeks, peak times of the season such as January and so on. This work helps us capture the visitor’s general mood and frame of mind too and this helps you create content as a solution.

The key piece is getting the flow right and this is where the work done on content type is important as it enables you to then fill in the weeks with a view on what kind of content will follow each other well.

Timing too is important. Huge amounts of effort and many 'column inches' have been put into measuring and understanding the timing of social media activity and the same is true of other content. During a stint working for the UK's biggest golf media brand we discovered that sending a newsletter on a Friday full of equipment reviews etc worked amazingly well as the 'reader' believed that they were about to shoot the round of their lives that weekend, and wanted all the kit to do it with. Come Monday though reality had set in and so we would send a newsletter full of tips to help them improve!

Dan Zarella's blog is great for insight around social sharing and I would suggest you spend some time here absorbing that data to help you build your own content plan.

The other secret is then creating both ‘big bang’ and smaller regular content ideas and get them to work in unison, but that’s a post for another day.

Simon Penson is MD and founder of Zazzle Media, a UK based content marketing and technical optimisation agency.


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What do you want to know about the White House?

The White House

Your Daily Snapshot for
Wed., September 5, 2012

 

What do you want to know about the White House?

The White House isn’t just a home to First Families or meeting space for world leaders. It’s also known as "The People’s House" -- a place that should be open to everyone. And that’s why President and Mrs. Obama have made it a priority to invite young people, military families, and Americans of all ages to join them here at the White House.

Have questions about White House history and ways to engage? Join us for a special session of "Office Hours" on Twitter with White House curator William Allman at 2:00 p.m. EDT today, September 5th. Ask your questions now with #WHChat and follow the Q&A live @WHLive.

Read more about ways to engage with the White House from home.

The Google Art Project at the White House

As part of President and Mrs. Obama’s commitment to open the White House to as many Americans as possible, we have partnered with the Google Art Project and allowed their 360 Street View cameras to capture the rooms that are featured on the public tour. Now anyone, anywhere, can experience the history and art of the White House via their computer.

Check out the Google Art Project.

Behind the Scenes: The Google Art Project at the White House

In Case You Missed It

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

We the People: 3 Million Signatures Later
Last year, the White House launched a new tool called We the People, offering a powerful and simple way to petition the Obama Administration to take action on a range of issues. Take a look at the platform more than three million signature later.

Spending Less, Spending Smarter
The Campaign to Cut Waste has already achieved $4 billion dollars in savings in 2012, well on track to meet and exceed President Obama's goal of $8 billion by the end of FY 2013.

 

President Obama Meets with Victims of Hurricane Isaac
President Obama visits St. John's Parish in Louisiana to take in the damage from Hurricane Isaac and meet with officials responding to the disaster.

Today's Schedule

 

All times are Eastern Daylight Time (EDT).

9:30 AM: The President receives The Presidential Daily Briefing

1:15 PM: The President departs the White House en route Joint Base Andrews

1:30 PM: The President departs Joint Base Andrews

2:45 PM: The President arrives Charlotte, North Carolina

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Why every department needs to care about SEO

Why every department needs to care about SEO

Link to SEOptimise » blog

Why every department needs to care about SEO

Posted: 04 Sep 2012 05:54 AM PDT

SEO used to be something that happened on the sidelines of a business, usually by some tech specialist in a separate office. It often seemed like it had very little to do with the rest of the organisation.

But as the internet and what we do with it has changed, most firms have now realised that this needs to change. To make the most of their online presence, SEO has to be an integral part of their online operations in every department.

Search engine optimisation is now too important to be left lingering on the sidelines. From customer services and HR to marketing and PR, here's how SEO matters to every single area in your business. Read on to find out why you should be optimising everything you do online.

Customer services

Good or bad, customers love to give feedback, ask questions and leave reviews. Thanks to the growth of the internet their comments could be seen by thousands of potential customers, and this could be incredibly good or incredibly bad news for your business.

You may not realise it, but customer service efforts and SEO can work hand-in-hand to help highlight the positives and reduce the impact of any negatives.

The key here is to be part of the conversation. This means having a presence not only through your own dedicated website, blog and social media, but also by being seen in the wider arena.

Essentially, you need to get involved in relevant conversations on sites and forums other than your own. Saying the right things in the right places ensures that SEO and social media come together with potentially massive results for your company.

You must also be available, be ready to answer any questions or deal with problems swiftly and give honest, open responses to every message you receive. Many of these will be public-facing – gone are the days of ringing up to complain directly – so be mindful that everything you say and do could impact how other people view your company. Ensure every customer-facing member of the team knows the company line on big issues so you're all singing from the same hymn sheet.

SEO is also a vital part of building your FAQ or help sections for your site. Use analytics to identify what it is people are coming to you for, and make sure you are providing it.

HR

Today's job market is very different from a few years ago, and it follows that how people search for a new position has changed as well. Even dedicated jobs boards have seen numbers fall and are having to evolve to meet a new set of expectations.

For your business, this gives an important opportunity to reach out to potential employees.

A careers section within your site can act as a constant source of information for job-hunters, and can be an integral part of your SEO strategy. Even if you don't have any vacancies at the moment, a holding page with details on the kind of people who work for you can work wonders. See this as another chance to get your targeted keywords on your site in a relevant, useful and honest way.

And where you continue to use job boards, see SEO as a way to increase findability and get the right people for your roles. There's no point using words that people won't search for – target your ads carefully and you could get people breaking down the doors to work for you, as well as enhancing your online presence.

You can also use social connections here too – the more involved you are with social platforms, the more people you can reach with your job opportunities.

PR

PR and SEO are already joining forces for many companies, and they should work together in many respects to promote your brand and help get you seen in the right places.

In the world of public relations, SEO is incredibly useful as it can help understand behaviour – how people search and what keywords they use. This means you can then target your PR materials effectively.

And don't forget that journalists use search too. They will be scouring the web for their latest stories, so make sure you optimise everything you put out there so it can be seen by them. Whether you publish articles directly on your site, apply for news results listings or send your press releases out to journalist distribution sites, each piece of content should be optimised. This goes for associated media too – images and videos must also be searchable and recognisable by the bots.

Think of SEO and PR as a way to unify your brand messages and ideals, and don't miss out on the opportunity to be seen online.

Marketing

There is no point having an all-singing, all-dancing website if no-one can find it. You may have sent out leaflets to thousands of potentials, and placed adverts in relevant publications or on local radio, but you still won't reach every possible customer. Besides, many people turn to the internet as their first port of call these days, rather than the traditional local press.

So, if you run an Italian restaurant in Coventry, you need to make sure your website appears whenever someone types that phrase into their search engine. If you don't show up, you're losing out immediately.

Search engine marketing is the backbone of creating and maintaining a prominent, positive online presence. Your site must be accessible – to both the bots who will index your pages and the people who will view it. To be visible, you must target specific keywords that are relevant to your business and avoid underhand techniques.

Google and the other search engines keep the specifics of their ranking algorithms a closely-guarded secret, but there is a lot we can deduce from the top-ranking sites, and from information they have shared.

Content must be optimised without keyword overstuffing; the site must be user-friendly, up-to-date and functional; and backlinks to your pages should be relevant and not spam attacks.

All change

It might seem like a lot to understand and instigate, especially for departments that haven't had to think about SEO in the past. However, the results will speak for themselves. If the rest of the business is unsure of the benefits, or even hostile to the required changes, it might help to hold a presentation and outline the many ways SEO will strengthen the business.

In the current climate, no company can afford to be left behind online, and it can seem like an arms race with your competitors. That's why it can't be left to one lone department to fight the SEO war everyone needs to come on board.

You may find it helps to use an SEO agency, which will be able to assess how different departments are performing and make vital recommendations. Often, outsiders can more clearly see the ways in which the company could improve its holistic SEO.

All this may seem like a lot of work, but by coming together every department in your business can help to establish a holistic SEO strategy that boosts success. By working to the same plan, different departments can ensure that all content is optimised and that everything they do, from issuing a press release to answering a customer query, can have a positive effect on SEO.

The result could be huge boosts to your online presence – with higher rankings, better visibility, more engagement and increased conversions. Start integrating SEO throughout your entire organisation and you will soon see that it's a recipe for online success.

Image credit: Baltic Development Forum

© SEOptimise - Download our free business guide to blogging whitepaper and sign-up for the SEOptimise monthly newsletter. Why every department needs to care about SEO

Related posts:

  1. Google Acquires Motorola Mobility
  2. 3 Free Tools to Establish Competitors Online
  3. Social media and blogging tips for businesses at OxonDigital

Seth's Blog : The soapbox and the city

The soapbox and the city

Cities work because they create collisions between and among diverse individuals. Ideas go to cities to be born and to be spread, and the chaos that bubbles just under the surface feeds those ideas. The web, at its most effective, is a digital city, a place where access is equal and ideas race and connect and morph.

If you want to find creative work, go to a city. If you want to find inspiration, expose yourself to diversity, not a bubble. The city is chaotic, without much of a filter.

The soapbox, on the other hand, is the amplified voice of a single speaker. The soapbox is the newspaper with subscribers, the Twitter account with followers, the blog with readers. A soapbox cannot ever scale to be like the city, because given the chance, the mob, attracted by the attention that comes with the soapbox, will grab the microphone and create nothing but noise. Open mic night is an interesting concept, but it never sells out Madison Square Garden.

Everyone deserves their own soapbox. The web has handed everyone a microphone and said, "here, speak up." But everyone doesn't deserve their own audience. That's something that's earned. Once you're on your soapbox, by all means take inspiration from the city. Learn from the diverse voices you hear. But your soapbox is yours, and the people who listen to you came to hear you, not everyone.

Access isn't really the issue when it comes to soapboxes. The issue is whether cultural and social forces will further push those with something to say (which is every resident of the city, which is all of us) to patiently and clearly say it, to build the audience that they are able to.

Your soapbox might be the reputation you have in the comments section of a favorite blog, or your page on a social networking site. It might be those that listen to you in the conference room of your organization. But it's yours.

For the first time in the history of media, those that are able to consume the media are also able to create it. That's a powerful (and thus frightening) choice.

One day soon, it's possible that corporate interests will impose barriers on soapbox access, all in an effort to reclaim power for themselves. Until then, the race is on to build your tribe, to tirelessly connect and to earn an audience that wants to hear from you.



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marți, 4 septembrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Lifesaving Injection of Debt

Posted: 04 Sep 2012 10:04 PM PDT

The bailout schemes get sillier and sillier. The Spanish bank Bankia has requested €19 billion in state aid, but in Bizarro World fashion will instead receive €4 billion in debt which it would then swap with the ECB for cash.

Please consider Madrid plans to inject Bankia with debt.
Madrid is planning to provide €4.5bn of stopgap rescue money to Bankia, the nationalised bank, by injecting it with Spanish government debt, in a move likely to reignite debate over how states can use the European Central Bank to recapitalise troubled lenders.

The Frob, Spain's state bank bailout fund, will issue BFA, Bankia's parent company, with €4.5bn of government bonds, said a spokeswoman for the economy ministry.

This gives the bank the possibility of depositing the bonds with the ECB as collateral in return for cash.

The bonds will later be returned by Bankia to the Frob after the arrival of €100bn in European aid for Spanish banks in late October or November.

The ECB declined to comment on Bankia or the Spanish government's plans. But any attempt to help Bankia create collateral in this way could well founder on rules designed to prevent so-called monetary financing.
The contortions the ECB goes through just so it can say it is not doing monetary financing are staggering.

Indeed, the entire Target2 scheme is nothing but backdoor monetary financing.

For details, please see Discussion of Target2 and the ELA (Emergency Liquidity Assistance) program; Reader From Europe Asks "Can You Please Explain Target2?"

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


By 2015 Hard Commodity Prices Will Collapse; Australia's Mining Boom Dies (and the Official Denials Start)

Posted: 04 Sep 2012 01:38 PM PDT

I have been calling for a base metals bust for some time, fueled by a slowdown in China. Michael Pettis at China Financial Markets has been saying the same thing. Indeed, it is analysis from Pettis that influenced my views in the first place.

Pettis now believes commodity prices will collapse by as much as 50% over the next few years. His rationale is solid.

Here are a few snips from a recent Michael Pettis email in which he outlines the case.
By 2015 Hard Commodity Prices Will Collapse

For the past two years, as regular readers know, I have been bearish on hard commodities.  Prices may have dropped substantially from their peaks during this time, but I don't think the bear market is over.  I think we still have a very long way to go.

There are four reasons why I expect prices to drop a lot more.  First, during the last decade commodity producers were caught by surprise by the surge in demand.  Their belated response was to ramp up production dramatically, but since there is a long lead-time between intention and supply, for the next several years we will continue to experience rapid growth in supply.  As an aside, in my many talks to different groups of investors and boards of directors it has been my impression that commodity producers have been the slowest at understanding the full implications of a Chinese rebalancing, and I would suggest that in many cases they still have not caught on.

Second, almost all the increase in demand in the past twenty years, which in practice occurred mostly in the past decade, can be explained as the consequence of the incredibly unbalanced growth process in China.  But as even the most exuberant of China bulls now recognize, China's economic growth is slowing and I expect it to decline a lot more in the next few years.

Third, and more importantly, as China's economy rebalances towards a much more sustainable form of growth, this will automatically make Chinese growth much less commodity intensive.  It doesn't matter whether you agree or disagree with my expectations of further economic slowing.  Even if China is miraculously able to regain growth rates of 10-11% annually, a rebalancing economy will demand much less in the way of hard commodities.

And fourth, surging Chinese hard commodity purchases in the past few years supplied not just growing domestic needs but also rapidly growing inventory.  The result is that inventory levels in China are much too high to support what growth in demand there will be over the next few years, and I expect Chinese in some cases to be net sellers, not net buyers, of a number of commodities. 

This combination of factors – rising supply, dropping demand, and lots of inventory to work off – all but guarantee that the prices of hard commodities will collapse.  I expect that certain commodities, like copper, will drop by 50% or more in the next two to three years.

Based on my many trips in recent years to places like Australia, Peru and Brazil, I had plenty of anecdotal reasons to believe that commodity producers had significantly overestimated the sustainability of the Chinese growth model (or, perhaps more accurately, had not really thought about whether or not it was sustainable).  I was worried that they were expanding production very quickly.  Everywhere I went I heard stories of large-scale investments to expand production.

Many producers have acknowledged recent price declines, but they seem to believe that these are likely to be short-lived and that prices will soon rebound when Chinese demand returns. For example the Financial Times' Alphaville quotes Nev Power, chief executive of Fortescue Metals, discussing iron ore at a recent meeting:

Iron ore prices have slumped to $US104 a tonne in recent days, yet Mr Power said it could soon rebound as high as $US150. "As soon as restocking and production returns to normal we expect to see prices back in the $US120 to $US150 per tonne range," he said.

He will almost certainly be wrong.  

Production capacity has grown

The surge in Chinese demand at the beginning of the last decade consequently caught everyone by surprise. Minack shows, for example, that in the past twenty years, global demand for steel grew by roughly 6% a year, with most of that coming in the past decade. If you exclude China, however, global demand for steel grew by only 2% a year in the past twenty years, implying that China accounted for almost all the increase in global demand in the last twenty years – and almost all of that occurred in the past decade.  In the past ten years Chinese demand for iron ore has grown by 16% a year on average.

The initial surge in demand caught commodity producers off-guard.  Because they were unable to ramp up production quickly enough, prices surged.  After a few years of high prices, however, commodity producers responded to the huge new increase in demand by planning major expansions in production facilities. 

What about demand?

China currently is the leading consumer of a wide variety of commodities wholly disproportionate to its share of global GDP.  The country represents roughly 11% of global GDP if you accept the stated numbers, and substantially less if you believe, as I do, that growth has been overstated because of the difference over many years between reported investment, i.e. its input value, and the actual economic value of output.  China nonetheless accounts for between 30% and 40% of total global demand for commodities like copper and nearly 60% of total global demand for commodities like cement and iron ore.

The only reason China has provided such an extraordinarily disproportionate share of global demand for hard commodities has been the nature of China's growth model.  While China may represent only 11% or less of the global economy, it represents a far, far greater share of the world's building of bridges, railroad lines, subway systems, skyscrapers, port facilities, dams, shipbuilding facilities, highways, and so on. 

Over the next decade, two things are going to change.  The first is increasingly recognized, and that is that Chinese growth rates will drop sharply.  The second is that China will rebalance its economic growth away from its appetite for commodities.

Which Way Can Prices Go?

For these reasons I am very pessimistic about hard commodity prices and expect them to drop substantially further in the next two to three years. 

  1. Production capacity for hard commodities is rising much too quickly, in a belated response to the unexpected surge in demand just under a decade ago.
  2. Expected economic growth rates in the country that has been biggest source of new demand – virtually the only source – have fallen sharply and commodity prices have fallen with them.  Historical precedents and the arithmetic of rebalancing suggest, however, that the current consensus for medium-term Chinese growth is still too optimistic.  Expected growth rates will almost certainly fall further in the next two years.
  3. Beijing has finally become serious about rebalancing China's economy, and rebalancing means shifting Chinese growth away from being disproportionately commodity intensive.  Instead of representing 30-60% of global demand for most hard commodities, Chinese demand will shift to a more "normal" level.  Remember that even a very limited shift – from 50% of global demand, for example, to a still high 40% of global demand – represents a sharp drop in global demand.
  4. There has been so much stockpiling of commodities and finished goods with implicit commodity content in China that the country could well become a net seller, and not net a buyer, of a wide variety of commodities in the next few years.

This is going to come as a shock to many people.  In my discussions with senior officials in the commodity sectors in Brazil, Australia, Peru, Chile and even Indonesia, it seems to me that many analysts have been insufficiently skeptical about the Chinese growth model and are unaware of how dramatically the consensus has changed in the past two years. 

They have failed to understand how deep China's structural problems are and how worried Beijing has become (this worry may be best exemplified by the extraordinary growth in flight capital from China since early 2010).

Under these conditions I don't see how we can avoid a very nasty two or three years ahead for commodity producers.  This isn't all bad news, of course.  What will be a disaster for hard commodity producers will be great news for companies and countries that are commodity users or importers.  One way or the other, however, we are going see a big change in the distribution of winners and losers.
Given that iron ore prices have already fallen by more than 50% perhaps iron does not see another 50% decline. Regardless, there is certainly room for many commodities to plunge that much, and copper is a prime example.

The price of copper at the beginning of 2005 was $1.50 and it fell below that price in late 2008 and early 2009.

Pray tell why can't (and shouldn't) copper see that price again if Pettis' view of Chinese growth is accurate (and I am quite confident in his view).

Official Denial from Australia Prime Minister

Please consider an official denial regarding Australia's mining sector : Boom Isn't Over Says Prime Minister
AUSTRALIA'S mining boom is not over and its 'death' has been exaggerated according to Prime Minister Julia Gillard.

Ms Gillard said she understood there was growing uncertainty due to economic problems in Europe and America, rising competition and a softening of China's growth.

"Let's be clear," she said, "reports of the mining boom's death are exaggerated."

Ms Gillard said the boom had three distinct phases - a prices boom, which was passing; an investment boom, yet to reach its peak, and a production boom "as all that effort comes to fruition in the years and decades ahead".

Her comments come as iron ore prices drop and Australia's third largest iron ore producer, Fortescue Metals Group, today added its name to the list of companies pulling back expansion plans.
Question? What Question?

"There is no question about whether we have a boom, the issue is whether we make it last" said Prime Minister Gillard.

Note the sheer foolishness of Gillard's statement. It is not up to Australia at all whether the boom is over or not. The boom is entirely dependent on what China does or doesn't do.

Moreover, there is no question the boom is over. The real question is "How big is the bust?"

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Manufacturing ISM Contracts 3rd Month Led by Declining New Orders; Recession-Type Numbers? You Bet!

Posted: 04 Sep 2012 09:35 AM PDT

Those looking for evidence the US is already in recession (and has been since June) need look no further than the August Manufacturing ISM Numbers released today.

IndexAugustJulyChangeDirectionRate of ChangeTrend in Months
PMI™49.649.8-0.2ContractingFaster3
New Orders47.148.0-0.9ContractingFaster3
Production47.251.3-4.1ContractingFrom Growing1
Employment51.652.0-0.4GrowingSlower35
Supplier Deliveries49.348.7+0.6FasterSlower7
Inventories53.049.0+4.0GrowingFrom Contracting1
Customers' Inventories49.049.5-0.5Too LowFaster9
Prices54.039.5+14.5IncreasingFrom Decreasing1
Backlog of Orders42.543.0-0.5ContractingFaster5
Exports47.046.5+0.5ContractingSlower3
Imports49.050.5-1.5ContractingFrom Growing1

Key Points

  • The PMI™ registered 49.6 percent, a decrease of 0.2 percentage point from July's reading of 49.8 percent, indicating contraction in the manufacturing sector for the third consecutive month. This is also the lowest reading for the PMI™ since July 2009. 
  • The New Orders Index registered 47.1 percent, a decrease of 0.9 percentage point from July, indicating contraction in new orders for the third consecutive month. 
  • The Production Index registered 47.2 percent, a decrease of 4.1 percentage points and indicating contraction in production for the first time since May 2009. 
  • The Employment Index remained in growth territory at 51.6 percent, but registered its lowest reading since November 2009 when the Employment Index registered 51 percent. 
  • The Prices Index increased 14.5 percentage points from its July reading to 54 percent. 
  • Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies.

Recession-Type Numbers

Inventory added .6 to the PMI vs. a neutral reading of 50 or the PMI would have come in at 49.

The third month of declining new orders coupled with declining production strongly suggests that manufacturing employment will soon contract. 

These are start-of recession type numbers.

Unless economic numbers quickly improve, the NBER is likely to backdate the start of the recession to June.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Central Bankers Fail to Understand Forces Holding Back the Economy; Ten Major Economic Headwinds

Posted: 04 Sep 2012 12:05 AM PDT

Central bankers Debating the Limits of Power in Jackson Hole are wondering what's holding back the economy.
"What is holding the economy back? Why is it that we've had such incredibly accommodative monetary policy for so long (but) we've had so little growth? I think it remains a puzzle," said Donald Kohn, who is now a senior fellow at the Brookings Institution think tank in Washington.

Adam Posen, who finished his final day as a member of the Bank of England's monetary policy on Friday and is a powerful advocate for more forceful central bank action, asked the same question as Kohn: "Why has all this lower short-term interest rates failed to make the economy go go go?" He argued that policymakers in Europe and the United States should waste no time in extending asset purchase programs to spur growth.

Alan Blinder, another former Fed vice chair who now teaches economics at Princeton, ticked off the two most blatant culprits for why the U.S. economy continued to struggle: government spending cuts and the drag from the depressed housing market.
Binder, Posen are Delusional

Adam Posen and Alan Blinder are clearly delusional.

Posen fails to understand the problems caused by going deeper in debt, even though Japan did just that for decades to no avail and has nothing to show for it but a mountain of debt.

As for Blinder, might I ask: precisely what spending cuts is he referring to?

Please note the Fiscal Year Budget for 2011 was $3.603 trillion. Also note the budget for 2012 was $3.796 trillion, and the 2013 budget is projected to be higher still, at $3.883 trillion.

Indeed, the projected budget rises every year through 2022. It is ludicrous to talk of spending cuts, when spending is projected to increase every year for a decade.

Failure to Understand the Obvious

Central bankers and economists are so wrapped up in warped mathematical formulas they fail to understand the obvious. The answer, which they refuse to accept, or even consider as a possibility, is that central bankers and the monetary system itself are the problem.

Belief that a bunch of central planners can sit in a room and divine interest rates and the proper amount of money in circulation is as ridiculous as belief that Russian central planners could properly set the price and quantity of steel or orange juice.

The boom-bust cycles of ever-increasing amplitude benefiting the 1% while hollowing out the middle class should be poof enough central bankers do not know what they are doing.

That they met in Jackson Hole wondering why their policies are not working is also sufficient proof they do not know what they are doing.

What's holding back the economy is three-fold.

Three Root Causes

  1. Fractional Reserve Lending
  2. No enforcement mechanism on governmental spending (i.e. lack of a gold standard)
  3. Central bank and governmental meddling

For a discussion of point number 2 above, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited

Since the end of the great depression until the year 2000 the Fed had tailwinds at its back and that made it appear Fed policy was successful.

Four Major Tailwinds

  1. US productive capacity not destroyed in WWII
  2. Baby boomer demographics
  3. Women entering the workforce en masse
  4. Internet revolution

Those major tailwinds, in order, are what made it appear Fed policy was working. It is easy to inflate when powerful forces are at your back.

Party-of-a-Lifetime

Following the 2001 recession, the Greenspan Fed held interest rates too low too long, allowing one last party. And it was the party-of-a-lifetime, culminating in the biggest housing and credit bubbles the world has ever seen.

In the wake of that party, all that is left is a big hangover and ten major headwinds.

Ten Major Headwinds

  1. Boomers heading into retirement have insufficient savings
  2. Student debt holds back home-buying, marriage, and family formation
  3. Ability and willingness of individuals and businesses to take on more debt has shrunk dramatically. Attitudes towards lending, borrowing, and home ownership have changed.
  4. Bank bailouts at taxpayer expense left banks intact but did nothing for households deep in debt
  5. Tax policy encourages flight of jobs and capital
  6. Technology now serves to destroy more jobs than it creates. Please see Robots to Rule the World? Taking All Jobs? Replace Women? for a discussion.
  7. Untenable pension problems at the city, state, and federal level can no longer be put off. 
  8. Public unions and collective bargaining are structural problems at the heart of the pension mess as well as the heart of numerous city bankruptcies.
  9. Artificially low interest rates weakens those on fixed income
  10. Commercial real estate bust on top of housing bust limits further job expansion. How many more Walmart, Pizza Huts, McDonalds, nail salons, Kohl's stores, Office Depots, Home Depots do we need? Where?

Inflate to Grow Model Never Worked

It is disconcerting yet entirely predictable that central planners and government bureaucrats cannot see what the root problems are. After all, no one wants to blame themselves.

However, one might expect central bankers to at least understand headwinds and tailwinds. Sadly, you can forget about that as well.

The simple truth of the matter is the central planners model of "lowering interest rates to spur growth" never worked in the first place. Rather, four major tailwinds coupled with consumer attitudes (willingness to take on more debt) only made it appear so.

Central planners still fail to understand 10 obvious reasons why their policies are futile. And they are supposed to be guiding the economy!

Since central bankers cannot and will not admit the truth, they are left scratching their heads asking easily explainable questions like "What is holding the economy back?"

I would have loved to present my views in a speech at Jackson Hole, but even if I was allowed, the participants would not have taken too kindly to the obvious truth: Central bankers and planners are a huge part of the problem, and no part of the solution.

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