vineri, 27 mai 2011

Damn Cool Pics

Damn Cool Pics


50 Creative Logos With Hidden Symbolism

Posted: 27 May 2011 01:49 PM PDT

Logo is branding for every company and simple, easy to remember and unique logo can do wonders for company and make it stand out just by branding itself! This time we will showcase fresh logos where most of them will have hidden thought, some recognizable similarity to specific company you will easily understand and feel amazed!

So, lets take a look at collection of 50 great logos for your inspiration.




































































































Source: logopond


Game Arthritis

Posted: 27 May 2011 11:21 AM PDT

What are the real effects of dig­i­tal gam­ing to our fin­gers, hands, and bod­ies?
The con­for­mity of inter­faces pro­duces defor­mity. It's a fact. Call it "the real­ity of the vir­tual". Pro­longed vic­ar­i­ous aggres­sion lead to per­ma­nent phys­i­cal dis­fig­u­ra­tion. Gam­ing activ­i­ties pro­duce real con­se­quences for the users.

Research has been con­ducted for years in sev­eral clin­i­cal lab­o­ra­to­ries across the globe but doc­tors and researchers are not will­ing to share their find­ings with the gen­eral pop­u­la­tion. How­ever, evi­dence of new technologically-​​induced dis­eases is now becom­ing known out­side of the sci­en­tific com­mu­nity. These patholo­gies — labeled col­lec­tively "Game arthri­tis" — are offi­cially not "recognized".
















Source: gamearthritis


SEOmoz Daily SEO Blog

SEOmoz Daily SEO Blog


Competitive Link Analysis Tips - Whiteboard Friday

Posted: 26 May 2011 01:58 PM PDT

Posted by caseyhen

We all want to build up the reputation and authority of our websites and this week Rand discusses some competitive link analysis tips using Open Site Explorer. He talks about how to avoid some common pitfalls when trying to get similar links that your competitors have and give you a few good ideas on how you should be doing it. If you have any tips that you can share with the community on how you do competitive link analysis, please feel free to share those in the comments.

 

Video Transcription

Hi, everyone. Welcome to Whiteboard Friday. This week, we're going to talk about competitive link analysis tips. The thing is that a lot of people, when they're trying to build up their reputation and authority and the rankings of their website, one of the big things that they do is they look at who's linking to my competitors and can I get some of those links. This is a great practice, but there are a lot of pitfalls and there are also a lot great areas of unexplored opportunity. People typically do a very simple thing, which is just to look at who's ranking in the top 10, see who's linking to them, and try to get links. There's a little more depth.
 
A tool that a ton of people use is Open Site Explorer. It's a tool that we here at SEOmoz use and tons of people like it. There are other opportunities. There are things like Majestic. There's Link Diagnosis. There's obviously Yahoo! Site Explorer, which is very popular, and a few others that are well known as well.
 
Open Site Explorer is pretty simple, has a nice, easy-to-use interface. You can see here, I basically search for a URL up at the top, and it shows me all the places that Open Site Explorer, that the Linkscape Index knows about that link to that particular page. There are some filters up here and some different tabs. Basically, I get a list that looks like this. Here's the page. Here's the anchor text that's linking. Here's the page authority and domain authority. If I'm on the linking domains, it will also show me the number of linking root domains. It gives me some title information and that kind of stuff. Great. I can get some prospects here.
 
I want to be careful about a few things when I'm looking through here. Number one, whose links are you looking at? One of the problems that we see a lot of the time is that the people who rank in the top 10, particularly in a short-term time frame, sometimes can be spammers or manipulative folks who have earned links that get them into the top 10 but only very briefly. By very briefly, I mean somewhere between 30 days and 3, even 6, months sometimes. If you're examining sites and you're looking at their links and you think to yourself, "Boy, these are really scummy sites. The site quality is low. I don't know why anyone would organically want to link to this page," looking at their links may only help you in a really short-term scenario. You might find a ton of junky stuff, stuff you have to pay for, stuff that's manipulative, stuff that requires you to reciprocally link back to them, or jump through all these hoops. You don't necessarily want those.
 
What you do want are folks who are long lasting in the top 10. If I look at a list of top 10 folks and I see oh, wow, this is a domain that's very well trusted and I've heard the name of the brand before, it's a popular and good brand, then I'm really interested in who's linking to this guy. If I see a three-hyphen domain.info, maybe I don't need to investigate his links. Or maybe I want to look at them, but I don't necessarily want to pursue them. I just want to be more careful about how I interpret those.
 
The other thing is that folks will be really simplistic about this. As opposed to just looking at the top 10 of who's ranking here, I can go deeper into the results. I can go into the top 20 or 30. I can look at different keywords. I can look at keywords that are more broad. Let's say I'm trying to rank for "used Toyota cars." I might look at used Toyotas. I might look at Toyota in general. Who's ranking in the top 50 or 60 for a super competitive phrase like Toyota? Who are those big important sites? There might be a bunch of places that are linking to other listings that could link to me. Or the people who are in the results themselves could be link opportunities.
 
There's also the issue that when you do that kind of expansion, you'll just find that many more places that have diversity of links. Earning those can give you a step up on the competition, because when they look at your links, they're going to go, "Wow. Where did they get all those? How did they find all those? It's amazing."
 
The other thing I want you to pay attention to is, are these the links that matter? The same scrutiny that you give the websites in the top 10, I think we should all be giving that same scrutiny to the links that point in here. A lot of the time, there will be links that are fairly manipulative and low quality and temporary. They will appear in here because Open Site Explorer and Linkscape doesn't have anything like the sophistication of Google's webspam algorithm. Google webspam has a whole team working in a big building down in Mountain View. They're some of the best-paid and most highly talented scientists in the world. They're working on this problem of solving spam. Open Site Explorer has a few simplistic things. PA and DA, page authority and domain authority, use symmetrics to calculate how important we think it is. We get fooled all the time by spammers. The links that you see in here might not necessarily be the ones that count. You have got to use good judgment.
 
There are two great ways to do this. Number one is does it rank? What I want you to do is look at this page itself, the linking page. Go to that page. Figure out the keywords that it's trying to target in the title or grab a snippet of 7 to 10 words in a sentence there. Put them in quotes and put it into Google. Does that page rank? If it's not ranking in Google, I'd be very suspicious about how it's doing. Number two, who does it link to? If it's linking to reputable sources and really good places, that's a very good sign. If it links to places that are very suspect and a lot of those places aren't ranking very well for their keywords, I'm usually a little more concerned. Those two things will really help you see whether this is the right link or not.
 
Do pay close attention to another thing, the page and domain level metrics. If you see something that's like wow, this is a very low page authority but high domain authority, that might be a really good link opportunity. In fact, that domain might be a great link opportunity. I worry when I see folks who are like, "Low page authority, I'm not interested." I wouldn't go that route. If domain authority is high, that means it's a big, important, powerful domain. I would much rather, in my SEO, have a link from a powerful, important domain than from a powerful page but on an unimportant domain. If it's the homepage of Mikes-House-of-Viagra.info, I totally don't care. I don't care that it's homepage. I don't care that he has a page rank of four or five on his homepage. I'm not interested. If it's some super deep page way down on the Scientific Americans website, wow. PA may only be a 35 or a 40 or something, but the domain authority is going to be like an 88 or 90. I'm looking for those links. I'd encourage you to do the same thing.
 
You can actually resort in Open Site Explorer by DA. There's a little arrow there. You can resort your links if you want. You can also export. There's an export to Excel function. You can get the top 10,000 links. Then you can sort however you want inside Excel.
 
The last thing I'm going to talk about is do be cautious. A lot of people will go right up to here and they'll use the filter that lets you exclude no-followed links. I wouldn't be too worried about that. Some of the time, maybe you only want to care about the followed links. A lot of the time, what we've seen is that no-followed links present link opportunities of their own. They're often social opportunities, opportunities in social media or on social sites for social profiles. Some of them are engagement and interaction stuff, like blog comments, forum participation. Those can actually be great places to do inbound marketing, get people aware, pay attention to the community, get opportunities for content, get opportunities to interact, and that will lead to good SEO things in the future.
 
Hopefully, you've got some good competitive link analysis tips out of this. We look forward to seeing you again for another edition of Whiteboard Friday. Take care.

Video transcription by SpeechPad.com


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Linkbait and Content Marketing – What Are Your Goals Graywolf's SEO Blog

Linkbait and Content Marketing – What Are Your Goals Graywolf's SEO Blog


Linkbait and Content Marketing – What Are Your Goals

Posted: 26 May 2011 10:33 AM PDT

Post image for Linkbait and Content Marketing – What Are Your Goals

One of the most difficult conversations I have with new or perspective clients is about Linkbait and content marketing and explaining how its real goal isn’t to drive sales but to build links, build awareness, and send social signals to the search engines. To make this post useful and actionable, I’m going to take you through the process/planning stage for a former client I had who has since sold his business.

an important point to understand: we are targeting the “general online population,” not just potential customers …
When I was working for the man and building my own business by moonlighting at night (ok–and a little during the day), one of my first clients was for a salt water fish store. He sold fish and aquarium supplies online. Now, ultimately, his goal was to get his content in front of people who own salt water fish tanks and are interested in his products. However, unless you are a well known brand, competing on price (aka running a sale or promotional offer), or are offering an impulse purchase (no long term commitment and low price), you won’t make sales from social media (stay tuned to the end when I will talk more about this).

IMHO the biggest benefits from social media are link building potential, brand awareness, and social media signals (see what social signals might Google use). Lets take a look at our niche:

  • There is a small subset of the population that has a salt water fish tank and has a potential interest in our merchandise.
  • There is a slightly larger subset of people who know someone who has a salt water fish tank and might forward/share with them content they come across.
  • There is a larger subset of people who are interested in the science/nature/environmental aspects of marine life, marine mammals, and ocean life.
  • There is a larger set of people who are interested in travel aspect of marine life, snorkeling, scuba, diving with sharks, swimming with dolphins, and visiting aquatic-related travel destinations.
  • There is a larger set of people who would enjoy/share photos of marine/ocean-related content, especially if the photos are beautiful, interesting, engaging, or unusual.
  • There is a much larger set of people who will read/share interesting content that is about marine related subject matter, if it is exceptional.
  • There is a small group of people who will publish marine related content and will link to it
  • There is a medium sized group who will write/link/tweet about marine based content if it is exceptional enough (aka the linkerati)

We are going to target two groups of people because they include most of the other groups. They are “people who will read/share marine based content if it is interesting enough” and “people who will write/link/tweet about marine based content if it is interesting enough.” This is an important point to understand: we are targeting the “general online population,” not just potential customers, because our goals are links, sharing, and social signals.

So how do we get started? Let’s come up with some potential ideas for our Linkbait (see creating exceptional content for boring subjects):

Top 10/15/20 Most Beautiful/Ugly/Bizarre Creatures in the Ocean – This isn’t a typical piece of image based Linkbait. I would do all three. Just choose a different number for each one and space them out at least a month apart.

Best Places to Scuba/Snorkel in the Country/Continent/World – This is a bit of travel Linkbait but, again, it has multiple versions. In fact, you can do them as head & tail continent and refresh the posts every year like seasonal living URL’s.

Most Expensive/Dangerous Seafood Meals – This has a lot of options. You can do an info graphic of seafood prices to other food like beef and chicken. You could map graphics of seafood consumption. You could create cooking linkbait about expensive seafood, or dangerous seafood to eat (like the fugu blowfish). You can do Eco/green based content on sustainability of seafood. You can do “mom” based content like how to eat healthy seafood on a budget. You can do health focused content on seafood. There are lots and lots of variations here.

Largest Marine Mammals/Fish/Invertebrates – People like stories about giant sharks, whales, squid or octopi, and you can revisit this kind of post every 2-3 years as news/science updates (see how often should I update my content and updating evergreen content).

Most Dangerous/Poisonous/Deadly Fish/Sea Snakes/Marine Life – Again, people tie into group-think and share common fears of (and fascination with) sharks, snakes, piranhas, and general ocean life. Just be careful and don’t run a scuba piece right before or after a piece about dangerous sharks. It looks … contradictory.

Most Beautiful Ocean/Beach/Underwater photography/paintings – Again people like looking at “nice pictures.”

Now, this list is by no means all encompassing and the titles are just working concepts at this point. Hopefully they give you some idea about how you can take a niche shopping site and widen the focus to include a larger group of people who would be interested in liking/sharing/linking to your website/blog.

The next step is to start to flesh out the articles. Do a little research and figure out which one will have the best content. For example, use a service like oDesk and hire someone to research the most expensive seafood dishes, both currently and historically. Have them be on the lookout for unusual anecdotes like seafood that was expensive and hunted to extinction or seafood that’s illegal to eat. Have them give you source links so you can verify the data before sending it off to your premium content writer or infograpic artist.

Once you know about your pieces, start scheduling them and sending them out to be produced. You could push out a minor piece every 2-3 weeks and a major piece every 4-5 weeks. You want to spread out similar pieces unless you are doing a content series. Make sure you have the tail pieces in place before you push out the head (see head and tail content). As a I mentioned above, don’t push out a “Top 5 most dangerous sharks of Australia” back to back with “Best places to scuba dive in Australia.” It looks … odd.

So what are the takeaways from this post:

  • Think about who your customers are then widen the focus to include as large an audience as possible while still staying “on topic.”
  • Brainstorm for ideas on possible topics for articles.
  • Do research then prioritize/schedule content creation.
  • Create any backup content you may need.
  • Create content and schedule for publication.
  • Spread campaigns out over time to send new links and social signals to search engines over a prolonged period of time.
  • Pay attention to seasonal news/events and tie into them.
  • Look to update science/news/informational content on a regular basis as needed. Use living URL’s.

Ok, you made it to the end. This post has some bonus content! What if you do want to actually sell things using social media? Well IMHO you will need to do one or more of these things:

 

  • Be a well known, established, trusted brand – If Amazon puts out a top Father’s Day gift ideas list, people will buy from them because they know/trust Amazon. If you aren’t Amazon, you will have a hard time with this strategy.
  • Compete on price – If you offer a sale, discount, or promotional price below your competition, you may make some sales. Keep the item(s) as general interest as possible (aka you can’t sell catfood–no matter how low the price–to someone who doesn’t have cats)
  • Be General Interest, Low Commitment - A lot of people like clown fish thanks to “Finding Nemo,” but not everyone wants to commit to having a fish tank, not even at a cheap price for a startup tank with a free clown fish. However, almost everyone can buy a T-shirt with sharks saying funny things on it.
  • Be impulsed priced – Lots of people want to go to France for vacation, but not a lot of people will drop a thousand dollars or more on a discount vacation at the drop of hat. However, a lot of people will spend $10/$20/$50 on an impulse item if they like it.

Creative Commons License photo credit: Stephen Childs

tla starter kit

Related posts:

  1. Using Others Content as Linkbait Perfect of example of how to take someone’s else’s content...
  2. Linkbait Failure – Not Understanding the Need For Instant Gratification Whenever I see someone else’s linkbait that fails, one of...
  3. Using Images for Better Linkbait The following is part of a series on image optimization. In...
  4. How to Ruin an Excellent Piece of Linkbait, and Why Someone Should be Fired Here’s a prime example of how to ruin an otherwise...
  5. When Your Title is Linkbait and Your Post Isn’t I’ve often written that using a linkbait is like signing...

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Linkbait and Content Marketing – What Are Your Goals

West Wing Week: "OCONUS III: A Homecoming of Sorts"

The White House Your Daily Snapshot for
Friday, May 27, 2011
 

West Wing Week: "OCONUS III: A Homecoming of Sorts"

West Wing Week is your guide to everything that's happening at 1600 Pennsylvania Avenue. This week, President Obama embarked on a six-day trip to Europe, visiting Ireland, the United Kingdom, France and Poland to engage our allies in the region on a host of issues. While overseas, the President pledged support for those back home affected by devastating tornadoes in Missouri and across the Midwest. Before leaving, the President met with Israeli Prime Minister Netanyahu and went to the CIA Headquarters in Langley, VA. That's May 20th to the 26th, or "OCONUS (Outside the Continental United States) III: A Homecoming of Sorts."

Watch the video.

Photo of the Day 

In Case You Missed It

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

President Obama at the G8 Summit in Photos
The President meets with G-8 leaders in Deauville, France. Take a look at the day in photos.

Defending the Rights of the LGBTQ Community
The Department of Justice’s Office of Victims of Crime has released a grant program designed to ensure that all crime victims, including LGBTQ individuals, receive comprehensive, quality services and are afforded fundamental rights.

President’s Advisory Commission on Educational Excellence for Hispanics: The Next Step in Improving the Academic Achievement of Latino Students
Today, the President's Advisory Commission on Excellence for Hispanics were announced at the White House and held their inagural meeting at the White House.

Today's Schedule 

All times are Eastern Daylight Time (EDT).

2:30 AM: The President holds a bilateral meeting with President Sarkozy of France

3:30 AM: The President participates in a G-8 Working Session

4:15 AM: The President participates in a G-8 Working Session

5:30 AM: The President participates in an expanded G-8 Working Session

6:45 AM: The President participates in the expanded G-8 Family Photo

7:00 AM: The President participates in an expanded working lunch with G-8 Leaders

8:25 AM: The President departs Deauville, France en route Paris, France

9:00 AM: White House Initiative on Educational Excellence for Hispanics - Morning Session WhiteHouse.gov/live

9:10 AM: The President arrives in Paris, France

9:40 AM: The President departs Paris, France en route Warsaw Poland

11:50 AM: The President arrives in Warsaw, Poland

12:25 PM: The President participates in wreath laying at the Tomb of the Unknown Soldier

1:00 PM: The President participates in a wreath laying at the Warsaw Ghetto Memorial

1:00 PM: White House Initiative on Educational Excellence for Hispanics - Afternoon Session WhiteHouse.gov/live

1:25 PM: The President arrives at the Presidential Palace

1:30 PM: The President and the President Komorowski of Poland host dinner for Central and European Union Leaders

WhiteHouse.gov/live   Indicates events that will be live streamed on WhiteHouse.gov/Live

Get Updates 

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Seth's Blog : Caring

Caring

No organization cares about you. Organizations aren't capable of this.

Your bank, certainly, doesn't care. Neither does your HMO or even your car dealer. It's amazing to me that people are surprised to discover this fact.

People, on the other hand, are perfectly capable of caring. It's part of being a human. It's only when organizational demands and regulations get in the way that the caring fades.

If you want to build a caring organization, you need to fill it with caring people and then get out of their way. When your organization punishes people for caring, don't be surprised when people stop caring.

When you free your employees to act like people (as opposed to cogs in a profit-maximizing efficient machine) then the caring can't help but happen.

 

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joi, 26 mai 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Former ECB Chief Economist Says "Greece is Insolvent"; Junker Says IMF May Not Pay Next Greek Loan Tranche; Axel Weber Was Right, Trichet Wrong

Posted: 26 May 2011 02:02 PM PDT

In the battle of words and wills between ECB president Jean-Claude-Trichet and Euro Finance Minister Jean-Claude Junker, the latter says IMF May Not Pay Next Greek Loan Tranche
Greece might be denied the next tranche of financial aid if an audit of its budget accounting shows that the country cannot guarantee financing for the next 12 months, Eurogroup President Jean-Claude Juncker said Thursday.

"I'm not the spokesman of the International Monetary Fund, but the rules say they can only disburse if there is a financing guarantee for the 12-month period," Juncker told reporters at a conference in Luxembourg.

"I don't think that the troika will come to the conclusion that this is given. If the Europeans have to realize that the disbursement of the IMF before June 29 can't operatively happen, the expectation of the IMF is then that the Europeans will take the place of the IMF," he added.

He said some countries, including Germany and Finland, would likely not accept this. "Everything depends on the troika report which is due next week," he added.
"Greece Not Just Illiquid, It's Insolvent"

Bloomberg has additional details in German 10-Year Yield Drops Below 3%; IMF May Withhold Greece's Bailout Aid
German government bonds rallied a Luxembourg Prime Minister Jean-Claude Juncker said the International Monetary Fund may not release its portion of aid for Greece next month, boosting demand for the safest assets.

German government bonds have handed investors a return of 2.1 percent since the end of March, trimming this year's loss to 0.3 percent, according to indexes compiled by the European Federation of Financial Analysts Societies and Bloomberg. Greek debt has lost 14 percent this year, Irish debt 9.1 percent and Portuguese bonds 15 percent. Treasuries returned 2.2 percent.

China may account for a "strong proportion" of demand for Portuguese bailout bonds when the European Financial Stabilization Mechanism rescue fund begins selling them in June, Klaus Regling, chief executive officer of the European Financial Stability Facility, was quoted by the Financial Times as saying yesterday.

Former ECB Chief Economist Otmar Issing said Greece will probably be unable to meet its obligations as the euro region's most indebted nation is "insolvent." While it is "not physically impossible" for Greece to honor its obligations, repayment is unlikely, he said today at a press conference hosted by Nykredit A/S in Copenhagen.

"I'm skeptical about Greece," said Issing, who joined the ECB a year before the euro's inception in 1999 and stayed there until 2006. "Greece is not just illiquid, it's insolvent."
Axel Weber Was Right, Trichet Wrong

We all know that Greece is insolvent. I suspect even Trichet now realizes as much. However, Trichet does not want a default on his watch. Trichet will be gone in October and Trichet's mission is to hang on until then.

However, Trichet cannot duck the problem he arrogantly contributed to.

Former German central bank Axel Weber pleaded with Trichet to not buy Greek government bonds. Following an open feud, Weber, who was not too long ago the heavy favorite to replace Trichet, backed out of the race and resigned as head of the Bundesebank as well.

Feud Details

Flashback February 12, 2011: Ex-Goldman Sachs Managing Director is Leading Candidate to Replace Trichet as ECB President
Philosophical Reasons For Weber Leaving

Weber is not leaving for "personal reasons" per se. He is leaving because of huge feuds with current President Jean-Claude Trichet, and the likelihood he would be in disagreement with the the rest of the ECB as well.

ECB's Trichet Rejects Weber's Call to End Bond Purchase Program
Trichet said that as ECB president he is the only one who speaks on behalf of the Governing Council. Weber, who opposed the bond purchases since their inception in May, is regarded by economists as a frontrunner to succeed Trichet when his non-renewable eight-year term expires in just over a year.

European Central Bank President Jean-Claude Trichet rejected Bundesbank President Axel Weber's call to end the bond purchase program that has provided a lifeline for European governments and banks trying to shore up their finances.

There is only one single currency; there is one Governing Council, only one monetary policy decision, and one president, who is also the porte-parole of the Governing Council", Trichet told La Stampa.
Weber was never in favor of the ECB's bond program to begin with, and that caused a feud at the outset.

Weber felt the ECB was not only violating the Maastricht Treaty, but making unsound decisions on monetary policy as well. Given Weber was in a distinct minority on many decisions he decided to say to hell with it.
Debt Restructuring Could Trigger Contagion

Jens Weidmann, the New Bundesbank head pleads Debt Restructuring Could Trigger Contagion
Weidmann, who took over from Axel Weber as head of the Bundesbank at the start of this month, said in an interview with German newspaper Frankfurter Allgemeine Zeitung that the German central bank was not opposed to the idea of a debt restructuring in principle, but that such a move could have consequences.

"Lengthening debt maturities helps only to a limited degree. There is also the risk that an after-the-fact forced maturity extension would amount to default and have contagion effects on other countries," Weidmann said.

"A soft restructuring could lead to troubles in other euro zone countries' banking systems, when the credibility of other aid programmes would be questioned."

Weidmann is currently being squeezed between his former employer the German government, which argues bond holders should swallow losses if a borrowing country does not pay, and the ECB where he is now a policymaker, which remains vehemently opposed to a restructuring.

One of the possible reasons for the ECB's fierce opposition is that it is estimated to have bought around 40-45 billion euros of Greek debt last year under its Securities Markets Programme which was openly criticised by Weidmann's predecessor, Weber.

Weidmann warned a Greek restructuring would hit the ECB and trample over the rules of monetary union.

"In principle, the consequences of fiscal policy mistakes may not be pushed to central banks. In the end, this would lead to a monetisation of debt."

Despite the intensifying debt restructuring debate, the ECB is currently expected to raise euro zone interest rates to 1.5 percent in July, having ended almost two years of record low rates by hiking them to 1.25 percent in April.

Weidmann bolstered that view. "I will not prejudge the policy decisions of the ECB Governing Council. I'll just note that the monetary policy stance currently continues to be expansionary," he said.
Monetization of Debt

The threat of monetizeation of debt by the ECB is very real. For now, the market is ignoring that threat in favor of the view the ECB will hike.

The irony is, the more hikes the ECB makes, the more pressure it puts on Greece, Portugal, Spain, and Ireland.

The risks pile up as noted in Bailing Out the ECB; Hidden Cost of Saving the Euro; ECB Time Bombs Continue to Tick

Here is a chart from the article courtesy of Der Speigel

ECB's Balance Sheet Contains Massive Risks



Trichet's Arrogance Puts ECB, German Taxpayers at Risk

Monetization of debt is against ECB rules. However, so were the bailouts and so were Trichet's purchases of Greek and Irish sovereign debt.

Trichet blew it with his arrogance and the ECB (and/or German taxpayers) are on the hook for it.

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


Bailing Out the ECB; Hidden Cost of Saving the Euro; ECB Time Bombs Continue to Tick

Posted: 26 May 2011 10:56 AM PDT

With myopic eyes focused solely on problems in the US, I am wondering what would it cost to bail out the ECB?

Please consider The Hidden Cost of Saving the Euro on Der Spiegel International.
While Europe is preoccupied with a possible restructuring of Greece's debt, huge risks lurk elsewhere -- in the balance sheet of the European Central Bank. The guardian of the single currency has taken on billions of euros worth of risky securities as collateral for loans to shore up the banks of struggling nations.

ECB's Balance Sheet Contains Massive Risks





There are many of these ghost towns in Ireland, including 77 in small County Longford alone, which includes Carriglas. They could end up costing German taxpayers a lot of money, as part of the bill to be paid to rescue the euro.

That bill contains many unknowns, but almost none of them is as nebulous as the giant risk lurking in the balance sheet of the European Central Bank (ECB), in Frankfurt. Many bad loans have now ended up on that balance sheet, including ones that were used to build houses like those in Carriglas and elsewhere. No one knows how much they are worth today -- and apparently no one really wants to know.

Since the beginning of the financial crisis, banks in countries like Ireland, Portugal, Spain and Greece have unloaded risks amounting to several hundred billion euros with central banks. The central banks have distributed large sums to their countries' financial institutions to prevent them from collapsing. They have accepted securities as collateral, many of which are -- to put it mildly -- not particularly valuable.

Risks Transferred to ECB

These risks are now on the ECB's books because the central banks of the euro countries are not autonomous but, rather, part of the ECB system. When banks in Ireland go bankrupt and their securities aren't worth enough, the euro countries must collectively account for the loss. Germany's central bank, the Bundesbank, provides 27 percent of the ECB's capital, which means that it would have to pay for more than a quarter of all losses.

For 2010 and the two ensuing years, the Bundesbank has already decided to establish reserves for a total of €4.9 billion ($7 billion) to cover possible risks. The failure of a country like Greece, which would almost inevitably lead to the bankruptcy of a few Greek banks, would increase the bill dramatically, because the ECB is believed to have purchased Greek government bonds for €47 billion. Besides, by the end of April, the ECB had spent about €90 billion on refinancing Greek banks.

But even greater risks lurk in the accounts of commercial banks. The ECB accepted so-called asset-backed securities (ABS) as collateral. At the beginning of the year, these securities amounted to €480 billion. It was precisely such asset-backed securities that once triggered the real estate crisis in the United States. Now they are weighing on the mood and the balance sheet at the ECB.

No expert can say how the ECB can jettison these securities without dealing a fatal blow to the European banking system. The ECB is in a no-win situation now that it has become an enormous bad bank or, in other words, a dumping ground for bad loans, including ones from Ireland.

According to AFME figures, the total value of all outstanding asset-backed securities in the euro zone and the United Kingdom is an almost unimaginable €1.8 trillion. Of course, not all asset-backed securities are toxic. German banks, for example, package together car or small-business loans to ease pressure on their balance sheets. But the securities that end up at the ECB from peripheral countries like Greece or Ireland are often of questionable value. The central bank is supporting lenders that are in fact no longer viable. And the bombs continue to tick.
There is more in the article. Inquiring minds may want to give it a closer look.

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