luni, 8 august 2011

Interview with Robert Sheinbein About Creating Quality Content Graywolf's SEO Blog

Interview with Robert Sheinbein About Creating Quality Content Graywolf's SEO Blog


Interview with Robert Sheinbein About Creating Quality Content

Posted: 08 Aug 2011 10:35 AM PDT

Post image for Interview with Robert Sheinbein About Creating Quality Content

The following is a sponsored post for MadContent.com.

For those of you who missed the first interview be sure to read Robert Sheinbein Talks About LinkWheels. In today’s Interview we’re going to be talking about content and Panda, and creating quality content for your website. Hi Rob welcome back, one of the obvious things Google wanted to eliminate with the Panda Update was low quality content and content farms. What are some of the changes you think site owners and publishers have to make as far as existing content, and new content on their websites.

For me, Google Panda is one of the best things that Google has done! Most Internet users would have experienced trash sites in their search results while searching for a keyword before Panda! Since Panda, there is now a focus on quality. Gone, or almost gone, are the days where you can do tricks to get yourself ranked in Google. There are a few more tricks left but one thing is for sure is that these tricks are short term( 3 months to 18 months) and eventually you will be hit with a Google penalty if you do these tricks. I'm also sure that there is more to Panda than meets the eye. There will be many more updates not just from Google, but from the whole search engine community at large, and that is all good change!

So now what are we supposed to do? The first change website owners have to make is to move entirely away from low quality content. Actually, what needs to be done is to re-orient the site to visitors once again, and not just search engines. When there is engaging content on websites, and when the site is updated frequently, search engines automatically notice and will rank them high for the respective keywords. When there is good content, SEO becomes easy too!

Google has put out some recommendations for site owners affected by this update and what they should look into changing. One of the things many people in the Internet marketing community recommend is identifying low quality content, and updating or removing it. What do you think are some of the better ways to identify low quality content or content that might be problematic and how do you recommend dealing with it?

Site owners will know the source of their content. If they know that they've got spun or other low-quality content (or even worse –copied content), they'd do well to purge it all and start afresh – before the sites get a slap or a ban from Google. This is a better solution than just updating the content by making superficial changes. And it is necessary that there be frequent updates. Nothing works better than a website or a blog with frequent high-quality content updates.

You own a website copywriting service MadContent.com can you give my readers a brief overview of the service.

MadContent.com has been around for several years now, and we're absolutely proud of it! It is one of the very few pure-content service providers online, and we have worked with over 2000 separate websites in the last couple of years. We've also been on top of Google for most of our keywords, and we're doing better than ever. In the last 2 years, we've groomed a team of fabulous writers from all over the world, and we have them on a salary. That is why we can manage to deliver top quality content at prices which are so attractive. In the recent months, we've added Press Releases, Article Submissions, and E-Books to our arsenal, and the results have been quite good for clients. We have a totally customizable order form, where customers can order articles according to their own needs – keyword density, format, etc. We deliver quite fast – within 5-7 business days for large orders, and 3-4 days for smaller orders. Customers can start with as low as 1500 words in an order.

When we were speaking offline before this interview I had a few questions. Is this original content written by humans or is just “spun” content? Can I use this content anywhere, like my website or maybe guest posts on other websites? How do you verify the content being created hasn’t been copied from somewhere else?

Very valid question! We actually started off by having a small content team for our own internal customers, and that grew into MadContent.com. We value content quality and never stoop down to spinning and rewriting existing content. Our writers are dedicated to the highest standards of quality, and we have a strong code of conduct, which does not allow such practices. So yes, you can order content which you will use directly on your website home page! All our articles pass CopyScape, and we have an internal quality control team which proof checks every article before it reaches the customers. Once we send you the articles we relinquish control over them and will never use the articles again – even as samples to prospective customers. It is this work ethic which has brought us to where we are today and we always keep looking for ways to delight our customers!

What types of content do get the most requests for, or do you feel would help site owners and publishers the most? What are some unusual ways people have used your service that site owners might not think of right away?

About 50% of orders we get on MadContent.com are for SEO Articles. Since these have a wide range of applications – from usage on third party blogs to article sites, they get ordered the most. Then come articles for Submission to directories – which are longer than the normal SEO articles. Customers have the flexibility of choosing the word count of each set of articles they order with us but we've noticed most people choosing 500-600 word articles for submission. Press Releases come next (which are also 500+ words). Website Content is another regular niche – with customers ordering content which will actually be used on their websites directly. There are several interesting uses people have come up with – product reviews, product descriptions, sales copy, and image / video descriptions keep coming in frequently. We also get description orders for sales sites as well.

When I first started using copywriting services and authors, one of the biggest difficulties I had was “spec’ing out” a project, or giving clear instructions on what I wanted as an end result. My problem was I assumed people on the other end of the screen knew what I wanted, without me telling them, once I started giving clearer directions as far as tone and style, and an example or two, the results came a lot closer to my expectations. What are some tips you can share about providing better instructions for people who want to try to use your service?

Another fabulous question! You hit the nail on the head when you say that most people do not have an exact idea about what they want. If such an order comes in – where the client gives us vague instructions, we normally send them a mail asking for more details, and in the mail we mention the kind of details we want – like what do they aspire to do with the content, and so on. That helps them get more specific. Also, we are going to make another change on the site to increase our customer support. We are adding a 24/7 Live Chat operator – so that customers can actually chat with one of our people before placing an order. Our sales professionals are trained to ask the right questions, allowing customers to choose the right kind of content and the right keywords. That should help! We have been slowly adding this service to all our sites after we bought the company recently. We have noticed over a 100% increase in sales since we have added the service to our sites. It does take time to train the live chat operators but "wow" the result are amazing. You can learn more about the service at http://www.www.livechatagent.com

Let’s pull out the crystal ball, as website owners the best thing we can do is not try to be where Google wants us to be today, but to try and be where Google is going to be in 2-3 years. So what do you think are some forward thinking strategies or tactics people can use as far as creating content that will have the longest life, and be the most effectiveness in Google’s eyes?

The first and foremost thing customers need to do is to get their keywords right. A keyword strategy is not something which can be changed every other week! Once the right keywords are in place, content starts. Having content which is in sync with the primary keywords of the website – at a low density of about 2% – is the kind of content which will have longevity. This is the content which will yield best results too. And a content based SEO strategy is best done on a regular basis. Updating content on a regular basis is much better than posting a thousand articles at one go. Also, website owners should make sure that they use tools like RSS, Ping, and Social Media to get people into the content they write.

Thanks for taking the time to talk to me today Rob, since you’ve provided some helpful tips and advice, I’ll give you this opportunity to remind everyone about your copywriting service and how it can help them.

Thanks MadContent.com is probably the most economical place for quality content today. And most of your readers probably already know that! We specialize in writing original, keyword-rich, and engaging content for all kinds of websites (with the exception of adult, gambling related, and a few other genres). Our flexible order form and quick turnaround ensure that we fit right into your SEO strategy. We are also the backend provider of choice for several large SEO consultants and Web designers. Try out MadContent.com (if you haven't done so already), and we know that you won't look for a content provider ever again.

Rob Sheinbein provides many services to website owners. His full list of services can be found by visiting http://www.ezd.com

The preceding has been a sponsored post. Find out more information about sponsored posts.

photo credit: Photospin

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Interview with Robert Sheinbein About Creating Quality Content

Watch Live at 1 p.m. EDT: President Obama delivers a statement

The White House Your Daily Snapshot for
Monday, August 8, 2011
 

Watch Live at 1 p.m. EDT: President Obama delivers a statement

This afternoon at 1 p.m. EDT, the President will deliver a statement to the press in the State Dining Room. You can watch live at WhiteHouse.gov/Live.

Photo of the Day



President Barack Obama walks across the South Lawn of the White House before departing for Camp David, Aug. 5, 2011. (Official White House Photo by Lawrence Jackson) 

In Case You Missed It

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

President Obama Directs New Atrocity Prevention Measures
A new tool to strengthen our ability to prevent genocide and other crimes against humanity

Startup Stories: A Race for Better Healing Therapies
How President Obama's capital gains tax cut is helping entrepreneurs develop a promising new medical treatment

Meeting the President’s Challenge: Businesses Supporting our Veterans
The public and private sector reacts very positively to President Obama's new proposals on finding jobs for our military veterans

Today's Schedule 

All times are Eastern Daylight Time (EDT).

10:00 AM: The President receives the Presidential daily Briefing

1:00 PM: The President delivers a statement to the press WhiteHouse.gov/live

1:45 PM: Press Briefing by Press Secretary Jay Carney WhiteHouse.gov/live

6:40 PM: The President delivers remarks at a DNC event

7:40 PM: The President delivers remarks at a DNC event

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

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Seth's Blog : Selling the benefits of charity

Selling the benefits of charity

Everything we do, we do because somehow it benefits us.

We go to work for the satisfaction (I hope) and because we get paid. We smile at a stranger because it feels good to be nice (and perhaps we'll get a smile in return). We pick up litter when no one is looking because telling ourselves a story about being a good person is worth the effort.

Some people have figured out that charity is an incredible bargain. For the time and money it costs, the benefits exceed what could be attained in almost any other way. A bargain compared to chocolate, or an amusement park visit or buying a shiny new car you probably don't need.

For some, the benefit is in the way society respects the donor. Hence buildings named after Andrew Carnegie or Bill Gates. For many, though, hidden charity is worth far more, because the incentives are purer. A donation earns you peace of mind.

I'm fascinated by people who see no benefit in donating to charity, who, in fact, see a negative. My hunch is that for these people, the worldview is: if charity is important, I better give more. If that's true, the thinking goes, then whatever I give isn't going to make me feel good, it's going to make me feel worse... for not giving enough. Easier to just avoid the issue altogether.

I think marketers of causes that do good have a long way to go in selling the public on the core reason to give... don't give because you get a tote bag, or a prize at the charity auction or even a plaque. The scalable unique selling proposition is that being part of the community is worth more than it costs.

 

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duminică, 7 august 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Do These Idiots Realize How Stupid They Sound?

Posted: 07 Aug 2011 08:36 PM PDT

Just how idiotic is it to seek to prevent what has already occurred? I suggest that is blatantly idiotic. Here is a case in point.

Earlier this evening, I noted ECB Seeks to Avert What Has Already Happened
I cannot help but laugh out loud at some of the headlines this evening. By any rational measure, confidence has collapsed, yet G-7 Seeks to Avert Collapse in Confidence

That the ECB needs to take these actions is a 100% sure-fire sign that investors have lost confidence.
That is ridiculous enough, but the height of absurdity is found in the G-7 Statement on Renewed Strains
We reaffirmed our shared interest in a strong and stable international financial system, and our support for market-determined exchange rates.
Today the G-7 advocated both currency and and bond-market interventions "whatever it takes" yet sings the praises of "market-determined exchange rates".

I really do have to ask "Do These Idiots Realize How Stupid They Sound?"

Definition of Idiot

The above question is more complicated than it seems at first glance. In typical usage, "idiots" by definition do not realize what they are saying.

However, let's throw out a definition as follows: Idiot - Someone devoid of common sense who lives in the shelter of academia or politics, with no real-world experience. Also included in this definition is someone with real-world experiences yet ignores the real world in favor of academics, politics, or desires.

Bernanke with a PhD, and Krugman with a Noble Prize both qualify as potential idiots under the above definition. Bear in mind that sometimes (when it suits their goals) both may say things that make perfect sense. I agree with Krugman about 20% of the time. Such is the problem with this definition of idiocy.

Common Sense vs. Purposeful Idiocy

On grounds of common sense, anyone simultaneously praising free markets and intervention on the exact same issue is an idiot.

But Wait! What if the statement was a lie on purpose, hoping that idiots in mainstream media would not catch the lie?

Recall that Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister says "When it becomes serious, you have to lie"

Is the support for free markets just another purposeful lie?

One cannot easily determine the truth in these instances. However, in accordance with Occam's Razor, the simplest explanation is likely the best.

One case suggests that potential idiots are telling lies on purpose. The simple case suggests that idiots can be expected to behave like idiots.

Thus, I come to the conclusion that "These Idiots Do Not Realize How Stupid They Sound".

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


ECB Seeks to Avert What Has Already Happened; Raspberries and Gold

Posted: 07 Aug 2011 06:13 PM PDT

I cannot help but laugh out loud at some of the headlines this evening. By any rational measure, confidence has collapsed, yet G-7 Seeks to Avert Collapse in Confidence
Group of Seven nations sought to head off a collapse in global investor confidence after the U.S. sovereign-rating downgrade and a sell-off in Italian and Spanish debt intensified threats to the world economic recovery.

The G-7 will take "all necessary measures to support financial stability and growth," the nation's finance ministers and central bankers said in a statement today. Members agreed to inject liquidity and act against disorderly currency moves if necessary.

The European Central Bank indicated separately that it will buy Italian and Spanish bonds and Japan signaled further dollar purchases in a sign of concern that prices are becoming unhooked from fundamentals. Stocks extended last week's decline, the biggest since 2008, adding to risks for a global rebound already burdened by European fiscal cuts and elevated U.S. unemployment.
That the ECB needs to take these actions is a 100% sure-fire sign that investors have lost confidence.

Raspberries and Gold

"The G-7 just gave a raspberry to S&P and basically said its analysis is irrelevant," said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago.

I can top that. The futures so far have given the raspberry to the ECB and the G-7. Moreover, gold has given the raspberry to nearly everything else. Grain, energy, and equity futures are all trading lower. However Gold is up $34 to $1684 and silver is up $1.18 to $39.39.

Addendum:

The feed on Zero Hedge has been messed up all evening. It has been both duplicated and not working. I am not sure if this is universal or not. However, links are now working (at least for me) but some of them may still be duplicated.

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


S&P Futures Open Down 30 Points, -2.6%; ECB to "Actively Implement" Bond Purchases

Posted: 07 Aug 2011 03:02 PM PDT

What started out as an extremely poor idea has now turned into a bet the bank bond-buying strategy as ECB Signals Purchases of Italian, Spanish Bonds.
The European Central Bank said it will "actively implement" its bond-purchase program, signaling it is ready to start buying Italian and Spanish securities to counter the sovereign debt crisis.

In a statement issued in the name of President Jean-Claude Trichet after an emergency teleconference meeting of policy makers, the Frankfurt-based ECB welcomed Italy and Spain's efforts to reduce their budget deficits. It also called on all euro-area governments to follow through on the measures agreed at a July 21 summit, including allowing the European Financial Stability Facility to purchase bonds on the secondary market.

"It is on the basis of the above assessments that the ECB will actively implement its Securities Markets Program," the central bank said. "This program has been designed to help restoring a better transmission of our monetary policy decisions -- taking account of dysfunctional market segments -- and therefore to ensure price stability in the euro area."

Buying Italian and Spanish debt may open the ECB to accusations it is bailing out profligate nations, breaching a key principle in the euro zone's founding treaty and eroding its credibility. Germany's Bundesbank opposes the move.

"The ECB is once again intervening as the last line of defense," said Jacques Cailloux, chief European economist at Royal Bank of Scotland in London. "The intervention will put a halt to the bond market crash that some member states faced. However, the ECB is now in for the long haul and will potentially have to buy up to half of the Italian and Spanish traded debt, the biggest risk-pulling effort ever engineered in Europe."
The initial reaction from the market was swift and severe. S&P futures opened up 30 points in the red, Nasdaq futures 47 points in the red.

The night is still young and the intervention in Italian bonds begins tomorrow.

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


France AAA Rating on the Line; S&P Says 1 in 3 Chance of Further US Downgrades; Contagion in Downgrades? Currency Crisis Escalates; Euro Endgame

Posted: 07 Aug 2011 11:58 AM PDT

With the US AAA rating gone, how long can France hold its AAA rating? I suspect not long. So where will that leave the ECB attempting to put a circle around Italy? Will Germany have to backstop all of Europe?

Those are the new key questions and notice how the key question list keeps growing larger in size and significance.

France Vulnerable to Rating Cuts

Bloomberg reports AAA France May Be Vulnerable After U.S. Cut

The decision by Standard & Poor's to downgrade the U.S. credit rating leaves France as the AAA country most likely to lose its top grade, some investors and economists say.

France is more expensive to insure against default than lower-rated governments including Malaysia, Thailand, Japan, Mexico, Czech Republic, the State of Texas and the U.S.

"France is not, in my view, a AAA country," said Paul Donovan, London-based deputy head of global economics at UBS AG. "France can't print its own money, a critical distinction from the U.S. It is not treated as AAA by the markets."

"If Italy and Spain have difficulties, are we sure that, for instance, France can still be considered a 'core' country?" said Marco Valli, chief euro-area economist at UniCredit Global 'Core' is becoming a narrower group of countries."

While France's debt of 84.7 percent of gross domestic product is less than Italy's 120.3 percent, as a percentage of economic output it has risen twice as fast as Italy's since 2007. French government debt totaled 1.59 trillion euros ($2.3 trillion) at the end of 2010, according to the European Union; Italy's was about 1.8 trillion euros. France has had a larger budget deficit than Italy every year since 2006. S&P rates Italy A+, four levels below France.

"If French authorities do not follow through with their reform of the pension system, make additional changes to the social-security system and consolidate the current budgetary position in the face of rising spending pressure on health care and pensions, Standard & Poor's will unlikely maintain its AAA rating," S&P said in a June 10 report.
The S&P warned the US, now it has warned France. Notice how the rating agencies want austerity. I asked some tough questions above, here is a cream-puff question: Short-term, what will all these austerity measures do to global growth?

Japan Threatens More Yen Intervention

Adding to the global tension, Japan Official Warns of More Yen Selling

A Japanese Finance Ministry official said the government is ready to sell yen again following last week's move if it sees speculative trades driving the currency higher.

Further intervention would "maintain the effect and warn those who make unusual moves" in the currency market, Vice Finance Minister Fumihiko Igarashi said on a television program of public broadcaster NHK yesterday.

Japan acted alone in selling the yen last week, in contrast with a previous intervention in March that was coordinated among the G-7. The Bank of Japan added 10 trillion yen of monetary stimulus on Aug. 4, hours after the Finance Ministry's move.

Baba and Lee at Goldman Sachs said that Japan has been buying U.S. Treasuries when it sells yen, leaving it with more than 30 trillion yen in unrealized losses that will test the government's "true determination" to combat the currency's rise.

Japan maintains its trust in the ability of the U.S. to pay its debts and expects Treasuries to remain an attractive investment, a government official from the Asian nation said yesterday on condition of anonymity. Japan is the second-largest international investor in Treasuries, behind China.
Countries do not care much about losses on treasury holdings. They care about exports. Notice how even amidst the S&P downgrade of US debt Japan's reaction is to buy more.

I covered this topic at length on Friday in Reserve Currency Curse: Idea China to Stop Buying Treasuries After S&P Downgrade is Fallacious; US Would Welcome China Not Buying US Treasuries!.

Global Currency Wars

In spite of its stated "strong dollar" policy, clearly the US wants a lower dollar. It is equally clear (and stated) that Japan wants a lower Yen, Brazil wants a lower Real, Switzerland wants a lower Swiss Franc, and China does not want the Yuan to rise.

Yet every month, someone talks about China or Japan or some other country dumping treasuries or dumping the dollar.

In case you missed it, please consider Global Currency Wars Enter New Stage; Brazil Calls Off Truce, South Korea Reviews "All Possibilities", Philippines Threatens "Prudential Limits".

When does this madness blow sky high in a global currency crisis? I will tell you it is going to happen, I just cannot tell you when.

Europe's Structural Problems

Structurally the only way to resolve the European mess is

  1. Adoption of a European nanny state complete with common bonds and common fiscal policies
  2. Partial breakup of the Eurozone

Euro Endgame

Would Germany go along with the former? How difficult is the latter?

I cannot answer the former but the latter is easier said than done. Greece for example would immediately blow up in hyperinflation if it was forced to immediately go back on the Drachma. No one would want that. Capital and human capital would both flee Greece. The same might apply to Portugal and Spain.

Germany could leave. Otherwise, slowly but surely the European Nanny State solution will be forced down the throats of screaming German taxpayers.

The endgame is not clear, and both option 1 and 2 involve huge unresolved issues with global consequences. What is clear is the current path is unsustainable. There has never been a successful currency union in history that did not also involve a fiscal union as well. This time will not be different.

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


Israel, Dubai, Saudi Arabia Shares Plunge in Wake of S&P Downgrade; Israel Drops 7%, Dubai 3.7%, Saudi 5.5%; Is S&P Downgrade to Blame?

Posted: 07 Aug 2011 10:25 AM PDT

The Mideast markets typically run Sunday to Thursday. However, the Saudi Arabia market is open on Saturday. The global selloff hit Saudi on Saturday and spread to Israel and Dubai on Sunday.

Israel Drops 7 Percent, 19.9% Since April 21

Israeli Stock Index Tumbles Most Since 2008
Israel's benchmark stock index plunged the most in almost 11 years after Standard & Poor's lowered the U.S. credit rating and amid concern the widening sovereign debt crisis in Europe will stall global growth.

Israel Discount Bank Ltd. (DSCT), the country's third-largest lender, skidded 10 percent. Nice Systems Ltd. (NICE) slumped the most since November 2008. All 25 shares in the TA-25 Index tumbled, pushing the gauge down 7 percent, the biggest decline since October 2000, to 1,074.27 at the 4:30 p.m. close in Tel Aviv. The index is near the so-called bear-market territory after retreating 19.9 percent from a record high of 1,341.89 on April 21.
Dubai Shares Drop 3.7 Percent

Dubai Shares Drop Most Since February
Emaar Properties PJSC (EMAAR), developer of the world's tallest tower, slumped 5.3 percent. Arabtec Holding Co. (ARTC) dropped the most since March after it said second-quarter profit fell 74 percent. The DFM General Index (DFMGI) lost 3.7 percent, the most since Feb. 28, to 1,484.31 at the 2 p.m. close in Dubai. The measure has plunged 12 percent from this year's high in April, entering a so-called correction.
Saudi Shares Plunge 5.5%

Saudi Shares Plunge as U.S. Downgrade Fuels Concern Over Global Economy
Saudi Arabian shares tumbled for a third day, sending the benchmark index to its largest intraday drop since March, amid rising concerns about the global economy after Standard & Poor's cut the U.S.'s credit rating for the first time.

Saudi Basic Industries Corp. (SABIC), or Sabic, the world's biggest petrochemicals maker, fell the most in five months. Al Rajhi Bank (RJHI), the kingdom's largest publicly traded lender by market value, reached its lowest price since March.

The 147-company Tadawul All Share Index (SASEIDX) slumped 5.5 percent to 6,073.44, the steepest decline since March 1, at the 3:30 p.m. close in Riyadh. All 15 industry groups fell. The gauge has fallen 10.5 percent from the year-high of 6,788.42 on Jan. 16.

"The Saudi market is reacting to the steep declines in global markets over the weekend," said Asim Bukhtiar, an equity analyst at Riyad Capital. "Growing concerns of the U.S. relapsing into recession are driving sentiment."
S&P Downgrade Did Not Cause This

Analysts worded all these reports as if the S&P downgrade was to blame or partially to blame. The facts of the matter are these.

  1. The global economy is slowing
  2. European debt crisis has escalated
  3. A global currency war is underway
  4. The US is headed for recession if not in recession now
  5. Europe is already in a recession in my estimation

The downgrade itself is not the problem. Rather the S&P downgrade (long overdue) is one of many symptom of a much larger global financial crisis. Nonetheless, expect many demagogues to make S&P the scapegoat if the decline escalates this week.

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


Decade of Stimulus Yields Nothing But Mountain of Debt; What to Do About It?

Posted: 07 Aug 2011 12:13 AM PDT

Is there any kind of stimulus the US did not try in the last 10 years?

  1. We had 1% interest rates from Greenspan fueling housing.
  2. We had wars from Bush and Obama fueling defense industry employment.
  3. We had two rounds of Quantitative easing from the Fed.
  4. We had cash-for-clunkers.
  5. We had two housing tax credit packages.
  6. We had an $800 billion stimulus package from Congress for "shovel-ready" projects.
  7. We had stimulus kickbacks to states.
  8. We had HAMP (Home Affordable Mortgage Program).
  9. We had bank bailouts out the wazoo to stimulate lending.
  10. We had Small Business lending programs.
  11. We had central bank liquidity swaps.
  12. We had Maiden Lane, Maiden Lane II, and Maiden Lane III
  13. We had Single Tranche Repurchase agreements
  14. We had the Citi Asset Guarantee
  15. We had TALF, TARP, TAF, CPFF, TSLF, MMIFF, TLGP, AMLF, PPIP, and PDCF
  16. We had so many programs the Fed must have run out of letters because they were not given an acronym.


That is a partial list. Other than bailing out bondholders what exactly do we have to show for any of it? The one-word answer is "debt".

Decade of Stimulus Yields Nothing But Debt

Caroline Baum wrote an excellent article on this theme. It was so good I asked if I could reproduce it in entirety.

With permission please consider Decade of Stimulus Yields Nothing but Debt: Caroline Baum
When George W. Bush took up residence in the White House in January 2001, total U.S. debt stood at $5.95 trillion. Last week it was $14.3 trillion, with $2.4 trillion freshly authorized by Congress Tuesday.

Ten years and $8.35 trillion later, what do we have to show for this decade of deficit spending? A glut of unoccupied homes, unemployment exceeding 9 percent, a stalled economy and a huge mountain of debt. Real gross domestic product growth averaged 1.6 percent from the first quarter of 2001 through the second quarter of 2011.

It doesn't sound like a very good trade-off. And now Keynesians are whining about discretionary spending cuts of $21 billion next year? That's one-half of one percent. And it qualifies as a "cut" only in the fanciful world of government accounting.

The Budget Control Act of 2011 will save $917 billion over 10 years relative to the Congressional Budget Office's baseline. It leaves the tough work to a bipartisan congressional committee of 12, to be appointed by the leadership in each house. If this supercommittee fails to agree on a minimum of $1.2 trillion of additional savings over 10 years, automatic spending cuts -- evenly divided between defense and nondefense -- will kick in.

Is there any reason to think the same folks who couldn't agree on a grand bargain this past month will join hands and find commonality in the next three, with one month off for vacation?

Rosy Scenario

Even if the committee agrees on the prescribed savings by Nov. 23 and Congress enacts them by Dec. 23, as required, laws passed today aren't binding on future congresses.

Throw in the fact that revenue and budget forecasts tend to be overly optimistic, and there's even less reason to think Congress has put the U.S. on a sound fiscal path.

In a July 2011 working paper for the National Bureau of Economic Research, Harvard economist Jeffrey Frankel identified a pattern of over-optimism in official forecasts, a bias that gets bigger in outer years. (Who can forget the CBO's 2001 estimate of a 10-year, $5.7 trillion budget surplus?) A fixed budget rule, such as the euro area's Stability and Growth Pact with its mandated deficit-to-GDP ratios, only exacerbates the tendency.

"Political leaders meet their target by adjusting their forecasts rather than by adjusting their policies," Frankel writes.

First Installment

The deal hashed out in Washington at the eleventh hour this week does nothing to curb the unsustainable growth of entitlement spending -- on programs such as Medicare, Medicaid and Social Security. Medicare outlays have risen 9 percent a year for the last 30 years in a period of stable demographics, according to Steven Wieting, U.S. economist at Citigroup Inc. The automatic spending cuts outlined in the budget act would limit reductions in Medicare expenditures to no more than 2 percent a year.

By the end of 2012 or start of 2013, the federal government will be back at the trough with a request for additional borrowing authority. The debt will keep rising, and the ratio of publicly held debt to GDP will increase from 62 percent last year to as much as 90 percent in 2021, according to some private estimates, depending on what Congress does about the expiring tax cuts, the Medicare "doc fix" and the alternative minimum tax.

The CBO's estimate of $2.1 trillion in savings over 10 years is well short of the $4 trillion Standard & Poor's says is necessary to stabilize the debt and avoid a rating downgrade.

'Architectural Change'

No matter. Some prominent Keynesians are advocating more spending now for an economy that is sputtering. Alas, there is little appetite in this country, and less in Congress, for more spending in light of the questionable results. A lost decade doesn't seem like a good return on an $8.35 trillion investment. (For purists, only $6 trillion of the increase was in marketable debt, the kind of good old deficit spending Keynesians love.)

Maybe it's time to try something new and different. In 2002 I wrote a column titled, "How About Some Tax Reform Along With Tax Relief?"

How about it? Get rid of the loopholes. Better yet, scrap the entire tax code, which would decimate the lobbying industry. Implement a flat tax or a national sales tax. The time has come for what former Treasury Secretary Paul O'Neill calls "architectural change."

Can the Code

The current tax code is burdensome, inefficient and costly to administer. O'Neill says it costs the Treasury an estimated $800 billion annually, divided equally between administrative costs and uncollected revenue.

Eliminate the corporate and individual income tax, he says, and replace them with a value-added or consumption tax, with tax refundability for lower-income households.

"We should focus the tax system on raising revenue for the things we as a society need," O'Neill says.

Of course, what society needs is a matter of opinion. Without strong economic growth, the options are more limited, the choices more difficult. Fiscal stimulus can have only a short-term impact. The government taxes or borrows from Peter to pay Paul, reflecting a temporary transfer of resources, nothing more.

What does the nation have to show for chronic short-term thinking and policies like these? Long-term problems and a mountain of debt.
Keynesians Always Want More Stimulus

Baum wrote "Some prominent Keynesians are advocating more spending now for an economy that is sputtering."

She is too polite, but to follow suit I will not name-drop either.

Keynesians always want more stimulus. They claim they don't, but there is never a time any of them ever wanted to run surpluses or even a balanced budget out of fear of ending a nascent recovery or starting a "recession of choice" as one Keynesian clown put it.

More to the point, the idea that government or the Fed can micro-manage the economy stepping in as needed is absurd. Heck the Fed could not even see a housing bubble or a recession and it is supposed to manage the economy?

Look at the supporters of Fannie Mae in Congress. Look at Democrats whining about cutbacks in social programs 100% of the time. They are supposed to run a surplus?

Lesson of Japan

For over 20 years Japan tried Monetarist (various QE and interest rate) stimulus as well as Keynesian (fiscal) stimulus and all it has to show for it is the highest debt-to-GDP ratio of any major country in the word. Rest assured that is going to matter sometime within the next 5 years.

Right now we are following their path and it clearly is not working.

How About We Try Something Different?

I am with Caroline here, how about trying something different like scrapping the tax code?

I will add my standard three ideas 100% guaranteed to help cities and states.

  1. Scrap Davis and all prevailing wage laws
  2. Eliminate collective bargaining of public unions
  3. Institute national right-to-work laws

If you want to try something really radical (yet perfectly sensible), here is an idea that is also guaranteed to help: get rid of the Fed and its perpetual bubble-blowing, moral-hazard, bail-out-the-bondholder policies.

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


Seth's Blog : Bypassing the leap

Bypassing the leap

Every now and then, a creative act comes out of nowhere, a giant leap, a new way of thinking apparently woven out of a brand new material.

Most of the the time, though, creativity is the act of reassembling many elements that are already known. That's why domain knowledge is so critical.

The screenwriter who understands how to take the build that went into the classic Greg Morris episode of the Dick Van Dyke show and integrate it with the Maurce Chevalier riff from the Marx Bros... Or the way Moby took his encyclopedic knowledge of music and turned into a record that sold millions... if you don't have awareness and an analytical understanding of what worked before, you can't build on it.

That's one of the reasons that the recent incarnation of the Palm failed. The fact that the president of the company had never used an iPhone left them only one out: to make a magical leap.

It's not enough to be aware of the domain you're working in, you need to understand it. Noticing things and being curious about how they work is the single most common trait I see in creative people. Once you can break the components down, you can put them back together into something brand new.

 

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