joi, 12 ianuarie 2012

Let’s See Those Numbers

I could keep talking, or I could show you the numbers. The following graph shows Spearman correlations (r-values) for 13 variables with UPVs. Blue bars are social factors, green are community factors, and purple are content factors:

Correlations with Unique Pageviews

Most of the variables are self-explanatory, but a few that might need elaborating:

Words (Post) is the word count of the post’s content
Words (Title) is the word count of just the post’s title
Headers is the count of all header tags (<h1>, <h2>, etc.)
Bold Tags is the count of all <b> and <strong> tags
Lists is the count of all <ol> and <ul> lists

We use Spearman rank-order correlations because many of these variables tend to be skewed (for example, some posts get a ton of Tweets, whereas many get very few). As always, correlation does not imply causation. I originally captured both Pageview (PV) and Unique Pageview (UPV) data, but the correlation between them was very high (r = 0.998), so I decided to just keep it simple. Every cited r-value is significant at p < 0.01. Many thanks to our resident stats guru, Dr. Matt Peters, for helping me pull the numbers together.

What Does It All Mean?

First off, I’d better explain the “Post Age” data (in red). That’s actually a negative correlation with UPVs. In other words, the older the post, the less traffic it got. That may sound counterintuitive, but remember that the traffic data was only from 2011, whereas the posts could be written at any time. Naturally, posts written in 2011 tended to get more traffic in 2011. In retrospect, that seems obvious. Interestingly, thumbs up was also negatively correlated with post age (r = -0.76) – the other reality is that the community has just grown over time.

Clearly, social factors had the strongest influence in this data set. Causality is a bit tough to pin down, as we do have a chicken-vs-egg problem. Likes, for example, may drive sharing and traffic, but posts with a lot of traffic will naturally get more clicks on the Like button. Which came first? Probably a little of both. As we saw in the smaller data set last year, there does seem to be “cross-talk” between the 3 social buttons. People that like a post will naturally +1 it. For reference, here are the inter-correlations between social factors:

Social Factor Inter-Correlations

As you can see, they’re pretty highly correlated with each other. It’s hard to separate why, at least from this data. It could be that (1) The best content attracts the most social signals and the most traffic, (2) People who regularly use social tend to use all 3 services, or (3) People use all 3 because the buttons are close to each other.

Community factors are similarly tricky – posts with more traffic get more thumbs, all else being equal. Still, it seems that our community metrics have some validity – posts that get a lot of thumbs up and comments tend to also get a lot of traffic.

The content factors are the weakest group, as a whole, but here the causality is at least clear. No post magically got longer or had more images in it because more people visited it. It does appear that longer posts tended to fare pretty well with our audience.

Where Do We Go From Here?

While we can’t predict the future of any given social network, and Google+ is still in its infancy (even by internet time), I think that 2011 was the year where social really made its mark. It’s clear that social is driving traffic, and the impact of social factors on SEO is growing fast.

I think both studies suggest that you shouldn’t be afraid to use all 3 of the major social buttons. I wouldn’t go crazy (if you have 50 social buttons, you weaken them all), but the inter-correlations strongly suggest that, at worst, the 3 big buttons don’t hurt each other. People who regularly use social probably send multiple signals.

It’s also interesting to me that long posts seem to do pretty well on SEOmoz. When I wrote my duplicate content mega-post, it was a bit of an experiment. We had talked about doing another guide for e-commerce SEO and opted to try a long-form post on one sub-topic instead. I don’t think that every post needs to be that long, but there’s certainly room for mega-posts when the topic merits them. To give credit where credit’s due, Oli’s mega-post made that point before mine did.

Of course, every audience is different. I admit that I do these analyses as much for myself as anyone else – I’m really fascinated by trying to figure out what works and what doesn’t. Much like with SEO in general, though, “quality” is a complicated thing. If you write a long post just to fill up space, you’ll have a mountain of crap instead of a pile. Use the data wisely.

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Ring in the New Year with New Moz Features!

Posted: 11 Jan 2012 06:15 AM PST

Posted by Erica McGillivray

Holy smokes, I don't think our product and development teams have slept since Thanksgiving; they're probably really dreaming of figgy pudding with all the new features they've been creating. These four features: universal search, historical link metrics, custom reports, and branded keywords are definitely squee-worthy. Plus, there's a bonus that you might've not heard about yet.

I realize that for you die-hard Mozzers -- yes, those of you checking your RSS reader while everyone else watched shiny disco balls drop from the sky -- this may be a little bit of a repeat. This is more for those of you who are like me and spent most of your holiday break playing with your family's new puppy, eating pumpkin pie, and airing grievances at Festivus parties. (My cat swore he'd finally get a job in 2012, lazy bum.)

Onto the features...

Custom Automated Reports: Make the data talk for you.

"I need that report..." You know what follows. Or you know the reminders that pop up on your calendar every Monday or every 1st of the month telling you it's time for reports.

Boss Cat Doesnt Believes Ur Excuses

Take a deep breath. SEOmoz reports now are customized and automated! Instead of logging in every week or month just to pull numbers for your boss, client, or other person-in-need, you can concentrate on making the perfect swirl of cream in your coffee or working on improving your site's SEO while being assured your report's arriving on time.

Send up to 5 people .pdf reports of your keyword SERPs, crawl errors, and more. Make your boss happy and be a superhero. Learn how to set them up.

Branded Keywords: Separate and track them as a group

One of the most important segmentation you can do in your SEO analytics is to look at the differences in rankings and traffic between your branded and non-branded keywords. By setting up some simple rules, you'll be able to automatically label which keywords are branded. (You can also add other labels for other groups your business may need.) You'll be able to filter to clearly see improvements or declines.

Tip: Don't forget to set up your Google Analytics profile to your campaign so you can dive into traffic, in addition to your rankings.

Why is this important?

To really dive deeply into SEO, you need to recognize differences in keywords. Different groupings have different needs -- sometimes even different customers! -- and need to be optimized differently.

Your brand's name is generally a powerful signal. Typically, most companies find that branded keywords generate the majority of their organic traffic. But if your brand name's dropping that's a sign you need to work on some brand building and getting your name out there.

Instead of setting up crazy filters in Google Analytics, you can now see both your rankings and your traffic as they change without pain. And it's so easy to set up!

You want to gain insights into your groupings of keywords so you can give shape to your plans for SERP improvements. As I was filtering through my own analytics for this post, I found through this feature that my non-profit GeekGirlCon needs to spend some more time on non-branded keywords since 80%+ of our organic traffic's coming through via our brand! Group behavior helps you see keywords more clearly and come up with better actionable plans. More on this update.

Universal Search: Holy local search SERP!

Fresh out of the Moz laboratories, we just launched our first venue into Universal Search yesterday. Like you, we've been closely monitoring the rise of Universal Search results and seeing Google's results serving up more personalized results. There's local, video, shopping, images, news, and more. Traditional organic rankings are being pushed further and further down the page. How's an SEO to keep up?

search for "vegetarian food"

We're working on making it easier for you to track your SERPs and know exactly where you stand in Universal Search.

Why is this important?

Rankings are more than just 10 SERPs these days, especially if people are looking for your business locally or a certain product you sell. The more relevant information -- whether it's location, hours, phone number, catalog, pictures of the outside of your shop -- that they can find the better.

Plus, if you show up multiple times on the first page, you look like the authority over your competitors. Clearly, she who has the most SERPs wins. (Someone please make me that t-shirt.)

Now when you start tracking keywords with local results too, we'll let you know where you are. And you'll also be able to figure out where you aren't if that keyword has local rankings, but just not for you.

Local SERP hover

Looking at how Google personalizes everyone's searches based on local gives you a different way of looking at your page optimization. You may realize that some terms are extremely important locally and other's not so much. You may find new competitors or that known competitors don't rank well for local.

The more relevant you can be for Google's Universal Search, the more relevant you're going to be for your customers in the long-run. Which just translates into customer happiness. How-to dig into your local SERP rankings in PRO.

Historical Link Metrics: Rock your data

We now keep track of your historical link metrics. That's right, access information from your numbers going back to October 2011 or when you first set up your campaign, whichever came first.

Instead of digging back through spreadsheets that you downloaded, you can access this information right in SEOmoz's PRO app in your campaign. See your improvements in link building just jump right out at you. Or see where the competition is leaving you in the dust.

Don't run around collecting old numbers when you can start investigating your site's link metrics' strengths and weaknesses today. Read more on accessing this invaluable resource.

Mystery Solved!

Bonus...New Link Directory

Yes, we updated the Link Directory and rolled it in glitter just for you! Directory listings can still help your link juice a little bit. But you want to make sure those sites are quality ones, so the signal doesn't go the wrong way. Filter directories by category, DA, and MozRank and add your voice by thumbing them up or down. Start evaluating quality directories today.

*beep beep* --> That's Roger Mozbot sharing in the excitement.

Hope you enjoy all the New Year's gifts from us at SEOmoz and that they enhance your SEO reporting, planning, and execution. Like you, we have big goals for 2012, and our number one goal is to help you achieve your inbound marketing goals with the best analytics we can provide.

Want more info? Join tomorrow's webinar!

For more insights into these new features, tune into tomorrow's webinar at 10:30am PST (6:30pm GMT) for Upgrade Your SEO Reporting with Local Rankings, Historical Link Metrics, Branded Keywords, and Custom Reports. Join Mozzers Adam Feldstein, Karen Semyan, Samantha Britney, Miranda Rensch, and me as we walk you through SEOmoz latest PRO tool updates -- universal rank tracking for local search, historical link metrics, branded keywords, and custom reports -- and give you tips and tricks on how to make them work for your SEO and greater inbound marketing efforts. Bring your questions! Register today; it's free.

Please let us know how you're enjoying these new features and how you're using them to make your site(s) even more awesome. If there's something you want to see added to these features or they make you think of another feature you'd love to have, don't be shy and leave us a feature request.

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Everything You Need to Know About Insourcing

Your Daily Snapshot for
Thursday, January 12, 2012

Everything You Need to Know About Insourcing

After decades of watching American companies outsource jobs to other countries, we're beginning to see entrepreneurs and manufactures insource, making the decision to keep factories and production facilities here in the United States—or even bring jobs back to the U.S. from overseas.

Find out why insourcing is so important and see what the President had to say at the "Insourcing American Jobs" forum yesterday.

SEOptimise

How Google Search Plus Your World Will Impact SEO

Posted: 11 Jan 2012 06:28 AM PST

You've probably heard by now that Google announced the roll out of social search yesterday, dubbed 'Search, Plus Your World'. There has been vast speculation about Google's motives, with the most credible of which suggesting it's to do with…

Gaining market share in the social network market.
To improve the quality of search results through increased trustworthiness and personalisation (research by Nielsen suggests that 42% of people trust search results, but 90% trust recommendations from friends).

In reality, all of the above will contribute to why Google's launched social search. However, in this post I don't want to talk about the politics – I'll leave that to the tabloids. I want to talk about how this is inevitably going to impact our jobs as SEOs.

What’s Google’s Game Plan With ‘Search, Plus Your World?

To really understand the impact, we need to realise what Google's game plan with social search is. I’ll point out now that I’m not an expert or an insider in any way, but this is where I think Google might be going with Search, Plus Your World and Google+.

Google is creating a 'map' similar to Facebook's Open Graph that connects people with their content, websites and readers to understand who produces what content, what happens with that content and how people react. This is where the rel="author" and rel="publisher" tags play a big part (I wrote a post about this on Social Media Explorer).
Google will then learn contextual information about readers and content producers taken from their Google account activity (e.g. what YouTube videos they watch and searches they make when signed in) and use this data in combination with existing ranking factors and G+ sharing data to better place content in search results.

If I'm right, then I can see a shift in prominence in the SERPs to content producers with an active audience, but only in niches where communities exist.

For example, in the social media niche, sites such as Mashable, Social Media Explorer and Social Media Today will receive extra prominence in SERPs because they have an audience containing not only the 'influencers' but also the remaining mass of social media enthusiasts who share their content. The social media sites that don't have an active audience or community will lose prominence.

In niches where there is no community (think 'septic tank maintenance' or 'zinc coating of ships') social search won't change anything, at all. That is unless a company creates an active audience from scratch – for example, how Compare The Market arguably created an active audience in the insurance niche using Aleksandr Orlov.

As I never wrote a '2012 predictions' post, here are five things I think this shift towards social search will make us think about more as online marketers.

Email marketing will become increasingly important due to the power it has to encourage desired actions, such as social shares. I am currently writing a post on SEOmoz about using email auto-responders to influence social SEO – hopefully it should go live in the coming week (follow me and I'll tweet it when it does go live!)
SEO strategies will have two sub-strategies: the ‘personalised SEO strategy’ and the ‘non-personalised strategy’ – the latter of which will be almost identical to what you’re doing already, but the former being more about gaining social approval and engagement from your audience.
Low quality link building will become obsolete in niches where communities and active audiences exist. High quality link building will still play a major part in ranking for all sites, low quality link building will still work for uncompetitive niches with no audience.
Companies will need to find ways of gaining the 'social approval' of influencers in their niche (if such a thing exists). +1s from your niche's celebrity will be the social equivalent of the .edu/.gov link.
Google will work on increasing the proportion of people who are signed in. That one’s just obvious :)

Conclusion

It’s fair to say that Google+ and social search will inevitably impact SEO this year. To what extent we don’t know, whether Google decides to make the ratio of social:links as a ranking factor 1:1 or 5:1 or 0.1:1 just isn’t possible to say yet, but my advice is prepare for the worst case scenario and you won’t regret it, because it’s something that will only increase in importance over time.

Of course, this is all my opinion and if you disagree with me I’d love to hear about it and build a fuller understanding of all sides of the story. As usual, share your thoughts in comments below!

Image Credit: Birgerking, vanmarcianoart.

Seth's Blog : The first thing you do when you sit down at the computer

The first thing you do when you sit down at the computer

Let me guess: check the incoming. Check email or traffic stats or messages from your boss. Check the tweets you follow or the FB status of friends.

You've just surrendered not only a block of time but your freshest, best chance to start something new.

If you're a tech company or a marketer, your goal is to be the first thing people do when they start their day. If you're an artist, a leader or someone seeking to make a difference, the first thing you do should be to lay tracks to accomplish your goals, not to hear how others have reacted/responded/insisted to what happened yesterday.

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miercuri, 11 ianuarie 2012

Mish's Global Economic Trend Analysis

China Snubs Geithner on Iran Oil; China Gets Cheaper Iran Oil as U.S. Pays Tab for Hormuz Patrols; Retired Admiral Warns "US Policy Benefits the Chinese"
Europe’s $39 Trillion Pension Time Bomb Explodes in 2012; Simple Proposal to Fix the Problem
German Economy Contracts in 4th Quarter; Spain's Industrial Output Plunges 7%; UK Trade Deficit Widens; European Banks Wisely Hoard Cash
Debt Trap Looms in India on Convertible Bonds; Borrowing Costs May Quadruple for Indian Corporations
Greek Crisis Has Pharmacists Pleading for Aspirin; Bailout Money Used for Military Spending

China Snubs Geithner on Iran Oil; China Gets Cheaper Iran Oil as U.S. Pays Tab for Hormuz Patrols; Retired Admiral Warns "US Policy Benefits the Chinese"

Posted: 11 Jan 2012 10:42 PM PST

The US' complete ineptitude on oil policy is in the spotlight just as predicted. A pair of articles will show what I mean.

China Snubs Geithner on Iran Oil

Bloomberg reports China Snubs Geithner on Iran Oil, Japan Plans Cut

U.S. Treasury Secretary Timothy F. Geithner's efforts to tighten economic sanctions on Iran over its nuclear program won backing from Japan a day after China rejected limiting oil imports from the country.

China, which counts Iran as one of its top petroleum suppliers, yesterday snubbed the U.S., with a vice foreign minister saying his nation "opposes imposing pressure and sanctions."

'Halfway Solution'

"Japan will try and seek a halfway solution where they'll try and limit imports from Iran and boost imports from other Middle Eastern countries that are also U.S. allies," said Razeen Sally, a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. Given its military alliance with the U.S., Japan "is much more susceptible to U.S. pressure than China," he said.

Halfway Idiocy

Razeen Sally, a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore is an economic dunce. Oil is fungible. It makes no difference where one gets the oil.

If Japan gets oil from Saudi and China gets more oil from Iran nothing changes. However, if there is any supply disruption prices will rise. Simply put, if Iran pumps less oil prices will rise unless Saudi Arabia or other supplies makes up the difference.

If Iran oil is shut off, Saudi and other supplies cannot make up the difference. If there is a partial shutdown, and China buys Iranian oil to make up the difference nothing at all changes unless China uses pressure to get a better deal.

I mentioned such problems were likely in Geithner Seeks Support for Iran Oil Sanctions From China; What Should China's Response Be? Shoddy Reporting by Bloomberg on Oil Story

What Should China's Response Be?

I propose this:

Dear Secretary Geithner

In light of the fact that the US Defense Secretary announced on Face the Nation that "Iran Not Trying to Develop Nuclear Weapon" China will not support a US-Led oil embargo.

Moreover, we will consider any efforts by the US or Europe to block Iranian exports to be economic warfare against China.

We call on the United States to dump their unfounded economic attack on Iran immediately.

That would set the proper tone for discussion and make the Obama administration as well as Republican warmongers look foolish in the process.

Unfortunately, China is unlikely to do that. Instead, If the US and Europe are stupid enough to ban Iranian oil, China would have additional leverage on those disputed Iran oil contracts mentioned above.

It took precisely one day to prove the above highlighted theory correct.

China Gets Cheaper Iran Oil as U.S. Pays Tab for Hormuz Patrols

Please consider China Gets Cheaper Iran Oil as U.S. Pays Tab for Hormuz Patrols

China stands to be the biggest beneficiary of U.S. and European plans for sanctions on Iran's oil sales in an effort to pressure the regime to abandon its nuclear program.

As European Union members negotiate an Iranian oil embargo and the U.S. begins work on imposing sanctions to complicate global payments for Iranian oil, Chinese refiners already may be taking advantage of the mounting pressure. China is demanding discounts and better terms on Iranian crude, oil analysts and sanctions advocates said in interviews.

"The sanctions against Iran strengthen the Chinese hand at the negotiating table," Michael Wittner, head of oil-market research for Societe Generale SA in New York, said in a phone interview. Chinese refiners are likely to win discounts on Iranian crude contracts as buyers from other nations halt or reduce their purchases of Iranian oil to avoid being penalized by U.S. and European sanctions, he said.

At the same time, the U.S. is bearing most of the cost of air and sea patrols and surveillance in the Strait of Hormuz, through which transit 17 million barrels a day of crude, or 20 percent of world supplies. China, the No. 2 importer of oil after the U.S., enjoys protection for the shipping lanes without paying a cent, retired Admiral Dennis Blair, a former U.S. Director of National Intelligence, said in an interview.

"Policing the region imposes a cost on us, and benefits the Chinese," Blair said in an interview. A few Iranian officials recently have threatened to shut the passage if the U.S. and Europe enforce tough oil sanctions.

China's oil executives are expected to demand lower prices for Iranian crude, said Mark Dubowitz, director of the Iran Energy Project at the Foundation for Defense of Democracies, an advocacy group in Washington.
Reducing Purchases

Dubowitz estimates that if China were the only remaining buyer of Iranian crude, it might command as much as 40 percent discounts. Among the other major refiners of Iranian oil, India has increased orders from Saudi Arabia, and Japanese and South Korean officials say they are gradually reducing their dependence on Iran, Dubowitz said.

Inane US Oil Policy

The US picks up the tab for China to get cheaper oil as prices rise elsewhere. In light of the fact US Defense Secretary Admits "Iran Not Trying to Develop Nuclear Weapon" , US policy is inane.

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

Europe’s $39 Trillion Pension Time Bomb Explodes in 2012; Simple Proposal to Fix the Problem

Posted: 11 Jan 2012 03:44 PM PST

Europe's pension time bomb has gone off. European demographics are among the worst in the world and Europe is heading into a huge, prolonged recession on top of it.

Please consider Europe's $39 Trillion Pension Risk Grows as Economy Falters

Even before the euro crisis, people were worried about Europe's pension bomb.

State-funded pension obligations in 19 of the European Union nations were about five times higher than their combined gross debt, according to a study commissioned by the European Central Bank. The countries in the report compiled by the Research Center for Generational Contracts at Freiburg University in 2009 had almost 30 trillion euros ($39.3 trillion) of projected obligations to their existing populations.

Germany accounted for 7.6 trillion euros and France 6.7 trillion euros of the liabilities, authors Christoph Mueller, Bernd Raffelhueschen and Olaf Weddige said in the report.

Stable or falling birthrates, plus rising life expectancies, are adding to pressures, with the proportion of economic output devoted to spending on retirement benefits projected to rise by a quarter to 14 percent by 2060, according to the ECB report.

Europe has the highest proportion of people aged over 60 of any region in the world, and that is forecast to rise to almost 35 percent by 2050 from 22 percent in 2009, according to a report from the United Nations. That compares with a global estimate of 22 percent by 2050, up from 11 percent in 2009.

The number of people aged over 65 in the 34 countries in the Organization for Economic Cooperation and Development is forecast to more than quadruple to 350 million in 2050 from 85 million in 1970. Life expectancy in Europe is increasing at the rate of five hours a day, according to Charles Cowling, managing director of JLT Pension Capital Strategies Ltd. in London.

In so-called developed countries, the average lifespan will reach almost 83 by 2050, up from about 75 in 2009, the UN said.

By 2060, the average French pension benefit will be 48 percent of the national average wage, compared with 63 percent now, said Stefan Moog, a researcher at Freiburg University in Freiburg, Germany.

State pension obligations in France and Germany are three times the size of their economies, according to data compiled by Mercer. It's more sustainable in France than Germany because of France's higher birthrate.

Last year, there were 4.2 people of working age for every pensioner in France. The ratio will fall to 1.9 by 2050, according to a report by Economist magazine in March. In Germany, the proportion will decline to 1.6 from 4.1 in the same period.

Simple Proposal to Fix the Problem

The punchline to this economic disaster came in the middle of the article: "Pension managers and governments are relying on economic growth to safeguard the promises they make."

Europe will be lucky to average 1% growth in the next 5 years. However, I have an idea guaranteed to fix the problem.

Every country but Greece should exit the Euro but keep pension plans denominated in euros. The value of the Euro will sink to zero as Greece goes into hyperinflation. Thus, pension plans denominated in Euros will quickly be solvent. At that point the plans can be converted back to their respective currencies with obligations that can be paid with a few ounces of gold.

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

German Economy Contracts in 4th Quarter; Spain's Industrial Output Plunges 7%; UK Trade Deficit Widens; European Banks Wisely Hoard Cash

Posted: 11 Jan 2012 09:24 AM PST

There are numerous signs the entire Eurozone is in recession, including Germany. Nonetheless economic dunces talk as if recession can be avoided. For making just that claim, I blasted the IMF on Monday in Dimwit Comment of the Day: Christine Lagarde, IMF Director says "Europe May Avoid a Recession This Year".

Let's ponder a sampling of data released today that proves without a doubt Europe is already in recession.

German Economy Contracts in $4th Quarter

Bloomberg reports Germany May Be on Brink of Recession

Europe's largest economy shrank "roughly" 0.25 percent in the fourth quarter from the third, the Federal Statistics Office in Wiesbaden said today in an unofficial estimate.

The weaker global economy and waning demand from debt- stricken euro-area neighbors have eroded German foreign sales, the main pillar of its economic expansion. Net trade contributed 0.8 percentage point to growth last year, with exports up 8.2 percent and imports gaining 7.2 percent. In 2010, exports increased 13.7 percent.

"All in all, the German economy has remained relatively resilient," said Annalisa Piazza, an economist at Newedge Group in London. "Signs of moderation have recently emerged but we expect the German economy to remain afloat in the coming quarters, maintaining its role as the major engine of growth for the euro area."

2012 Forecast

German growth will slow to 0.6 percent this year before recovering to 1.8 percent in 2013, the Bundesbank predicted on Dec. 19. The European Central Bank, which has cut interest rates to a record low and flooded the banking system with cash during the debt crisis, last month reduced its 2012 growth forecast for the 17-nation euro region to just 0.3 percent.

Preposterous Growth Forecast

The growth forecast for Germany and the Eurozone are both preposterous.

If Europe heads into a prolonged recession (and it has already started), Germany cannot help but get sucked into it. Approximately 28 percent of German GDP is derived by exporting goods to EU countries and Switzerland.

Think German exports to the rest of Europe are going to rise forever? Think again, starting with a look at the Eurozone's 4th largest economy.

Spain's Industrial Output Plunges 7%

Economic Times reports Spain's Industrial Output Plunges 7%.

Spain's industrial output plunged by 7.0 percent in November compared to a year earlier, its biggest drop in more than two years, official data showed on Wednesday.

Economists have warned that Spain may have already entered a recession, with a likely contraction in the last quarter of 2011 and the first quarter of 2012.

The official growth forecast for 2011 stands at 0.8 percent.

The fall in production accelerated in November after a decline of 4.2 percent in October, according to Wednesday's figures.

"All the industrial sectors displayed negative year-on-year rates," the institute said in a statement.

The fall in production was sharpest in the consumer goods sector, at 16.3 percent. Energy fell 5.2 percent.

Industrial production fell 1.4 percent on average from January to November compared to the same period a year earlier, the figures showed.

The November figure was the worst since October 2009 when output fell 9.1 percent during the first wave of the economic crisis.

Spanish Minister Sees Recession Risk

Bloomberg reports Spain Industrial Output Falls, Minister Sees Recession Risk

Spanish industrial production fell the most in two years in November as Budget Minister Cristobal Montoro warned that the euro area's fourth-largest economy is on the edge of a recession.

Spain's economy is close to entering a recession, Montoro told lawmakers in Madrid as they began examining Prime Minister Mariano Rajoy's first package of austerity measures. The plan was announced on Dec. 30 after the new government learned that the 2011 budget gap will be a third larger than forecast.

Interpreting Bureaucratese

Spain has been in recession for two quarters already (assuming it ever got out of recession that started in 2007), yet talk is still Spain "may" fall into recession. Just what the heck does it take for these bureaucratic clowns to admit the obvious?

Actually, if one knows how to interpret "bureaucratese" they already have. When bureaucrats talk of "risk of recession" it is a sure-fire sign the economy is already in one.

UK Trade Deficit Widens

Please consider Pound Weakens to Three-Month Low Versus Dollar After Trade Deficit Widens

The pound fell to a three-month low versus the dollar after a government report showed the trade deficit widened more than economists forecast, fueling bets the central bank will need to add more stimulus to spur growth.

Sterling declined versus all its 16 major counterparts and gilts advanced after the British Retail Consortium said shop- price inflation slowed in December to the lowest in 16 months. The Bank of England will keep its bond-purchase target unchanged at 275 billion pounds ($422 billion) at a policy meeting tomorrow, according to a Bloomberg News survey.

"The trade data is worse than expected, and it has negative connotation on sterling," said Jane Foley, a senior currency strategist at Rabobank International in London. "There is also some outside talk about possibility that the Bank of England may expand the target for bond purchases. The consensus view is that it remains unchanged."

With the Eurozone in deepening contraction, don't expect the UK to export its way out of its economic mess either.

European Banks Wisely Hoard Cash

Please consider Europe Banks Hoarding Cash Resist Draghi

Banks are hoarding the European Central Bank's record 489 billion-euro ($625 billion) injection into the banking system, thwarting attempts by policy makers to avert a credit crunch in the region.

Almost all of the money loaned to 523 euro-area lenders last month wound up back on deposit at the Frankfurt-based central bank instead of pouring into the financial system, ECB data show. Banks will use most of the three-year loans to meet their refinancing needs for this year and next, analysts at Morgan Stanley and Royal Bank of Scotland Group Plc estimate.

"It's illusory to think that the measure will translate into credit generation," Philippe Waechter, chief economist at Natixis Asset Management in Paris, said in an interview. "It will assuage some of the anxiety banks have regarding their liquidity needs. But they've engaged into a massive overhaul of their strategy and shrinkage of their balance sheets, which is, coupled with the deteriorating economy, not compatible with increasing credit."

Governments are urging European banks to keep lending to companies and individuals while requiring them to raise an additional 114.7 billion euros of core capital by June to weather a deepening sovereign-debt crisis.

Euro-area banks have more than 600 billion euros of debt maturing this year, the Bank of England said in its financial stability report last month. The first ECB loan offering should help cover about two-thirds of that amount, Goldman Sachs Group Inc. analysts say. Morgan Stanley's Van Steenis estimates banks may reduce assets by as much as 2.5 trillion euros in two years, a process known as deleveraging.

The volume of loans to households and companies in the 17- nation euro area shrank in November for the second consecutive month, the ECB said on Dec. 29. Loans were still up 1.7 percent over the year-earlier period, slowing from a 2.7 percent increase in the 12 months through October.

Expect Severe European Recession

Telling banks to lend in the midst of a deepening recession with numerous austerity measures yet to kick in is simply absurd. If banks did increase loans, it would add to bank losses. The smart thing for banks to do is exactly what they are doing, parking cash at the ECB.

Austerity measures in Italy, Spain, Portugal, Greece, and France combined with escalating trade wars ensures the recession will be long and nasty.

For additional details please see ...

"Social VAT" Trade Wars Heat Up Between Spain and France

Brussels Recommends Sucking Spain Dry with Increased VAT; France to Raise Sales Tax to Protect Jobs; Is There Any Point or Reason for the Eurozone?

Don't expect the US to be immune from a Eurozone recession and a Chinese slowdown. Unlike 2011, it will not happen again.

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

Debt Trap Looms in India on Convertible Bonds; Borrowing Costs May Quadruple for Indian Corporations

Posted: 11 Jan 2012 07:54 AM PST

Let's turn our focus on a different country today, and ponder the plight of Indian convertible bonds.

Bloomberg reports Debt Trap Looms in Convertibles Due After 25% Sensex Plunge

Indian companies with a record $5.3 billion of convertible bonds due this year may see borrowing costs more than quadruple after the worst performance among the world's 10 biggest stock markets.

Reliance Communications Ltd., Suzlon Energy Ltd. (SUEL) and Tata Steel Ltd. (TATA), sold a third of the total debt, according to data compiled by Bloomberg. Their shares are trading as much as 88 percent below the bond conversion prices. Should they choose to issue debt that can't be converted into equity to meet repayments, companies will face an average yield of 6.92 percent on dollar-denominated bonds, a HSBC Holdings Plc index shows, compared with 1.55 percent on convertible notes, according to Barclays Capital data.

"Companies are heading into a debt trap," Raj Kothari, a convertible bond trader at Sun Global Investments Ltd., said in a phone interview from London on Jan. 4. "Companies have no option but to repay the debt."

Cash levels for Indian borrowers relative to their interest commitments fell to a five-year low after the central bank raised interest rates a record 13 times since March 2010 to combat inflation and as operating profits declined, Standard & Poor's Indian unit Crisil Ltd. (CRISIL) said in a report this month. Corporate earnings will probably post the biggest drop in three years in the financial year ending March, according to analysts' estimates compiled by Bloomberg.

Reliance Communications, India's second-largest mobile- phone operator, is due to repay $925 million of convertible debt on March 1, the largest amount by any Indian company this year, according to data compiled by Bloomberg.

All except for $116 million of the bonds due this year were sold before 2008, according to data compiled by Bloomberg, as investors were attracted by the Sensex trebling in value in 2006 and 2007.

"Equity prices have gone below the conversion prices on convertible bonds," Samir Shah, head of technical analysis at BP Equities Pvt. said in a phone interview from Mumbai on Jan. 6. "There's no option for companies but to repay the debt."

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

Greek Crisis Has Pharmacists Pleading for Aspirin; Bailout Money Used for Military Spending

Posted: 11 Jan 2012 01:04 AM PST

The Greek economy is now totally and completely dysfunctional. The government has resorted to price controls on goods to contain costs. However, price controls do nothing but cause shortages.

The sad result has Pharmacists Pleading for Aspirin.

For patients and pharmacists in financially stricken Greece, even finding aspirin has turned into a headache.

The 12,000 pharmacies that dot almost every street corner in Greek cities are the damaged capillaries of a complex system for getting treatment to patients. The Panhellenic Association of Pharmacists reports shortages of almost half the country's 500 most-used medicines. Even when drugs are available, pharmacists often must foot the bill up front, or patients simply do without.

Official Denial of Pharmaceutical Tragedy

Without a doubt the medical crisis in Greece is a tragedy underway. Proof comes from Nicolaos Polyzos, secretary general of the Ministry of Health, who says "It would be unrealistic to deny that there are many difficulties regarding all public services due to the financial crisis. However, this cannot justify characterizing the current picture of (the) health sector in Greece as a tragedy."

Apparently shortages of 500 drugs including aspirin is not a tragedy.

Shortages Caused by Price Controls

As part of an effort to cut its own costs, Greece has mandated lower drug prices in the past year. That has fed a secondary market, drug manufacturers contend, as wholesalers sell their shipments outside the country at higher prices than they can get within Greece.

Strained government finances only make matters worse. Wholesalers and pharmacists say the system suffers from a lack of liquidity, as public insurers delay payments to pharmacies, which in turn can't pay suppliers on time.

"Wholesalers simply do not have the money anymore to play bank to the pharmacies," Heinz Kobelt, secretary general of the European Association of Euro-Pharmaceutical Companies, said in a telephone interview.

Reimbursement fraud compounds the drain on the country's health resources, Richard Bergstrom, director-general of European Federation of Pharmaceutical Industries and Associations, said in an interview. Drugs shipped elsewhere yet submitted for reimbursement to public insurers as if they had been prescribed to patients cost Greece more than 500 million euros a year, Bergstrom said, citing figures he said he got from the Ministry of Health.

In a later e-mail, Bergstrom said he had personally seen packs of drugs with Greek reimbursement stickers on the market outside of Greece, suggesting that exporters were reimbursed and able to ship the packs abroad.

"If the pack is exported, the exporter is obliged to 'cancel' the code, a bar code, by using a black pen," Bergstrom wrote. "But this is not monitored."

Plenty of Money Though for Military Spending

Via choppy Google translation, please consider Fine weapons for Athens

Frigates, tanks and submarines: A Greek military passes any savings package. And Germany benefited.

The Gift of the Greek Ministry of Defense has the man in the head: up to 60 fighter aircraft fighter for maybe € 3.9 billion euros. French frigates for about four billion, patrol boats worth 400 million euros, as much is the necessary modernization of the existing Greek fleet. Then it still lacks of ammunition for the Leopard tank , also would have two American Apache helicopters will be replaced. Oh, and one would like to buy German U-boats, total price: two billion euros.

What the man who goes in and out of Greece's Defence Ministry, in an Athens cafe is because of the sounds absurd. A State which is on the verge of bankruptcy and is supported by billions of the European Union wants to buy tons of weapons?

According to the just-released report, Arms Export in 2010 after the Portuguese, the Greeks - a state on the verge of bankruptcy - the largest buyers of German war weapons.

According to the just-released report, Arms Export in 2010 after the Portuguese, the Greeks - a state on the verge of bankruptcy - the largest buyers of German war weapons.

Bailout money first goes to French and German banks. What is left over goes for weapons systems.

Meanwhile, price controls and fraud have made aspirin hard or impossible to get. To top it off, Germany and France want still more tax hikes and austerity measures.

Greece will default soon. It's all over. Nothing is left but a corrupt hollow shell.

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

joi, 12 ianuarie 2012

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