marți, 12 iunie 2012

The Bigfoot Update (AKA Dr. Pete Goes Crazy)

The Bigfoot Update (AKA Dr. Pete Goes Crazy)


The Bigfoot Update (AKA Dr. Pete Goes Crazy)

Posted: 11 Jun 2012 11:40 AM PDT

Posted by Dr. Pete

On June 5th of 2012, at around 9:00am Central Daylight Time, I spotted what appeared to be a major Google algorithm update in the wild. Unfortunately, I was alone… and the photos all turned out blurry… ok, and I had had a few beers. Still, that doesn’t mean it didn’t happen. This is the true story of an update that I honestly believe we missed, and why we’re just not as good at spotting them as we like to think.

The First Sighting

Let’s cut to the chase – this is an artist’s representation of what I saw that fateful morning (not a very talented artist, granted):

Graph of ranking change from May 26 to June 4

Please note that the Y-axis has been scaled to enhance differences. This is a graph of ten days of “Delta10” – I can’t fully explain what that is right now (come to MozCon to hear more), but the short version is that it’s a measure of 24-hour rankings fluctuations across a sample of top 10 Google results. The higher the Delta10, the more rankings changed over that 24 hours.

Delta10 theoretically goes from 0-10, but the practical range is much smaller. For reference, the Delta10 on the morning of June 5th (which really indicates activity on June 4th) was 3.24. The 30-day average just prior to this was 2.29. Over 60 days, June 4th had the 2nd highest Delta10 on record – the record is currently held by the “Penguin” update (3.32).

I spot-checked my data and confirmed it from a second tracking station – this wasn’t a fluke. So, I told the Twitterverse what I had seen…

Pete's tweet asking about Google changes

Replies ranged from “I didn’t see anything” to “Stop drinking, Dr. Pete!” to “Who are you?!” Clearly, the SEO community was unconvinced.

The Second Sighting

I was about to go back to the bottle, when a second sighting was confirmed by SERPmetrics:

SERPmetrics tweet confirming "flux"

While I don’t know the exact details of their tracking system (or how it compares to mine), it also measures ranking fluctuations. So, I asked the burning question: “How big was it?” and got back this:

SERPmetrics follow-up tweet

If I was crazy, at least there were two of us. Was it an authentic Sasquatch, though, or just a hairy, naked dude taking a walk in the forest? It was time to go CSI on the data…

Clues in the SERPs

One of the plusses of my system is that it stores the top 10 URLs for the tracked keywords, so I can see how any given SERP changed. The tough part, as I’m learning, is that many SERPs change every day, so you have to learn to separate out “normal” volatility from unusual change. As I went through the SERPs that changed the most from 6/4 to 6/5, I came across one that seemed pretty quiet in the preceding week. This is the top 10 for “bjs menu” on the morning of 6/4:

  1. http://www.bjsbrewhouse.com/menu
  2. http://www.bjsbrewhouse.com/
  3. http://bjsrestaurants.com/restaurants_page/restaurant_menu.html
  4. http://byjoomla.com/joomla-extensions/list-menu
  5. http://www.bjsbbq.com/menu/default.asp
  6. http://www.bjs.com/deli-bakery.content.services_deli_bakery.A.services
  7. http://www.allmenus.com/nv/las-vegas/38881-bjs-restaurant--brewhouse/menu/
  8. http://www.bjclancys.com/
  9. http://dineries.com/ca/lagunabeach/bjs/280pacificcoasthwy
  10. http://pub.bjwillys.com/our-menus/

I’ve color-coded the domains – for reference, there are nine root domains in this SERP. Here’s where it gets interesting – look at the data for the morning of 6/5:

  1. http://www.bjsbrewhouse.com/menu
  2. http://www.bjsbrewhouse.com/
  3. http://www.bjsbrewhouse.com/about-us/faqs
  4. http://bjsrestaurants.com/restaurants_page/restaurant_menu.html
  5. http://www.bjsrestaurants.com/menus/desserts
  6. http://www.bjsrestaurants.com/locations/ca/bjs-grill-anaheim-hills
  7. http://www.bjsrestaurants.com/locations/fl/gainesville
  8. http://byjoomla.com/joomla-extensions/list-menu
  9. http://www.bjsbbq.com/menu/default.asp
  10. http://www.bjs.com/deli-bakery.content.services_deli_bakery.A.services

The number of root domains in the top 10 dropped from nine to only five – BJsBrewhouse.com grew from two to three listings, and BJSRestaurants.com expanded from one to four listings. By itself, this could mean anything, but I started to see the same pattern repeated as I dug into more and more individual SERPs.

Here’s another example – a search for “kohl store locator”. On 6/4, the top 10 included seven different domains:

  1. http://www.kohlscorporation.com/maps/html/store_locator.htm
  2. http://www.kohlscorporation.com/maps/siteadvantage/advantage.asp
  3. http://www.kohls.com/
  4. http://www.kohls.com/kohlsStore/homepage.jsp
  5. http://www.kohls.com/kohlsStore/womens.jsp
  6. http://www.whitepages.com/store-locator/TX/Dallas/Kohls
  7. http://www.weusecoupons.com/upload/kohls/268041-kohls-store-locator.html
  8. http://find.mapmuse.com/brand/kohls
  9. http://en.wikipedia.org/wiki/Kohl's
  10. http://itunes.apple.com/us/app/kohls/id472014516?mt=8

On the morning of 6/5, only four domains were left standing:

  1. http://www.kohlscorporation.com/maps/html/store_locator.htm
  2. http://www.kohlscorporation.com/maps/siteadvantage/advantage.asp
  3. http://www.kohls.com/
  4. http://www.kohls.com/kohlsStore/landingpages/lclaurenconrad.jsp
  5. http://www.kohls.com/kohlsStore/ourbrands/jenniferlopez.jsp
  6. http://www.whitepages.com/store-locator/TX/Dallas/Kohls
  7. http://www.whitepages.com/store-locator/CA/Los-Angeles/Kohls
  8. http://www.whitepages.com/store-locator/TX/Houston/Kohls
  9. http://www.whitepages.com/store-locator/TX/San-Antonio/Kohls
  10. http://find.mapmuse.com/brand/kohls

Although this is only one result, there are a couple of interesting things to note here. First, this wasn’t simply a change in exact-match domain handling or brand power. Kohl’s sites didn’t expand, and power domains like Wikipedia lost ranking – meanwhile, WhitePages.com jumped from one listing to four. It’s also interesting to note that two previous, broad Kohls.com pages were replaced with specific landing pages. Of course, it’s possible that was just a change on the Kohl’s site and not a Google tweak.

Clues in Domain Diversity

Of course, these single SERPs are anecdotal at best. I needed a larger-scale metric, so I decided to run some numbers on domain diversity across the entire data set (1,000 SERPs = 10,000 URLs). Put simply, across the 10K URLs, how many domains were in play? To simplify the data processing, I treated each sub-domain as unique. Here’s what I saw over the ten days from 5/28 to 6/6 (in this case, 6/5 is the critical day):

Domain diversity graph (dropped on June 5)

Again, I’m cheating a little on the Y-axis here – for the record, domain diversity decreased 2.6% on June 5th, from 5,802 domains on 6/4 to 5,654 on 6/5. I included 6/6 to show that the change seems to have stuck, at least temporarily. While 2.6% isn’t a huge change, the numbers appear to have been very steady prior to 6/5, and this data does match the pattern shown in the example queries.

It’s interesting to note that Google’s April Search Highlights included a change that was supposed to increase domain diversity in the SERPs:

More domain diversity. [launch codename "Horde", project codename "Domain Crowding"] Sometimes search returns too many results from the same domain. This change helps surface content from a more diverse set of domains.”

So, I decided to run out the domain diversity calculation over the full data set (which goes back to 4/5). What I saw was the following…

Long-term domain diversity graph

Keep in mind that more sub-domains across the 10K URLs equal more diversity. Not only can I find no clear evidence of Google’s “Horde” update in April, but the data suggests that domain diversity has steadily declined over the past two months. There are, in fact, two steep drop-offs.  The second drop-off is the one being discussed in this post and shown in the previous graph. The first drop-off is the Penguin update.

Of course, it’s important to note that this is a hand-selected sample of 1,000 keywords and only measures the top 10 rankings. While the domain diversity patterns across the data set are interesting, they don’t necessarily reflect the entire population of Google’s rankings.

Entity Detection Changes

After my initial Tweet on 6/4, SEO patent guru Bill Slawski turned me on to a Google patent published on 5/31 (although it was filed back in February). Interpreting patents, let alone if and when they enter the algorithm is a tricky business, and I’m not 5% as adept at it as Bill, but the patent essentially covers how Google matches queries to entities. In particular, note Claim 28, which describes how a term could be matched to “a plurality of domains”. Or, as Bill noted:

Entity detection tweet from Bill Slawski

This is highly speculative, and I don’t want to put words in Bill’s mouth or over-simplify a long conversation, but if this reflects a general change in capability on Google’s part, it does match the pattern somewhat. If Google could match an entity like Kohls to not only Kohls.com, but it’s listings on WhitePages.com, the algorithm could give more weight to those non-brand domains, in theory.

Could I Be Wrong?

NO!! KHAN!!!! *shakes fist at sky*

Ok, yes, I could. At this point, I think the fluctuation data is reliable – I’ve confirmed it wasn’t a bug, and the SERPmetrics numbers back me up. Of course, fluctuations in the rankings are just one way of looking at things, and the tougher question is: What was the impact? If you look at the sample queries, you can see that many of the changes happened in the bottom 5 of the top 10. For my metric (Delta10), a change from #6 to #7 is the same as a change from #2 to #3, or, for that matter, a change from #7 to #6. Maybe, fluctuations were high but occurred almost entirely in lower-impact positions.

There’s another possibility, though – maybe the fluctuations occurred in rankings that do matter (in the aggregate) but that most of us aren’t watching. How many of us take notice when a few long-tail keywords drop from #6 to #7? By themselves, they don’t mean much, but across hundreds of keywords, I suspect some sites experienced significant traffic changes.

Does Bigfoot Have a Brother?

Or possibly a sister – I’m not getting close enough to check. Just as I had almost finished this post, weekend monster sightings were off the charts. Although Google is officially confirming Panda 3.7 and an impact of <1% of queries, ranking fluctuations over the weekend were massive. Here’s an updated graph that includes June 4th:

Delta10s from June 1 to June 10

The original “Bigfoot” (I owe Dave Snyder a hat tip for the name, even if he was kidding) was June 4th (Delta10 = 3.24), but that was followed up by an unusually active weekend, including a peak Saturday of Delta10 = 3.62. Keep in mind, Saturday topped not only the first Penguin update, but dwarfed Panda 3.5 and 3.6.

My gut reaction is that something bigger happened here than just a Panda data refresh, but I honestly can’t prove that. Keep in mind that weekends are also normally pretty quiet, so relative to a typical Saturday/Sunday, these numbers are even more unusual. It’s possible that Panda 3.7 impacted more sites than 3.5 or 3.6, or that Google had to make adjustments on the fly, or that Panda 3.7 rolled out in addition to other updates.

Unfortunately, the timing of this post made a full analysis of Panda 3.7 tricky and the pattern of change over the weekend isn’t clear, but I pulled a couple of numbers. First of all, the domain diversity drop I’ve documented leading up to June 4th has not reversed. June 8-10 was not simply a rollback of June 4, as far as I can tell. These were separate events. It is entirely likely that June 8-10 were related to each other (you can see a pretty clear ramp-up into the weekend).

It also appears that the weekend was not simply a matter of a big change that got reversed. Let’s say, for example, that every URL moved on Saturday and then moved back on Sunday to its original position. Each day would show high Delta10s, but the two-day change would be zero. Looking at Sunday vs. Friday, the two-day change here is 3.91 (compared to a 24-hour change of 3.44). Although multi-day changes can be very tough to interpret, the evidence suggests that the changes from this past week are here to stay, at least for a while.

What’s in a Name?

I’m almost sorry Panda 3.7 came along before this post went live, because it painfully illustrates a fundamental problem in SEO right now – we’re letting Google define what we pay attention to. By my numbers, Penguin 1.0 was big, and Panda 3.7 was bigger, but many recent Panda updates have been barely blips on the radar (just above average), and I’ve tracked a half-dozen events in the past 60 days that are as bigger or bigger than Panda 3.5 and 3.6.

Google has stated publicly (under oath, in fact) that they made 516 updates in 2010. The numbers for 2011 and 2012 appear to be on par with that. On average, that’s 1.4 updates every day. We’re chasing two runaway animals while an entire zoo is stampeding toward Grandma’s house, and we’re too often doing bad SEO along the way.

I’m not asking you to chase the algorithm – my obsession shouldn’t become yours. I’m asking you to pay attention and stop waiting for official confirmation that something changed. Think long-term, pay attention to your traffic, and watch the numbers that matter to you. The picture of rapid change I’m painting doesn’t even count localization, personalization, rich results, vertical results, etc. You have to know your own niche, and if you want to succeed, you’d better watch it like a hawk. Don’t rely on Google to tell you which changes are important.


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A Golden Girl in the Oval Office

The White House

Your Daily Snapshot for
Tuesday, June 12, 2012

 

A Golden Girl in the Oval Office

President Barack Obama talks with Betty White in the Oval Office, June 11, 2012. (Official White House Photo by Pete Souza)

President Barack Obama talks with Betty White in the Oval Office, June 11, 2012. (Official White House Photo by Pete Souza)

In Case You Missed It

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

White House Rural Council Celebrates Its One Year Anniversary
Yesterday President Obama announced new investments to help rural small businesses expand and hire.

New Guide Highlights Best Practices and Innovations in Helping Veterans Thrive in the Private Sector
More than 30 companies and organizations from America’s private sector share lessons learned in effective recruitment, assimilation, retention, and development of veterans in the civilian workforce.

My First Job: Chris Lu
The Cabinet Secretary at the White House talks about the lessons he learned on his first summer job, many of which still apply in the work he does today.

Today's Schedule

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11:00 AM: The President receives The Presidential Daily Briefing

11:45 AM: The President departs the White House en route Baltimore, Maryland

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Seth's Blog : Either, not both

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luni, 11 iunie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Gap-and-Crap Comparison: Spain Ibex vs. S&P 500

Posted: 11 Jun 2012 01:48 PM PDT

Inquiring minds just may be interested in a gap-and-crap comparison of the the S&P 500 index, the Spain Ibex index, and the Euro.

Spain Ibex Stock Market Index



S&P 500 Cash Index




Above Charts From Yahoo! Finance Major World Indices
Annotations by Mish

Euro vs. US Dollar



Above 15 Minute Chart from Stockcharts.

The 6% gap-and-crap action as happened in Spain is not an everyday occurrence to say the least. Clearly, the bailout euphoria was totally unjustified, as called in advance.

For a look at the European bond market selloff, please see An "Emperor Has No Clothes" Moment: ESM Has Failed Already

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


An "Emperor Has No Clothes" Moment: ESM Has Failed Already

Posted: 11 Jun 2012 10:44 AM PDT

In what may become a historic "Emperor Has No Clothes" moment, the euro, stocks, oil, and European government bonds all quickly reversed course following initial euphoria of a Spanish bank bailout that is sure to do more harm than good.

For details of the bailout please see Rajoy Proclaims "Victory", Says It's Not a Bailout "It's a Credit Line"; Existing Bondholders Subordinated

S&P 500 Futures 5-Minute Chart



Notice the ramp late Friday. Someone knew before the announcement, this bailout was coming. Official news did not come out until Saturday.

The market gapped up this morning on the news, and those who bought on Friday likely dumped at the open.

Not only was the initial Monday morning gap up taken back, the late-day ramp job on Friday went down the drain as well.

Subordinated Bondholders

This is what I had to say on Sunday regarding Subordinated Bondholders
In the too stupid to make up category, Rajoy defends 'victory' for EU credibility

"Holders of the subordinated debt will probably have to accept losses". So who wants to hold that debt given what happened to Greece?

It will be interesting to see if there is initial euphoria in the bond markets. Regardless, sooner or later (probably sooner), selling pressure will eventually overtake any initial excitement of this alleged "victory".
Bond Selloff

Someone emailed on Sunday proposing the market would run for about six days. While not making a specific prediction, I suggested the rally might not even last a day, and that it all depended on European bonds.

Spain 10-Year Bond Yield 6.508%



In the initial misguided euphoria, the yield of Spanish 10-Year bonds fell 15 basis points. The yield is now up nearly 30 basis points.

Chart from Bloomberg.

Italy 10-Year Bond Yield 6.03%



Chart from Bloomberg.

"Emperor Has No Clothes"

Those bond movements are the "Emperor Has No Clothes" moment.

Who wants to hold Spanish or Italian debt if it is going to be subordinated by special deals made to governments from the ESM?

ESM Has Failed Already

Rather than calm the bond markets, Rajoy's alleged "victory" is going to strengthen the selloff. The ESM concept has already failed. Ironically, the ESM has not even been officially launched!

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


Modern Day Fairy Tale of 3 Economic Wizards (Except It's True)

Posted: 11 Jun 2012 01:15 AM PDT

Once upon a time (today), in a land not so far away (USA), there lived a trio of economic wizards (economists), whose names shall remain anonymous (Paul Krugman, Greg Mankiw, Ben Bernanke).

A fourth wizard, Murry Rothbard, is no longer among the living but resides in the netherworld.

The above wizards seldom agree with each other because they come from competing schools of wizardry.

Three Schools of Economic Wizardry

  1. Keynesian School of Fiscal Voodoo and Witchcraft
  2. Monetarist School of Monetary Voodoo and Witchcraft
  3. Austrian School of Sound Money, Sound Economic Principles and Common Sense.

"Dark Arts" Wizardry

The first two wizardry schools belong to a class of wizardry promoted to aspiring wizards as the "Dark Arts".

Philosophical Beliefs

  • Keynesian wizards believe governments can spend their way to economic health and although fiscal deficits may matter at some point in time, they never matter now, in practice.
  • Monetarist wizards believe money will cure any and every problem if enough is dropped from helicopters and interest rates held low.
  • Austrian wizards believe that economic problems are created by unsound money, haphazard loans, excessive debts, and government manipulations.
  • Keynesian and Monetarist wizards believe in the voodoo principle "the problem is the solution if only you do more of it". The former relies primarily on fiscal voodoo, the latter relies primarily on monetary voodoo.
  • Austrian wizards do not believe "the problem is the solution", no matter how many times it is repeated.


Grand Poobahs

  1. Paul Krugman is the economic "Grand Poobah" of the Keynesian wizards.
  2. The "Grand Poobah" of Monetarist Voodoo is Fed chairman Ben Bernanke.
  3. Murray Rothbard, no longer alive, was the last great proponent of  school of Sound Money, Sound Economic Principles, and Common Sense.

"Dark Arts" Schools Overflowing With Students

The "Dark Arts" are very enticing to modern day wizards-in-training because nearly everyone likes money from helicopters and deficit spending (even when they claim they don't).

In response to demand for voodoo economists, the "Dark Arts" schools for voodoo economics are overflowing with young wizards all hoping to win a Nobel Prize in Voodooism with "fresh thinking" and new voodoo proposals.

Voodoo Proposal Example - Purposely Make Money Go Worthless

Aspiring Grand Poobah Greg Mankiw (Professor of Economic Wizardry at Harvard University) put forth a proposal that caused a stir in both the real world and the world of wizards.

Mankiw proposed that purposely making money go worthless over time would be of great economic benefit.

No Demand for Common Sense

The average non-wizard, living in the real world, with an education level beyond 2nd grade, would quickly see the ridiculousness of making money go worthless.

However, at the highest political levels, there is virtually no demand for common sense, and shockingly high demand for voodoo wizardry.

For example, if you ever expect to make chairman of the president's Council of Economic Advisers or become an economic adviser to Mitt Romney (Wizard Mankiw did both), then common sense must go out the window.

Aspiring wizards hoping for careers in politics better quickly learn that politicians never want to hear they cannot spend money. Instead, politicians want to hear economic voodoo.

"Dark Arts" Feuds

Given Keynesian and Monetarist wizards both believe in voodoo, one might think the two schools would get along reasonably well. One would be wrong.

There have been numerous public squabbles between Mankiw and Krugman but the mother of all verbal wizardry battles came when Krugman went so deep into fiscal voodoo theory that Bernanke Called Krugman "Reckless"

Ivory Towers and Academic Wonderland

Unlike non-wizards, modern-day economic wizards do not live in the real world, in real cities. Instead, they live in ivory towers in secret villages for wizards only, typically tucked away in obscure corners of major U.S. universities.

Collectively, these secret villages are known as "Academic Wonderland".

"Academic Wonderland" is strictly off limits to non-wizards with the exception of "Dark Arts" wizards-in-training. It is even off limits to those few aspiring wizards who believe in Sound Money, Sound Economic Principles, and Common Sense.

Real World Experience

"Dark Arts" wizards of the Keynesian and Monetarist schools generally have never worked in the real world. Instead, they sit in their ivory towers and devise empirical formulas as to how they expect the real world to behave.

Occasionally the "Dark Arts" wizards surface in the real world, primarily to explain their mathematical formulas as to how the world functions.

It is seldom of concern to economic wizards if the real world does not follow their mathematical formulas.

Decision Making at Night

"Dark Arts" wizards are very concerned about such nebulous concepts as the "Decision Making at Night". Here is set of equations from an aspiring wizard-in-training.



"Decision making at night" is of course different from "decision making in the day". Both are distinctly different than "decision making with no news".

Voodoo Wizards Like Secrecy

The voodoo wizard-in-training making the above proposal is a big proponent of secrecy, believing that Grand Poobahs need to keep what they are doing a big secret lest it change real-world decision making processes of non-wizards during the day or night.

Austerity

No "Dark Arts" wizard worth his weight in salt would ever propose that any country live within its means.

For a recent example, Paul Krugman, the Grand Poobah of the Keynesian School of Fiscal Voodoo and Witchcraft writes about Estonian Rhapsody.
Since Estonia has suddenly become the poster child for austerity defenders — they're on the euro and they're booming! — I thought it might be useful to have a picture of what we're talking about. Here's real GDP, from Eurostat:



So, a terrible — Depression-level — slump, followed by a significant but still incomplete recovery. Better than no recovery at all, obviously — but this is what passes for economic triumph?
Left Unsaid

Here's what Grand Poobah Krugman failed to say about the Booming Estonia Economy.
Sixteen months after it joined the struggling currency bloc, Estonia is booming. The economy grew 7.6 percent last year, five times the euro-zone average.

Estonia is the only euro-zone country with a budget surplus. National debt is just 6 percent of GDP, compared to 81 percent in virtuous Germany, or 165 percent in Greece.

Shoppers throng Nordic design shops and cool new restaurants in Tallinn, the medieval capital, and cutting-edge tech firms complain they can't find people to fill their job vacancies.

Estonia's achievement is all the more remarkable when you consider that it was one of the countries hardest hit by the global financial crisis. In 2008-2009, its economy shrank by 18 percent. That's a bigger contraction than Greece has suffered over the past five years.

How did they bounce back? "I can answer in one word: austerity. Austerity, austerity, austerity," says Peeter Koppel, investment strategist at the SEB Bank.
Estonia vs. Fantasyland

Estonia is not Nirvana. Estonia is not "Academic Wonderland" either.

In contrast, Krugman is in "Academic Wonderland". The Grand Poobah clearly believes Estonia would be in better shape with helicopter drops of fiscal stimulus than a very nice partial recovery and no debt, in spite of the fact the eurozone in general is going to hell in a hand basket.

Debt Never a Problem

In modern-day ivory towers, with voodoo economics, debt is never a problem. The only thing that matters is GDP.

One might think that a Nobel prize winner would figure out that government spending will make GDP rise by definition (government spending is part of the equation) and the debt must be paid back. However, one would be wrong.

Bear in mind, Japan has tried both Keynesian voodoo and Monetarist voodoo for over 20 years. The result is a nearly unfathomable debt-to-GDP ratio of 220% and rising. Krugman would have you believe still more spending is the answer. Monetarists like Mankiw would propose making the Yen worthless.

Remember the Voodoo Motto!

Please remember the voodoo motto: If it doesn't work, keep doing more of it, even if that is what got you in trouble in the first place!

Anyone with an ounce of common sense would realize that artificial stimulus will always end, but the debt will remain, hanging like the Sword of Damocles over the economy.

Sadly, these modern-day economic wizards do not have the common sense of the average 6th grader who inherently knows that you cannot keep spending what you do not have.

Invalid Comparisons

No doubt Krugman will point to the misery in Spain and Greece. The comparison is invalid. Estonia is booming not solely because of austerity but rather because it did a number of common-sense things that Spain and Greece did not fully do.

  1. Slashed public sector wages
  2. Raised the pension age
  3. Reduced job protection
  4. Made it more difficult to claim health benefits

Keynesian wizards would be against all those things!

Was Krugman a Housing Bubble Proponent?

In a 2002 New York Times editorial Krugman said "To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Krugman claims "that wasn't a piece of policy advocacy, it was just economic analysis."

For further discussion please see Krugman's Intellectual Waterloo

When wizards get into trouble they claim they were misquoted, someone did too much, someone did not do enough or any number of other excuses.

No, it was not "policy advocacy", it was simply economic voodoo that Krugman condoned.

Krugman a Panderer to Public Unions

One of the reasons Estonia is recovering is it had the common sense to slash public sector wages.

In contrast, Krugman is a strong backer of public unions as noted in Wisconsin Power Play.

The reasons Krugman supports unions should be obvious:

  1. Krugman wants to waste as much money as possible (because that is what Keynesian voodoo economics is all about).
  2. There is no better way to waste taxpayer money than overpay for services from public unions.
Wizards in ivory towers have not completely figured out that money to pay public unions has to come from somewhere (namely taxpayers in general). Of course liberal Keynesian wizards (the worst kind) have an answer for that as well: take from productive members of society and slosh it around to public unions.

Never mind that public unions have bankrupted numerous cities and even in economic la-la land (otherwise known as California), backlash against unions is justifiably high and rising.

Moral of the Story

The average non-wizard non-union employee has long ago figured out the moral of this story. Those in ivory towers in "Academic Wonderland" have not, so I need to spell it out.

It is indeed possible to have a genuine economic debt-free recovery, along with austerity, as long as other sound economic measures are incorporated at the same time.

Yes, there will be some short-term pain. However, any attempt to avoid pain via heaps of fiscal and monetary stimulus is nothing but voodoo economics and can-kicking witchcraft.

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