luni, 13 august 2012

How to Learn SEO

How to Learn SEO


How to Learn SEO

Posted: 12 Aug 2012 08:04 PM PDT

Posted by willcritchlow

At Distilled, we define our purpose as "discovering, implementing and sharing the ways great companies succeed online". It should come as no surprise, then, to learn that (a) I think a lot about how to learn SEO effectively and (b) we try to build learning into pretty much everything we do.

"How should I learn more about X?" is one of the most common questions I get asked both internally at Distilled and from the community and 
"How should I learn more about SEO? is probably the most common among those.

Paddy wrote a really useful post this week covering some excellent resources for those starting out in SEO. I wanted to add my thoughts about the most effective ways of learning:

How to learn SEO

1. Curiosity is your biggest asset

Firstly, and most importantly, it's entirely up to you. Nobody else can learn for you. The single lesson that I remember most clearly from my school days was from Mr. Wilson, my electronics teacher. Paraphrasing:

Always ask yourself 'how does that work?'

I think this is one of the most critical life skills you can possibly acquire. It might surprise you to know that I think it'll make you a better SEO if you spend your time asking yourself questions like these (Spoiler: answers at the end of the post):

  1. How do they get cranes on top of big buildings?
  2. How come phone touch screens work through paper but not through foil?
  3. How does gmail's two-factor authentication work? [Side-note: please turn on two factor authentication - it's more pain-free than you expect]

This highlights one of the key distinctions I wanted to make in this post. Learning is not the same as training. If you are provided with formal training opportunities at work then that's great, but in my opinion it's never going to be more than 5-10% of your learning. You are responsible for you - I highly recommend this talk by Sheryl Sandberg who I think is one of the best speakers on getting ahead at work.

From an SEO perspective, I suggest applying this first to the whole stack of a search result - from crawling, indexing and ranking to the actual delivery mechanism (DNS, TCP/IP etc.). The more curious you are, the better you'll be.

Closely related to this, I highly recommend getting your hands dirty in order to try to understand how things work. I'm a big advocate that this is very rarely a bad idea - though sometimes you also need a sandbox while you're learning. (This was the motivation behind our interactive modules in DistilledU - when you are learning about robots.txt syntax or Google Analytics code modifications it's nice to take the very first steps in a safe environment).

Curiosity killed the cat

Curiosity strikes again

I would go as far as to say that if you are looking to get into online marketing from scratch, the very first thing you should do is get a small site entirely under your control - everything from registering the domain to adding the Google Analytics code. What could go wrong?

2. Take advantage of steep learning curves

It can take a lifetime to dominate specific skills, but it's surprising how much you can learn in a weekend (or even a couple of hours).

I talked about the exponential nature of learning in my Searchlove presentation in London last year. See slides 18+ here:

Link building mediocre to great from Will Critchlow

In summary, my mental model for learning is not an evenly paced journey from beginner to expert but more like an exponential scale where it gets many times harder to get from each stage to the next:

  1. No experience at all - complete beginner
  2. Basic competence - you start to be able to complete basic tasks (perhaps with oversight)
  3. Core competence - you can handle pretty much everything in this subject area
  4. "Distilled expert"(*) - one of the people that those with core competence turn to for help
  5. Renowned expert - wrote the book

(*) that's what we call it at Distilled - you can use your initiative to come up with your own name for this level

Side-note: this scale deliberately includes a little confusion between excellence and fame - I'm afraid the real world works this way as well. My thinking on the subject was influenced by Joel Spolsky's writing on the subject of developer compensation [PDF]

You can make this work to your advantage - even if you don't intend to become a world expert in something, there is huge benefit to learning enough to know what you don't know. In my own online marketing journey, I've enjoyed applying this to technical skills ranging from setting up a linux server to toying with client-side jQuery as well as creative skills like basic video editing and animation.

I think Danny Dover's checklist is a great place to get started with this kind of learning for SEO.

3. You need to know the existence of trivia

I've observed that a trait that appears to separate highly successful technical marketers (and knowledge workers in general) from everyone else is the ability to recall the existence of arbitrary details.

Not everyone is a trivia geek, but they all tend to remember enough about the subtleties of a problem to find the detailed answer they need to get their job done. Whether this is remembering that there can be a time-lag to DNS propagation, that googlebot only crawls from US IP addresses or that if you include a specific user-agent directive in a robots.txt file that robot will only listen to those rules(*), it's this skill that avoids disaster over and over again.

(*) this last tidbit was something I learnt while building the robots.txt interactive module for DistilledU.

I think the way you cultivate this skill is to read widely and to create things yourself (what @bfeld has been inspiring me to call maker mode).

On the "reading widely" front, I strongly recommend setting yourself up with something like Instapaper that allows you to remain curious and interested without getting sucked into reading articles all across the internet all day every day. Instapaper gives you a browser bookmark (and mobile app) that lets you save an article to read later - and formats it for easy distraction-free reading. (My favourite feature is its ability to send a weekly "magazine" to my kindle every week). Others at Distilled like Pocket which does something similar.

The need for maker mode is the realisation that you never really understand the subtleties of something until you've done it. I talk more about this later.

Of course, you probably need deep expertise in at least some areas as well (the notorious T-shaped inpidual) but I would counsel that you should avoid spending all your time learning minutiae. The internet is full of it, half of it isn't correct and for much of the rest, you are far and away better served by shipping real things.

4. Expose yourself to intimidation

I talked about this at our all-hands company meeting in London in January. I talked about the perils of letting yourself be the smartest guy/gal in the room (TL;DR get yourself into a different room - at least some of the time). I think most people who have been really good at something let themselves at some point get exposed to people who are really, really good. For me this happened when I went to college. I had an experience very much like that described by @mechanical_fish in this Hacker News comment where he talks about going to a math competition:

This was one of the most valuable experiences of my life and I heartily endorse it. Because here's what happened: I got my ass handed to me. My teammates were freakishly smart. It turns out that the distribution of math-contest talent is not at all normal, and that being in the top 1% of contest-takers doesn't mean that you're within hailing distance of the top 0.5%. Oh, no.

Last year I went back to my old high school to give a talk entitled "things I wish I'd known". As I said on slide 11, you come to resemble the people you hang out with, so you should choose carefully:

Things I wish I'd known from Will Critchlow

The desire to get smart people together and let them share ideas is one of the driving forces behind the way we have designed our conferences. It's why we go for a single-track event with social events afterwards - giving people a shared context to discuss the things they've learnt with people who've got a wide range of experiences.

You don't have to go to a conference though. I started out my learning journey in SEO hanging out in online communities. Back in the day it was cre8asite (I recently saw black_knight at a conference and had fun reminiscing about those days). More recently it was SEOmoz and Twitter. I don't think you necessarily should expect to learn everything from the social interactions, but hanging out with people you know and like who know more than you do about a subject helps to steer you to learn the right thing next.

5. Focus on learning to drive

I like to think about two very different kinds of learning:

  1. Learning to drive - you remember the first time you drove (the first time you drove stick for my US friends)? The experience of going from "HOLY CRAP I HAVE TO WATCH IN FRONT AND BEHIND AND SIDEWAYS WHILE MOVING BOTH MY HANDS AND BOTH MY FEET IN HARMON...BOUNCEBOUNCEBOUNCESTALL" to "I barely think about the mechanics of coordinating feet and hands and have time to pay proper attention to the road"
  2. Learning the directions to a new place - this is more like the transition from: "Before I looked up the way, I didn't know which street to take" to "After I looked up the way, I knew which street to take"

Only one of those is transformational, isn't it? So focus on things that look more like learning to drive and less on things that look like directions to a new place.

Never written any HTML? That is a great skill for an SEO to know - a form of online "learning to drive". (I recommend Treehouse and Codecademy which complement each other nicely).

Don't know the specific way to mark up a date in the hEvent micro-format? Don't worry about it until you need it - it's a form of online "learning directions".

Another way of thinking about this is to focus on learning real-time and bicycle skills. It's worth noting here that both these forms of learning can come with the same endorphin hit, so you need to keep asking yourself if the things you are learning are the right things. This was the main reason I left my first real job. I was a "coder-in-a-suit" (Accenture-style) for a small company. As I transitioned from learning real things (we were working on financial software, so I learnt about general ledger, P&L, balance sheets etc. as well skills as diverse as SQL and business process mapping) to learning the specific way you deploy certain changes on an IBM AS400 iSeries, I realised I'd gone from learning to drive to learning directions and I had to get out.

6. Allow yourself to fail

By its definition, learning involves new things. Some new things go wrong.

This is the greatest argument for actually shipping things - it's not until you try to ship something that you discover whether it really is a success or a failure.

If you are in a position of authority, I believe it's especially important to allow yourself to fail publicly (at least openly in front of your team). I read a great article about management at Github that talks about a management style of:

Show what, don't tell how

The core point of the article is that you can lead a team by getting stuck into the team's work but holding yourself to a form of open-ness where you not only do, but are seen to do.

The author relates this mainly to core job skills, but I think it's equally important about life skills like learning. As a leader, it's even more important that you take risks and fail visibly.

My journey of learning presentation skills falls into this category. Many of you will have seen me get crushed by Rand in a head-to-head presentation competition. Slightly fewer of you will have seen the times when the learning paid off and I repaid the favour.

I fail in public

7. Write

I'm a big fan of writing as a core part of learning. I was taught that writing things down helped you retain them in your memory. I suspect that is true, but the more powerful effect is that the act of composing your thoughts shapes them. Structuring and editing a piece of writing gets you thinking more deeply about a subject than anything else I know.

Perhaps most importantly, writing is designed to be published. And in a world of blogging and social media, it's easier than ever to get other people's eyes on your writing. This gives you a safe environment in which to fail, allows feedback and makes it easy to surround yourself with people who are smarter than you are.

8. Remember your liberal arts

Finally, remember that being the most effective SEO you can be has remarkably little to do with SEO knowledge. We find that once you're past the basics, the bottlenecks are increasingly likely to be what I'm going to call the "liberal arts" of marketing.

To be truly effective at SEO you need to round out your education with a whole bunch of wider knowledge including:

  • Regular marketing
  • Business awareness
  • Project management
  • Presentation skills
  • Writing skills
  • Leadership and people management skills

I still love this post by Paddy at Distilled on his views of what it takes.

For each of these skills, you can apply the methodology outlined above.

In summary

Learning something deeply doesn't happen in hours or days. But I would really like to see people working on their own learning experience - so if you are starting from scratch, start with these specific actions from my first three suggestions:

  1. Get curious - go and look up the answer to something that's been bugging you. How does that work?
  2. Benefit from a learning curve - challenge yourself to learn something in 2 hours
  3. File away the trivia - sign up for Instapaper

But also - update us here - I would love to hear your learning stories and any tips and tricks you have to share with the community.


Spoiler for the curious:

The answers to my "curious" questions above:

  1. Cranes that build themselves
  2. Capacitance
  3. A shared key and epoch time

Ready to learn? Check out DistilledU

I've been a bit quiet recently.

I've been spending a lot of time working on DistilledU - our new online training platform for SEO. It's in beta just until 22nd August (the middle of next week). Now's the time to check out the free bits (a free keyword research module and interactive guide to advanced search query operators) to see if it's something that'd help you do your job because if you sign up during beta you lock in a 50% discount for life:

DistilledU

More information about our conferences

We recently announced the line-up of speakers for our Searchlove conferences in London in October and Boston in November. If you have done all of the above and want to see presentations from people at the top of their game, we'd love to see you there. If you sign up now, you get early bird pricing (there's an additional £100 / $150 off for SEOmoz PRO members - get your discount code here).


PS - I mentioned at the beginning that I've been a little busy. It's not just at work. At home, the news is a new Olympic champion in the "smallest Critchlow" event - Adam Joseph was born just over a month ago. Here he is with his sister showing off presents from Rand and the moz crew - thanks again guys:

Moz's newest fans

Moz's newest fans - Rachel thinks all robots are called "Roger"


Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Seth's Blog : You won't benefit from anonymous criticism

You won't benefit from anonymous criticism

I recently heard from a TED speaker who was able to quote, verbatim, truly nasty comments people had posted about her talk.

And yet, I've never once met an author who said, "Well, my writing wasn't resonating, but then I read all the 1 star reviews on Amazon, took their criticism to heart and now I'm doing great..."

There are plenty of ways to get useful and constructive feedback. It starts with looking someone in the eye, with having a direct one on one conversation or email correspondence with a customer who cares. Forms, surveys, mass emails, tweets--none of this is going to do anything but depress you, confuse you (hey, half the audience wants one thing, the other half wants the opposite!) or paralyze you.

I'm arguing that it's a positive habit to deliberately insulate yourself from this feedback. Don't ask for it and don't look for it.

Yes, change what you make to enhance delight. No, don't punish yourself by listening to the mob.



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duminică, 12 august 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Percentage Growth in Government Jobs vs. Private Jobs vs. Population Growth; Facts and Consequences

Posted: 12 Aug 2012 09:21 PM PDT

Keynesian clowns are concerned about the decline in government jobs in the past few years. They want the government to step up spending and hire more workers to make up for the loss of jobs in the private sector.

Here is a chart from reader Tim Wallace that will help put the recent loss of government jobs in a better perspective.

Percentage Job Growth vs. Population Growth



click on any chart for sharper image

The growth in government jobs is not sustainable nor is there any genuine excuse for it other than political pandering and vote-buying operations.

The deviance between private bobs and population growth is easily explained by the entry of women in the workforce.

Percentage Male and Female Job Growth vs. Population Growth



Note how the percentage growth of men in the labor force closely tracks population growth the percentage growth of women in the workforce has skyrocketed.

Employment in Millions



Entry of women in the workforce allowed much higher household debt levels than ever before.

Now what?

I'll tell you what. Ability of households to take on more debt has peaked. There are no more female workers to add to the pool. Everyone male or female is working (or is looking for work) whether they really want to or not.

Women actually overtook men in the work force way back in 1990.

Percentage of Total Workforce That is Female



Unfortunate Facts

  1. The unfortunate fact of the matter is everyone need to work to pay off accumulated debts and meet living expenses, but the jobs are not there.  
  2. The second unfortunate fact is we cannot afford and do not need all of the existing government jobs.
  3. The third unfortunate fact is demographics are no longer favorable. Indeed, there are too few jobs, too much student debt, and too few workers supporting too many retirees on Social Security.

Those unfortunate facts happen to be highly deflationary.

Demographic Time Bomb

For a graphical representation of point number three above, please see Demographic Time Bomb in Pictures and Dollar Amounts; Ratio of Social Security Beneficiaries to Private Employment Now Exceeds 50%

Consequences

  1. Much pain awaits the US. 
  2. Public worker pension promises have been made that cannot possibly be delivered.
  3. The US simply cannot afford to be world's policeman. Military spending must come down or it will destroy us.
  4. Medicare and Social Security problems must be addressed as well.
  5. Upcoming generations are highly likely to see a drop in standard of living vs. the baby boomers. This has never happened in US history.

Heartaches by the Number

Please consider Heartaches by the Number
 
  • Just 14% expect today's children to be better off than their parents
  • Just 31% believe the U.S. economy will be stronger in one year
  • Just 27% think the country is heading in the right direction. 
  • Just 24% of American Adults believe the job market is better than a year ago
  • 44% think the job market is worse, up 15 points from June

Demographics Suggest Majority is Right

I happen to agree with the majority who think those now graduating from high school will not be better off than their parents.

There are too few jobs, too much student debt, and too few workers supporting too many retirees on Social Security.

Who Will Address the Problems?

As I look out on the political landscape, I see little hope that either Republicans or Democrats will address these problems.

Republicans refuse to address the income side of the balance sheet, and Democrats refuse to address the spending side.

Neither party is willing to tackle military spending.

How long the market lets these can-kicking exercises continue is anyone's guess, but the longer this goes on, the more pain there will be.

The culmination will be a currency crisis at some point down the road. Timing is very problematic. Japan proves debt-to-GDP ratios may go on much further than anyone thinks possible.

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


Europe's Most Dangerous Politicians: Angela Merkel, Francois Hollande, David Cameron, Jean-Claude Juncker, Jose Barroso, Mario Monti, Herman Van Rompuy

Posted: 12 Aug 2012 10:43 AM PDT

Der Spiegel has published an inane article about Europe's 10 Most Dangerous Politicians.

Top 10 List

  1. Markus Söder, Bavarian Finance Minister: The politician from the Christian Social Union, the conservative sister party to Chancellor Angela Merkel's Christian Democratic Union, is known for his tub-thumping rhetoric and has stepped up a gear in the euro crisis with vitriolic comments about Greece. "An example must be made of Athens, that this euro zone can show teeth," he told the Bild am Sonntag tabloid newspaper this week.
  2. Alexis Tsipras, the leader of Greece's leftist Syriza party: In his latest proposal, Tsipras argues the Greek government should refuse to talk to the so-called troika comprised of the European Commission, the European Central Bank and the International Monetary Fund. He wants to "criminalize" the privatization of public enterprises. He has been labelled the "most dangerous man in Europe" since he became leader of the radical left and has been pressuring successive governments to abandon austerity measures that underpin Greece's continued access to international aid.
  3. Silvio Berlusconi, entrepreneur and former Italian prime minister: His Popolo della Libertà (People of Freedom) party supports current Prime Minister Mario Monti but is secretly preparing for Italian elections next year. Berlusconi wants to win a fifth term as prime minister with the help of populist anti-euro rhetoric. He recently said the Italian central bank should simply print more euros to avoid instructions from Brussels. He has also threatened to reintroduce the lira.
  4. Marine Le Pen, leader of the far-right Front National in France: The populist politician campaigned in this year's presidential election by warning about the supposed might of the EU. "Frau Merkel and her friends, Van Rompuy and the European Commission are in the final stages of creating a European Soviet Union," she thundered. "We are about to lose our status as a free nation."
  5. Timo Soini, leader of the True Finns party and a member of the European Parliament: Since the election, Finland has demanded that Greece provide collateral in return for Finnish aid. Soini wants that aid to stop. "Not a penny more," he says. "We've paid enough."
  6. Alexander Dobrindt, general secretary of the conservative Bavarian Christian Social Union (CSU): "It's the end of the line for Greece," Dobrindt said recently. Previously, he had demanded that the Greek government should no longer pay its civil servants and pensioners in euros but in drachmas.
  7. Nigel Farage, leader of the UK Independence Party (UKIP) and a member of the European Parliament: Farage is the man who can cause an uproar in the otherwise dull European Parliament, where he called the Lisbon Treaty "the most spectacular, bureaucratic coup d'etat that the world had ever seen." He has described European Council President Herman Van Rompuy as having the "charisma of a damp rag."
  8. Heinz-Christian Strache, head of the Austrian Freedom Party (FPÖ): Strache claims that the permanent euro bailout fund, the European Stability Mechanism (ESM), will destroy "not only our state, but also our democracy and constitution." He says the ESM is tantamount to an ´Ermächtigungsgesetz, an allusion to the 1933 German law that allowed Hitler to rise to power.
  9. Geert Wilders, head of the Dutch Freedom Party (PVV): Wilders wants to see the return of the Dutch guilder and described the ESM as "a dictate from Brussels."
  10. Viktor Orbán, Hungarian prime minister: Orbán's statement that he would bow to Brussels' power but not to its arguments created considerable irritation.

Der Spiegel is Clueless and Dangerous

While the list does include some fascists and other questionable characters, the main "crime" against the collective group is they seek to end the euro.

Reader "Martin" from Australia writes ...
Hello Mish

Der Spiegel's article on dangerous politicians is a good example of how clueless main stream media is. While some in the list are clearly facists like Orban and Le Pen, the media tries to discredit Nigel Farage by putting him in the same group.

By the way Der Spiegel is considered a major respectable magazine. They all work for the EU.

Regards,
Martin, Sydney, Australia
Eurozone Cannot Possibly Survive

Reader Martin is exactly correct. In this regard Der Spiegel is not only clueless, but dangerous, because it fans myths that the eurozone can survive intact (it cannot), and the myth the euro is worth saving in the first place (it's not).

For details, please see Problem in Europe is Arithmetic, Not Confidence; Why the Eurozone Cannot Possibly Survive Intact

Mish's Top List of Europe's Most Dangerous Politicians

  1. Angela Merkel, Chancellor of Germany, deserves special mention. Merkel is widely blamed for not doing enough to keep the eurozone crisis from spreading. However, her hands are tied by constitutional issues as well as political issues within her coalition. Yet, every step of the way Merkel caved in to demands of those desperately attempting to save the unsaveable. Nothing is more dangerous that ranking politicians on a mission to do the wrong thing, hoping to preserve their legacy.
  2. Francois Hollande, president of France: Hollande is about to wreck France with a plethora of tax hikes, by rolling back retirement age, and a preposterous policy that would "Make Layoffs So Expensive For Companies That It's Not Worth It"
  3. David Cameron,  UK Prime Minister: Cameron refuses to call a vote on exiting the EU even though the UK is damaged by inane EU rules. Last December, Cameron almost gave in to ridiculous EU treaty changes but did not do so only because he was dead set against preposterous financial transaction taxes proposed by Brussels. Were it not for the financial transaction tax, it appears Cameron would have done the wrong thing.
  4. Jean-Claude Juncker, Luxembourg Prime Minister and head of the eurozone finance ministers: Juncker is famous for his quote "When it becomes serious, you have to lie". More recently, Juncker told another whopper "I Don't Envisage, Not Even for One Second, Greece Leaving the Euro Area"
  5. Mario Monti, technocrat Prime Minister of Italy. Monti was never elected, he was installed by eurocrats because he would support the euro.
  6. Herman Van Rompuy, European Council president: Van Rompuy spends his time flying all over Europe promoting discarded eurobond ideas. He seldom shows up in European Parliament.
  7. José Barroso, European Commission president: Farage describes Barroso as "delusional idiot and was a supporter of Chairman Mao"

Reflections On Merkel

Nigel Farage properly classifies Barroso as a "delusional idiot". The same applies to Herman Van Rompuy, and self-admitted liar Jean-Claude Juncker.

In contrast, Chancellor Merkel is anything but a delusional idiot.

Rather, Merkel is an extremely skilled, as well as widely respected if not charismatic leader, with a seriously misguided notion there needs to be a European nannyzone super-state. Worse yet, she appears willing to sell her soul and the future of Germany to secure that outcome.

As noted above,  nothing is more dangerous that ranking politicians on a mission to do the wrong thing, hoping to preserve their legacy.

Without a doubt, Merkel's attributes make her the most dangerous politician in Europe.

A Note About Nigel Farage

Der Spiegel labeled Farage Europe's 7th most dangerous politician. Check out the platform of UKIP, Farage's party.



We believe in the minimum necessary government which defends individual freedom, supports those in real need, takes as little of our money as possible, and doesn't interfere in our lives.

I think the Republican Party in the US should adopt that platform and that anything except a platform based on minimal government and individual freedom is dangerous.

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


Hermosa Beach Police Chief and Councilman Fishman Defend $100,000 Meter Maids on Grounds "When You Outsource, You Take Away Union Jobs"

Posted: 12 Aug 2012 12:24 AM PDT

No price of labor is too high if you are a supporter of public unions. Here is a case in point: In Hermosa Beach California, Police Chief Steve Johnson and Councilman Howard Fishman defended $100,000 meter maid positions on the grounds "When you outsource, you take away union jobs."

Note that meter maid positions do not require much more than the ability to drive a standard transmission car and have a high school diploma.

Please consider Hermosa Beach Meter Maids Make Nearly $100K
When contemplating the many reasons cities in California and elsewhere are venturing closer to bankruptcy, look no further than the relatively lucrative and often-unjustifiable salaries bestowed on municipal employees – and the lofty pension benefits attached to the high pay.

One of the latest examples comes from the California coastal city of Hermosa Beach, where some community service staffers who collect money from parking meters and manage their operations – positions once widely known as "meter maids" – are making nearly $100,000 a year in total compensation, according to city documents.

There are 10 parking enforcement employees for the 1.3-square-mile beach city southwest of downtown Los Angeles, and they pull down some disproportionate compensation, considering their job functions. In fact, the two highest-earning employees for fiscal year 2011-12 are estimated to have made more than $92,000 and $93,000, respectively, according to city documents provided by Patrick "Kit" Bobko, one of five council members and who also serves as mayor pro tem. Those two have supervisory roles. The other eight parking-enforcement employees make from $67,367 to $84,267 in total compensation.

Bobko also wrote in a memo that the retirement costs for these 10 employees "from [fiscal year 2011-12] through their retirement age at 62 was nearly $1.6 million, and the medical costs for these employees from this fiscal year to their retirement at age 62 would be $1,353,827." Excluding salaries, the [retirement] contributions and medical costs for the 10 employees performing parking enforcement will cost, on average, nearly $300,000 apiece."

Aside from the personnel costs, there has been criticism from Hermosa Beach Treasurer David Cohn that parking meter operations have been mismanaged. Cohn cited nonfunctioning parking meters, a backlog in disputed parking tickets and problems with the accounting for revenue.

Bobko is pushing a plan to outsource the city's parking enforcement operations, which he says will save money, reduce maintenance costs, relieve the city of accounting functions related to parking enforcement, increase efficiency and, perhaps most importantly, increase revenue and "reduce the city's pension and salary obligations."

There has been opposition to the outsourcing proposal from Hermosa Beach's Police Chief Steve Johnson and Councilman Howard Fishman. Both expressed concerns about letting go full-time city staff. Bobko accurately characterized the resistance: "When you outsource, you take away union jobs."
As I have said repeatedly, the goal of public unions is to little or no work for enormous sums of money at taxpayer expense.

In these trying times, one might think that public union supporters would back off of ludicrous demands, at least a tiny bit.

However, statements by union nutcase supporters like Police Chief Steve Johnson and Councilman Howard Fishman show the only solution is the complete elimination  of public unions.

If that sounds harsh, please note that even FDR would agree.

Message From FDR

Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937.
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.

A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.
Musical Tribute to Meter Maids

In "honor" of the asinine position of Police Chief Steve Johnson, who deserves to have his entire staff outsourced as happened in Camden (see Camden NJ, Population 77,344 Fires Entire Police Force, 270 Officers; Why Cities are Going Bankrupt), I offer this musical tribute by the Beatles.


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


Seth's Blog : Buying the thing your project truly needs

Buying the thing your project truly needs

In our commercial culture, it's easy to buy just about anything—except the things you really need.

Like a decision. (And the confidence to execute on it.)

Grace.

Persistence.

And one hundred other things that are valuable precisely because they can't be bought, can't be outsourced and don't appear precisely when needed.



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sâmbătă, 11 august 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Ponzi Bank Financing of "Wealth Management Products" in China Backed by Dubious Real Estate Projects; "Golden Elephants", Poway, and Pay Option ARMs

Posted: 11 Aug 2012 09:30 AM PDT

Top Chinese banks are involved in Ponzi financing of investment deals, offering interest rates over 7% to depositors, to finance real estate projects gone bust and other projects whose assets are not even disclosed.

Banks label these schemes "Wealth Management Products" (WMPs) but any individuls foolish enough to invest in them are going to lose money, perhaps all of it.

Reuters explains in a special report China's answer to subprime bets: the "Golden Elephant"
The Chinese investment vehicle known as "Golden Elephant No. 38" promises buyers a 7.2 percent return per year. That's more than double the rate offered on savings accounts nationally.

Absent from the product's prospectus is any indication of the asset underpinning Golden Elephant: a near-empty housing project in the rural town of Taihe, at the end of a dirt path amid rice fields in one of China's poorest provinces.

"They haven't even built a proper road here," said Li Chun, a car repairman, who said he lives in the project. "The local government is holding onto the flats and only wants to sell them when prices go up."

Golden Elephant No. 38 is one of thousands of "wealth-management products", instruments aimed at monied investors, which have shown phenomenal growth over the last five years. Sales of them soared 43 percent in the first half of 2012 to 12.14 trillion yuan ($1.90 trillion), according to a report by CN Benefit, a Chinese wealth-management consultancy.

They are usually created in China's "shadow banking" system - non-banking institutions that are not subject to the same regulations as banks - which has grown to account for around a fifth of all new financing in China.

Like the subprime-debt lending spree in the United States that helped spark the 2008 financial crisis, the products are often opaque, and usually dependent on high-risk underlying assets, such as the Taihe housing project.
Chinese Banks' Weapons of Mass Ponzi

Financial Times Alphaville picked up on the story in Chinese Banks' Weapons of Mass Ponzi
We wrote last week that China's shadow banking system was reflecting and, to an extent, contributing to a growing liquidity risk which in turn is being exacerbated by net capital outflows. Since then, there have been some interesting revelations on the domestic liquidity management, especially in shadow banking, and especially especially in wealth management products.

To recap, wealth management products or WMPs are a little like a term deposit, only they offer Chinese investors a more appealing rate of return than a normal bank deposit (which will deliver a negative real return) and it can be backed by assets — effectively, an informal securitisation.

If you're wondering what sort of assets that includes, Reuters wrote up an excellent investigation of the WMP scene, beginning with the case study of "Golden Elephant no. 38″ which promises a 7.5 per cent return. It shows just how illiquid some of these things are.

At the same time as the risks around WMP issuance are gaining attention, something else is going on in Chinese financial system: interbank assets are surging, as Also Sprach Analyst points out.



There's no knowing when, how or if some kind of liquidity crisis might happen in the Chinese banking system, but there are plenty of possible triggers to be found.

A story on Tuesday in China Daily cited a study by The Chinese Banker that found capital shortfalls among the five biggest banks would grow sharply in 2012 and 2013. The China Daily link is now broken, unfortunately, [Mish Note: the link is now working] but Chinascope Financial has a summary:

"Data from the report shows that capital shortfall in China's major five state-owned banks in 2012 will be: CNY 60.4 billion (Industrial and Commercial Bank of China), CNY 63.5 billion (Agricultural Bank of China), CNY 37.6 billion (Bank of China), CNY 35.4 billion (China Construction Bank), and CNY 47.8 billion (Bank of Communications). By the end of 2013, the capital gap of the five banks will further increase to CNY 69.1 billion, CNY 83.8 billion, CNY 78.7 billion, CNY 39.9 billion and CNY 68.7 billion, respectively."
Capital Shortfalls

Alphaville totaled the above numbers and came up with a capital shortfall of Rmb 244.7 billion for 2012 and a Rmb 340.2 billion shortfall by the end of 2013.

While converting Rmb 244.7 billion  to US dollars (the answer is $72.11 billion), I accidentally stumbled across the Rmb 244.7 billion figure in KPMG China's weekly banking news summary
Better than expected profits from Chinese banks

Ten Chinese commercial banks have reported better than expected net profits of RMB 244.7 billion (USD 72.11 billion) in the first half of 2011, approximately 30 percent more than the net profits reported for the same period in 2010. The increase was boosted by strong growth in the banks' net interest income and intermediary business.
Better than expected earnings exactly match expected capital shortfalls. Fancy that.

Poway, Golden Elephants, and Pay Option ARMs  
 
This setup sounds much like the "better than expected earnings" reports by US banks in 2006 on Pay Option ARMs. No money came in to banks but accrued interest added to the bottom line (until the deferred payment scheme on questionable assets blew sky high).

Poway vs. "Golden Elephant"

"Golden Elephant" also sounds like the Ponzi scheme in Poway, California.

Poway borrowed $105 million and will defer interest and principal payments for 20 years at which time Poway will owe $1 billion.

For further details, please see Ponzi Financing in Poway California Based on Massively Rising Property Values

Regarding Poway, I was asked "Who is dumber, the city of Poway or the bank that made the loan?"

That's a good question. Certainly the bank that originated the loan will not be paid back if they hold this loan to term. But did they keep  it? Given the fiasco in Pay Option ARMs I rather doubt it.

Indeed, I highly suspect the bank that originated the deal sold the loan to some unsuspecting pension plan such as CALPers, or perhaps some plan covering Poway itself.

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