joi, 27 septembrie 2012

International SEO: Dropping the Information Dust

International SEO: Dropping the Information Dust


International SEO: Dropping the Information Dust

Posted: 26 Sep 2012 07:54 PM PDT

Posted by gfiorelli1

As many of you already know, I am Italian and I am a web marketer. These two facts made me discover International SEO very soon because - let's face it - Italy is well-known, but there are not many people in the world who speak or understand Italian.

If you consider the nature of many Italian companies which rely on the foreign market for a good portion of their revenues, you can understand why SEO and International SEO are essentially synonymous for me and many others European SEOs.

This map explains why I must be an International SEO. Image by: http://www.hu.mtu.edu

This explains my interest in how search engines treat the problems associated with multi-country and multi-lingual sites. It also influences my interest in how a company can come in, attack, and conquer a foreign market. I've seen both interests becoming quite common and popular in the SEO industry during these last 12 months.

Many small and medium-sized  businesses now have the desire to engage in a globalized market. Their motivations are obviously fueled by expanding their business reach, but are also a consequence of the current economic crisis: if your internal market cannot assure an increase from your previous business volume, the natural gateway is trying to conquer new markets.

My Q&A duties as SEOmoz Associate have made me notice the increased interest in International SEO. Rather than seeing a small number of questions community members publicly and privately ask us, we are seeing many questions based on the confusion people still have about the nature of International SEO and how it really works.

In this post, I will try to answer the two main questions above referencing a survey I conducted a few months ago, which (even though it cannot be called definitive) is representative of the common International SEO practices professionals use.

What kind of solution is best for International SEO?

The answers given in the survey clearly show that people seem to prefer to use country code, top-level domains (ccTlds) against the sub-carpet option and the sub domain. (I'm still wondering what “other” may mean.)

The main reason for this choice is the bigger geo-targeting strength of ccTlds. However, this strength is compromised by the fact that you have to create the authority of that kind of site from the ground up through link building.

Does that mean more companies should go for the sub-carpet option? From an SEO point of view, this could be the best choice because you can count on the domain authority of an established domain, and every link earned in any language version will have positive benefits for the others. Sub-carpet domains could be also the best choice if you are targeting a general language market (i.e.: Spanish) and not a specific country (i.e.: Mexico).

However, there are drawbacks in choosing sub-carpet domains:

  • Even though a sub-carpets can be geotargeted in Google Webmaster Tools, they seem to have less geotargeting power than a country code, top-level domain.
  • In some countries, users prefer to click on a ccTld than on a sub-folder results page because of the trust that is (unconsciously) given to them.
  • If any part of your site is flagged for Panda, the entire domain will be penalized. A poorly organized and maintained multilingual/multicountry site may increase this risk exponentially.

I consider the pro's and con's of both options, and I tend to be strongly influenced by non-strictly SEO needs in my final decision

For instance, it is quite logical that Amazon decided to base its expansion into foreign market using ccTlds. Apart from the SEO benefits, having  all the versions of its huge store on one site would have been utterly problematic.

On the other hand, Apple preferred to use the sub-carpet option as its main site does not include the store part, which is in a sub domain (i.e.: store.apple.com/es). Apple chose a purely corporate format for its site, a decision that reflects a precise marketing concept: the site is for showing, amazing, and conquering a customer. Selling is a secondary purpose.

I suggest you to do the same when choosing between a sub-carpet and ccTld domain. Go beyond SEO when you have to choose between these options and understand the business needs of your client and/or company. You will discover there are bigger problems to avoid in doing so.

The local IP issue and the local hosting paranoia

This is a classic issue I see in Q&A. Google personally responded to this issue in an older, but still relevant, post on their Webmaster blog:

"The server location (through the IP address of the server) is frequently near your users. However, some websites use distributed content delivery networks (CDNs) or are hosted in a country with better webserver infrastructure, so we try not to rely on the server location alone."

Nonetheless, in the case that you are using a CDN, examine where its servers are located and check if one or more are in or close to the countries you are targeting. The reason for this examination is not directly related to SEO, but concerns the Page Speed issue. Page Speed is more of a usability problem, but it has an effect on your site's SEO.  

Finally, don’t confuse local IP with local hosting as you can use a local IP via proxy from your own server. In certain countries, a hosting solution can be a real pain, and that drives many companies to host their clients sites in servers located in another country.

Takeaway: do not get obsessed by having a local IP for your ccTld site, as it is now a minor factor.

In case you choose the sub-folder option, another important technical aspect is to create separate sitemaps.xml files for every one of them. Again, common sense, but worth mentioning. 

The “signals”

If you are going to do International SEO, the first problem you will have is translating the content of your site in the language of the country you are going to target.

It is common sense to use a professional translator (or a translation agency), but some people lack common sense and tend to rely on:

  • Automated translation services (especially Google Translate)
  • People in-house who happen to know the language the content needs to be translated to

The latter is nonsensical. Professional translators have studied for years and know the nuances of the language they translate, whereas a professional translator will usually translate from a foreign language into their own language, not vice versa. If your translator is bilingual, that's even better.

The first choice is officially deprecated because it is considered (correctly) as a bad quality signal to Google. Even though Google's translator tool was created for this purpose, it seems as if they are sending some mixed messages and I advise you to look elsewhere for translating services. 

A professional translation of your content is the best ally for your keyword search

For example, let's say you want to rank for “car sell” in the Spanish and Latin American market. If you use Google Translate (or Babylon, WordLingo, or Bing Translate), you will have just one of the many variants of that keyword possible all over the Spanish variations map:

  • Venta de coches (Spain)
  • Venta de carros (Mexico)
  • Venta de auto (Argentina)
  • And so on…

Even worse, maybe you won’t discover that some countries have peculiarities in dialect expressions instead of “official/standard language” ones, or that people in these countries use both the English wording and the equivalent in their language. For instance, in Italy is very common to say both “voli low cost” and “voli a basso costo,” both meaning “low cost flights."

When I have to optimize a site for a foreign language, I give the translator a detailed list of keywords in which they will:

  • Translate properly according to the target
  • Use in the translations themselves

Once the site has been translated, I use the Adwords Keyword Tool suggestions copy pasting the translated keywords. The process includes:

  • Creating a list of keywords with traffic estimations
  • Google suggesting “related to my topic” keywords
  • Collecting and analyzing Google Trends information for the keywords
  • If you copy and paste the translated page (not just the translated keywords list), Adwords will suggest a larger and more sophisticated list of keywords
  • Refinement of the initial list of keywords and, if there are changes to make in the translations due to that keywords analysis, asking the translator to revise them.

Pro tip: Another step I take is to pull the final keywords list into the SEOmoz Keyoword Difficulty Tool to have a complete map of the difficulty and the competitors my site will have to compete with.

Do you think all this is possible using an automatic translator?

A correct translation is one of the most powerful geo-targeting signals a site can have, especially when a language is spoken in more than one country It is an extremely important usability tactic (which is correlated to better conversions), because people tend to trust a vendor who speaks as they speak.

Other classic geo-targeting signals are the use of local currencies, addresses, and phone numbers. Using them is very common sense, but again, some people don’t excel in that field.

However, you may have problems when you target a language all over the world and not a specific country. Obviously you cannot use the local signals described before, because you have the opposite objective. What to do then? I rely on the following steps:

  • If the language has variants, try to use an academically standardized translation which is comprehended and accepted in every country that language is spoken.
  • You may not have offices in the countries your targeted language is spoken, but you might have a customer care department in that language. Try to “buy” legitimate local phone numbers and redirect them to your real toll-free number, while listing them in your “how to contact us” page on the site.
  • Rely more heavily on other signals such as local listings and a balanced link building strategy.

The never ending story of how to implement the rel=”alternate” hreflang=”x” tag

If you reflect wisely about I have written up to this point, be sure to notice that "On Page International SEO" is not all that different from “On Page National SEO”. However, the slight differences arise when we talk about tagging for multilingual and multi-country sites, and there is a lot of confusion about this topic (thanks in part to some contradicting messages Google gave over the last two years).

The geo-targeting tags are needed to avoid showing the incorrect URL in a determined regional Google search. A classic example is seeing a US site outranking a UK site in Google.co.uk, usually due to a stronger page/domain authority. They don’t have any other function than that.

At first sight, its implementation is quite simple:

if Page A (US version) exists also in Page B (Spanish), C (French), and D (German) versions from other countires, no matter if they are in the same domain or different, then on page A you should suggest the last three URLs as the ones Google must show in the SERPs in their respective targeted Googles. 

Those tags must be inserted in the <head> section and look like this:

<rel=”alternate” hreflang=”es-ES” href=”http://www.domain.com/es/page-B.html” />

In this line, “es” indicates the language accordingly to the ISO 6391-1 format, and “ES” the country we want to target (in ISO 3166-1 Alpha 2 format).

You can also submit the language version information in your sitemaps. This is the best choice in order to not burden your site code, and it actually works very well, as Peter Handley discusses in this post. Also, they offer pre-existing tools which integrate the rel="alternate" hreflang="x" value in the sitemaps.xml files, as this one by The Media Flow.

Is not so hard, is it? Unfortunately, SEOs had been discouraged by atrocious doubts, especially when their International SEO previewed targeting countries where the same language is spoken.

What is the reason of these doubts? It is the fear for the (substantially) duplicated content those sites (or sub-carpets) tend to have, and the correct use of rel=”canonical”".

For example, in a multilingual site, we have the US American portion of our eCommerce store on www.mysite.com/store/. In www.mysite.com/au/store/  we have the Australian version. Both sell the same products and their product pages are substantially identical.

As we know, duplicated and substantially duplicated content is one of the classic Panda factors. So, does that mean we need to use as canonical of the Australian store pages the American ones? The answer is: no!

Google lists a couple of reasons why this is the case:

  • The rel=”canonical” should show a different URL than the one self referential only if the page is an exact duplicated content of the “canonical” one.
  • Product pages are not exact duplicates because they have slights differences like currencies, contact phone numbers, addresses, and – if you localized also the text – in the spelling of some words.

In this cases, as Pierre Far wrote in August on G+: "The idea of rel-alternate-hreflang is to help you signal to our algorithms that although these two pages have substantially the same content, the small differences between them are still important. Specifically, the small differences are relevant for users of a specific language (and in a country). By the same logic, the title can be different too."

Therefore, using canonical to direct to a different URL will cause your users to miss a page with potential useful and important information.

What about Bing?

Bing does not use the rel=”alternate” hreflang=”x” markup.

As written by Duane Forrester in this post, Bing relies over a series of signals, the most important being the meta equiv=”content-language” content=”x-X” tag.

Inbound Marketing, Link Building, and International SEO

Now we have our multilingual/multi-country site optimized, but even if we choose the sub-carpet way in order to have a first boost from the existing domain authority of the site and the flow of its link equity, we still must increase the authority and trust of the language/country targeted sub-carpet in order to earn visibility in the SERPs. This need becomes even more urgent if we decided the ccTld option.

So, why is the sum of the budget for all of your International SEO link building campaigns usually smaller than the one of your national market?


 

Logic should suggest that the first answer (“almost the same…”) was the most common.

The reasons typically used to justify this outcome is that “link building in X is easier” or that “the costs for link building are cheaper." Both justifications are wrong, and here's why:

  1. To do link building in every country is harder than it seems. Take Italy, for instance. is not so easy as you can imagine. In Italy, the concept of guest blogging is still quite “avant-guarde.”
  2. To do #RCS which will earn your site links, social shares and brand visibility is not cheap. In Italy (I'm using my home country as an example, again), the average price for a good infographic (not interactive nor video) ranges between $1,000-1,200 US dollars.

My suggestion is to investigate the real costs for International SEO content marketing, link building, and – eventually – social media marketing. You should also ask the opinion of local link builders if you can, even in the common case that you will perform the link building campaigns internally.

In fact, those local link builders are the best source to explain what the reality of link building looks like in their countries. For instance, how many of you know that Chinese webmasters tend to prefer a formal outreach contact via email than any other option? I didn't know until I asked. 

Modern-day link building does not mean anymore directory submissions, dofollow comments, or forum signatures than it used to, but it has evolved into a more sophisticated art which uses content marketing its fuel and social media as its strongest ally.

Therefore, once you've localized the content of your site accordingly to the culture of the targeted country, you must also localize the content marketing actions you have planned to promote your site with.

Luckily, many SEOs are aware of this need:

And they usually work with local experts:

If we consider SEO as part of a bigger Inbound Marketing strategy, then we have to consider the importance Social Media has on our SEO campaigns (just remember the several correlation studies about social signals and rankings). So, if you are doing International SEO, especially in very competitive niches, you must resign yourself to the idea that you will need a supporting International Social Media strategy.

Conclusions

International SEO for Google and Bing is SEO, no questions asked. It is also not substantially different than the SEO you do for your national market site.

Sure, it has some technicalities, but you may need to use them if you want to target other languages spoken in your own country, as Spanish is in the USA. All the rest of your SEO strategy is identical, other than the language used.

All the concepts related to Link Building and Inbound Marketing in International SEO and SEO are the same. The only difference lies in what tactics and what kind of content marketing actions works best from country to country.

What can really make International SEO much more difficult than “classic SEO” is one basic thing: not understanding the culture of the country and people you want to target. Don't make the mistake of having your International sites written by someone like Salvatore, the literally multilingual character of "The Name of Rose" by Umberto Eco.

Ron Pelman in the role of Salvatore in "The Name of Rose" (1986) - Twentieth Century Fox Film Corporation

Bonus

Here are a few other posts you will find useful about International SEO:

 


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Using AdWords Data for SEO: Unlocking the Ultimate Keyword Research Treasure Trove (Arrrgh!!)

Posted: 26 Sep 2012 05:46 AM PDT

Posted by larry.kim

Ahoy, SEOmoz UGC blog lubbers! In honor of International Talk Like a Pirate Day, today's post will show you how to unlock a secret treasure trove of SEO keyword research data from your own company’s AdWords account! Avast!

Unlocking the Ultimate Keyword Research Treasure Trove

Great SEO always starts with great keyword research – unfortunately, getting high-quality, actionable keyword data can sometimes be challenging for several reasons:

  • Google’s keyword tool is an undependable source – it doesn’t always provide complete, accurate data.
  • Google analytics is an unreliable source, no longer showing all of the data for organic search referrals. Also, your Google Analytics data, by definition, tells you about what you’re already ranking on, not what you're missing out on!
  • Keyword suggestion data in general is unreliable from a conversion perspective – it can tell you how popular a keyword is relative to other terms, but it can't tell you how it will perform on your specific site.

For these and many other reasons, mining your existing Google AdWords campaign data can be incredibly helpful in determining keyword targets for SEO.

In my article today, I’ll show you how to unlock a secret treasure trove of SEO keyword research data from your own company’s AdWords account!

Keywords vs. Search Queries

Before diving in, I’d like to first call attention to an important distinction in PPC regarding the difference between keywords and search queries.

In SEO, the term "keyword" is usually synonymous with the specific term you're targeting. However in an AdWords campaign, every "keyword" is like a pirate-ship packed full of many different user search queries that triggered your ads, including synonyms, related terms, misspellings, word variations, plurals, etc. of the main keyword.

The keyword metrics you see in AdWords, like clicks, impressions, cost, conversions, etc. are a blend of the performance metrics for the entire set of search queries associated with your keyword.

The key point here is that in order to get our hands on the secret SEO keyword research treasure trove, we'll need to first unpackage the AdWords keywords into their constituent search queries.

Arrr Now Surrrrrender the Booty! (Accessing Search Query Data in AdWords)

Getting your search query data in AdWords is a bit hidden – a bit like trying to find a buried treasure! Here's how to unpack your keywords into their underlying search queries:

  1. Set the date range to as large a date range as possible, to download as much search query treasure as possible.
  2. With “All Campaigns” selected, navigate to the keywords tab
  3. Find the “Keyword Details” button, and then click the “View All Search Terms” option, as illustrated here.

Accessing Search Query Data in AdWords

From there you can see the specific search query terms that users searched on, right before clicking on your ads! Every search query comes with all kinds of great data that we can use to help with SEO keyword research, including impressions, clicks, cost, conversions, conversion rates, etc. as shown here:

search query data, including: impressions, clicks, cost, conversions and conversion rates

The above search query data is much more valuable than the fool's gold you get from the Google Keyword Tool and other free keyword tools, because it’s real campaign data for your own site! Key advantages include:

  1. Geo-Targeted Volume Data: Most companies target specific countries, states, or cities in their SEO efforts. One neat feature in AdWords is that you can target specific regions or cities, so, the keyword impression data that you’re getting is reflective of only the markets that your business caters to.
  2. Actual Performance Data: The search query data contains real outcomes on your websites. For example, you can you can see what search queries actually led to happy outcomes, like a lead capture or completed sale.
  3. It's Proprietary Data: The search queries are unique to your website. Your competition does not have access to it.
  4. Cost-Per-Click Data: This gives you a true sense for the value your company and your competitors place on different types of keywords and can be used to justify the value of SEO in a very concrete way.

Now it's very likely that you're looking at a crap-ton of search query data here, having just expanded you keywords into their underlying search queries – if your company is spending a few thousand dollars per month on paid search, there could easily be thousands or hundreds of thousands (or possibly even millions) of search queries here.

If you’re finding that there are just too many rows of data here, it’s important that you sort or filter out some of this data so that your pirate ship doesn’t sink from the crushing weight of all this keyword research booty.

Search Query Booty Filtering Ideas

If you have conversion tracking on, the instant metal-detector way of finding the doubloons in the search query data is to just filter out non-converting search queries. This means that all remaining search query data has all proven itself to be both valuable and relevant to your business.

If you don't have conversion tracking on, or if the number of conversions in your account is too low (i.e. too many of your search queries are being filtered out), I recommend filtering out search queries with very low impression volume and/or spend, for example, search queries with fewer than say, 2 impressions, or with less than a few dollars in spend. Both of these tactics will help weed out the 1-off keyword searches which typically make more than half of the rows in your search query report data.

The following screenshot shows how to apply search query filters in AdWords, using the built-in filtering options:

how to apply search query filters in AdWords

Once you’ve gotten your search query data down to a more manageable level, download it to Excel.

Panning for Gold (Search Query Analysis)

Now that you've exported your filtered AdWords search query data, it's time to analyze this data to prioritize a few SEO targets.

In SEO keyword research, there are tons of metrics that SEOs use like KEI, or Global Google Monthly Search Volume Estimate, or keyword competition, or keyword difficulty, to help in picking what keywords to target in their content creation efforts.

In AdWords, there's many different search query metrics to choose from. There are too many to list out, but here's some of key search query metrics that I pay most attention to for SEO keyword research, and why:

  • Conversions – Any search queries that convert might be good candidates to target via SEO. Even the terms that are converting at high cost per conversions via PPC could be good terms to target via SEO.
  • Conversion Rate – High performing search queries in paid search will likely enjoy similar conversion metrics in relative terms when targeted via SEO.
  • Impressions – Use keyword impression data to get a better sense for actual search query volume in your targeted region.
  • Click Trough Rates – if you’re seeing very high click through rates that means your ad is resonating and should give you some ideas for content creation.
  • Cost Per Click – I have found that this is generally directly proportional to SEO keyword difficulty. Meaning, the higher the cost per click, the harder it will be to rank organically on that same term.
  • Total Cost – By successfully targeting keywords for which your company is already spending money on paid search, you can easily justify the value of SEO to your boss or client in a very concrete way.

Using these and other metrics, you can get a really great sense of which terms have the most overall value to your business, as well as a handle on the effort required to be successful, and even content creation angles to pursue.

Grouping and Organizing your Keyword List into Themes

Once you’ve pulled out or rank-ordered the different terms that seem to look promising based on your analysis, you may want to re-organize that data to make sense of it, especially because you’ll probably still have a ton of keyword data.

For example, say you find that you have a bunch of promising keywords, like:

  • best Internet marketing software
  • top Internet marketing software
  • internet marketing seo software
  • ... (etc.)

These search query variations are similar ways for searching on internet marketing software – it would be nice to try to roll these and other similar search queries into top-level keyword themes, instead of having to process hundreds of similar search queries.

It's kind of the opposite of what we did early on in this process, when we expanded our PPC keywords into their constituent search queries – it would be nice to somehow repackage our final list of promising looking search queries back into categories and sub-categories based on keyword themes.

An easy way to organize your keyword data is to drop it into WordStream's Free Keyword Grouper, which will not only group your keywords into relevant clusters but also shows you which clusters of keywords from your list are the most profitable (you can enter in the keyword and corresponding visits, which in this case you likely want to use impression data for):

Organizing big keyword lists into themes using a Keyword Grouping Tool

You can use this tool for free 10 times. And heck, because the SEOmoz community is so awesome, if you run out of free credits, just shoot me an email this week (lkim at wordstream dot com), and I’ll generate a free 1-year license for the paid version of my Keyword Research Suite (valued at $329 / year) which includes this keyword grouper tool.

The key point here is using a keyword grouping tool such as this one, you can take up to 10,000 search queries and package them back into a more manageable number of higher level topics and sub-topics, and you can use the resulting taxonomy to map out keyword groupings into specific pages on your site in the same way you would with any keyword research process.

Summary: The Pirate's SEO’s Guide to Keyword Research using AdWords Data

Mateys: In my article today, we covered:

  • How to find and unpack your company’s AdWords keywords into valuable search query data
  • Tips for filtering out some of the noise from your AdWords search query data
  • Tips for analyzing and prioritizing your search query data
  • How to repackage and organize your analyzed search query data back into topics, for use in SEO content creation efforts

By following these steps to super-charge your SEO keyword research, I think you’ll be yo-ho-ho’ing all the way to the bank!

Arrrr.... About The Author

Captain Larry Kim be the Founder/CTO of WordStream, provider of PPC Management Tools, including the 20 Minute PPC Work Week, and the AdWords Grader.

You can follow him on Twitter or Google+.

In observance of International Talk Like a Pirate Day, all comments must be in the form of Pirate-speak! :)


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Join a Live Video Chat on Combatting Human Trafficking

The White House Your Daily Snapshot for
Thursday, September 27, 2012
 
Join a Live Video Chat on Combatting Human Trafficking

On Tuesday, President Obama spoke at the Clinton Global Initiative Annual Meeting about his administration’s efforts to combat human trafficking and made it clear that the United States will continue to be a leader in this global movement to fight modern slavery.

Want to learn more about the Obama Administration’s efforts to combat human trafficking at home and abroad?

Join us today at 12:00 p.m. EDT, for a White House Google+ Hangout with Assistant to the President, Chief of Staff to the First Lady and Executive Director of the White House Council on Women and Girls, Tina Tchen, Special Assistant to the President and Senior Director for Multilateral Affairs, Samantha Power and leaders from the NGO and faith communities who play an important role in the global movement in the fight against modern slavery. Joshua DuBois, Special Assistant to President Obama and Executive Director of the White House Office of Faith-Based and Neighborhood Partnerships will moderate the conversation.

Here are the details: In case you missed it, check out President Obama's speech on human trafficking at the Clinton Global Initiative Annual Meeting:



In Case You Missed It

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

Empowering Women and Girls in the United States and Abroad
The Obama Administration takes two major steps in empowering women and girls both here in the United States and abroad: launching the Equal Futures Partnership and taking new steps to combat human trafficking.

Administration Teams Up to Bring Jobs Back to America
A new multi-agency competition will make three-year grants available to states, cities, nonprofits, colleges and economic development districts that develop plans to help attract companies that want to build in the U.S. but might need a few more resources.

Education Drives America
See photos from the Department of Education's coast-to-coast back to school bus tour.

Today's Schedule

All times are Eastern Daylight Time (EDT).

9:30 AM: The President and the Vice President receive The Presidential Daily Briefing

10:00 AM: The President departs the White House en route Joint Base Andrews

10:15 AM: The President departs Joint Base Andrews

11:05 AM: The President arrives Virginia Beach, VA

11:50 AM: The President delivers remarks at a campaign event

1:00 PM: The President departs Virginia Beach, VA

1:55 PM: The President arrives Joint Base Andrews

2:10 PM: The President arrives the White House

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Seth's Blog : Overstimulated

Overstimulated

Time to pay attention to the Weber-Fechner Law.

It's easier to tell the difference between two bags of flour that are three ounces apart in weight when one weighs a pound, than it is to tell the difference between two bags that are three ounces apart when one weighs twenty pounds.

It's easier to tell the difference between two flashlights that are 6 lumens apart when one is just 2 lumens bright than it is to tell them apart when one is 200 lumens.

The more stimulus you're getting (light, sound, pressure, delight, sadness) the less easily you can notice a small change. That seems obvious, but it's worth saying.

If you're entering a market filled with loudness, it's harder to be noticed, even if the incremental benefit you offer seems large to you. If you're trying to delight existing customers, the more delighted they already are, the more new delight you need to offer to turn heads.

One more reason to seek out those that are both interested and underserved.



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miercuri, 26 septembrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


French Unemployment Tops 3 Million, First Time Since 1999

Posted: 26 Sep 2012 10:31 PM PDT

Given the disastrous mess in Southern Europe, compounded by the election of socialist Francois Hollande (together with his extremely foolish tax hike policies), France Set to Implode was a very easy call to make.

The evidence is strongly pointing in that direction. Please consider French unemployment tops 3 million as economy struggles
The number of unemployed people in France has topped 3 million for the first time since 1999, according to latest labour ministry figures.

Speaking before the data was officially announced, Labour Minister Michel Sapin said: "It's bad. It's clearly bad."

However, the government blamed the previous regime of Nicolas Sarkozy.

[Hollande] pledged to revive the eurozone's second largest economy, tackle rising unemployment, and reverse industrial decline. However his approval rating is now at its lowest since he assumed power, pollsters say.

Since May, major companies have announced thousands of layoffs, including carmaker Peugeot, drugmaker Sanofi, airline Air France-KLM, and retailer Carrefour.

Mathieu Plane, economist at the French Economic Observatory, told the Reuters news agency: "There are almost one million more unemployed people compared with early 2008 and we can't yet say that we have reached the peak."

The French economy has posted three consecutive quarters of zero growth, and forward-looking data suggests it may continue to flatline.

The 2013 budget, due to go before the cabinet on Friday, is expected to contain more than 30bn euros in budget savings, and fresh tax rises.

The government has forecast 0.3% growth for the year, and has so far kept its 2013 target at 1.2%, which many economists now consider unrealistic.

France's central bank this month predicted that the economy would contract by 0.1% in the third quarter after flatlining for the first half of the year.
Flatline? Please Be Serious

The idea that France is going to flatline is ridiculous. Growth estimates for next year are even more ridiculous.

Eurozone Unemployment Rates



With the rest of Europe slowing dramatically, do not expect German unemployment to buck the trend forever. Italy is in a steep downturn now, and France is going to follow suit.

Meanwhile, France, Spain, Greece, and Italy are busy hiking taxes which is economic insanity in a recession. They ought to be reforming work rules, but on that score there is little progress, with negative progress in France.

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


Is China Burning? Shanghai Stock Index Breaks 2000 For First Time Since 2009; Reflections on Sentiment

Posted: 26 Sep 2012 12:08 PM PDT

Today the Shanghai stock index, $SSEC, dipped below the 2000 level for the first time since 2009.

Stockcharts does not have intraday charts of ADRs so here are a couple of charts from yesterday to consider.

$SSEC Daily Chart



The following monthly chart puts things in better perspective.

$SSEC Monthly Chart



Shanghai Rout is On

Misguided China bulls shorting the dollar and buying Chinese stocks have gotten their heads handed to them on a platter.

Those aware of the fraud, corruption, and simple sustainability of economic growth in China either stayed away completely or were short China like Jim Chanos.

Bloomberg reports Shanghai Rout Sinks ADRs
Chinese stocks in New York slid to a two-week low as the Shanghai Composite Index's slump below a key level for the first time in three years stoked concern government efforts to avert a slowdown won't be sufficient.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. dropped for a third day, losing 0.7 percent to 90.18 by 12:44 p.m. in New York. The decline followed the Shanghai Composite Index's descent below 2,000 for the first time since 2009. Mobile-chip designer Spreadtrum Communications Inc. (SPRD) sank after its stock rating was cut.
Is China Burning?

Forbes columnist Gordon Chang asks the question, Is China Burning?
Chinese streets were quiet today after anti-Japan protests, many of them violent, rocked more than a 100 cities last week.  Large demonstrations continued through Tuesday, the 81st anniversary of Japan's invasion of Manchuria.

The disturbances, triggered by a territorial dispute over the Senkaku Islands in the East China Sea, are commonly described as the worst anti-Japan riots to hit the country since at least 2005, and they may have even been more destructive than that.

In any event, the damage to Japan's business interests in China was substantial.  More than a dozen Japanese companies halted operations in the country as fire bombings, sabotage, and looting took their toll.  Manufacturers Honda, Nissan, Toyota, Mazda, Mitsubishi, Yamaha, Komatsu, Hitachi, and Canon shuttered plants.  Panasonic locked the doors of a factory after employees broke windows, ruined equipment, and set fires.  Retailers Aeon, Fast Retailing, Ryohin Keikaku, and Seven & I closed stores.

Japanese tourists are canceling trips to China, and hard-hit Panasonic is, not surprisingly, reducing business trips from Japan to the country.  As a result, Japan Airlines reduced flights to and from Chinese destinations.  It halved Tokyo-Beijing and Osaka-Shanghai flights, for example.  All Nippon Airways reported an increase in cancellations on its flights from China to Japan.  And it is not only Japanese carriers that have been hurt.  China Eastern, China's second-biggest airline, is delaying the October 18 start of its Shanghai-Sendai route due to insufficient bookings.

the Chinese economy is in obvious distress, with fewer analysts buying Beijing's claims that the country is growing in the high single digits.  Charles Dumas of Lombard Street Research, for example, thinks China's growth rate is only 1.6%, and it could even be lower than that.  In this environment, even minor disruptions could have a "tipping point" effect.

Moreover, the prospects for Japanese companies will be even worse than it is for others.  Who in China is going to buy a Toyota when last Saturday, in an incident now well-known throughout the country, a 51-year-old Chinese man in Xian was savagely beaten—he is now paralyzed and mostly unable to speak—because he was driving a white Corolla?  And don't think this affects only Japanese companies.  China's new ultra-nationalism, on display this past week, can also affect brands from other countries.

And we should not think the Chinese are limiting their anger to the Japanese.  Last week's events have been compared, in their intensity and their aims, to the anti-foreigner Boxer Rebellion, which began just at the end of the 19th century.

That, unfortunately, is a historical parallel we should remember.  Rioters on Tuesday attacked and damaged the car of American ambassador Gary Locke while he was in it.

China at the moment is unstable, and that puts foreign businesses there—not to mention the Chinese economy—at risk.
Reflections on Sentiment

A few years ago nearly everyone was a China bull.

China, China, China was all I heard at gold and natural resources conferences. My calls pointing out the unsustainability of Chinese growth fell mostly on deaf ears.

Remember how in the 1980s everyone thought Japan would soon rule the world. That's what many thought about China, and still do. I did not buy into it, nor did Michael Pettis at China Financial Markets.

Here are a few posts to consider.


The idea that China was going to rule the world by the end of the decade was complete silliness. Exponential math, as well as energy constraints said it would not happen. Malinvestments and fraud were simply icing on the absurdly-bullish cake.

That said, as compared to a few years ago, or even earlier this year, sentiment on China has soured remarkably.

The fundamentals did not change, just the sentiment. Indeed, sentiment is now so sour on China that a nice rally may happen at any time.

This is not a recommendation that people buy into China, rather it's a suggestion that sentiment is now moving towards extreme pessimism. Reversals from such extremes can lead to powerful rallies. However, timing the reversal is problematic as the four percent rally quickly taken back shows.

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


Firebombs, Teargas, Riots Near Greek Parliament; 57% Say Greece Should Abandon Pledges Made to Troika

Posted: 26 Sep 2012 08:16 AM PDT

Once again things are out of control in Greece. A general strike is underway, and schools, hospitals, and transit are affected. Firebombs and teargas have hit Athens as Greek citizens protest the latest round of austerity measures.

Please consider Greek Strike Sees Violence as Police Use Tear Gas by Parliament
Police fired tear gas near the Greek Parliament after protesters threw fire-bombs as thousands of people joined a strike opposing wage cuts and austerity that Prime Minister Antonis Samaras said are vital to keep the euro.

Demonstrators streamed into the central Syntagma Square in Athens, opposite the Parliament House, shouting slogans such as "struggle, clash, overturn: history gets written by those who disobey." Police spokesman Takis Papapetropoulos estimated the crowd at 35,000 people.

Schools, hospitals, ferries and government services shut down in the first walkout since February. Shops will close from 3 p.m. today to let staff take part in demonstrations. Public transport is operating from 9 a.m. to 9 p.m. to allow protesters to attend rallies in Athens city center. A three-hour walkout by air traffic controllers will disrupt flights around the country.

Athens, the capital, has been wracked with demonstrations by groups ranging from police officers to parents of three or more children in the past week as Finance Minister Yannis Stournaras remained locked in talks with officials from the European Union, the IMF and the European Central Bank.

Hooded youths throwing fire-bombs at police were met with tear gas today, forcing some of the marchers to scatter. Teams of riot police guarded the Finance Ministry and surrounding streets.

The IMF has indicated that any additional financing for Greece will have to come from Europe, where officials have told Samaras no discussion can be held on debt relief or on extending the time to implement measures until he honors pledges made for the country's second rescue package.

Polls show continued dissatisfaction with economic policies. More than 57 percent said the country shouldn't keep to pledges made in exchange for the bailout as the policies have failed, compared with 40 percent who said it should stick to its commitments, according to a Metron Analysis poll for Ependytis newspaper.
Sentiment Has Turned

Sentiment in Greece has turned, and likely turned for good. 57% of Greeks have had enough of austerity to the point they would rather default.

Turn back the hands of time a bit and think how this might have played out if Greece simply left the euro and defaulted three years ago as it should have. Tourism would likely have increased and if  Greece had implemented true structural reforms rather than tax hikes, its economy would be stable or recovering now.

Instead, the country is in ruins, tourism is down, and in an on-again-off-again fashion, absolute chaos breaks out.

Another round of austerity and tax hikes can only make things worse at this point, and the people know it. This will pressure political parties to not go along with Samaras.

If another round of elections were held today, there is no way Samaras would win. Instead, the radical left, and radical right (both of which want to exit the euro), would be fighting over the pieces.

The nannycrats in Brussels and Chancellor Merkel are to blame for this sad state of affairs.

Finally, please note that the big fear of the nannycrats and Merkel is not that Greece leaves the euro per se, but rather Greece leaves the euro and the Greek economy starts to recover.

Well, here's the deal and it is something I said years ago: the sooner Greece abandons the euro, tells the Troika to go to hell, and defaults, the better off it will be.

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