miercuri, 11 decembrie 2013

Simplify Your Inbound Marketing Process: Focus on Content Assets

Simplify Your Inbound Marketing Process: Focus on Content Assets


Simplify Your Inbound Marketing Process: Focus on Content Assets

Posted: 10 Dec 2013 03:14 PM PST

Posted by kaiserthesage

Content ties everything in the digital marketing realm togetherâ€"that's why it is king.

Content creation has been the core part of my blog/business' inbound marketing strategy this year, which was around 70% of my entire marketing effort. The other 30% was allocated to content promotion/distribution, relationship building, site optimization, and analytics.

So this post is basically a case study of how I simplified a very complex process by only focusing on one integral part of inbound marketing (content), and how that led to hundreds of service leads for our company this year.

On content strategy

Content assets help brands communicate their messages to their target audiences. These may come in the form of visual guides, web-based tools, extensive resources and many more (as also listed by Cyrus Shepard on his recent Moz post).

In my case, I aim for every blog post I publish to be an asset that I can continuously optimize and improve.

So in order for my overall campaign to be really scalable (and for me to be able to easily integrate other inbound marketing practices), I based my content development efforts on these core principles:

  • Create content that contains ideas/information that isn't found anywhere else.
  • Make the content very comprehensive and evergreen if possible.

And as for the content formats, I mostly focused on creating:

  • Case studies
  • Extensive and evergreen blog posts (how-to's)
  • Reusable content (newsletters, slide presentations, PDFs, etc.)

If in case you're wondering about the content assets I've repurposed, here are few samples:

2 months ago, I released a 4 part newsletter series that talks about 12 different scalable link building tactics.

After a couple of weeks, I decided to publish the entire series as a long-form blog post here on Moz.

Another sample is with one of my most popular guides this year (that was also featured on Moz's top-10 monthly newsletter) entitled 22 link building tips from @xightph, which I just recently turned into a SlideShare presentation:

Perhaps this approach of allocating the majority of my efforts into content development is easier for me to accomplish because I established my blog's readership 2 years before I tried it, and also given that I've already built relationships with other online marketers who habitually share my new blog posts.

I still believe that this exact process is replicable for those who haven't yet established themselves. Since it always comes down to what you can provide to your industry and finding ways to let others know you have it.

Content = links

Content assets are able to attract and build links over time, knowing that it is in the nature of content to be genuinely linkable.

Link building becomes automatic when you focus on creating useful and actionable content on a regular basis (and, of course, letting other people who're interested in your content's topic know that your content exists).

Your content won't stand on its own and be linkable by itself, so it's also important to make an effort for it to be more visible to your target audience. Here are a few things you can do to ensure it'll get to your audience:

  • Outreach: Connect with other content publishers, industry influencers, and enthusiasts, and see if they're interested in checking out your content.
  • Social ads: Use content placement services from Facebook or StumbleUpon to get more eyeballs to your content.
  • Conversations: Participate and share your content on relevant discussions from online communities in your space (forums, groups, blogs, Q&A sites, etc.).
  • Distribution: Promote your content assets through other content distribution channels such as guest blogging, regular columns, newsletters, slide presentations, videos, or podcasts.

Further reading:

Content = relationships

Providing high-value content assets on a regular basis will also help you easily connect and engage other content publishers in your industry.

This can somehow impact how other people perceive your brand as a publisher, especially when other thought leaders are sharing your content, interacting with your brand, and inviting you to contribute to their websites (which is quite similar to what Moz has done in past years).

Relationships, partnerships, and alliances are vital in this age of marketing, as they can help increase your readership and follower base, and can particularly help improve the shareability of your site's content.

Here are a few pointers on how to engage and build relationships with industry influencers:

  • Mention or use their works as a reference for your content. You can also ask them to review and validate the information within your content to build a rapport (which is also a great way to get them to see the quality of your work).
  • Make sure that your content appeals to their audience/followers; this increases the likelihood of getting your content shared.
  • Don't worry. You don't have any reason to be afraid to reach out to influencers when you're really confident with the caliber of your content.

Content = social activity

With the right push, a well-thought-out piece of content will almost always do well in terms of social sharing. Most content assets are designed to be share-worthy, and the common factors that make most content assets shareable are:

  • Their design and if they're visually appealing.
  • If they've been shared by popular/influential entities in their industries.
  • If the content is emotionally compelling, educational, useful, and/or just simply adds unique value to the industry.

Making your linkable assets timeless or evergreen can also amplify its social activity, given that every time it gets a new visitor the content remains relevant, which can continuously increase the amount of social shares it is getting.

And the more you create content assets on your website, the more you can grow your following base and network. Which is why content plays a big role in social media - because it's what people are sharing.

For more actionable tips on increasing your content assets' social activity, you might want to also check the post I wrote a few weeks ago at Hit Reach on how to get more social shares for your site.

Content = search rankings

The ways in which search engines determine web pages' importance (and whether they really deserve to be prominently visible in search results) have evolved over the years.

Major factors such as relevance (which can be measured through usage/page activity) and authority (measured through social, links, domain authority, brand signals, etc.), though, still play a huge role in terms of search rankings. These metrics are also elements that most successful content assets embody.

Great content generates rankings.

A couple of pointers on making the most out of your site's content pool to boost your SEO:

  • Turn the pages on your website that target key industry terms into evergreen content assets.
  • Optimize your important pages/content assets for interaction, conversions, and user-experience. For example, test your pages' CTAs, encourag people to share the content, etc. These are the key areas that will make your pages rank better in search results.

Further reading:

Content = email subscribers

Email marketing is an essential part of inbound marketing, because it's a marketing platform that many businesses have full control of (owned media).

Growing your email list is a whole lot easier when you're consistently putting new content up on your site (and especially when you consider every piece of content you launch as an asset).

The more content you publish, the more people get to discover your brand, which can ultimately increase your chances of getting them to subscribe or sign up for your email newsletter.

Tips on how to increase email sign-ups:

  • Make your opt-in form(s) very visible on the site's key landing pages.
  • Incentivize sign-ups by offering free content such as ebooks, whitepapers, newsletter series, and/or access to free web-based tools.

Content = conversions

Content assets can definitely lift conversions, mainly because they can strongly demonstrate the brand's domain expertise and authority.

If you've planted a lot of useful and actionable content on your site, then these things are influencing your site's ability to convert visitors.

More on improving your content assets' conversions:

  • Identify which landing pages/assets are constantly driving sales/new customers/service inquiries to your business. Make them more visible by building more internal/incoming links to them, improving or updating the content itself to earn better search rankings, sharing them on social networks, or basically anything that can improve their traffic.
  • Continually test and improve the content's calls to action.

Becoming a better inbound marketer

Before I became an SEO in 2010, I was a freelance writer. It never occurred to me that I'd be doing both in the futureâ€"and actually more.

But I guess knowing how to get the right traffic and having a better grasp of the kinds of content that my audience needs and wants to read made me a better inbound marketer.

I would love to hear your ideas about this approach to inbound marketing, or if you have questions, I'd also love to see them in the comments section. You can also follow me on Twitter @jasonacidre.


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4 Lessons From a Year of MozCast Data

Posted: 10 Dec 2013 02:37 AM PST

Posted by BenMorel86

We all know that over the past year, there have been some big updates to Google's algorithms, and we have felt what it has been like to be in the middle of those updates. I wanted to take a big step back and analyse the cumulative effects of Google's updates. To do that, I asked four questions and analysed a year of MozCast data to find the answers.

Looking back over the last year â€" or more precisely the last 15 months through 1st September 2013 â€" I aimed to answer four questions I felt are really important to SEOs and inbound marketers. These questions were:

  • Are there really more turbulent days in the SERPs than we should expect, or are all SEOs British at heart and enjoy complaining about the weather?
  • If it's warmer today than yesterday, will it cool down tomorrow or get even warmer?
  • It sometimes feels like big domains are taking over the SERPs; is this true, or just me being paranoid?
  • What effects have Google's spam-fighting had on exact and partial domain matches in SERPs?

Before We Start

First, thanks to Dr. Pete for sending me the dataset, and for checking this post over before submission to make sure all the maths made sense.

Second, as has been discussed many times before on Moz, there is a big caveat whenever we talk about statistics: correlation does not imply causation. It is important not to reverse engineer a cause from an effect and get things muddled up. In addition, Dr. Pete had a big caveat about this particular dataset:

"One major warning - I don't always correct metrics data past 90 days, so sometimes there are issues with that data on the past. Notably, there was a problem with how we counted YouTube results in November/December, so some metrics like "Big 10" and diversity were out of whack during those months. In the case of temperatures, we actively correct bad data, but we didn't catch this problem early enough…
All that's to say that I can't actually verify that any given piece of past data is completely accurate, outside of the temperatures (and a couple of those days have been adjusted). So, proceed with caution."

So, with that warning, let's have a look at the data and see if we can start to answer those questions.

Analysis: MozCast gives us a metric for turbulence straight away: temperature. That makes this one of the easier questions to answer. All we need to do is to take the temperature's mean, standard deviation, skew (to see whether the graph is symmetric or not), and kurtosis (to see how "fat" the tails of the curve are). Do that, and we get the following:

Mean 68.10°F
Standard Deviation 10.68°F
Skew 1.31
Kurtosis 2.60

What does all this mean? Well:

  • A normal day should feel pretty mild (to the Brits out there, 68°F is 20°C). The standard deviation tells us that 90% of all days should be between 46°F and 90°F (8°C and 32°C), which is a nicely temperate range.
  • However, the positive skew means that there are more days on the warm side than the cool side of 68°F.
  • On top of this, the positive kurtosis means we actually experience more days above 90°F than we would expect.

You can see all of this in the graph below, with its big, fat tail to the right of the mean.

Graph showing the frequency of recorded temperatures (columns) and how a normal distribution of temperatures would look (line).

As you can see from the graph, there have definitely been more warm days than we would expect, and more days of extreme heat. In fact, while the normal distribution tells us we should see temperatures over 100°F (38°C) about once a year we have actually seen 14 of them. That's two full weeks of the year! Most of those were in June of this year (the 10th, 14th, 18th, 19th, 26th, 28th, 29th to be precise, coinciding with the multi-week update that Dr. Pete wrote about)

And it looks like we've had it especially bad over the last few months. If we take data up to the end of May the average is only 66°F (19°C), so the average temperature over the last three months has actually been a toasty 73°F (23°C).

Answer: The short answer to the question is "pretty turbulent, especially recently". The high temperatures this summer indicate a lot of turbulence, while the big fat tail on the temperature graph tells us that it has regularly been warmer than we might expect throughout the last 15 months. We have had a number of days of unusually high turbulence, and there are no truly calm days. So, it looks like SEOs haven't just been griping about the unpredictable SERPs they've had to deal with, they've been right.

Analysis: The real value of knowing about the weather is in being able to make predictions with that knowledge. So, if today's MozCast shows is warmer than yesterday it would be useful to know whether it will be warmer again tomorrow or colder.

To find out, I turned to something called the Hurst exponent, H. If you want the full explanation, which involves autocorrelations, rescaled ranges, and partial time series, then head over to Wikipedia. If not, all you need to know is that:

  • If H<0.5 then the data is anti-persistent (an up-swing today means that there is likely to be a down-swing tomorrow)
  • If H>0.5 the data is persistent (an increase is likely to be followed by another increase)
  • If H=0.5 then today's data has no effect on tomorrow's

The closer H is to 0 or 1 the longer the influence of a single day exists through the data.

A normal distribution â€" like the red bell curve in the graph above â€" has a Hurst exponent of H=0.5. Since we know the distribution of temperatures with its definite lean and fat tails not normal, we can guess that its Hurst exponent probably won't be 0.5. So, is the data persistent or anti-persistent?

Well, as of 4th September that answer is persistent: H=0.68. But if you'd asked on 16th July â€" just after Google's Multi-week Update but before The Day The Knowledge Graph Exploded - the answer would have been "H=0.48, so neither": it seems that one effect of that multi-week update was to reduce the long-term predictability of search result changes. But back in May, before that update, the answer would again have been "H=0.65, so the data is persistent".

Answer: With the current data, I am pretty confident in saying that if the last few days have got steadily warmer, it's likely to get warmer again tomorrow. If Google launches another major algorithm change, we might have to revisit that conclusion. The good news is that the apparent persistence of temperature changes should give us a few days warning of that algo change.

Analysis: We've all felt at some point like Wikipedia and About.com have taken over the SERPs. That we're never going to beat Target or Tesco despite the fact that they never seem to produce any interesting content. Again, MozCast supplies us with a couple of ready-made metrics to analyse whether or not this is true or not: Big 10 and Domain Diversity.

First, domain diversity. Plotting each day's domain diversity for the last 15 months gives you the graph below (I've taken a five-day moving average to reduce noise and make trends clearer).

Trends in domain diversity, showing a clear drop in the number of domains in the SERPs used for the MozCast.

As you can see, domain diversity has dropped quite a lot. It dropped 16% from 57% in June 2012 to 48% in August 2013. There were a couple of big dips in domain diversity â€" 6th May 2012, 29th September 2012, and 31st January 2013 â€" but really this seems like a definite trend, not the result of a few jumps.

Meanwhile, if we plot the proportion of the SERPs being taken over by the Big 10 we see a big increase over the same period, from 14.3% to 15.4%. That's an increase of 8%.

Trends in the five-day moving average of the proportion of SERPs used in the MozCast dataset taken up by the daily Big 10 domains.

Answer: The diversity of domains is almost certainly going down, and big domains are taking over at least a portion of the space those smaller domains leave behind. Whether this is a good or bad thing almost certainly depends on personal opinion: somebody who owns one of the domains that have disappeared from the listings would probably say it's a bad thing, Mr. Cutts would probably say that a lot of the domains that have gone were spammy or full of thin content so it's a good thing. Either way, it highlights the importance of building a brand.

Analysis: Keyword-matched domains are a rather interesting subject. Looking purely at the trends, the proportion of listings with exact (EMD) and partial (PMD) matched domains is definitely going down. A few updates in particular have had an effect: One huge jolt in December 2012 had a particular and long-lasting effect, knocking 10% of EMDs and 10% of PMDs out of the listings; Matt Cutts himself announced the bump in September 2012; and that multi-week update that cause the temperature highs in June also bumped down the influence of PMDs.

Trends in the five day moving averages of Exact and Partial Matched Domain (EMD and PMD) influence in the SERPs used in the MozCast dataset.

Not surprisingly, there is a strong correlation (0.86) between changes in the proportion of EMDs and PMDs in the SERPs. What is more interesting is that there is also a correlation (0.63) between their 10-day volatilities, the standard deviation of all their values over the last 10 days. This implies that when one metric sees a big swing it is likely that the other will see a big swing in the same direction â€" mostly down, according to the graph. This supports the statements Google have made about various updates tackling low-quality keyword-matched domains.

Something else rather interesting that is linked to our previous question is the very strong correlation between the portion proportion of PMDs in the SERPs and domain diversity. This is a whopping 0.94, meaning that a move up or down in domain diversity is almost always accompanied by a swing the same way for the proportion of SERP space occupied by PMDs, and vice versa.

All of this would seem to indicate that keyword matching domains is becoming less important in the search engines' eyes. But hold your conclusions-drawing horses: this year's Moz ranking factors study tells us that "In our data collected in early June (before the June 25 update), we found EMD correlations to be relatively high at 0.17… just about on par with the value from our 2011 study". So, how can the correlation stay the same but the number of results go down? Well, I would tend to agree with Matt Peters' hypothesis in that post that it could be due to "Google removing lower quality EMDs". There is also the fact that keyword matches do tend to have some relevance to searches: if I'm looking for pizzas and I see benspizzzas.com in the listings I'm quite likely to think "they sound like they do pizzas â€" I'll take a look at them". So domain matches are still relevant to search queries, as long as they are supported by relevant content.

So, how can the correlation stay the same but the numbers of results drop? Well, the ranking factors report looks at how well sites rank once they have already ranks. If only a few websites with EMDs rank but they rank very highly, the correlation between rankings and domain matching might be the same as if a number of websites rank way down the list. So if lower quality EMDs have been removed from the ranking - as Dr. Matt and Dr. Pete speculate - but the ones remaining rank higher than they used to, the correlation coefficient we measure will be the same today in 2011.

Answer: The number of exact and partial matches is definitely going down, but domain matches are still relevant to search queries â€" as long as they are supported by relevant content. We know about this relevance because brands constantly put their major services into their names: look at SEOmoz (before it changed), or British Gas, or HSBC (Hong Kong-Shanghai Banking Corporation). Brands do this because it means their customers can instantly see what they do â€" and the same goes for domains.

So, if you plan on creating useful, interesting content for your industry then go ahead and buy a domain with a keyword or two in. You could even buy the exact match domain, even if that doesn't match your brand (although this might give people trust issues, which is a whole different story). But if you don't plan on creating that content, buying a keyword-matched domain looks unlikely to help you, and you could even be in for a more rocky ride in the future than if you stick to your branded domain.

Whew, that was a long post. So what conclusions can we draw from all of this?

Well, in short:

  • Although the "average" day is relatively uneventful, there are more hot, stormy days than we would hope for
  • Keyword-matched domains, whether exact or partial, have seen a huge decline in influence over the last 15 months â€" and if you own one, you've probably seen some big drops in a short space of time
  • The SERPs are less diverse than they were a year ago, and the big brands have extended their influence
  • When EMD/PMD influence drops, ERP diversity also drops. Could the two be connected?
  • If today is warmer than yesterday, it's likely that tomorrow will be warmer still

What are your thoughts on the past year? Does this analysis answer any questions you had â€" or make you want to ask more? Let me know in the comments below (if it does make you ask more questions I'll try to do some more digging and answer them).


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This Afternoon: We're Answering Your Questions on Immigration

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This Afternoon: We're Answering Your Questions on Immigration

Today at 3:45 p.m. ET, Vice President Biden and Cecilia Muñoz, the President's Domestic Policy Advisor, are sitting down to answer your questions about immigration reform.

During the conversation hosted by Bing and Skype, the Vice President and Cecilia will speak with folks from around the country via live Skype Video Call, and answer questions submitted through both Skype Video and social media.

Click here to find out how to get involved in today's chat.

Watch live: Vice President Biden and Cecilia Munoz answer your questions

 

 
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Remembering Nelson Mandela

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South Africans cheer as President Obama waits in a tunnel at the soccer stadium before taking the stage to speak at Nelson Mandela's memorial service, Dec. 10, 2013. (Official White House Photo by Pete Souza)

 

 
 
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President Obama's Message to the People of the Central African Republic

This week, in an audio message taped in Dakar, Senegal, President Obama sent a clear and important message to the people of the Central African Republic: that they should reject the violence currently threatening their country, and move together toward a future of security, dignity, and peace.

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Watch: Creating the 2013 White House Gingerbread House

Over the course of several weeks, pastry chef Bill Yosses and his talented team created a 300-pound, edible White House replica. The time lapse video lets you see how Chef Yosses and his team put the whole project together.

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President Obama addresses his support of Computer Science Education Week, an annual grassroots campaign dedicated to highlighting the importance of computer science education for K-12 students.

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Seth's Blog : Eight email failures (and questions for those that want to do better)

 

Eight email failures (and questions for those that want to do better)

A friend sent out an email blast (I hate that word, for good reason) to his ample address book to promote a new project and got a lot of blowback for it. He asked me for my feedback...

  1. Just because you have had a previous relationship with someone doesn't mean you have permission to email them. Permission marketing is anticipated, personal and relevant messaging. The simple measure is this: Would they miss you if you didn't mail them? If not, then you're fooling yourself into thinking you have something you don't.
  2. Blaming the tool. There are a wealth of powerful email tools out there (like Mailchimp). If your email campaign isn't working, it's almost certainly not their fault. Don't waste time looking for a better pencil--learn to write better.
  3. Your mailmerge is broken. Dear is far worse than no mailmerge at all. Here's the simple test: if you're not willing to spend fifteen seconds per name reviewing the list and cleaning it up (why did you email me six times?), then don't expect that we have fifteen seconds to read what you wrote. If you have 4,000 names, that's 1,000 minutes. Don't have 1,000 minutes? Don't send the mail.
  4. Text is what humans send. Corporations send HTML and pretty graphics. Either can work if expectations are set properly, but if you're a human, act like one.
  5. Why are you emailing me? If you can't tell me in six words what you need me to do, it's unlikely I'll be able to guess.
  6. The thing you need me to do better be fun, worth doing and generous. If it's not, I'm not going to do it, no matter how much you need me to do it.
  7. When does this end? If you're going to send me a series of notes to promote something, does it go on forever? Telling me what's ahead is more likely to earn you permission going forward. "Oh good, the next one!" If people aren't saying that, you've failed.
  8. Pinging everyone, at once. Why on earth would you hit SEND ALL? Send 20, see what happens. Send 20 different ones, compare. Send 50. Now send all.

If your email promotion is a taking, not a giving, I think you should rethink it. If you still want to take the time and attention and trust of your 4,000 closest friends, think hard about what that means for the connections you've built over the years. There are few promotional emergencies that are worth trading your reputation for.

       

 

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marți, 10 decembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


About That Illinois Pension "Fix"

Posted: 10 Dec 2013 09:30 PM PST

The highly touted Illinois plan to fix its pension system is largely hot air. I was waiting for details to prove just that and they came out today. Let's flashback to the initial claim.

A headline from six days ago reads Illinois lawmakers approve fix for $100b pension crisis
The Illinois Legislature approved a historic plan Tuesday to eliminate the state's $100 billion pension shortfall, a vote that proponents described as critical to repairing the state's deeply troubled finances but that faces the immediate threat of a legal challenge from labor unions.

The measure approved Tuesday emerged last week following negotiations by a bipartisan pension conference committee and then meetings of Illinois' legislative leaders. They say it will save the state $160 billion over 30 years and fully fund the systems by 2044.

It would push back the retirement age for workers ages 45 and younger, on a sliding scale. The annual 3 percent cost-of-living increases for retirees would be replaced with a system that only provides the increases on a portion of benefits, based on how many years a beneficiary was in their job. Some workers would have the option of freezing their pension and starting a 401(k)-style defined contribution plan.

Workers will contribute 1 percent less to their own retirement under the plan. Legislative leaders say they included that provision, as well as language that says the retirement systems may sue the state if it does not make its annual payments, in hopes of boosting the measure's odds of surviving the unions' anticipated court challenge.
Actuarially Unsound

Unions are opposed to the plan, as always, and will file lawsuits, as always. But the plan does not even work.

Via email, Jonathan Ingram, at the Illinois Policy Institute explains...
House Speaker Mike Madigan and proponents of the temporary pension "fix" enacted last week promised taxpayers that it would immediately reduce the state's unfunded pension liability by about $20 billion. But despite these promises, the credit rating agencies have indicated that they would be waiting for actuarial analyses before making any decisions on how the new law will affect Illinois' worst-in-the-nation credit rating.

They're wise to wait. It turns out that somewhere between $6 billion and $8 billion of Madigan's promised reduction is solely the result of accounting gimmicks.

Part of the "fix" Madigan's bill offers is to eventually move to what's called the "Entry Age Normal" cost method for calculating how much the state should be contributing to pensions each year. That's actually a good idea. This new accounting method helps make the pension ramp a little less steep. It's also required by the new pension accounting rules promulgated by the Governmental Accounting Standards Board.

But here's the problem: switching to this new accounting method actually increases the state's unfunded liability by approximately $6 billion to $8 billion in the short term, because it attempts to spread the costs over the course of employees' careers, rather than having them backloaded like we do now.

So how do you make up for that increase when you're trying to reduce the state's unfunded liability? Do you incorporate more comprehensive reforms to get that debt under control? Not if you're Madigan.

Instead of addressing that increase, the pension bill simply delays implementing the accounting change until fiscal year 2016. This means that the state gets to pretend that at least $6 billion to $8 billion of the pension debt simply doesn't exist for now. But when the new rules take effect in 2016, that pension debt is added back to the books. Instead of cutting $20 billion off the unfunded liability as promised, it looks like Madigan's bill only really cuts $12 billion to $14 billion.

Actuaries for the state's largest pension system recommended against delaying the new accounting rules. As they noted, the gimmick is being used to "maximize the amount of liability reduction," even though 25% to 35% of that liability reduction will be added back to the pension debt in just a few years.

The rating agencies have already begun cracking down on state and local governments for using gimmicks to paper over their true pension debt.

Are lawmakers seriously hoping they'll overlook this one, especially when our own actuaries are highlighting it?
Pension Fight Could Create Deeper Hole

The Washington Post reports Ill. pension fight could create deeper fiscal hole
With the fight over solving Illinois' worst-in-the-nation pension shortfall now headed to the courts, the financially troubled state faces a grim possibility: The plan could be tossed, and Illinois could wind up in an even deeper fiscal hole than the one it's in now.

Legislative leaders, anticipating a legal challenge from public-employee unions once the landmark bill approved Tuesday is signed, went extra lengths to bolster the law's odds in the courtroom — including an unusual three-page preamble to the legislation in which they lay out their case for cutting worker and retiree benefits.

But legal experts say those efforts could mean little in a state that provides some of the country's stronger constitutional protections of pension benefits.

They point to Arizona as a possible warning sign. In 2012, a judge there said a law raising the employee contribution to pension benefits was illegal, and ordered the state to repay the money to workers — with interest.

Illinois, Michigan and Arizona are among the seven states that have clauses in their state constitutions that protect pension benefits, according to the Center for Retirement Research at Boston College. The others are Alaska, Hawaii, Louisiana and New York.

Illinois and New York's protections are considered to the strongest, however, because the language expressly states that it applies to current and future benefits.

A coalition of labor unions known as We Are One Illinois stated immediately after the bill passed that it will sue if Gov. Pat Quinn signs it, which the Chicago Democrat is expected to do as early as this week.

Quinn said he believes the legislation is constitutional and will ultimately be upheld by the Illinois Supreme Court.

"It is necessary for the economic good for the people of our state, and I think the court will see it that way," he said.
Economic Good of the State

If Governor Quinn really wants to do something for the "economic good of the state" he can start by signing legislation that would ...

  1. End collective bargaining rights for Illinois public unions.
  2. Make Illinois a right-to-work state.
  3. Scrap prevailing wage laws.
  4. End defined benefit pension plans going forward.
  5. Lower taxes for the average citizen.
  6. Hike taxes on public union pension payments enough to make the system sound.

Plan Worth Fighting For

As long as there is going to be a court battle with the unions, you may as well go to court over a plan that will actually fix the system.

Illinois should figure pension liabilities at a reasonable rate of return, say the 30-year treasury rate. That would make the plan underfunding look far worse today, but so be it. The idea is sound.

Then after barring new entrants into the scheme, the state should hike taxes on pension recipients enough to make the system fully funded with no additional taxes on regular taxpayers.

I propose something along the lines of "taxing pension benefits above a specified amount at 80%, taken straight out of the check". The "specified amount" would be determined based on what it takes to make the system actuarially sound in a reasonable timeframe (say 15 years).

If you going to have a fight, make it a fight worthwhile.

As always, it's best to have a plan B. I propose a simple one: default on pension obligations above a certain level, but pay all other state obligations early to avoid bond market disruptions.

Public Unions Should Bear the Brunt of the Pain

Public unions (in conjunctions with pandering politicians) wrecked Detroit, and numerous cities in California and other states. Together they wrecked Illinois.

It's perfectly fair for unions to bear the brunt of the pain in working out a solution.

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

French Industrial Output Drops Unexpectedly; France Finance Minister in Complete Denial; Expect the Unexpected

Posted: 10 Dec 2013 11:39 AM PST

I am in a near-constant state of amusement regarding what economists and analysts expect vs. what happens. A perfect example came up today.

MarketWatch reports French Industrial Output Drops Unexpectedly.
French industrial output dropped unexpectedly in October for the second month in a row, data from national statistics bureau Insee showed Tuesday, providing a further indication of a weak start to the final quarter of 2013 in the euro zone.

Industrial production in the currency bloc's second largest economy fell 0.3% in October from September, when it also fell 0.3%, Insee said. Analysts polled by Dow Jones Newswires had expected a 0.2% rise in October.

The October decline confirms a steady shrinking of output in industry. Over the three months through October, industrial production was 0.6% below the previous three months, Insee said.

The disappointment comes after separate data showed Monday that German industrial production dropped 1.2% in October from the previous month.

Why Was This Unexpected?

This decline should have been completely expected. I can give you three reasons.

  1. On December 2, the Markit France Manufacturing PMI final data showed "France PMI sinks to five month low as output and new orders fall at sharper rates".
  2. On December 4, the Markit France Services PMI final data showed "French service sector slips back into contraction in November".
  3. On December 4, the Markit Eurozone Composite PMI final data showed "Eurozone growth slows further as France and Italy suffer renewed contractions".

If you are looking for a 4th bonus reason, please pencil in "Francois Hollande" and all the socialist ministers in his government.

From the third Markit link above ...
Sector Output Growth ( Nov. )

Germany   55.4    29-month high
Ireland       55.4      5-month low
Spain         50.8      3-month high
Italy           48.8      5-month low
France       48.0      5-month low

Eurozone employment fell again in November, extending the current unbroken sequence of decline to 23 months. France, Italy and Spain all reported job losses during the latest survey month.
Chris Williamson, Chief Economist at Markit said: "declines in the PMIs for Italy and France raise the prospect of these countries' economies contracting again in the fourth quarter, meaning Italy's recession will have extended into a staggering tenth successive quarter and France will have slid back into a new recession."

Amusingly, analysts polled by Dow Jones Newswires had expected a 0.2% rise in industrial production.

France Finance Minister in Complete Denial

Those of you seeking still more amusement can find it in one of the usual places: statements made by French politicians.

For example (and also from today), the Financial Times reports Pierre Moscovici, France Finance Minister Says Economy has 'Truly Emerged from Recession'
"France has truly emerged from recession," Moscovici insists. "Of course, I would like to see the growth rate increase, but I wish we could stop this attitude of systematic doubt about the French economy."

This week the Bank of France upped its forecast for fourth-quarter growth to 0.5 per cent. The big international economic institutions, including the European Commission, broadly agree with the government's forecasts of about 1 per cent growth next year, followed by 1.7 per cent in 2015.

"It's not wishful thinking. I base what I am saying on reality," says Mr Moscovici.

[In regards to EU deficit limit of 3 per cent of GDP, the target pushed back to back to 2015] ... That will be met, Mr Moscovici assures. "I'm not just confident, I'm committed. We are on course to hit the target and there is no reason to doubt that."

From 2015, 100 per cent of the deficit reduction effort will come from public spending cuts, he says. But he offers no apologies for the government's initial reliance on tax increases, despite the recent protests.
Anyone Believe Moscovici?

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

Close Inspection of Alleged "Draconian" Cuts in Food Stamp Program; Mish SNAP Proposal

Posted: 10 Dec 2013 09:23 AM PST

Inquiring minds are digging into the alleged "Draconian Cuts" in Food Stamps as championed by the Daily Koz. Of course the Daily Koz is not alone in whining about "draconian" cuts.

Note: The food stamp program is now called "SNAP" Supplemental Nutrition Assistance Program. 

"The Unthinkable"

On December 5, Greg Kaufmann, writer for The Nation wondered Why Is a Senate Democrat Agreeing to Another $8 Billion in Food Stamp Cuts?
On the same day that President Obama eloquently described his vision of an economy defined by economic mobility and opportunity for all, Senate Agriculture Committee Chairwoman Debbie Stabenow was busy cutting a deal with House Agriculture Committee Chairman Frank Lucas to slice another $8 to $9 billion from food stamps (SNAP), according to a source close to the negotiations.

"That was the first time in history that a Democratic-controlled Senate had even proposed cutting the SNAP program," said Joel Berg, executive director of the New York City Coalition Against Hunger. "The willingness of some Senate Democrats to double new cuts to the program…is unthinkable."
Mother Jones Says "Kill the Farm Bill Entirely"

Bitching and moaning would not be complete without Mother Jones getting in on the act. On November 12, Mother Jones proposed House Dems Can Block GOP Food Stamp Cuts—by Killing the Farm Bill
The food stamps program—which helps feed 1 in 7 Americans—is in peril. Republicans in the House have proposed a farm bill—the five-year bill that funds agriculture and nutrition programs—that would slash food stamps by $40 billion. But by taking advantage of House Republicans' desire to cut food stamps as much as possible, Democrats might be able to prevent cuts from happening at all.

To pull it off, Democrats would have to derail the farm bill entirely, which would maintain food stamp funding at current levels.
Where's the Beef?

On December 10, The Tennessean more evenly covers the issue in its report TN House Republicans back $40 billion in food stamp cuts.
The future of food stamps — the Supplemental Nutrition Assistance Program — remains the largest sticking point in House-Senate negotiations to finalize a new farm bill before the end of the year.

In September, the House approved a farm bill that cuts almost $40 billion from food stamps over 10 years — about 5 percent a year. The Senate earlier approved a bill that would cut $4 billion over that time.

At $80 billion a year, food stamps remain the single costliest item in the farm bill. The program serves almost 48 million Americans and 1.34 million Tennesseans — about 20 percent of the state population.

Among House members from Tennessee, all but Reps. Jim Cooper of Nashville and Steve Cohen of Memphis — the two Democrats in the state's congressional delegation — voted for the bill making $40 billion in cuts.

Groups such as the Center on Budget and Policy Priorities, a liberal-leaning Washington think tank, say cuts of that magnitude would result in denying benefits to 3.8 million low-income Americans in 2014.

"Those who would be thrown off the program include some of the nation's most destitute adults, as well as many low-income children, seniors and families that work for low wages," the CBPP said in an analysis of the House bill. "The House SNAP bill is harsh."

Rep. John Duncan, R-Knoxville, complained that administrators of the program "have no incentive to keep people off."

"They will get bigger offices, staffs and funding if even more people get food stamps," he said.
Close Inspection of "Draconian" Cuts

Please note that the alleged $40 billion in cuts is really only $4 billion in a close to $80 billion program. They arrive at $40 billion by multiplying $4 billion by 10 years.

OK Fine. The cuts then are $40 billion in an $800 billion program. And I actually doubt we will ever see those "cuts" in the first place.

A few charts from reader Tim Wallace will help explain.

SNAP Growth in Benefits

 

click on any chart for sharper image

SNAP Benefit Facts

  • SNAP benefits more than doubled between 2000 and 2007.
  • Between 2007 and 2013 snap benefits went up another 150%.
  • Trendline growth would have annual benefits at about $32.5 billion.
  • Instead benefits are more than double.
  • Liberals are whining about a 5% cut when a cut to the trendline would be a 50% cut

SNAP Participation



SNAP Participation Facts

  • Participation is nearly double what it was in 2007.
  • Participation in 2013 is 275% of the 2001 total.

SNAP Per Person Benefits

 

SNAP Per Person Benefits Facts

  • Monthly benefit goes up over time because of inflation.
  • Benefits per person jumped in 2007.
  • Monthly per person benefit is now $133.
  • Trendline benefit is $117.

Supposedly a 5% cut is draconian.

The Problem

  • Growth in the number of participants is on an unsustainable trend. 
  • Growth in benefits per person is also on an unsustainable trend.
  • Multiply the two together and you get the first chart.

As is typical with government programs, there is no incentive by the administrators to eliminate waste or fraud. 

The more funding for food stamps, the bigger the salaries and staffs of the administrators.

I suggest that we need a way to provide necessary safety-net benefits while simultaneously providing an incentive to get off the program and get a job.

I repeat my proposal.

Mish SNAP Proposal

  • Prohibit food stamp purchases of potato chips, snacks, soft drinks, candy, pizza, frozen foods of any kind except juice.
  • Limit food stamp users to generic (store brand vs. name brand) dried beans, rice, peanut butter, pasta, fresh vegetables, fresh fruit, frozen (not bottled) juice, canned vegetables, canned soup, soda crackers, poultry, ground beef, bread, cheese, powdered milk, eggs, margarine, and general baking goods (flour, sugar, spices).
  • Calculate a healthy diet based on current prices, number in the family, ages of recipients, and base food stamps allotments on that diet.
  • In the interest of health and cleanliness, expand the food stamp program to include generic soap and laundry products.

My proposal will not only lower the cost of the food stamp program, the resultant healthier diets would lower Medicaid and Medicare costs as well.

Moreover, my proposal would give people a strong incentive to get off the food stamp program without intrusive, costly big-brother ideas like drug testing which cannot possibly work for the simple reason that anyone who fails will steal to get food rather than starve.

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