luni, 3 februarie 2014

6 Principles of Service Design to Help You Reach Your Customers

6 Principles of Service Design to Help You Reach Your Customers


6 Principles of Service Design to Help You Reach Your Customers

Posted: 02 Feb 2014 03:12 PM PST

Posted by mariahayhow

Three months ago, in a group interview for a position at Distilled, Rob Ousbey asked, "If I were to do a Google search on "coffee" in Seattle at noon on a Saturday, what would it look like?" Still not sure I gave the best answer, but the rest of the interview must have gone well.

Another coffee quote that has been brewing in my mind (I'll stop now) has to do with service design.
Marc Fontijn
, co-founder of the Dutch service design agency 31Volts states, "When you have two coffee shops right next to each other, that each sell the exact same coffee at the exact same price. Service design is what makes you walk into the one and not the other."

Good service design is a series of choreographed tangible and intangible brand experiences that lead users to differentiate and choose between products and services.

I've become increasingly interested in how to pinpoint what makes good service design and how it can enhance businesses and brands. The field is very well explained in This is Service Design Thinking's one-minute video below...

One major principle of service design is meeting users where they are, and what better place than the Internet? For the purposes of this audience and those you serve, let's look at six ways in which service design can be applied to your work online.

Include Users Early and Often

Service design helps weave together experiences with brands, creating an ongoing brand relationship.

Take, for example, Lululemon's "One More Time"campaign, which asks the heylululemon online community members to collectively decide which garments to bring back into production. Lululemon then relays the story of how and why the garment was made in "Sketchpad to Shelf."

The multiple asks for user-participation in "One More Time" allows users to feel like part of the designer and merchant selection process, while the "SketchPad to Shelf" collateral allows users to experience even more of the creation process.

Applied online...
Bounce rate: Check out Michael King's blog segment on user journey exercises. It offers insight into how users interact both on- and offline. Consider developing user journeys to create a more user-centric website design, inserting delightful moments throughout the users' navigation.

Design for Everyone

Service design improves support system infrastructure while empowering all users.

Kiind, a "zero-waste gift campaign platform," allows gift-givers the ability to send and track gift card usage. The service allows gift recipients to either use the gift certificate or donate the dollar amount to charity. The gift-giver is notified of how the recipients used the gift, so they can determine the best gifts to give in the future. The gift-giver is also not charged for any unclaimed gift cards.

Seamless operational design and close attention to user needs allows for all involved parties to have an experience worth their engagement or recommendation.

Applied online...
Conversion rate: Look no further than Paddy Moogan's 18 Tools for CRO. Pinpoint which user testing tools and tactics can identify your users' needs and predict their future behaviors.

Expand Your Brand

The application of service design principles can expand business offerings, defend brand ethos, and re-affirm customer loyalty.

Look to the popular "Dumb Ways to Die" Internet video sensation, which supported a pledge campaign for rail safety and is now expanding into the plush toy market. The idea to push the adorably dead-defined creatures to plush came from fans of the viral video. While there were other offers for product monetization, Metro spokesperson Leah Waymark stated they "narrowed it to what we thought would be most important, and that's the brand integrity [...] Finding a way to engage with people in different ways and keep the conversation alive was foremost."

The focus on maintaining the original piece's brand integrity not only maintains consistency but prolongs the character(s) of the video in a meaningful way. Service design places a large emphasis on the user relationship, not just a single interaction.

Applied online...
Content strategy: Look at Stephanie Chang's breakdown of consumer purchasing involvement outlines how to determine the, "marketability of a product." Note the differences between "think" and "feel" purchases in order to create content catered to your consumers' expectations and level of brand investment.

Use Data Driven Design

The best examples of service design aren't built with data in mind, but by data itself.

Jetpac, a city app guide, taps into Instagram via image analysis algorithms, to determine an area's feel. The data analysis determines people's moods in the photos, using even their facial attributes to curate the "Happiest places in town" or the background colors to compose "Scenic Hikes." The app uses publicly posted photos to vote up specific areas in each city to compose these lists.

The Jetpac app portrays data in a very personable and quirky way, all too relatable for travelers looking to grab a cup of joe while avoiding "Hipster hangouts." The ability to provide a service for people by other locals' input helps to create more personalized and unique experiences.

Applied online...Keyword research: No one says it better than THE Kate Morris, "If you want to know what content to write to rank for terms, ask the people who are searching for that topic what they are looking for, and write that. This changes how we do research, but I think for the better." Check in with your consumers early and often, and build content accordingly.

Meet and Create Expectations

In regards to user expectations for online experiences, good informational design and content should allow the user to understand the information presented to them and offer a logical next step in their decision process. Service design uses the same navigable path, but seeks to provide moments of delight.

Grey Poupon meets its consumers in an online space, but in lieu of begging for Facebook likes their digital campaign judges whether people actually belong in "The Society of Good Taste." The application process is unique to Grey Poupon, with the same British snarkiness seen in their earlier TV marketing campaigns.

Service design thrives upon creating an open dialogue between creators and consumers. Brands that give their users something to talk about and a space to discuss enable a series of more notable brand relationship.

Applied online...
Influencer amplification: Brands that celebrate their users ultimately create influencers, who as Rand states, "need new unique content to share, all the time." Continuing the conversation is ultimately continuing the consumer relationship; brands should build experiences that enable ongoing conversations, to be seen as and support a higher level of service.

Deliver and Delight

Each touch point with a brand be it on or offline should carry equal recognition from the user. Good service design supports and infrastructure of consistent messaging, in a variety of unique ways.

Cards Against Humanity, the self-proclaimed "party game for horrible people," launched "12 Days of Holiday Bullshit," with 100,000 people paying $12/ea for an unknown array of gifts over 12 days. Cards Against Humanity obviously prides itself on witty content and the campaign collateral held its own. The brand messaging is consistent from the order summary email, the FAQ response to complaints regarding late shipments, and a 12-day recap website.

Service design is built to offer the user a seamless series of brand experiences with moments of delight. Cards Against Humanity ensured each piece of collateral was in its brand tone of voice and was delivered in a novel way.

Applied online...
Highly targeted content: Get the full tutorial from Kyra Kuik's post which details how you can build a consistent brand experience, brand identification, and brand trust.


Service design is designing notable experiences in consistently novel ways.

I'm truly excited by the potential of service design as a driver of both good user-centric design and innovation, online. It's great to see the mesh of a seemingly intangible field produce tangible results.

Please leave your thoughts or comments below!


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

Seth's Blog : Do you love your customers?

 

Do you love your customers?

There are two ways people think about this:

  • We love our customers because they pay us money. (Inherent here is customers = money = love.)
  • We love our customers, and sometimes there's a transaction.

The second is very different indeed from the first.

In the first case, customers are the means to an end, profit. In the second, the organization exists to serve customers, and profit is both an enabler and a possible side effect.

It's easy to argue that without compensation, there can be no service. Taking that to an extreme, though, working to maximize the short-term value of each transaction rarely scales. If you hoard information, for example, today your prospects will simply click and find it somewhere else. If you seek to charge above average prices for below average products, your customers will discover this, and let the world know. In a free market with plenty of information, it's very hard to succeed merely by loving the money your customers pay you.

I think it's fascinating to note that some of the most successful organizations of our time got there by focusing obsessively on service, viewing compensation as an afterthought or a side effect. As marketing gets more and more expensive, it turns out that caring for people is a useful shortcut to trust, which leads to all the other things that a growing organization seeks.

Your customers can tell.

       

 

More Recent Articles

[You're getting this note because you subscribed to Seth Godin's blog.]

Don't want to get this email anymore? Click the link below to unsubscribe.




Email subscriptions powered by FeedBlitz, LLC, 9 Thoreau Way, Sudbury, MA 01776, USA.

 

duminică, 2 februarie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Gold and Silver Derivatives in Chart Form: What Market Makers Have Controlling Interests?

Posted: 02 Feb 2014 08:11 PM PST

Here are a few charts from Sharelynx Gold regarding precious metal derivative holdings. The charts are as September 30, the latest data available. Click on any chart for sharper image.

OCC Gold Derivatives All Maturities



OCC Silver, Palladium, Plagtinum Derivatives All Maturities



Aggregate Precious Metal Derivatives



Some will point to these charts as "proof" of manipulation. I suggest it is proof of "possible" manipulation.

Is there manipulation? Of course there is. But there is no evidence to prove it is in one direction only, or that central banks are behind it all, as some maintain.

For further discussion, please see Gold Manipulation: Is it Illegal? Risk Free? What About JP Morgan?

As always, views expressed regarding charts created by other, are mine.

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

Real Life Obamacare Small Business, Benefit-Shifting Example

Posted: 02 Feb 2014 10:00 AM PST

Here is an interesting video regarding the effects of Obamacare on all the employees at at Simonetta's auto repair shop in Pennsylvania. The video was made by a local TV station.

A couple premiums dropped, but most went up, some by huge amounts. In every case deductibles soared. Every person involved is worse off than before.




Link if video does not play: Employees in Pennsylvania Company Learn of Increased Health Costs Due to Obamacare

Partial Transcript

Jeff and Dave used to have a $1,250 deductible. Since Obamacare went into effect, it's now jumped 60 percent to $2,000. That's nothing compared to Brian, Kristi, and Judy who have kids. they are going to pay twice that, four grand."

"I don't know how President Obama thinks he's helping us because we can't afford this, we can't afford to pay these co-pays, to pay these deductibles on what we're making," says one of the workers.

Another worker adds, "They call it the affordable health plan. There's nothing affordable about it. I can't afford it."

Winners and Losers

Obamacare shifted the winners and losers.

A small number of people gained big (those with no insurance, those with preexisting conditions, and those who get free Medicaid). To pay for that, a large number of people lost, to varying degrees.

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

Seth's Blog : Groundhog day and the Super Bowl

 

Groundhog day and the Super Bowl

One way the tribe identifies is through the observance of a holiday, of a group custom, of the thing we all do together that proves we are in sync. People thrive on mass celebration, but as our culture has fragmented, these universal observances are harder to find. We used to watch the same TV shows at the same time, eat the same foods, drive the same car. Given a choice, though, many people take the choice—and so, as the culture fragments, we move away from the center and to the edges.

Halloween and the Super Bowl are the new secular holidays, the group-mania events that prove we're able to stay in sync. Every year, signed up for it or not, each of us is expected to survive the relentless hype. We see almost a month's worth of never-ending media about the Super Bowl—business articles, travel articles, legal articles, cooking articles—a huge onslaught of content-free noise.

And every year, the commercials disappoint, while the game includes eleven minutes of action over the course of four hours of not so much.

And yet we do it again and again. Because the corporate hoopla is beside the real point, which is a chance for all of us to talk about the same thing at the same time. This is part of what it means to belong.

While the Super Bowl is a large-scale example of this happening across a huge swath of people, these occurences happen often in much smaller tribes as well. The buzz about Fashion Week or CES or the latest from Sundance are micro varieties of the same desire to be in sync. Your customers and your employees want to feel what it feels to do what other people are doing. Not everyone, just the people they identify with.

It's easy to be persuaded that this event is somehow about the game, or the coverage or the hype, but it's not. Like Groundhog day, it's a pointless thing we do over and over again, because hanging out with people you care about (even if it's just to eat junk food and talk about how bad the commercials are) is almost always worth doing.

       

 

More Recent Articles

[You're getting this note because you subscribed to Seth Godin's blog.]

Don't want to get this email anymore? Click the link below to unsubscribe.




Email subscriptions powered by FeedBlitz, LLC, 9 Thoreau Way, Sudbury, MA 01776, USA.

 

sâmbătă, 1 februarie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Argentina Central Bank Bans Imports Due to Lack of Dollars; Argentina to Apply "Iron Fist" to Those Who Raise Prices

Posted: 01 Feb 2014 07:21 PM PST

As reserves run dry, demand for dollars soars in emerging market countries, prompting inane economic actions.

Via google translation from Libre Mercardo, please consider Argentina Cerntral Bank Bans Imports Due to Lack of Dollars.
The fourth day of falling reserves has the Argentine central reeling. This Wednesday reserves fell by 180 million and this month reserves declined by $2 billion. Due to demand and the low level of foreign exchange reserves, the central bank has stopped payment of imports, according to Argentine newspaper La Nacion.

"Almost all the customers who went to the bank did so to hoard dollars," claimed the cashier of a national bank to the southern newspaper.

"Today almost no imports were approved import" confided the head of the table of a major bank in the nation.
Argentina to Apply "Iron Fist" to Those Who Raise Prices

Via translation from El Economista, please consider Argentina Threatens to "Get Tough" on Businesses that Raise Prices.
Economic war has moved to Argentina. The Argentine government said it will apply an "iron fist" against the shops and businesses that raise prices following the sharp devaluation of the local currency last week, hoping to avoid tripping high inflation in the country.

Argentina has one of the highest inflation rates in the world, which in 2013 was around 25% according to private estimates.

Prices of products with imported components such as appliances and vehicles rose immediately after the devaluation. Moody's expects a devaluation of the Argentine peso 50% in 2014.

Before the devaluation, the Government launched a plan to fix maximum prices on about a hundred products sold in supermarkets. But the incentive is limited and includes products that are hard to find on the shelves.
Simple Rules

Fix prices too low and there will be no supply. Stores will not sell at a loss. Set prices too high and sellers will come out of the woodwork.

For an example of the latter, please see China Abandons Disastrous Cotton Stockpiling Program; Lessons Not Learned; What About Stockpiling Money?

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

Barcelona to Fine Owners of Empty Homes 100,000 Euros

Posted: 01 Feb 2014 11:11 AM PST

Via translation from Libre Mercado, the city council of Barcelona, Spain proposes €100,000 Fine on Owners of Empty Homes.
The City Council will fine owners of empty homes up to 100,000 euros. The proposal by the City Council commits the government to detect unused homes, starting with the banks.

The statement also reflects the Council's commitment to initiate disciplinary proceedings which could end up with three fines "of up to 100,000 euros" if homes remain empty. The municipality of Barcelona draw "Inspection Programs to detect, check and effects pointing this statement, in order to guarantee the right to housing of the population and to address the housing emergency."

With this measure, Barcelona joins other municipalities that have already approved the proposal of the PAH as Gerona, Tarrassa or Santa Coloma de Gramenet.
Scramble For Renters On

To get around this idiotic law, banks and other landlords will either have to tear down houses or quickly dump them at distressed prices. Both of those things will compound the difficulties of already stressed banks.

Alternatively, banks, other landlords, and owners of vacations homes will enter a mad scramble to find renters, at any price, to get around the occupancy restriction. An avoidance maneuver of that kind would stress rent prices and rental landlords.

Clearly, this is another one of those too stupid to make up ideas.

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

Restoring Opportunity for All

Here's What's Happening Here at the White House
 
 
 
 
 
 
  Featured 

Weekly Address: Restoring Opportunity for All

In his weekly address, President Obama discussed the goals he laid out in the State of the Union address to expand opportunity for all -- so that every American can get ahead and have a shot at creating a better life for their kids.

Click here to watch this week's Weekly Address.

Watch: President Obama's Weekly Address

 

 
 
  Top Stories

West Wing Week 01/31/14 or "West Wing Week Turns 200!"

This anniversary episode, hosted by the President, coincides with this year's State of the Union Address. We take you behind the scenes and on the road to speak directly with Americans like you about your lives and your families, and show how together we can make sure that every American who works and studies hard has a real chance to get ahead.

READ MORE

What You Missed: A Virtual Road Trip with President Obama

Yesterday afternoon, President Obama traveled (virtually) around the country via Google+ Hangout to answer questions about his State of the Union Address from everyday Americans.

READ MORE

President Obama Travels the Country to Promote Opportunity for All

Following the State of the Union address, the President traveled across the country this week to talk more about the importance of opportunity for all.

READ MORE


 

Did Someone Forward This to You? Sign Up for Email Updates

This email was sent to e0nstar1.blog@gmail.com

Unsubscribe | Privacy Policy
Please do not reply to this email. Contact the White House

The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

vineri, 31 ianuarie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Schiff vs. Ritholtz: Political Correctness vs. Law of Supply and Demand

Posted: 31 Jan 2014 01:17 PM PST

PolicyMic says There's a Good Reason Why Everyone's Cricizing Peter Schiff.

Jon Stewart's Daily Show mocked Schiff in an amusing video interview Wage Against the Machine. The video allegedly explores "the devastating economic effects of raising the minimum wage to the poverty level."

Schiff's opponent in the interview was Barry Ritholtz at the Big Picture blog. Before the show aired, Barry explained How I Ended Up On The Daily Show.

The feedback against Schiff was enormous. Ritholtz has the details in Follow Up: Daily Show Blowback.

Political Correctness Points

I am no fan of Schiff. We have radically different views on the inflation-deflation debate. And I do find the way he stated his case to be very distasteful.

That said, it's clear the Daily Show was out to score political points, not explore economic reality.

Given that Schiff was purposely displayed in the worst light possible and Ritholtz the best light possible (Ritholtz admits retake after retake) it is not shocking in the least to see all this blowback.

Merits of the Debate

Political correctness or not, I want a sound discussion of economic principles.

In a Shades of France Socialistic Proposal (my title), Ritholtz states "The most radical idea is bit of pure fantasy: Guarantee every person in America a minimum salary".

Indeed, let's hope that remains a fantasy because it's already proven if you give things away free, people able to work, will stop working.

Here's an important corollary: If you make people work, you end up with work that has no economic justification.

Campaign for a Bigger Paycheck

On January 2, in The Campaign for a Bigger Paycheck, a New York Times stated 'When you raise the price of employment, guess what happens? You get less of it,' said Speaker John Boehner, espousing a party-line theory that most economists agree has been discredited.

Someone Please Help New York Times With Econ 101

Actually, it's the New York Times editorial board that's discredited.

Caroline Baum, in one of her last articles at Bloomberg (she has gone on to other things and I wish her well), blasted that New York Times "discredited" fiction sky high.

Here is the pertinent snip from Someone Please Help New York Times With Econ 101.
This is one of the more outrageous political statements dressed up as economic theory from the editorial board of the New York Times. They should be ashamed of themselves.

If you learned anything from your Econ 101 class in college, hopefully it was the law of supply and demand. Lowering/raising the price of a good or service increases/decreases the quantity demanded. Similarly, producing less/more of something will raise/lower the price.

Isn't it about time opinion writers stopped using economics to justify a moral issue? Our hearts go out to those who can't earn a decent living, find a job, get laid off for no good reason or find themselves in harm's way. If we, as a society, want to provide support to those in need, fine. But the paper of record does a disservice when it makes wild, unsubstantiated claims about basic principles of economics.
Theory vs. Practice

Caroline Baum stated economic theory to perfection.

Let's now look at the economic law of supply and demand in practice as opposed to a biased political correctness in the way things were stated.

Annual Job Growth Rates Minimum Wage States vs. Non-Minimum Wage States

Here is a chart from the Institute for Research on Labor and Employment by UC Berkeley.



The chart shows lower job growth rates in states with higher minimum wages.

Bias Towards Believing Myths

I am sure you can find studies that allegedly prove or disprove anything, but things change over time and wages tend to go up over time so there is an inherent bias towards believing myths.

Europe and Excellent Backdrop for Discussion

Europe provides an even better look at the debate because of wide country-to-country variances.
 
Here is a rock-solid study of actual data by economist Steve Hanke, For Europe's Youth, Minimum Wages Mean Minimal Employment.
Yesterday, in the wake of Tuesday's State of the Union address, I poured cold water on President Obama's claim that a hike in the minimum wage for federal contract workers would benefit the United States' economy, pointing specifically to unemployment rates in the European Union. The data never lie: EU countries with minimum wage laws suffer higher rates of unemployment than those that do not mandate minimum wages. This point is even more pronounced when we look at rates of unemployment among the EU's youth – defined as those younger than 25 years of age.



In the twenty-one EU countries where there are minimum wage laws, 27.7% of the youth demographic – more than one in four young adults – was unemployed in 2012. This is considerably higher than the youth unemployment rate in the seven EU countries without minimum wage laws – 19.5% in 2012 – a gap that has only widened since the Lehman Brothers collapse in 2008.
Comedy is Comedy, Reality is Reality

Hanke concluded with a piece of wisdom from Nobelist Milton Friedman: "the minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills. That's what the law says."

I conclude with: Let's judge an argument based on merits, not on bias against the person stating it.

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

Nigel Farage Video: UKIP Takes Lead in British Polls; Message to Cameron

Posted: 31 Jan 2014 11:17 AM PST

I am pleased to report some good news today:  UKIP takes lead in British polls ahead of EU parliamentary elections to be held in May.



Nigel Farage Video

Inquiring minds should watch the an interesting Video Interview of UKIP leader Nighel Farage. Here's the opening lead "The UK Independence Party has managed to win over the hearts of the British public."




Also consider UKIP Tops Independent Poll as Nation's Favourite Party
'The UK Independence Party is the nation's favourite political party, a poll for The Independent on Sunday reveals today.

Voters regard Nigel Farage's party more favourably than Labour, the Conservatives or the Liberal Democrats. The surprising finding will underline concerns inside the mainstream Westminster parties that Ukip is on course to come first in May's European elections and could deny Labour or the Tories an outright victory in next year's general election.

What is more, Mr Farage is favoured over Ed Miliband and Nick Clegg as a party leader, beaten only by David Cameron, the ComRes survey reveals. Ukip is the favourite choice of 27 per cent of voters, while Labour is favoured by 26 per cent. The Conservatives are next, on 25 per cent, and the Lib Dems last, on 14 per cent. Although the differences in the first three parties are within the margin of error, the findings will fuel unease inside Downing Street that the Prime Minister has failed to close down the question of Europe and that Ukip's support remains strong.
Message to David Cameron

This shift in voter sentiment is a clear message to prime minister David Cameron: Get your head out from where the sun doesn't shine and announce a referendum on EU membership this year.

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

"Secret" Meetings on Greece? Say It Ain't So; Euro Contagion Coming Up

Posted: 31 Jan 2014 09:41 AM PST

How long can secret ECB meetings stay secret? Allowing time to write a story, the answer is something like 3 days, if that. The Wall Street Journal today reports on a secret meeting that took place Monday evening regarding Greece finances.

Please consider Greece Creditors, France, Germany Held Secret Meeting Monday.
Top officials peeled away from colleagues after a euro-zone finance ministers meeting in Brussels Monday evening for a secret meeting to discuss mounting concerns over Greece's bailout.

Greek Finance Minister Yiannis Stournaras, who was briefing the press in a building across the street at the time, wasn't invited.

High-level officials from the International Monetary Fund, the European Commission, the European Central Bank, senior euro-zone officials and the German and French finance ministers were present, according to people with direct knowledge of the situation. They spoke on condition of anonymity because they aren't authorized to talk to the press.

They were trying to figure out how to tackle two issues threatening to unsettle the fragile economic recovery in Greece and the broader euro zone.

They discussed how to press the Greek government to forge ahead with unpopular structural reforms; and second, how to scramble together extra cash to cover a shortfall in the country's financing for the second half of the year, estimated at €5 billion-€6 billion ($6.81 billion-$8.17 billion).

The meeting was inconclusive, the people familiar with the situation said.
Creditors Worried

Clearly, creditors are worried over Greece's ability to pay back bailout money (loans). They should be worried because there is no possible way Greece can ever pay back those loans.

The best time to be worried about getting paid back is before stupid loans are made, not now. It's far too late to be worried now about loans already made. There is still time to not compound the mistake of making further loans (something they have done several times already).

Politics

Support for Prime Minister Antonis Samaras' New Democracy coalition has crumbled to pieces. If an election were held today, opposition party SYRIZA would win without a doubt.

Moreover, SYRIZA leader Alexis Tsipras, who opposes the austerity measures and said his party wouldn't repay the $325 billion in loans granted by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has predicted the Leftists will come to power.

For details, please see SYRIZA Surges in Greek Polls, Would Win Election if Held Today; Message People Want to Hear; Contagion Guarantee.

Tsipras has since backed off on some of his harsh threats, but I suspect only for the purpose of increasing his election chances.

Repeating what I have stated before ...

Default Coming One Way or Another

Whether done properly, or with promises that cannot be met, Greece is going to default on that debt. When that happens, German citizens will discover that Chancellor Angela Merkel's promise that German taxpayers won't be impacted is as hollow as most chocolate Easter bunnies.

Calculating taxpayer responsibility percentages of various countries is simple enough.

Eurozone Financial Stability Contribution Weights

CountryGuarantee Commitments (EUR) MillionsPercentage
Austria€ 21,639.192.78%
Belgium€ 27,031.993.47%
Cyprus€ 1,525.680.20%
Estonia€ 1,994.860.26%
Finland€ 13,974.031.79%
France€ 158,487.5320.32%
Germany€ 211,045.9027.06%
Greece€ 21,897.742.81%
Ireland€ 12,378.151.59%
Italy€ 139,267.8117.86%
Luxembourg€ 1,946.940.25%
Malta€ 704.330.09%
Netherlands€ 44,446.325.70%
Portugal€ 19,507.262.50%
Slovakia€ 7,727.570.99%
Slovenia€ 3,664.300.47%
Spain€ 92,543.5611.87%
Eurozone 17€ 779,783.14100%


The above table from European Financial Stability Facility

Note that Greece is responsible for 2.81% of Greek defaults. How is that going to work?

It doesn't. So take that percentage and spread it around according by revised weight. And what is Spain supposed to do with it's 12% of €325 billion of defaults?

Contagion Guarantee

Thank the economic illiterates at Troika for this setup.

Greece could have defaulted in 2009 with perhaps a €40-50 billion mess to cleanup. In a foolish attempt to prevent contagion, the nannycrats turned a relatively small mess into major €325 billion problem, virtually assuring the contagion they set out to prevent.

Expect to see much use of the word "contagion" in the coming months.

Here is a question I asked in Prisoner's Dilemma Game in Greece; Contagion-Spread Eurozone Breakup More Likely Now; How will Greece NOT pay back €320 billion? So Angela Merkel, when are you going to admit this setup, and what are you going to do about it?

Results "Inconclusive"

Clearly she doesn't know. Results of the meeting were "inconclusive".

If the Troika wants to hold secret meetings on something realistic, they should include Greece, and discuss how best contain the damage when Greece does default. Instead they focus on the delusional zero percent idea they can somehow prevent default or further writedowns.

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

What the Crisis Taught Us: More Bubbles! We Need Bigger Bubbles to Combat Deflation!

Posted: 30 Jan 2014 11:40 PM PST

The Monetarists are out in full force warning about pending deflation.

First it was Christine Lagarde with her message about the deflation ogre (see Christine Lagarde Warns of Lord Voldemort, Hopes to Put Deflation Ogre in a Bottle).

Next on the list, deflation fighter extraordinaire, Telegraph writer Ambrose Evans-Pritchard, picked up on Lagard's commentary and screamed at the top of his lungs "More Bubbles! We need bigger and bigger bubbles to combat the threat of deflation!"

Of course Pritchard did not state it precisely that way, but it is indeed exactly what he called for, in equally loud, unmistakable tones.

World Risks Deflationary Shocks

I invite you to read World risks deflationary shock as BRICS puncture credit bubbles by Ambrose Evans-Pritchard.
It is a remarkable state of affairs that the G2 monetary superpowers - the US and China - should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger.
Tightening? What Tightening?

Pritchard calls a decrease in asset purchases by the Fed from $85 billion a month to $65 billion a month "tightening". The claim is preposterous.

It's very much like telling an obese child you can only have three pieces of cake after dinner, not four.

Correctly viewed, tapering asset purchases is a reduction in stimulus, not tightening.

Actual Tightening in Emerging Markets

Pritchard discussed Turkey, South Africa, India, Brazil, Indonesia, and every other country that actually did tighten recently, but he never addressed the reason they had to: inflation was completely out of control in those countries, with obvious asset bubbles in many of them. Tightening should have started long ago.

Spotlight on Europe
Eurostat data show that Italy, Spain, Holland, Portugal, Greece, Estonia, Slovenia, Slovakia, Latvia, as well as euro-pegged Denmark, Hungary, Bulgaria and Lithuania have all been in outright deflation since May, once tax rises are stripped out. Underlying prices have been dropping in Poland and the Czech Republic since July, and France since August.
Spotlight on Japan

No reputable deflation fighter could possibly leave Japan out of the mix, and there too, Pritchard did not disappoint.
Those who think deflation is harmless should listen to the Bank of Japan's Haruhiko Kuroda, who has lived through 15 years of falling prices. Corporate profits dried up. Investment in technology atrophied. Innovation fizzled out. "It created a very negative mindset in Japan," he said.

Japan had the highest real interest rates in the rich world, leading to a compound interest spiral as the debt burden rose on a base of shrinking nominal GDP.
Cure Worse Than the Disease

The ridiculousness of that last statement should be obvious. Japan has a debt burden because of its deflation fighting actions for three decades.

Before Japan embarked on its deflation-fighting mission, it had no debt at all. Now it has the largest debt-to-GDP ratio in the industrial world.

The cure "deflation fighting" was certainly worse than the disease, yet Pritchard wants central banks to "do more".

Pritchard Wonders "Why?"
Any such outcome in Europe would send Club Med debt trajectories through the roof. It would doom all hope of halting Europe's economic decline or reducing mass unemployment before the democracies of the afflicted countries go into seizure. So why are they letting it happen?
Silly Question of the Day

Here's the silly question of the day: Why are they letting it happen?

Here's a better question: Why did Argentina, Turkey, South Africa, India, Brazil, Indonesia, and every other country that tightened recently wait so long to tighten?

Price inflation was running rampant in every one of those countries. The stock market bubbles in India and Turkey are massive. The housing bubble in India is massive.

But central bankers cannot see bubbles. Pritchard mentions bubbles but chooses to ignore them. Arguably, that's even sillier than not seeing them at all.

Falling Prices a Bad Thing?

Pritchard's only concern is with falling prices, as if falling prices are a bad thing.

Ask anyone in Japan, the US, Europe, or India if they would like to see falling prices. The only people who don't want falling prices are central bankers, economic illiterates, and Wall Street types and banks dependent on ever-growing asset bubbles (because of bad loans made on speculative-priced assets).

Demise of Japan Coming Up

For all the pissing and moaning about Japan, until the revival of GM, Japan's auto and technology sales did quite fine. Technology did not stop.

It's the foolish Abenomics deflation-fighting policies of prime minister Abe (which Pritchard supports) that's gong to be the demise of Japan.

Reflections on "Letting it Happen"

It's not a matter of "letting it happen" (it being deflation).

Deflation is actually the natural state of affairs. As a result of increased productivity, prices should drop over time, with more goods available at cheaper prices, to the benefit of everyone!

And in spite of the ridiculous notion that people will hold off on consumer purchases if prices drop, it's actually the other way around. Falling prices and bargains spur sales.

If falling prices stopped sales, there would have been no sales of flat-panel TVs, computers, or any other electronic devices for years.

If the price of healthcare dropped, people would have more money to spend on other things, and spend they would.

It's asset prices, not consumer prices, where people stay away when prices are falling. That makes asset bubbles all the more dangerous.

Obama Irony

Consider the irony of this statement by President Obama in his state of the union address.

"Today, our housing market is finally healing from the collapse of 2007.Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent, and construction is expanding again. But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected."

Pater Tenebrarum at the Acting Man blog accurately summarized the situation in State of the Union or TOTALGOV as follows:

"We gotta blow a new housing bubble somehow! We're already half-way there apparently. It hasn't occurred to the president that the first sentence highlighted above is the main cause of what he bemoans in the second highlighted sentence."

Indeed! Please consider my December 20, 2013 article All-Cash Home Sales Hit Record 42% of Sales.

It's that flood of "all cash" money that has driven up prices. Obama calls it a success. So does Pritchard. Both want more bank credit issuance to complete the bubble reblowing episode.

Do Something!

Pritchard wants central bankers to "Do Something!" He sounds like a child who broke his toy and expects some miracle to fix it.

The fact of the matter is this: Central banks already have done something.  They made matters worse by doing exactly what Pritchard asked for.

However, that does not please Pritchard. He wants central banks to do still more, at the risk of blowing even bigger asset bubbles in the process.

Perfectly Obvious or Obviously Not?

It should be perfectly obvious to Pritchard (and everyone else) that if the Fed could control jobs or get banks to lend, it would have happened long ago.

Lord knows they tried. Three rounds of QE did not spur lending or hiring in the US. LTRO and near-zero interest rates did not spur lending in Europe.

But QE sure did spawn asset bubbles in the US and elsewhere.

Pritchad, Lagarde, Janet Yellen, Ben Bernanke, and others want to ignore massive asset bubbles in equities and bonds. Instead they worry consumer prices are not rising fast enough.

Deflation is a Good Thing!

Many countries desperately need falling prices to have a chance. Government spending in France is a ridiculous 56% of GDP. Does Pritchard want it to hit 100%?

Deflation spurred a welcome revival of Spanish construction companies. In the process, competition lowered costs in France (and that is not just a good thing, but a very needed thing).

For further discussion, please see Deflation Will Return: Europe First, Then US; Global Supply Arbitrage

Asset Bubbles the Biggest Threat to Banking

The only possible context in which deflation can be considered bad is the effect it has on banks and bank lending. Yet, that puts the cart before the horse.

It's not deflation that causes the problem, it's increasing loose monetary standards that create asset bubbles (on which much lending is based) that is the real problem. The bigger the asset bubble, the bigger the ultimate threat to banking!

Yet Pritchard wants to ignore all that. He wants more of the same "do something" actions of central bankers that created the very problems we have now.

Deflation Fighting (Inflation Promotion) Does Five Things

  1. It increases government debt (as Japan found out)
  2. It promotes asset bubbles
  3. It delays the inevitable bust, making matters worse in the mean time
  4. It creates moral hazards
  5. It is a major factor in rising income inequality

What the Crisis Taught Us

Lagarde warns "What the crisis has taught us is that we need to be extremely vigilant and expect bubbles from places that we don't anticipate."

Apropos Warning

Lagarde warns about the failure to anticipate bubbles. Her warning is very apropos!

Central banks never anticipate bubbles. Lagarde cannot even see the huge bubbles that are about ready to explode in her face.

Meanwhile, Pritchard wants to ignore bubbles in order to prevent deflation, and Obama complains about income inequality when the source of rising income inequality is Fed policies that create asset bubbles.

Lessons Not Learned

It's central bank inflationary policies, proposed by Pritchard, Yellen, Bernanke, and many others, that cause bubbles of increasing amplitude over time.

Ultimately, all bubbles burst, and the bursting of economic bubbles is the very asset-deflation they  need to prevent. And the only way to prevent asset bubbles from bursting is to not blow them in the first place.

Clearly the crisis did not teach any of them, anything at all.

Wine Country Conference II

The deflation debate continues. Want a live discussion of the issues and forces? Want to learn something?

Then come to the second annual Wine Country Conference which will be held May 1st & 2nd, 2014.

We have an exciting lineup of speakers for this year's conference.

  • John Hussman: Founder of Hussman Funds, Director of the John P. Hussman Foundation which is dedicated to providing life-changing assistance through medical research
  • Steen Jakobsen: Chief Economist of Saxo Bank
  • Stephanie Pomboy: Founder of MacroMavens macroeconomic research
  • David Stockman: Ronald Reagan's budget director, best-selling author, former Managing Director of The Blackstone Group 
  • Mebane Faber: Co-founder and the Chief Investment Officer of Cambria Investment Management
  • Jim Bruce: Producer, Director, and Writer of Money For Nothing: Inside the Federal Reserve 
  • Chris Martenson: Reknown speaker and founder of Peak Prosperity
  • Mike "Mish" Shedlock: Investment advisor for Sitka Pacific and Founder of Mish's Global Economic Trend Analysis

In addition, we expect confirmation from a number of other highly respected fund managers and speakers. This year's event is two days and will include additional "break-out" groups.

For speaker bios, please check out Wine Country Conference Speakers.

This Year's Cause: Autism

$100,000 of the money raised last year came from a generous matching grant from the John P. Hussman Foundation.

Some of us in the industry who have done well are making an effort to help others. John Hussman is at the very top of that list.

One of John's kids has severe autism. This year, all net proceeds will go to support autism programs.

Conference Details

For further details about the 2014 conference, please see Wine Country Conference May 1st & 2nd, 2014

Nothing Like It!

This event is not just another "come and hear someone talk" kind of thing. Attendees and their significant others can expect an educational, fun, and relaxed time.

Last conference, we arranged wine tours. They were a big hit. We will do so again. One of the wine estates we visited had a Bocce Ball court. On a couple of miracle shots, I won both games I played.

Stay an extra day and golf or travel. I did. The conference hotel is a fun place in and of itself.

Unlike many other conferences, you will have easy access to speakers.

Want to chat with me, Steen, John, or anyone else at the conference? You will have an easy chance.

Not only do we have an excellent lineup of speakers, you will have an opportunity to meet with them, have intimate discussions on important investment topics, with a lot of fun on the side, including wine tours and great wine.

There's nothing like it in the investment business. And your money goes to a great cause! What can be better?



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