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marți, 25 februarie 2014

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February Edition
Welcome to our newly designed AdSense Insider. Now it’s easier to find out about our latest product news, events and tips. This issue, you’ll learn what tool is key to better understanding your audience, why it’s now easier to integrate Google products within WordPress and how you can build a more smartphone-friendly website.

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Your Google Analytics questions answered

Looking for answers on how you can get the most out of Google Analytics as an AdSense publisher? Tune in on February 26th.

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Seth's Blog : Framers and polishers

Framers and polishers

The framer asks the original question, roughs out the starting designs, provokes the new thing.

The polisher finds typos, smooths out the rough edges and helps avoid the silly or expensive error.

Both are important. Unpolished work is hardly worth doing.

Polishing is relentlessly reinforced in school and feels safe. Framing is fraught with risk and thus avoided by many. Too often, we spend our time on a little more polish, instead of investing in the breakthrough that a framer can bring.

• Email to a friend •

Mish's Global Economic Trend Analysis

Ukraine Aftermath: Hunt for Yanukovich, Russia Denounces Interim Leaders, Documents Reveal Plans to Use Army on Civilians
Germany at Heart of Europe's Political Predicament; Squaring the Circle; When is the Breaking Point?
Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another

Ukraine Aftermath: Hunt for Yanukovich, Russia Denounces Interim Leaders, Documents Reveal Plans to Use Army on Civilians

Posted: 24 Feb 2014 04:30 PM PST

Let's tie up some loose ends on Ukraine, even as much uncertainty remains.

Documents Reveal Plans to Use Army on Civilians

Financial Times: Papers reveal Yanukovich plans to turn army against protesters

The Yanukovich regime had drawn up plans for a massive crackdown on protesters in Kiev using thousands of police and troops – and the chief of Ukraine's armed forces on Thursday last week ordered 2,500 army troops into the capital for an "antiterrorist" operation.

That order was never fulfilled, but leaked documents on Monday showed just how close Kiev came to a bloodbath that could have far exceeded the 100 deaths that occurred in clashes with police and snipers in downtown Kiev last week.

As well as the military documents, Ukrainian journalists were on Monday combing through piles of papers found dumped near Mr Yanukovich's luxury home outside Kiev, giving a fresh glimpse into his lavish spending and lifestyle.

One document apparently found at the log-built mansion at Mezhyhirya, posted online by Mustafa Nayem, an investigative journalist with the Ukrainskaya Pravda website, was a receipt for $12m in cash. Others included receipts stretching into millions of dollars for spending on decor at a gaudy home that has become a focal point of public rage.

But the most chilling were military and security papers. One set revealed that snipers who killed dozens of protesters on Kiev's central square last Thursday came from Ukraine's "Omega" special forces.

Hunt for Yanukovich

Financial Times: On the trail of Ukraine's missing Viktor Yanukovich

Viktor Yanukovich's whereabouts remained unknown for a third day on Monday, as rumours swirled that Ukraine's deposed president was hiding out in Crimea, a pro-Moscow stronghold with easy water access to Russia via the Black Sea.

While a few Ukrainian news outlets reported on Sunday night that Mr Yanukovich had succeeded in fleeing the country on his private yacht – the Bandido – by late Monday there were no reports of his arrival at a foreign destination. His options for escape, meanwhile, appeared to be narrowing.

Arsen Avakov, Ukraine's interior minister, announced early Monday that the new government had opened up a criminal case against Mr Yanukovich for "the mass murder of peaceful citizens". He added the government had been keeping careful watch over the former president's movements.

Russia Denounces Interim Leaders

Financial Times: Moscow takes aim at Ukraine's interim leaders and the west

Russia denounced Ukraine's interim leaders as dictators on Monday and blasted the western governments that it said helped bring them to power, in a sign that the toppling of President Viktor Yanukovich is triggering a regional stand-off.

The Russian foreign ministry claimed the new leadership was infringing on the human rights of Russians and other minorities in Ukraine. "This is headed towards the suppression of dissent in several regions of Ukraine by dictatorial and sometimes almost terrorist means," the ministry said in a statement.

Russia's furious statements came as the new Ukrainian authorities intensified their hunt for ousted president Viktor Yanukovich, who has not been seen since Friday, and tensions rose in Crimea, the Russia-friendly peninsula on the Black Sea.

In the Crimean port city of Sevastopol, home of Russia's Black Sea naval base, hundreds of pro-Russia protesters massed outside the city's main administrative building on Monday for more than five hours until the city council agreed to allow Alexei Chaliy, a Russian businessman, to take over immediately as mayor.

Waving Russian flags and wearing the arm bands of Russian Block, Crimea's leading pro-Russia political party, the crowd grew angry, shouting slogans such as "We won't let a fascist in!" and "Russia! Russia!"

Open House

Financial Times: Open house at Yanukovich's fabled palace

Ukrainians expressed shock and disgust as the full extent of Viktor Yanukovich's opulent lifestyle was revealed at the weekend.

Alerted via social media that Mezhyhirya – the president's fabled luxury estate, was no longer under heavily armed guard, thousands of people made the 15km trip from the capital to take a tour of the mansion and its attractions.

What they found was a 127-hectare site including manicured garden, a golf course, tennis courts, a shooting range, swimming pools and a marina as well as horses' stables. The purpose-built, five-storey dacha – essentially a large log cabin – was decorated with elaborate furniture and expensive chandeliers hanging from the ceiling.

Photographs on Twitter showed animals in a private zoo, a vintage car collection and a replica galleon on a lake. Visitors and commentators on social media expressed anger and disgust at the excesses revealed.

"I wanted to see where the money he [Mr Yanukovich] has stolen went," said Oleksander Heruk, 24, a computer programmer who visited the mansion.

"The first thing that shocked me was the colossal scale and tastelessness of the decor. It was shocking how megalomania had overtaken this person."

House Fit for a Tyrant

Mail Online: House fit for a tyrant: Protestors storm the sprawling, luxury estate of Ukraine's fugitive president which has its own private zoo, golf course and is half the size of Monaco

Mail Online has a series of images and videos. Here are a few images.

Many more pictures and videos on the site. It's amazing there was no destruction or looting. Cheers and best wishes to the citizens of Ukraine.

Unfortunately, many problems linger. Election uncertainty and chants of "Russia, Russia" in Sevastopol could easily lead to further violence.

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

Germany at Heart of Europe's Political Predicament; Squaring the Circle; When is the Breaking Point?

Posted: 24 Feb 2014 12:20 PM PST

Germany is at the heart of Europe's political predicament. Although the status quo cannot and will not work, there is no incentive to change.

Germany's Constitutional Court has strengthened the Eurosceptics and eliminates further moves by Germany towards debt mutualization.

Some think debt mutualization, eurobonds, and combined fiscal budgets are a good idea. Others, like myself, don't. Regardless, and as noted in Rethinking "Paper Tiger", those options remain off the table.

What remains on the table are policies that fuel high unemployment and undermine living standards says Brigitte Granville in Poking the Eurozone Bear.

Some take the sanguine view that the current "lie still" approach is adequate to ensure that the eurozone economy does more than avoid decline. From their perspective, Germany's decision over the last three years to permit actual and prospective transfers just large enough to prevent financial meltdown will somehow be enough to enable the eurozone finally to begin to recover from a half-decade of recession and stagnation.

But the fact is that these transfers – that is, European Stability Mechanism-financed bailout programs and the European Central Bank's prospective "outright monetary transactions" (OMT) bond-buying scheme – can do little more than fend off collapse. They cannot boost economic output, because they are conditional upon recipient countries' continued pursuit of internal devaluation (lowering domestic wages and prices).

Reinvigorating the eurozone economy requires a more radical effort to resolve the interlinked sovereign-debt and banking crises. Specifically, it demands sovereign-debt mutualization through Eurobonds, and thus the elimination of eurozone countries' fiscal sovereignty, and a full-fledged banking union with recapitalization authority and shared deposit insurance – a far cry from the arrangement that has been agreed.

If Europe's leaders continue to choose mild palliatives over bold tactics, the best-case scenario is a lackluster recovery, with GDP growing at a 1-2% annual rate. Unfortunately, this best case probably is not enough to prevent future sovereign-debt defaults in countries like Italy, Spain, and eventually even France. In other words, at some point, lying still will no longer be an option.

As it stands, Europe's political class is committed to internal devaluation in all of the troubled eurozone economies. The alternative approach – dismantling the eurozone to allow for external devaluations – has thus become the playground of hitherto marginal political parties, which are now surging ahead in opinion polls.

In France, the groups concerned – the National Front and the Union of the Left – represent political extremes. In Italy, a more ideologically neutral anti-establishment force may arise, with a much sharper anti-euro focus than Beppe Grillo's populist Five Star Movement, which emerged last year to become the country's third-largest political force. As these parties gain traction, the euro's chances of survival diminish.

In 2011, Edmond Alphandéry, a former economy minister, declared that a eurozone exit by a member country was as likely as a dollar exit by Texas or California. Here, on full display, was the wishful thinking that brought the euro into existence in the first place: its French architects dreamed of a Europe that could equal the US. That was always an illusory ambition, but it continues to cloud European leaders' judgment.

The single currency's advocates are right about one thing: political motives have always underpinned the establishment of monetary unions, from Latin America's in the period from 1865 to 1927 to that between Ireland and Britain from 1922 to 1979. But they are missing a crucial point: politics is also the reason for these unions' dissolution. When the economic costs and divergences become too much of a threat, the political will to do what it takes to ensure the common currency's survival collapses.

Voter reaction against the euro may well force the eurozone to stop lying still and take real action. The question is whether that would mean that some or all eurozone countries must go their separate ways.

Germany's Pyrrhic Victory

Also on Project Syndicate, please consider Germany's Pyrrhic Victory by Marcel Fratzscher.

The German Constitutional Court has ruled against the European Central Bank's pledge to buy potentially unlimited quantities of distressed eurozone countries' government bonds, and has called on the European Court of Justice (ECJ) to confirm its decision. Until that happens, the "outright monetary transactions" (OMT) scheme is effectively dead, weakening the ECB's ability to act as an effective and credible financial-market backstop at a time when European governments remain unwilling to fill the void.

How financial markets will digest the German court's ruling remains uncertain. There may be little initial reaction to the news, as there is no immediate threat to financial stability in the eurozone. But the big question is how markets will react in the future to bad news, whether about sovereigns or banks.

The tight feedback loop between sovereigns and banks in eurozone countries has become even more salient in recent years, as banks are holding an ever-larger share of their home countries' government bonds. The ECB's impaired ability to address sovereign and currency risks means that it will have to break the feedback loop via the banks – a more difficult and less effective approach that increases the likelihood of a market panic and a deeper crisis.

The German court's ruling jeopardizes the ECB's ability to act as an effective lender of last resort, thereby reducing its independence and ultimately undermining its ability to deal with market panics and crises – and thus to fulfil its primary mandate of price stability. The ruling makes it more urgent than ever that European governments establish a viable and effective banking union and strengthen the ESM as a backstop for countries in crisis.

When is the Breaking Point?

Notice the silliness of Fratzscher's last statement. He begs for a viable and effective banking union, when it should be perfectly clear the German constitution court won't allow for one.

Eventually something is going to break, and most likely at the worst possible time. Yet no one can say when. Meanwhile the imbalances continue to grow as complacency rules.

Spain 10-Year Government Bond Yield

That decline in yield looks like a good thing. But it comes with a huge risk. Spain's banks have plowed more and more into its own bonds. When yields rise, those banks are going to be in a huge amount of pain.

Here are some charts from Squaring the Circle.

Sovereign Bonds Held by Domestic Banks

Sovereign Bonds Held by Domestic Banks as Percentage of Assets

As long as yields decline, there are no problems. The crisis will be even bigger than before if and when yields rise. When that happens is anyone's guess. That it will happen is a near certainty.

One way or another Germany is going to pay a huge price. Theoretically, there are two solutions.

Germany can pay the price by debt forgiveness and mutualization of debt
Germany can pay the price via default when the eurozone breaks apart

If Germany will not allow option number one, the only viable choice is option number two. It would behoove Germany and the eurozone to have this discussion. Instead, Merkel has her head in the sand.

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

Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another

Posted: 24 Feb 2014 01:15 AM PST

Telegraph writer Ambrose Evans-Pritchard is back at it. In arguably his worst article ever, Pritchard complains France is Looking Straight Down the Barrel of a Deflation Shock.

Pritchard bemoans the horrors of falling prices and says "There is a technical solution to this. It is called QE. The European Central Bank can lift the entire EMU system off the reefs by launching a monetary blitz to meet its own M3 growth target of 4.5pc."

Pritchard ignores the fact that equity prices are back in bubble land. He ignores the fact that QE did not bring inflation to Japan. He ignores the fact that consumers desperately need falling prices. He ignores the fact that falling consumer prices do not stop consumers from buying anything.

Pritchard complains "French President François Hollande must now pay the price for kowtowing to the contraction polices of the eurozone."

Pritchard knows full well France is bound by eurozone policies. The only way France cannot "kowtow to the contraction polices of the eurozone" is if France leaves the eurozone. But Pritchard never mentions that. Instead he whines about falling prices.

One Centrally Bad Idea

Pritchard clings to the centrally bad idea that falling consumer prices will cause consumers to perpetually delay purchases.

In the real world, people have to eat. They have to buy gasoline for their cars. They have to buy clothes when they wear out. They have to heat their homes.

Those are relatively inelastic demands.

But there is also no evidence consumers will hold off for long on discretionary spending either. Every Christmas, shoppers line up for bargains. People continue to upgrade TVs, computers, monitors as they wear out, or simply because prices are lower and quality is up since they last bought.

In other words, people buy when bargains are many and stop buying when bargains are few.

Living Wages

Pritchard's solution is the same as that of many charlatans before him: Force prices up.

The Fed succeeded. As a result, people now bitch and moan about "living wages". Of course "living wages" are a moving target. Force prices higher and the more it takes to keep up with them.

People want $15 an hour for standing behind a cash register and handing you a sack of the worst food money can buy. It's ridiculous.

Hardly anyone ever points out the fact that wages have not kept up with inflation precisely because the Fed has done exactly what Pritchard wants.

People do not blame the Fed, nor do they blame economic illiterates like Pritchard. Instead they blame allegedly evil corporations like McDonalds and Walmart.

Actually, the world needs more Walmarts. I hope Walmart enters the health-care business in a big way. Costs would come down overnight. It would also be great if Walmart could directly compete with banks on financial services.

Costs Rising Faster than Wages

The problem is not that wages are too low, but rather costs rise faster than wages. Why does that happen? Because of the very central bank polices espoused by Monetarists like Pritchard.

Pritchard and others will note that falling home prices will slow bank lending and consumer credit. That is correct. OK, but what's the real problem?

The real problem is monetary inflation artificially jacked up the prices of assets (homes, cars, equities) upon which unsustainable loans were made. Rather than admitting that simple and obvious fact, Monetarists propose the solution is still more monetary printing which will do nothing but create even bigger asset bubbles.

Brief History

Monetarists act on the theory falling prices are a bad idea
The Fed prints money and holds rates too low
Housing bubble builds
Medical and education prices soar
Student loans soar to "help" the students
Because housing is not affordable numerous affordable housing programs appear causing still more unwarranted housing demand. Few see the bubble because housing is not in the CPI
Housing crashes
The affordable housing advocates are abhorred by falling prices
Fed bails out banks and steps in to support housing prices
Income inequality soars
Students remain stuck with debt

Because of one idiotic notion, that "falling prices are a bad thing", the Fed has generally managed to keep the CPI rising, with some things going up much faster than others.

In response to uneven price inflation, we have seen numerous "affordable housing" programs, massive student aid programs, bank bailouts at taxpayer expense, Obamacare to make medical insurance affordable, cash for clunkers, Abenomics in Japan, and countless other economic idiocies.

People propose bad idea after bad idea simply to fix problems caused by the previous bad idea. This is corollary six to the Law of Bad Ideas.

Law of Bad Ideas Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas.

Pritchard, like many before him and countless others yet to come, want higher inflation rates. Here is a table I put together that shows the silliness of it all.

Effect of Inflation Over Time

Year	2% Annual Inflation	4% Annual Inflation	6% annual inflation	10% annual inflation
1	100.00	100.00	100.00	100.00
2	102.00	104.00	106.00	110.00
3	104.04	108.16	112.36	121.00
4	106.12	112.49	119.10	133.10
5	108.24	116.99	126.25	146.41
6	110.41	121.67	133.82	161.05
7	112.62	126.53	141.85	177.16
8	114.87	131.59	150.36	194.87
9	117.17	136.86	159.38	214.36
10	119.51	142.33	168.95	235.79
11	121.90	148.02	179.08	259.37
12	124.34	153.95	189.83	285.31
13	126.82	160.10	201.22	313.84
14	129.36	166.51	213.29	345.23
15	131.95	173.17	226.09	379.75
16	134.59	180.09	239.66	417.72
17	137.28	187.30	254.04	459.50
18	140.02	194.79	269.28	505.45
19	142.82	202.58	285.43	555.99
20	145.68	210.68	302.56	611.59
21	148.59	219.11	320.71	672.75
22	151.57	227.88	339.96	740.02
23	154.60	236.99	360.35	814.03
24	157.69	246.47	381.97	895.43
25	160.84	256.33	404.89	984.97
26	164.06	266.58	429.19	1083.47
27	167.34	277.25	454.94	1191.82
28	170.69	288.34	482.23	1311.00
29	174.10	299.87	511.17	1442.10
30	177.58	311.87	541.84	1586.31
31	181.14	324.34	574.35	1744.94
32	184.76	337.31	608.81	1919.43
33	188.45	350.81	645.34	2111.38
34	192.22	364.84	684.06	2322.52
35	196.07	379.43	725.10	2554.77
36	199.99	394.61	768.61	2810.24
37	203.99	410.39	814.73	3091.27
38	208.07	426.81	863.61	3400.39
39	212.23	443.88	915.43	3740.43
40	216.47	461.64	970.35	4114.48
41	220.80	480.10	1028.57	4525.93
42	225.22	499.31	1090.29	4978.52
43	229.72	519.28	1155.70	5476.37
44	234.32	540.05	1225.05	6024.01
45	239.01	561.65	1298.55	6626.41
46	243.79	584.12	1376.46	7289.05
47	248.66	607.48	1459.05	8017.95
48	253.63	631.78	1546.59	8819.75
49	258.71	657.05	1639.39	9701.72
50	263.88	683.33	1737.75	10671.90

The above table shows what the price of something that costs $100 in year one will cost 49 years later at various inflation rates.

None of these inflation charlatans discuss what happens if wages do not keep up. Nor do they discuss the incentives businesses have to outsource jobs or automate because of high wages.

Amazingly, many people in academic wonderland are not satisfied with 2% annual inflation. They want 4% inflation or higher. For example, Laurence Ball at John Hopkins University claims to make a Case for Four Percent Inflation.

Ball is "grateful for suggestions from Olivier Blanchard, Daniel Leigh, Gregory Mankiw, and Richard Miller. This paper is prepared for the Central Bank Review, published by the Central Bank of the Republic of Turkey."

His paper was written in April 2013.

How is the Turkish Lira doing since that paper came out? Let's take a look.

Hmm. Once inflation steps in it seems difficult to turn it off.

Ball cited Gregory Mankiw, an economic professor at Harvard, who had an even more inane idea of drawing a number out of the hat every year and making currency ending in that digit worthless.

The effect would be 10% price inflation and lord only knows what asset price inflation would occur were Makniw to get his way.

Mankiw claims expiring currency would be a benefit. I responded Time For Mankiw To Resign

These charlatans sit in their academic ivory towers void of common sense and real world economics.

Of course economically asinine proposals from those in academic wonderland is expected behavior by corollary number four.

For the sake of completeness, here is a complete recap.

Law of Bad Ideas: Bad ideas don't go away until they have been tried and failed multiple times, and generally not even then.

Corollary One: Left alone, bad ideas get worse over time.

Corollary Two: The overwhelming desire to implement bad ideas leads to compromises guaranteed to make things worse.

Corollary Three: Those in positions of political power not only have the worst ideas, they also have the means to see those ideas are implemented.

Corollary Four: The worse the idea, the more likely it is to be embraced by academia and political opportunists.

Corollary Five: No politically acceptable idea is so bad it cannot be made worse.

Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas.

Although there is strong evidence that consumers will hold off making asset purchases (homes, stocks, bonds), when asset prices fall, there is not a shred of evidence of a meaningful reduction in consumer purchases due to falling consumer prices.

The irony is that QE tends to foster asset bubbles that ultimately crash, not a price rise in general goods.

Central banks in general, and the Fed in particular, are excellent examples of those in power, hell bent on implementing various bad ideas.

For further discussion please see Deflation Theory Reality Check.

Also see Bubblicious Questions: What Causes Economic Bubbles? When Do Bubbles Burst? Can the Fed Prevent Bubbles?

In yet another irony in this madness, monetarist polices benefit those with first access to money, namely the banks and the already wealthy. Yet the same academics screaming for higher inflation are typically the same ones screaming about income inequality.

The amount of damage caused by one central thesis "falling prices are a bad thing" is staggering. And to fix problems inherent in that central thesis, countless other bad ideas are sure to follow.

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

Damn Cool Pics

This Girl Scout Has a Brilliant Business Idea
Drug Lord Joaquin 'El Chapo' Guzman Busted
Girl Proposes to Her Boyfriend

This Girl Scout Has a Brilliant Business Idea

Posted: 24 Feb 2014 11:16 AM PST

Smart girl.

Drug Lord Joaquin 'El Chapo' Guzman Busted

Posted: 24 Feb 2014 09:26 AM PST

The most powerful drug lord in history Joaquin 'El Chapo' Guzman was captured on Saturday. He has been on the run for more than 12 years since the prison break in 2001 when he escaped in the back of a laundry truck. When Mexican marines burst into the apartment he was staying in, they discovered Guzman with an unidentified woman. Joaquin 'El Chapo' Guzman is worth an estimated $1 billion. He is on Forbes' list of the world's most powerful people - ranked higher than the presidents of both France and Venezuela.

Girl Proposes to Her Boyfriend

Posted: 24 Feb 2014 08:27 AM PST

The guy looks so happy!

An adorable "focus group"

Monday, February 24, 2014

An adorable "focus group"

Let's Move! -- First Lady Michelle Obama's initiative to end childhood obesity within a generation -- just turned 4.

We're celebrating all week, and we want you to join us.

The First Lady wants you to share how you're moving by using the hashtag #LetsMove on social media to share a photo of your favorite activity or healthy snack. If enough people get involved, President Obama and Vice President Biden will share how they get moving, too.

To kick off this anniversary week, First Lady Michelle Obama and comedian Will Ferrell held a "focus group" with young kids to talk about how they eat healthy and get active.

Frankly, it was adorable. And there's more great stuff coming all this week.

Watch the video -- then make sure you're signed up for Let's Move! updates.