sâmbătă, 26 iulie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Bad Day for Bad Teachers, Good Day for Kids

Posted: 26 Jul 2014 07:24 PM PDT

This is a guest post courtesy of Richard Berman at the Capital Research Center, under the title A Bad Day for Bad Teachers.

Summary: In 1954, the U.S. Supreme Court issued the landmark decision Brown v. Board of Education, which struck down racially segregated schools because, the court said, they were inherently unequal and they unjustly harmed poor and minority children. Last month, a California court cited Brown v. Board as it struck down multiple state laws, passed at the behest of teachers' unions, which the court said unjustly protected incompetent teachers and unconscionably harmed children, especially the least fortunate.

In a landmark decision that sent shock waves through the educational establishment, Los Angeles Superior Court Judge Rolf Treu ruled last month that California's teacher tenure laws unconstitutionally deprive students of their guarantee to an education and to equal rights. "The evidence is compelling," Judge Treu wrote. "Indeed, it shocks the conscience."

In Vergara v. California, nine students sued the State of California, claiming that ineffective teachers were disproportionately placed in schools with large numbers of "minority" and low-income students. Judge Treu agreed and quoted the U.S. Supreme Court's 1954 Brown v. Board of Education decision that education "is a right which must be made available to all on equal terms."



Nine young people and their families filed suit against California's laws on teacher retention and dismissal, which, they say, protect bad teachers and deprive students of a high-quality education.

The Vergara decision came down less than one month after the 60th anniversary of the Brown decision, in which the U.S. Supreme Court struck down state and federal laws establishing separate public schools for students classified by the government as "white" and "black."

(In Brown, the Court consolidated cases from Kansas, Virginia, South Carolina, and Delaware, as well as the federal jurisdiction of Washington, D.C.) The Supreme Court found that the practice of segregation violated the provision in the U.S. Constitution that "No State shall make or enforce any law which shall . . . deny to any person within its jurisdiction the equal protection of the laws."

The argument in the current case, Vergara, is that, by forcing schools to favor incompetent teachers with seniority over more capable junior teachers, the rules deprive students of the education that the state constitution guarantees them. Further, because these rules funnel bad teachers to districts with large numbers of poor and "minority" students, those students are denied the equal treatment of the law.

The Vergara lawsuit was backed by Students Matter, a nonprofit educational policy advocacy group funded by Silicon Valley entrepreneur David Welch. "The state has a responsibility of delivering an education for the betterment of the child," said Welch. "The state needs to understand that [its] responsibility is to teach children, and teach all of them." Welch's organization recruited the nine students, from several school districts, to serve as the public face of the case.
Astonishingly, the teachers' union response to the ruling was that it was actually an attack on children. "This decision today is an attack on teachers, which is a socially acceptable way to attack children," said Alex Caputo-Pearl, the president-elect of the Los Angeles teachers union. Instead of providing for smaller classes or more counselors, the reformers "attack teacher and student rights."
Welch answered that claim in an op-ed for the San Jose Mercury News in which he described the harm students suffer from bad teachers:

According to the testimony of Harvard economist Dr. Thomas Kane, a student assigned to the classroom of a grossly ineffective math teacher in Los Angeles loses almost an entire year of learning compared to a student assigned to a teacher of even average effectiveness. Students assigned to more than one grossly ineffective teacher are unlikely ever to catch up to their peers.
And far from wanting to attack all teachers, Welch in the same article pleaded with his fellow Californians to reward good teachers:

"Let's offer teachers opportunities for promotions, such as to master teacher, teacher mentor, or department chair, where the skills of a truly excellent, creative educator can reach more children—as well as better pay with incentives for excellence and taking on extra responsibilities or difficult positions."

No less a union friend than Rep. George Miller (D-Calif.), whose largest campaign support comes from unions, has bluntly admitted, "Vergara will help refocus our education system on the needs of students." No wonder the teachers' unions made five separate legal efforts to have the lawsuit dismissed on grounds other than the merits of the case.

California teacher union members number some 445,000. Both the California Teachers Association (CTA, an affiliate of the National Educational Association) and the California Federation of Teachers (CFT, an affiliate of the American Federation of Teachers) plan to appeal the court's decision. Jim Finberg, a lawyer for the two teachers' unions, said that Judge Treu's decision "ignores overwhelming evidence the current laws are working."

Actually, less than 0.002% of teachers in California are dismissed in any given year. Judge Treu noted that, when an effort is made to fire a teacher, "it could take anywhere from two to almost ten years and cost $50,000 to $450,000 or more to bring these cases to conclusion under the Dismissal Statute, and that given these facts, grossly ineffective teachers are being left in the classroom."
Judge Treu concluded that "distilled to its basics," the unions' position requires them to defend the proposition that the state has a compelling interest in the de facto separation of students from competent teachers, and a like interest in the de facto retention of incompetent ones. The logic of this position is unfathomable and therefore constitutionally insupportable.

Seniority vs. Merit

The Vergara decision overturned a LIFO (last-in/first-out) law requiring that teacher layoffs be based on seniority, rather than individual merit. California's Permanent Employment Law required that a teacher be tenured after two years at a school (which, because of an early notice requirement, worked out in practice to 18 months or less). California is one of only five states in which tenure may be received after such a short period. As noted by the blog Voices of San Diego:

Regardless of what we call it, here's how it looks in San Diego Unified. Once they're hired, rookie teachers have to make it through a two-year probationary period, during which they can be dismissed for pretty much any reason.

But because the district has to tell teachers by mid-March whether they'll be invited back for the next school year, the trial period is actually shorter than two years. In the past, the district hasn't been particularly aggressive in the number of probationary teachers it sends away—only about 1 percent wasn't given tenure.

"With such little time, you don't even have enough information to actually consider whether they're an effective teacher," said Nancy Waymack, a managing director for the reform-advocacy group National Council on Teacher Quality.

Compared to other states, California has some of the strongest laws in place to protect teacher employment. The effect of this case may spur action throughout the nation. "Without a doubt, this could happen in other states," said Terry Mazany, who served as interim CEO of Chicago's public schools in 2010-2011. A lawyer for Students Matter said they are already hoping to "engage with policymakers in New York and nationally," and donor David Welch said the group would consider suits in other states (New Jersey, Connecticut, Maryland, Minnesota, New Mexico, and Oregon were mentioned as possible sites).

Undue Process

The term "due process" refers to a legal or quasi-legal system that protects the rights of an individual, such as by requiring a trial before a person can be executed. Unions defend the complicated procedures for firing teachers by claiming they amount to "due process" that protects those teachers from arbitrary, unfair treatment. As the Pew publication Stateline reports, "The unions argue that the rules protecting teachers are needed for school districts to attract and retain good teachers and to ensure that employees are not fired for arbitrary or unfair reasons."

But the judge ruled in Vergara that the process has become so cumbersome—that it's become so difficult to get rid of bad teachers—that it deprives students of their rights. He ridiculed the process as "über due process," and observed that California state laws already provide a great deal of protection for government and private-sector employees facing dismissal. "Why," he pleaded, "the need for the current tortuous process" that is mandated only for teachers, a process so unjust, he added, that it was even decried by witnesses called by the teachers' unions?

James Taranto of the Wall Street Journal noted an irony at the center of the ruling: "The California Supreme Court had applied the same legal premises to hold unconstitutional funding disparities among districts and one district's decision to end the school year six weeks early owing to a budgetary shortfall. Vergara doesn't break new legal ground so much as apply precedent in a way that threatens the education establishment. It's a case of judicial activism coming back to bite the left."

A permanent job

As noted in Waiting for 'Superman,' a documentary promoting educational reform, one out of every 57 doctors loses his or her license to practice medicine, and one of every 97 lawyers loses his or her license to practice law. Yet, in many major cities, only one out of 1,000 teachers is fired for performance-related offenses. The reason is tenure, or as the unions call it, "permanent status."
Tenure is the practice of guaranteeing a teacher his or her job. Originally, this was a due process guarantee, something intended to work as a check against administrators capriciously firing teachers and replacing them with friends or family members. It was also designed to protect teachers who took political stands the community might disagree with. Tenure as we understand it today was first seen at the university level, where, ideally, professors would work for years and publish many pieces of inspired academic work before being awarded what amounted to a job for life.

At the elementary and high school level, tenure has evolved from the original understanding of "due process" to the university-style "job for life." In most states, teachers are awarded tenure after only a few years, after which time they become almost impossible to fire. The main function of these laws is to help bad teachers keep their jobs.

►One Los Angeles union representative has said: "If I'm representing them, it's impossible to get them out. It's impossible. Unless they commit a lewd act." Unfortunately for the students who have to learn from these educators, virtually every teacher who works for the Los Angeles Unified School District receives tenure. In a study of its own, the Los Angeles Times reported that fewer than two percent of teachers are denied tenure during the probationary period after being hired. And once they have tenure, there's no getting rid of them. Between 1995 and 2005, only 112 Los Angeles tenured teachers faced termination—eleven per year—out of 43,000. And that's in a school district where the high school graduation rate in 2003 was a pathetic 51 percent.
►One New Jersey union representative was even blunter about what his union does to keep bad teachers in the classroom: "I've gone in and defended teachers who shouldn't even be pumping gas."
In 10 years, only about 47 out of 100,000 teachers were terminated from New Jersey's schools. Original research conducted by the Center for Union Facts (CUF) has confirmed that almost no teacher is ever fired in Newark, which is New Jersey's largest school district, no matter how bad a job the teacher does. Over one four-year period, CUF discovered, Newark's school district successfully fired about one out of every 3,000 tenured teachers annually. This is a city where roughly two-thirds of students never graduate from high school.
►In New York City, the New York Daily News reported that "just 88 out of some 80,000 city schoolteachers have lost their jobs for poor performance" over 2007-2010.
Then there were the so-called "rubber rooms" of New York City, which operated until 2010. Teachers who couldn't be relieved of duty would report to these "rubber rooms," where they would be paid to do nothing for weeks, months, even years. According to the New York Daily News, at any given time an average of 700 teachers were being paid not to teach while the district jumped through the hoops, imposed by the union contract and the law, to pursue discipline or termination. (A city teacher in New York who ended up being fired spent an average of 19 months in the disciplinary process.) The Daily News reported that the New York City school district spent more than $65 million annually just to pay the teachers who were accused of wrongdoing. Millions more tax dollars were spent to hire substitutes.

After the embarrassing Daily News story and an exposé in the New Yorker, the union agreed to end the practice of rubber rooms but refused to expedite the dismissal process. Instead of whiling the days away doing nothing, the teachers were assigned to do clerical work and perform other semi-useful tasks.

The problem isn't limited to teachers accused of wrongdoing. The city spends more than $100 million every year paying teachers who have been excessed (i.e., whose positions have been eliminated) but have yet to find jobs.

According to the Wall Street Journal, the ironclad union contract requires that any teacher with tenure be paid full salary and benefits if he or she is sent to the "Absent Teacher Reserve pool." The average pay of a teacher in that pool is over $80,000 a year, and some teachers have stayed in the pool for years. The Journal reports that the majority of teachers in the pool had "neither applied for another job in the system nor attended any recruitment fairs in recent months."

►Things are no better in New York as a whole. The Albany Times Union looked at what was going on statewide outside New York City and discovered some shocking data: Of 132,000 teachers, only 32 were fired for any reason between 2006 and 2011.
►In Chicago, a school system that has by any measure failed its students—only 28.5 percent of 11th graders met or exceeded expectations on that state's standardized tests—Newsweek reported that only 0.1 percent of teachers were dismissed for performance-related reasons between 2005 and 2008. When barely one in four students nearing graduation can read and do math, how is it possible that only one in one thousand teachers is worthy of dismissal? It may well be that most of the city's teachers are good teachers, but can 99.9% of them be good?

Effects of tenure and related teacher "protections"

Modeled after labor arrangements in factories, the typical teachers' union contract is loaded with provisions that do not promote education. These provisions drive away good teachers, protect bad teachers, raise costs, and tie principals' hands.

● The Dance of the Lemons

One of the more shocking scenes in the documentary Waiting for 'Superman' is an animated illustration of "The Dance of the Lemons." This is no waltz or foxtrot. Rather, it's the systematic shuffling of incompetent teachers from school to school. These teachers can't be fired because union contracts require that "excessed" educators, no longer needed at their original school, must be given first crack at new job openings when slots open up elsewhere in the district. Administrators at other schools don't want to hire these bad teachers, but districts are unable to fire them.
What happens? LA Weekly documented just how this process plays out in Los Angeles in a massive 2010 investigation. "The far larger problem in L.A. is one of 'performance cases'—the teachers who cannot teach, yet cannot be fired. Their ranks are believed to be sizable—perhaps 1,000 teachers, responsible for 30,000 children. … The Weekly has found, in a five-month investigation, that principals and school district leaders have all but given up dismissing such teachers. In the past decade, LAUSD officials spent $3.5 million trying to fire just seven of the district's 33,000 teachers for poor classroom performance—and only four were fired, during legal struggles that wore on, on average, for five years each. Two of the three others were paid large settlements, and one was reinstated. The average cost of each battle is $500,000."
Unintended Consequences, a study by The New Teacher Project (TNTP), documented the damage done by this union-imposed staffing policy. In an extensive survey of five major metropolitan school districts, TNTP found that "40 percent of school-level vacancies, on average, were filled by voluntary transfers or excessed teachers over whom schools had either no choice at all or limited choice." One principal decried the process as "not about the best-qualified [teacher] but rather satisfying union rules."

● Thinning the talent pool

One problem related to the destructive transfer system is a hiring process that takes too long and/or starts too late, thanks in part to union contracts. Would-be teachers typically cannot be hired until senior teachers have had their pick of the vacancies, and the transfer process makes principals reluctant to post vacancies at all for fear of having a bad teacher fill it instead of a promising new hire.

In the study Missed Opportunities, The New Teacher Project found that these staffing hurdles help push urban districts' hiring timelines later to the point that "anywhere from 31 percent to almost 60 percent of applicants withdrew from the hiring process, often to accept jobs with districts that made offers earlier."

"Of those who withdrew," the TNTP report continues, "the majority (50 percent to 70 percent) cited the late hiring timeline as a major reason they took other jobs." It's the better applicants who are driven away: "Applicants who withdrew from the hiring process had significantly higher undergraduate GPAs, were 40 percent more likely to have a degree in their teaching field, and were significantly more likely to have completed educational coursework" than the teachers who ended up staying around to finally receive job offers.

● Keeping experienced teachers away from poor children

Another common problem with the union contract is a "bumping" policy that fills schools which are more needy (but less desirable to teach in) with greater numbers of inexperienced teachers. In its report Teaching Inequality, the Education Trust noted: "Children in the highest-poverty schools are assigned to novice teachers almost twice as often as children in low-poverty schools. Similarly, students in high-minority schools are assigned to novice teachers at twice the rate as students in schools without many minority students."

● Bad apples stay

A study conducted by Public Agenda polled 1,345 schoolteachers on a variety of education issues, including the role that tenure played in their schools. When asked "does tenure mean that a teacher has worked hard and proved themselves to be very good at what they do?" 58 percent of the teachers polled answered that no, tenure "does not necessarily" mean that. In a related question, 78 percent said a few (or more) teachers in their schools "fail to do a good job and are simply going through the motions."

When Terry Moe, the author of Special Interest: Teachers Unions and America's Public Schools, asked teachers what they thought of tenure, they admitted that the byzantine process of firing bad apples was too time-consuming: 55 percent of teachers, and 47 percent of union members, answered yes when asked "Do you think tenure and teacher organizations make it too difficult to weed out mediocre and incompetent teachers?"

● The union tax on firing bad teachers

So why don't districts try to terminate more of their poor performers? The sad answer is that their chance of prevailing is vanishingly small. Teachers unions have ensured that even with a victory, the process is prohibitively expensive and time-consuming. In the 2006-2007 school year, for example, New York City fired only 10 of its 55,000 tenured teachers, or 0.018%. The cost to eliminate those employees averages out to $163,142, according to Education Week. The Albany Times Union reports that the average process for firing a teacher in New York state outside of New York City proper lasts 502 days and costs more than $216,000. In Illinois, Scott Reeder of the Small Newspaper Group found it costs an average of $219,504 in legal fees alone to move a termination case past all the union-supported hurdles. In Columbus, Ohio, the teachers' union president admitted to the Associated Press that firing a tenured teacher can cost as much as $50,000. A spokesman for Idaho school administrators told local press that districts have been known to spend "$100,000 or $200,000" in litigation costs to toss out a bad teacher.

It's difficult even to entice the unions to give up tenure for more money. In Washington, D.C., school chancellor Michelle Rhee proposed a voluntary two-tier track for teachers. On one tier, teachers could simply do nothing: Maintain their regularly scheduled raises and keep their tenure. On the other track, teachers could give up tenure and be paid according to how well they and their students performed, with the potential to earn as much as $140,000 per year. The union wouldn't even let that proposal come up for a vote among its members, and stubbornly blocked efforts to ratify a new contract for more than three years. When the contract finally did come up for ratification by the rank and file, the two-tier plan wasn't even an option.

● Taking money from good teachers to give to bad teachers

During the expansion of teacher collective bargaining in the mid-twentieth century, economists from Harvard and the Australian National University found, the average, inflation-adjusted salary for U.S. teachers rose modestly—while "the range of the [pay] scale narrowed sharply." Measuring aptitude by the quality of the college a teacher attended, the researchers found that the advent of the collectively bargained union contract for teachers meant that on average, more talented teachers were receiving less, while less talented teachers were receiving more.

The earnings of teachers in the lowest aptitude group (those from the bottom-tier colleges) rose dramatically relative to the average wage, so that teachers who in 1963 earned 73 percent of the average salary for teachers could expect to earn exactly the average by 2000. Meanwhile, the ratio of the earnings of teachers in the highest-aptitude group to earnings of average teachers fell dramatically. In states where the highest-aptitude teachers began with an earnings ratio of 157 percent, they ended with a ratio of 98 percent.

Data from the National Center for Education Statistics, as reported by Education Week, add further evidence to the compressed-pay claim. The Center's stats indicate that the average maximum teacher pay nationwide is only 1.85 times greater than the nationwide average salary for new teachers.

● Locking up education dollars

Much of the money commanded by teachers' union contracts is not being used well, at least from the perspective of parents or reformers. Several provisions commonly found in union contracts that cost serious money have been shown to do little to improve education quality. A report from the nonprofit Education Sector found that nearly 19 percent of all public education spending in America goes towards things like seniority-based pay increases and outsized benefits—things that don't go unappreciated by teachers, but don't do much to improve the quality of teaching children receive. If these provisions were done away with, the report found, $77 billion in education money would be freed up for initiatives that could actually improve learning, like paying high-performing teachers more money.

● Putting kids at risk

Teachers unions push for contracts that effectively cripple school districts' ability to monitor teachers for dangerous behavior. In one case, school administrators in Seattle received at least 30 warnings that a fifth grade teacher was a danger to his students. However, thanks to a union contract that forces schools to destroy most personnel records after each school year, he managed to evade punishment for nearly 20 years, until he was finally sent to prison in 2005 for having molested as many as 13 girls. As an attorney for one of the victims put it, according to the Seattle Times, "You could basically have a pedophile in your midst and not know it. How are you going to get rid of somebody if you don't know what they did in the past?"

The Bottom Line

Too many schools are failing too many children. Americans should not remain complacent about how districts staff, assign, and compensate teachers. And too many teachers' union contracts preserve archaic employment rules that have nothing to do with serving children.

Even Al Shanker, the legendary former president of the American Federation of Teachers, admitted, "a lot of people who have been hired as teachers are basically not competent."

This is what the union wants: To keep teachers on the payroll regardless of whether or not they are doing any work or are needed by the school district. Why? As long as they are on the payroll, they keep paying union dues. The union doesn't care about the children who will be hurt by this misallocation of tax dollars. All union leaders care about is protecting their members and, by extension, their own coffers.

Most teachers absolutely deserve to keep their jobs, and some have begun to speak out about the absurdity of teacher tenure, but it's impossible to pretend that the number of firings actually reflects the number of bad teachers protected by tenure. As long as union leaders possess the legal ability to drag out termination proceedings for months or even years—during which time districts must continue paying teachers, and substitute teachers to replace them, and lawyers to arbitrate the proceedings—the situation for students will not improve.

The Vergara case offers hope, but supporters of better education cannot rely on judges to fix America's schools. Parents and teachers must join together to eliminate teacher tenure systems that protect bad teachers and that divert our best teachers away from many of the students who could benefit most from their skills and experience.
*   *   *
About the Author:  Richard Berman is executive director of the Center for Union Facts. Some of this material appeared previously on the website TeachersUnionExposed.com, a project of the Center for Union Facts. This article originally appeared on the website Labor Watch, and is republished here with permission.

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

Japan Exports and Trade Balance vs. the Yen; Abenomics in Review

Posted: 26 Jul 2014 01:59 PM PDT

Despite the widely touted success of Abenomics, a few charts will prove success is all hype and no reality. Let's start with a chart of the Yen.

$XJY Yen Monthly



click on any chart for sharper image

The Yen went on a tear from mid-2007 to mid-2011, rising from 80.55 to 132.18. Since then, the Yen declined to and 94.83 and is currently at 98.26. The Yen was in this general area, at times, in 2004, 2005, 2008, 2009, and 2014.

One intent of Abenomics was to devalue the Yen to aid exports. How did that work out?

Japan Left Behind

Bloomberg reports Japan's Export-Champ Days Are Left Behind.
The CHART OF THE DAY shows the value of Japan's exports is 23 percent below a March 2008 peak, even as those of South Korea, the U.S. and Germany have grown. The yen has lost 16 percent in value against the dollar since Prime Minister Shinzo Abe took office in December 2012. That hasn't been enough to spur growth in outbound shipments.

Japan's government and central bank have blamed weak overseas demand, especially in emerging markets, for export sluggishness. This weakness is negative for an economy that suffered a blow to domestic demand from an April sales-tax increase.

"Japan is being left behind in the export recovery mainly because Japanese companies accelerated the shift of production abroad when the yen appreciated after the Lehman shock," said Toru Suehiro, a market economist at Mizuho Securities Co. in Tokyo. "The loss of global market presence by Japan's companies, especially electronic appliance makers, is also a factor."

The impact of the move overseas by Japanese companies is striking in the U.S. automobile market, said Suehiro. U.S. sales for Japanese automakers in the six months through June rose 6.2 percent from a year earlier to 3.04 million, according to researcher Autodata Corp. Auto exports from Japan to the U.S. for the same period were down 8.5 percent, according to finance ministry data.
No Export Recovery for Japan (Chart of the Day)



Abenomics Flame-Out

What about exports vs. imports, a measure of trade deficits or surplus? Wolf Richter provides the answer in The Flame-Out Of Abenomics, In One Crucial Chart. Richter reports ...
Abenomics, the new economic religion of Japan, has kept some of its promises: It created inflation while wages stagnated, thus whittling down real incomes, further squeezed by the broad consumption tax hike. It devalued the yen by 25%, thus vaporizing a quarter of the wealth of the Japanese without having to tell them directly. And to make up for the tax increase on consumers, Abenomics elegantly cut taxes for Japan Inc. Grudging respect is due Prime Minister Shinzo Abe for these noble accomplishments.

In other areas, his record is spotty. One of the goals of his policies was to fire up exports by making them cheaper overseas and reduce imports by making them more expensive to consumers and businesses at home. It would crank up Japan's manufacturing sector and lead to a trade surplus that would inflate GDP, make Abe a hero, and save Japan.

Exports and trade surpluses have been vital to the Japanese economy. And reconstituting them has been a cornerstone of Abenomics. But that plan has gone to heck.

Not step by step, gradually over time, but in monthly leaps, whose size surprised even Abenomics-cynics like me. And the Ministry of Finance rubbed it in today when it published the trade statistics for June.

Exports, instead of soaring due to the watered-down yen, dropped 2.0% from a year ago to ¥5.94 trillion. Imports, instead of dropping due to consumers being squeezed by higher prices and stagnating incomes, soared 8.4% to ¥6.761 trillion. The resulting goods trade deficit jumped to ¥822.2 billion.

It was the worst trade deficit for any June ever. It was over four times as bad as last year's "worst June deficit ever." In June 2012, Japan still had a surplus. Historically, June is one of the better months for Japanese trade. But that surplus in June 2012 was Japan's last. What followed were 24 months of relentlessly deteriorating trade deficits. The worst series in Japan's recorded history (far ahead of the second-worst, the 14-month period in 1979-1980).

For the first six months this year, compared to the same period last year, the trade deficit soared 57%!

Here is what the flaming success of Abenomics looks like, boiled down to one chart:



The debacle was spread across the board, starting with its largest trading partner, both in terms of exports and imports, China. Since about one-third of Japan's exports to China get transshipped through Hong Kong, I combine them. So exports to China and Hong Kong edged up 1.6%. But imports from them jumped 10.6%. And the trade surplus in 2013 of ¥57 billion turned into a trade deficit of ¥63 billion. That's a deterioration of ¥120 billion. Even exports to the US, its second largest trade partner, declined 2.7%, while imports from the US rose 6.8%.

The export declines were spread across the largest categories: transportation equipment (cars, trucks, etc., which account for nearly a quarter of all exports) dropped -0.6%; machinery (about a fifth of all exports) -0.4%; electrical machinery (semiconductors, audio-video equipment, batteries, etc.) -5.1%; manufactured goods (steel products, etc.) -0.2%.

And imports rose across the largest categories. Mineral fuels (petroleum, LNG, coal, etc.), which make up nearly one-third of all imports, rose 8.3%.
Spotlight on Energy and Food

In the wake of Japan's nuclear disaster at Fukushima that closed multiple reactors, Japan has been very reliant on energy imports.

A falling yen certainly does not help.

Spotlight on Food

According to the USDA, Japan imports about 60% of its food.

And some of what Japan does produce is contaminated, and will be for thousands of years. See the July 15, 2014 report: TEPCO Failed To Disclose Crops Over 20KM From Fukushima Were Contaminated

Richter notes "[Japanese consumer] purchasing power is down by 3.6% year over year, for all items, including services; Purchasing power is down 5.6% for goods.

Abe wanted higher prices and got them, but not where he wanted them. Abenomics was supposed to help exports (but didn't), job creation (but didn't), manufacturing output (but didn't), real wages (but didn't).

Simply put, Abenomics has been a huge failure from every angle. Yet, economists are in near-universal praise because prices are rising. That's Keynesian idiocy at its finest.

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

Who's Winning the War in Ukraine? Answer May Shock You!

Posted: 26 Jul 2014 12:58 AM PDT

Here's the question, not of the day, but of the month: Who's Winning the War in Ukraine?

That may sound like a simple question, but it isn't.

That question leads to a second question "In whose eyes?" It also depends on the definition of "war". And it also depends on the definition of "win". And finally it depends on which media source you believe.

Military Aspect

From a military aspect, I have seen reports from both sides. The Western media portrays Ukraine on the march with the rebels surrounded, and losing ground. Is that accurate reporting?

I will let you be the judge. Please consider this video released on Friday.



The caption reads "Всё что осталось от 72-й бригады ВСУ 25.07.2014".

Diving into the details here is my rough translation (interpretation from the video) : "Ukraine's 72nd brigade is now an additional battalion short."

Where the bodies are, I don't know . But that is highly unlikely to be a fake video.

And contrary to Western media reports, my sources have said for a week "various Ukraine forces are trapped, looking for a way to escape to Russia".

Clearly, one of them failed to make it.

Are the Rebels Winning?

In whose Eyes? And what does "winning" mean?

In the eyes of the media, Ukraine is winning. The front page news everywhere you look says Ukraine is winning.

More importantly, the media has lined up behind Ukraine and now 22 US senators are willing to blame Putin and do everything they can to stop Russia.

Senator McCain, as always, is leading the pack.

Pat Buchanan exposed McCain the other day for the war-mongering hypocrite that he is. David Stockman has the details in My thoughts On Pat Buchanan's Brilliant And Incisive Take On Washington's Ukrainian Fiasco.

Senator John McCain's call to arm the ruffians, opportunists, oligarchs and neo-fascists who took power in a street level coup in Kiev is downright lunatic. It causes Buchanan to ask, "Who is the real problem here?"

Propaganda War

When it comes to the propaganda war, McCain and his primary war-mongering ally (none other than president Obama) are clearly winning! The only difference between the two is McCain is a far bigger war-monger than Obama.

Obama is likely to catch up. He usually does.

Energy

Yet, one must step back and ask "What the hell is this war really about?"

Is it NATO? Or is it energy?

I happen to believe both. Starting from that scorecard, please consider my post on Thursday Ukraine Government Breaks Up: Prime Minister Resigns Over "Vital Laws on Energy and Army Financing"; Follow the Money

Synopsis: The Ukrainian Prime Minister Arseniy Yatseniuk resigned and that will lead to early elections in which pro-Russian MPs will be removed from parliament.

In essence, Ukraine will be more pro-NATO. But that's not all.

Biden's Son, Kerry Family Friend Join Ukrainian Gas Producer's Board

Please consider this resignation statement as noted by RIA: "Yatsenyuk also expressed disappointment with Ukrainian parliament's decision to reject a bill that allows the government to hand over up to 49 percent of the country's gas transport system to investors from the European Union and the United States."

In response I said "Follow the Money"

I neglected to report precisely where the money flowed.

The Wall Street Journal has all you need to know with this May headline regarding Biden, Kerry, and Ukraine: Biden's Son, Kerry Family Friend Join Ukrainian Gas Producer's Board.

Who's Winning?

You tell me. Before you do, please define "win".

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

Closing Corporate Tax Loopholes

 
Here's what's going on at the White House today.
 
 
 
 
 
  Featured

Weekly Address: Closing Corporate Tax Loopholes

In this week's address, the President continued his call for our nation to rally around an economic patriotism that says rather than protecting wasteful tax loopholes for a few at the top, we should be investing in things like education and job training that grow the economy for everybody.

The President highlighted the need to close one of the most unfair tax loopholes that allows companies to avoid paying taxes here at home by shifting their residence for tax purposes out of the country. The President has put forth a budget that does just that, and he has called for business tax reform that makes investment in the United States attractive, and creates incentives for companies to invest and create jobs here at home. And while he will continue to make the case for tax reform, the President is calling on Congress to take action and close this loophole now.

Click here to watch this week's Weekly Address.

Watch: President Obama delivers the weekly address


 
 
  Top Stories

"You Are Why I Ran for President in the First Place"

On Thursday, President Obama spoke under sunny skies at the Los Angeles Trade-Technical College. He talked about the progress that we've made since he took office and training our workers for a 21st-century economy.

President Barack Obama delivers remarks on the economy in L.A.

The President called for a new sense of optimism and collective patriotism in this country: "Cynicism is a choice, and hope is a better choice. And if we can work together, I promise you there's no holding America back."

He also talked about something known as an "inversion." What's an "inversion," you ask? Learn more here.

READ MORE

Apollo 11: 45 Years Later

Forty-five years ago, two American astronauts -- Buzz Aldrin and Neil Armstrong -- landed on the moon's Sea of Tranquility, and Neil Armstrong planted the first footprint on the surface of the moon.

On Tuesday, President Obama invited Buzz Aldrin; Michael Collins, the astronaut who piloted the spacecraft that orbited the moon; and Neil Armstrong's wife, Carol, to the White House. Armstrong passed away in 2012.

President Barack Obama meets with Apollo 11 astronauts.

President Barack Obama meets with Apollo 11 astronauts Buzz Aldrin and Michael Collins, right, Carol Armstrong, widow of Apollo 11 commander Neil Armstrong, NASA Administrator Charles Bolden, and Patricia Falcone, OSTP Associate Director for National Security and International Affairs, left, in the Oval Office. This week marked the 45th anniversary of the Apollo 11 lunar landing. July 22, 2014. (Official White House Photo by Pete Souza)

To honor the anniversary, we spent a little time poring over archival footage of the Apollo 11 mission -- and included some of the incredible work that NASA is doing today. We won't spoil it all for you here, but it includes redirecting asteroids around the moon and going to Mars. So, that's pretty cool.

READ MORE

"For Conspicuous Gallantry"

On Monday, President Obama presented the Medal of Honor to Staff Sergeant Ryan M. Pitts for his unwavering courage in one of the fiercest battles of the war in Afghanistan.

The President presents the Medal of Honor to Staff Sergeant Ryan M. Pitts.

The President described Ryan's heroic acts during his remarks:

As the insurgents moved in, Ryan picked up a grenade, pulled the pin, and held that live grenade -- for a moment, then another, then another -- finally hurling it so they couldn't throw it back. Then he did it again. And again. Unable to stand, Ryan pulled himself up on his knees and manned a machine gun. Soldiers from the base below made a daring run -- dodging bullets and explosions -- and joined the defense. But now the enemy was inside the post -- so close they were throwing rocks at the Americans; so close they came right up to the sandbags. Eight American soldiers had now fallen. And Ryan Pitts was the only living soldier at that post.

READ MORE

As always, to see even more of this week's events, watch the latest West Wing Week.


 

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Seth's Blog : If you can't sell it, you can't build it

 

If you can't sell it, you can't build it

Architecture students bristle when Joshua Prince-Ramus tells them that they are entering a rhetorical profession.

A great architect isn't one who draws good plans. A great architect gets great buildings built.

Now, of course, the same thing is true for just about any professional. A doctor has to persuade the patient to live well and take the right actions. A scientist must not only get funded but she also has to persuade her public that her work is well structured and useful.

It's not enough that you're right. It matters if it gets built.

       

 

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Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


SBU Cleans Website of Bogus "Proof"; Mystery of 312 Grows

Posted: 25 Jul 2014 05:59 PM PDT

An image from the Security Service of Ukraine ("SBU") that purportedly showed a Buk heading back to Russia at nighttime, has now been removed from the cite.

I made a screenshot of the image and posted it in Ukraine Caught in Third Major Lie? Magic Number 312.

The image once was at the bottom of this SBU page: Russia is trying to hide the evidence of his involvement in a terrorist attack in the skies over Ukraine.

Here is the image I posted, now removed.



CNN Complicit as Well?

Shortly after the crash, CNN's Kyung Lah conducted an interview with Vitaly Nayda, Ukraine's Director of Informational Security.

Nayda made serious, unfounded charges, pointed straight at Russia. He also showed Lah the evidence, including those bogus photos.
 
There are now two versions of the CNN video, both still available, if you know how to find them. One has the bogus photos and associated comments stripped, the other doesn't.

The only timestamps that I can see mark them from the same day. Perhaps both were edited.

Both are highly inflammatory. Play either one and it's crystal clear Lah plays straight into hands of Nayda. 

Here is CNN Video 1

Here is CNN Video 2

The first video is 3 minutes 11 second long; The second video is 1 minute 33 seconds long.

Bear in mind, I do not know the precise order in which these were released, but reader Sergey who notified me of the SBU editing claims to know.

Sergey copied me on an email he sent to CNN (slightly edited for typos, spellings, and ease in reading).
Dear Sirs,

On July 20, CNN reporter Kyung Lah interviewed Ukrainian security Chiev Mr. Vitaly Nayda. I saw the interview. The full version includes Mr. Nayda's comments on photos of "Buk" missile "moved from Ukraine to Russia by terrorists after the MH17 crash. But the images Nayda presented turned out to be fake.

Russia Today.Tv published a video dated March, 2014 where from this "Buk" night photo was taken.

Since then, the Ukrainian secret service deleted the photos from their webpage.

What was surprised me, and made me sad, is that you did the same! It is disappointing, that the original version of the interview was censored.  Only half of it is still there on your webpage.

Mrs Kyung Lah and CNN in general are not responsible for what Mr. Nayda said to your correspondent. But deleting the fake evidence he presented on behalf of the Ukrainian state makes you complicit in fraud.

Why you did it?

Best regards,
Sergey
Moscow
Russia
The mystery of 312 grows.

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

France Unemployment New High, Output Down 15th Month; Prices Drop 27th Month; Activity Up in Peripheral Europe; Outlook for Germany

Posted: 25 Jul 2014 12:19 PM PDT

The grim economic news from France keeps piling up. Today, Europe Online reports Number of Unemployed in France Hits New High.
The number of unemployed people in France has hit a new high as the country grapples with the fallout of the financial crisis and a sluggish eurozone recovery, the Labour Department reported Friday.

At the end of June, there were 3.398 million people who were registered as being without a job in the eurozone's second-largest economy - 0.3 per cent more than in the previous month.

Compared to June of last year, the number of jobless was up 4 per cent.

In a glimmer of positive news, the number of unemployed youth was down compared to last year: those under 25 without a job decreased by 3.1 per cent to 535,000.

France's 10.1-per-cent unemployment rate is nearly twice as high as in neighbouring Germany, which registers a 5.1-per-cent rate.

French Private Sector Employment Contracts 9th Month

According to the Markit Flash France PMI, French private sector output contracts again, albeit at slower pace.
The latest flash PMI data signalled that France's private sector remained in contraction at the start of the third quarter. Output was down for the third month in succession, although the rate of decline eased to a marginal pace that was the weakest in that sequence.

Driving the headline index higher was an improvement in the performance of the French service sector. Activity there increased for the first time in three months, albeit marginally.

On the other hand, the manufacturing sector sank further into contraction, with output falling at the sharpest rate in 15 months. New business received by French private sector firms decreased for a fourth consecutive month in July. Although moderate, the rate of decline was quicker than in June. Lower new work was signalled in both the services and manufacturing sectors, with the latter reporting the sharper fall.

Anecdotal evidence suggested that client budgets were under pressure, leading to a squeeze on new orders despite further reductions in prices charged by French private sector firms. Indeed, output prices fell for a twenty - seventh successive month in July , with the rate of decline accelerating since June. A number of panellists indicated that they had been forced to pare their margins in order to stem the loss of new business , with competitive pressures generally reported to be strong. Both service providers and manufacturers reported lower charges. In contrast, firms' input prices continued to rise at a solid pace in July, with companies in both services and manufacturing signalling increases. There were reports from the survey panel of increased costs for labour and raw materials. Employment in the French private sector decreased for the ninth month running in July. That said, the rate of decline was marginal and the weakest since Marc h. Both service providers and manufacturers cut staffing levels
France Synopsis

  • Manufacturing down at sharpest rate in 15 months
  • New business down 4th month
  • Budgets under pressure
  • Input costs rising sharply
  • Output prices down 27th month and accelerating
  • Private sector employment down 9th month
  • Service sector activity improved slightly

Activity Picks up in Peripheral Europe

Meanwhile, things improve elsewhere in Europe. The Markit European Composite report makes this headline claim: Flash PMI signals rebound in Eurozone growth but French woes persist.
Eurozone economic growth rebounded in July, according to the „flash‟ estimate of Markit‟s Purchasing Managers‟ Index. The headline PMI, covering business activity across both manufacturing and services, rose from a six - month low of 52.8 in June to 54.0 in July. The latest reading matched the near - three year high seen back in April and exceeded the averages seen in the first two quarters of the year. Many companies reported that business had picked up again in July after an unusually high number of holidays and a knock - on effect of mild winter weather had depressed activity in prior months. However, growth of new orders slowed slightly in July amid signs that expansion , especially in manufacturing, is being subdued by geopolitical concerns, in particular the escalating crisis in Ukraine.

A lack of clarity on the economic outlook, as well as ongoing pressure to cut costs and boost competitiveness, meant employment rose only marginally once again in both sectors in July.

Output prices meanwhile continued to fall, with the rate of decline accelerating slightly on June. Average selling prices have now fallen continually since April 2012, although the rate of decline remains only modest and far weaker than that seen at the height of the financial crisis. A marginal rise in manufacturing factory gate prices was offset by a drop in charge s levied for services. Some rising cost pressures were evident. Average input prices in manufacturing rose for a second successive month, growing at the steepest rate for seven months, while service sector input costs also rose, albeit to a slightly lesser extent than June. Looking at the data by country, strong national divergences persisted, with France contracting while growth accelerated elsewhere.

Firms in France reported that output fell for a third month running after the brief return to growth seen in the spring. Although French service providers saw a marginal return to growth, output in the manufacturing sector fell at the steepest rate since April 2013.

Firms in Germany, in contrast, reported the strongest increase in business activity since April, with growth picking up sharply from the lull seen in June. Service sector activity picked up especially markedly, growing at the fast est rate for over three years.

Manufacturing output growth also revived in Germany, but remained much weaker than earlier in the year. Outside of France and Germany, the rest of the region recorded the largest monthly increase in business activity since August 2007. New orders also grew at the sharpest rate for seven years. Although manufacturers outside of France and Germany saw output growth moderate slightly, the pace of expansion in services hit a seven-year high.
Party is Over

The party is over (not that there was much of one outside the stock and bond markets) once German growth slows. And while the Markit report looks one way for Germany, other indicators don't.

Outlook for Germany

I side with Steen Jakobsen, chief economist for Saxo bank on the path for Germany, and it's not a pretty one.


Europe is not prepared for a German slowdown, but it is coming. France is obviously hopeless.

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

President Obama: "You Are Why I Ran for President in the First Place"

 
Here's what's going on at the White House today.
 
 
 
 
 
  Featured

President Obama: "You Are Why I Ran for President in the First Place"

Yesterday, President Obama spoke to an excited and energized crowd under sunny skies at the Los Angeles Trade-Technical College. He talked about the progress that we've made since he took office, training our workers for a 21st-century economy, and closing tax loopholes that could cost taxpayers nearly $20 billion over the next 10 years.

The President called for a new sense of optimism and collective patriotism in this country: "Cynicism is a choice, and hope is a better choice. And if we can work together, I promise you there's no holding America back."

Watch the President speak in L.A., and hear what he's fighting for every single day.

The President delivers remarks on the economy in LA


 
 
  Top Stories

What Are "Inversions," and Why Should You Care?

You might be seeing the word "inversions" in the news headlines a lot lately. It's a specific kind of corporate merger deal -- but it's not exactly the most intuitive name for a corporate tax loophole. So we're going to break it down for you.

READ MORE

A Tumblr Q&A with Valerie Jarrett

This afternoon, Valerie Jarrett, Senior Advisor to the President, took to Tumblr and answered questions about the President's new Executive Order to protect LGBT workers and expand opportunity for the LGBT community. If you missed it, check out all of the questions and answers on the White House Tumblr.

READ MORE

White House White Board: Vice President Biden on Rebuild America

Vice President Biden takes the marker in our newest White House White Board, and spends a few minutes explaining the history of America's infrastructure -- and why we need a long-term solution that will repair our transportation grid, invest in new infrastructure technologies, and rebuild America for a 21st-century economy.

READ MORE


 
 
  Today's Schedule

All times are Eastern Time (ET)

10:00 AM: The President and Vice President receive the Presidential Daily Briefing

1:00 PM: Press Briefing by Press Secretary Josh Earnest

2:00 PM: The President meets with President Molina of Guatemala, President Hernandez of Honduras, and President Ceren of El Salvador; the Vice President also attends


 

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How Do I Successfully Run SEO Tests On My Website? - Whiteboard Friday

How Do I Successfully Run SEO Tests On My Website? - Whiteboard Friday


How Do I Successfully Run SEO Tests On My Website? - Whiteboard Friday

Posted: 24 Jul 2014 05:15 PM PDT

Posted by randfish

By now, most of us have gotten around to doing testing of some sort on our websites, but testing specifically for SEO can be extremely difficult and requires extra vigilance. In today's Whiteboard Friday, Rand explains three major things we need to think about when performing these tests, and offers up several ideas for experiments we all can run!

For reference, here's a still of this week's whiteboard!

Video transcription

Howdy Moz fans, and welcome to another edition of Whiteboard Friday. Today we're going to talk about running some SEO tests. So it is the case that many of us in the SEO world, and in the web marketing world overall, love to run tests on our websites. Of course, there's great software, like Unbounce or Optimizely, if you want to run conversion-style tests, tests that kind of determine whether users perform better through conversion Funnel X or Funnel Y, or if Title X or Title Y convinces more people to buy. But SEO tests are particularly insidiously challenging because there are so many components and variables that can go into a test.

So let's say, for example, that I've got this recipes website, and I have my page on spaghetti carbonara, which is one of my favorite spaghetti dishes. Geraldine, my wife, makes a phenomenal carbonara as she grew up Italian.

So here we go. We've got our ingredients list. There's a photo. There are the steps. What if I'm thinking to myself: Gosh, you know, people on this webpage might want to check out other pasta recipes from here. I wonder if, by linking to other pasta recipes, I can get more people exposed to that and get them visiting that, but not just that. I wonder if I can send some extra link juice and link value, link equity over to these other pasta recipe pages that might not be as popular as my spaghetti carbonara page. Can I help them rank better by linking to them from this module here? Should I be putting this on lots of my pages?

So we might think: Well, I could easily put this on here and figure out user metrics. But how do I determine whether it's good or bad for SEO? That is a really, really challenging problem. It is.

So I wanted to take some time and not say this is a foolproof methodology, but rather here are some big things to think about that those of us who have done this a lot in the SEO world, run a lot of experiments, have seen challenges around and have found some solutions. This isn't going to be perfect. It's not a checklist to tell you everything you need to know about, and I'm sure there will be some additional items in the comments. But try these things at the very least.

#1 Experiments need control groups

What's unfortunate about the SEO world is we can't just do something like, "Hey, let's add this to all of our recipe pages and see how it does over the next month." You don't know whether that's going to help, even if you could prove to yourself that the user and usage tricks look a little bit better, but you're not sure about the ranking impact.

Well, gosh, you roll it out on every page, and you say, "Hey, over the last month things have gotten better. Now we know for sure that adding modules that interlink between our web pages is always better. Let's do that across lots of things." That's not an accurate conclusion to come to, and that's why we need a control group.

It could the case in the SEO world that maybe these pages are getting more links all of a sudden, maybe your domain authority has risen, maybe some of your competitors have done some bad stuff, and they have fallen in the rankings. It's just too hard to say. There are just too many inputs going in, and that's why this control group is so essential.

So I might take a group of pages and say those pages get the module, and at the same time these other pages don't get the module. Now if we have something like a rising domain authority or a bunch of competitors falling out, it will be fine, because we'll still see how the group with the module performed against the group without the module. If they both rise in the rankings, we can say reasonably that, "Well, this didn't appear to do enough to change the ranking. So if the user metrics are good, let's keep it, and if the user metrics are bad, let's not keep it, because ranking wise it seems like a wash." But if we observe differences in these two groups, assuming that there are no other differences in those groups, we can be reasonably assured that it was this that helped them rank better.

Now, be careful here. If I were doing this experiment, what I would want to make sure is that I didn't add the module to all of my recipe pages or to some types of recipe pages and not others. I would want to make sure that it is all pasta recipe pages, pages with people, visitors, metrics that are as close as possible to each other so that the control and the test group are as similar as possible.

By the way, when you're doing this, you also want to find a suitable target. What I mean by suitable target is I really like things for SEO experiments where I'm paying attention to the rankings in particular, I like search results with very low outside activity. Meaning, let's say spaghetti carbonara was one of them, I would watch the search results for spaghetti carbonara for a couple of weeks, and if I saw a lot of movement, my page bouncing around in the rankings, other people's pages bouncing around in the rankings, I wouldn't use it. I'd go to a much less active SERP where churn in the search results and movement in the search result was likely to be very low. That's where I love running experiments.

I'd also look for low competition that tends to go with low churn, and I'd try and find pages where I rank between number 8 and number 30. You might say, "Well, why do you care about ranking in number 8 to 30?" Well, I don't like ranking way at the tail end of the search results because any little thing, if you're ranking page 5 and result number 62 or something, hey man, any little thing could move you up 10 positions, 20 positions. Churn and movement that far back in the search results is much, much higher.

It's also the case that I don't love ranking number 1, 2, 3, 4, or 5, because it can be really hard to move results. You might need, gosh, without a ton of external links with anchor tags, blah, blah, blah, I'm not going to move 1 or 2 positions from number 3 or 4. This is why I like something between 8 and 30. That's what I mean by finding a suitable test result, and your selection may vary on this.

#2 Every test should be repeated multiple times

Every test should be repeatable and repeated multiple times. Preferably, if you can, you actually want to turn the test on and off for the same kinds of pages. This gets tough. Now, the reason you want to do the multiple tests is because you want to be assured, confident that it was what you changed that did it.

So after checking this on pasta recipes and seeing that, hey, my recipe site is getting better, the metrics looks good, the rankings are rising a few results each time that I put this on different pages, I feel confident that we can move ahead with this, great. Now run it on your dinner recipe pages or your risotto recipe pages, something similar to pasta. Run it on your salad recipe pages. If you repeat it on your risotto pages and your salad pages, and you're getting the same results each time, now you can feel pretty confident that probably it was the case that this module was, in fact, the impacting factor that moved the needle. If you just do it once on one set of results, it's much harder to say that with any kind of confidence.

With the turning on and off bit, so what I would want to do, let's say we have my group of pasta recipe pages that get the module. What if I take it off there? Will I see them fall back down in the results? The answer is kind of, well, hopefully I would because then I could be more sure that this was happening. In SEO though, this is really hard. In fact, the search engines make this kind of frustratingly impossible for a lot of link-based stuff, and the reason is something called the ghost effect.

I will probably do a Whiteboard Friday in the future on the ghost link effect. We've been testing this quite a bit with a project that I'm involved in called iMac Lab and here at Moz as well. We've seen people over the years report this. Essentially, you point a link to a page, and you see that page go up in the rankings, which makes sense. The link is helping it rank better. You remove the link and the page takes weeks, sometimes even months to fall back down. Google knows the link is gone. They've re-indexed that page. Why isn't the page that it helped rank falling right back down?
The answer is this ghost effect.

So ghost effects seem to be a real thing that Google really does around links that used to point somewhere, and so it makes testing with link-based stuff really hard. That's why you want to do the multiple times. That's why you want to do the control group and to test it in multiple different sections as opposed to relying on, "Well, I turned it on and it did this. I turned it off, and it went back to the original. So I know that that happened." Ghost effect will prevent you from observing that.

#3 Rankings have to be part of the test, but they can't be the only part

In fact, I would argue that if they are the only part of your test, you might do some things that could actually mess you up in the long run and mess you up with your users.

So the two other things that I really look at are, number one, how do users perform, user experience, and that can be everything from are my browse rate and my visits and traffic sources rate, are those staying relatively similar to the patterns that I've seen in the past? Traffic performance, I want to see that stay relatively stable or improve. If both of those things are improving, hey, maybe you have a real winner on your hands. With a lot of these tests, that could happen. You might see that more people are clicking on those. Maybe more people are liking different pasta recipes. Linking to those, that's helping you all across the board. Wonderful, wonderful.

Then I'm looking at rankings as well. Weirdly, even though I'm a hardcore SEO guy and I love SEO, I think rankings are the least important of these three. If I see something perform well for my users and I see my traffic improving, it doesn't matter too much what I see going on with my rankings. In fact, usually it's only when there's not much delta in these two, and the rankings performance is the only indicator that things are getting better that I would care about that deeply. When you're watching rankings performance, always, of course, watch logged out, non-personalized, non geo-
biased results. It's relatively easy with something like recipes, but could be very hard with something that's in the local world or that has local indicators in it.

Now for some example tests!

Okay. Now you've got these one, two, three. What are some interesting tests that you might actually want to run? Well, these are some of the ones that we've run here, or I've seen other companies run and observed interesting results. So making titles more narrative versus more keyword driven. I've seen this test performed. I've actually seen this positively and negatively performed. I think people who did the more narrative sort of click-baity style titles, and that hurt their rankings, hurt their traffic, and I've seen people improve with it as well.

Adding or removing links or blocks of links, it might surprise you to learn that I've seen people remove blocks of links like this and perform better. They find that user metrics stay the same or even improve a little, because people aren't dragged off to other sections, or maybe it helps make the content stand out better and the search engines seems to like it too. I think in particular, Google might be looking at some of that Panda-style stuff and saying, "Man, this chunky block of unrelated links or of links that no one is clicking or of links that look keyword stuffed, we don't like that." In particular, I've seen people remove links from their footer and get better rankings.

Adding or removing social or comment buttons and share accounts. So I've seen folks have share on Twitter, share on Facebook. Here's how many likes it has. I've had people say, "Comment on this", "Add a comment or don't add a comment", and those have actually moved the needle. The comment one is particularly fascinating. I've seen people remove comments and perform better, I think oftentimes because zero comments is sort of a negative psychological indicator for a lot of folks. So people don't share things that have zero shares or zero comments. But if they see the button to share something socially and no comments, because comments aren't allowed, sometimes that actually improves things. So interesting.

I've seen adding descriptive content, images, and videos help and hurt rankings at times. Sometimes people take a big block of text, they think I need more good unique content to rank this page. They shove it on the page, and the performance stays the same or goes down. I've seen people say,
"Hey, we need more good, unique content on this page." They write something really compelling, put it on there, and it helps the rankings results.

This is why these tests exist. This is why we have these kinds of principles of some testing in the SEO world. With that, hopefully, you'll run some fantastic tests of your own, learn something amazing, improve the performance of your site and rankings.

And we'll see you again next week for another edition of Whiteboard Friday. Take care.

Video transcription by Speechpad.com


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Seth's Blog : Back to the drawing board

 

Back to the drawing board

Isn't the drawing board the place where all the best work happens?

It's not a bad thing to go back there. It's the entire point. (HT to Neil).

       

 

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