vineri, 30 martie 2012

The New On-Page Optimization - Whiteboard Friday

Posted: 29 Mar 2012 02:07 PM PDT

In this week's Whiteboard Friday, we are covering some advanced techniques that you can use to optimize your landing pages. The typical web user has evolved and it's important for web marketers to evolve with them. By taking a look at how the web has changed we can make more informed decisions on how to optimize our pages and maximize their impact.

Please enjoy and don't forget to leave your comments below. Happy Friday Everyone!

Video Transcription

Hey everyone. I am Joanna Lord. I am the Director of Acquisition over here at SEOmoz. Welcome to another Whiteboard Friday. I am going to be stepping in for Rand today. So no, I am not Rand in case you are wondering. I want to be talking about something pretty exciting that I love talking about. So hopefully this goes well.

It is on-page optimization. We are going to be talking about a lot of the stuff that we do here for landing pages, and I am going to take a little spin on it. I know there are a lot of articles out there that help you with the basics of landing page optimization, but I think that that is really well documented and we are going to kind of skip through that really fast and instead we are going to talk about some of the more advanced things that we are doing, some kind of philosophical changes that we are trying to use to stir our test.

Traditionally, I put up here the kind of things that you would think about before. You are looking at your pages and you are like, "We really need to increase conversion, or we need to do better. What can we look at?" The first thing obviously is being specific, making sure that those landing pages really match up to what people are searching for. We can do this through headlines. We can do this through the images we put on the page or the paragraph text that you put on there.

Then you look and you want it to be clean and you want it to be concise. This one is really fun for designers, right? We want to make it visually appealing, and you want to make sure that what people are looking for is kind of well spread out on the page. It has got a lot of white space around it. It has got some bullets. It is really easy to find.

The third one is around the call to action, and I think that we are all pretty well versed on this. We want it to be big. We want it to be bold. We want it to be contrasting so that when people find the page, they know what we are expecting them to do.

The last one surprisingly a lot of people still kind of maybe mess around with or they haven't done enough for and that is this concept of the page really needs to branded. It needs to be trusted, and when someone shows up, it needs to be really obvious that you are the authority. You are the one they should go with. You can give them your money. It is all sorts of things around the idea of trust. For a long time, I think if you nailed those four things, you were doing really good. You were safe. You can make some money. You would have another day in your world. But I think that things have changed and users have evolved. That is kind of what we are talking about today.

I actually put up here a really beautiful, really sassy-looking diagram on why I think that the users' expectations have changed, and how we are going to solve for that we will get to in a little bit. The number one thing is I think just like what I just said, this concept that the user has evolved. Before, a person didn't see as many sites in one day. They didn't see as many sites on one topic. So they didn't have an expectation before they came to you. You might have been the first site they found that was e- commerce on this type of brand. But now, they are seeing so much more and it is saturated. So they have higher expectations before they even get to your site.

The second one is trust redefined, and this is a really big one. This one we can't understate, and that is that right now, because there are so many ways to show that you are authority and to show that people like you, that people expect to see it on the page. We will talk about some of the exact signals, but for the most part, they are really expecting more from you. The social engagement and the UGC expected, when people show up to a site, they really want to see that there is a community going on, that there is a number of people talking about you, that you are talking with them, and that there is kind of a sense of happiness around whatever the brand is or whatever the product might be. These too are already an expectation. It is not optional anymore. It doesn't separate you if you have it. You really need to have it.

Design expectations have been raised. I know Rand wrote a blog post about this a while ago, so I am not going to talk too much on it. But with sites like Dribbble coming out and just having so many great designers out there, the websites are beautiful and yours has to be beautifu, too. People are going to bounce if they just don't feel that your site is visually up to their standards.

Search equals discovery. I think before, if you answered their need, that was almost enough, but I don't think it is enough anymore. I think that they really want to discover more about who you are and what you do and why you are doing it. This idea of sentiment, which is just really this idea that when someone comes to you, they don't just need to feel that you can get them what they need. They don't just need to feel that you are there to answer their questions. They need to feel positive about you and that you are someone they can connect with on multiple levels. That is just because we spend so much more of our time online that where we spend our time is really that much more important to us.

I think that is a lot of how things have changed, and that is why these don't exactly answer it anymore. I am going to talk about some things that I think we really need to be thinking about as website optimizers.

The first, the basics. You do need to have these. Some people are getting really excited about their landing pages right now, and they are going out there and they are building these beautiful HTML5 sites, but they don't have the basics and people are bouncing because they don't feel comfortable. You do need to have these, but then you need to move on to some of these. Let us jump into some of these, and let us talk about what they are.

The concept of rethinking conversions is interesting because I think as marketers, we say to ourselves, "I need to track what's important to the bottom line," and we do, we absolutely do. You need to know your purchases, your conversions, your form fill-outs. You need to know even how many emails you are getting, if you are backing that out for lead gen.

All of those are still very important, but there is a lot of other conversions you need to be testing for and keeping an eye on. Your social counts, that should absolutely be an optimizer's job to increase. Getting people to like you, getting people to follow you, those should be your job. Member counts, can you get them to sign up for a membership? Where you put it on the page and how it is shown is all part of our job. Downloads and engagements, those are also important to us. It is not just about leaving them with something anymore. It is about getting them to go deeper into the site. Demo counts, I put this in there a lot because I think people forget about this. If you go to SEOmoz right now, you will see that we have our features there and we want you to take a free trial, but we also want you to explore the product, and we very much track how many people go into the feature section of our site and how do they interact there and how do they engage. That is a really important one.

Then feedback, I know a lot of marketers that when they put up a survey on the site, if they use something like KISSinsights, they get it up on the site and they say to themselves, "Well, we're not going to worry about conversions for the next seven days because we're collecting feedback." But that is not really the case. That should be your conversion. You should be testing to see how you can get more feedback, how you can get more surveys completed. All of this is about rethinking conversions, and you need to be testing for it as much as you would have tested for any of these more basic elements.

On the second here, we have the brand strengthening, really important and I think it is pretty fun stuff. Traditionally, as marketers, we might have thought to ourselves there is a certain job for that at the company. Whether it be the CMO or your MarCom manager, there is someone who is in charge of making sure that everyone sees us a certain way. I think that you can do this with your landing pages really effectively and you can build a story over time. That is what this column is all about. Traditionally, when you think of brand, you think we need logos up there, we need some testimonials up there, we need to make them feel safe. But I think there is more you can do. Things like mission statements, where you put them, do you just have a byline up? Is there more that you consistently use on every page on your site? Things like awards, have you won awards? Do you bury them in a press section or do you move them up? Things like consistency, making sure that whatever you say about your product or your company on one page you say across the whole site is really important. You don't change your key adjectives. You should be testing what adjectives really resonate with your audience.

Badges are also really important. I know a lot of people that they just put up kind of their phone number in one place, and they will put their email in another, or they will put their shipping policy over here. All of that should be compounded together into a badge. People want to see all of your trust signals in a very tight space because they are looking for all of them when they see one. They will just assume that you don't have a good shipping policy if they don't see it next to your phone number, that sort of thing. You need to think about that, where you are putting it, the placement.

Then positivity, I think a lot of people forget about this. They kind of put up words that they think are just kind of fun, maybe even a little bit snarky or comedic, but people don't know you. They don't know your culture. They don't know your brand. When they read it, they really want to feel positivity. They want to see positive words, happiness. There are some really great e-commerce sites out there that do this really well. Things like Sephora, they do it excellently. Think about those things when you are looking at your sites.

Then testing all truths, this is going to be the hardest one to push through. It is really, really challenging to walk into a room of people that have spent years on a website and say, "Everything that is the foundation of this site, let's go test it." But that is what you have to do, and that is what makes these really come to life. That is what makes these really big impacts across your entire site and your entire business goals. That is around the concept of traditionally you might test a feature or you might test an element on a page. Instead you are testing the whole kabang. You are saying, "Let's test the whole layout. Whereas, before maybe we were one picture and then text down here, let's do it dual columns." You are just changing up the entire visual aesthetic of your site.

The sentiment, so however you are presenting yourself, for example, if you are an outdoor site and you are saying, "We're adventurous and we're bold and we're exciting," maybe you think completely about it and, "We're about peacefulness and tranquility and nature," and you need to completely change the way that you are presenting yourselves and see how your audience reacts.

Things like features, a lot of companies know their key features really well and they always lead with them. Well, your audience has evolved, and lots of the message needs to evolve with it. What other features should maybe you lead with? What other features should you be testing as the true ringer, the one that gets their attention?

Design is really important. We have talked about it a little bit, but you get caught up in the design as a company and you think to yourself, "This is our vibe. This is the way that we're going to step forward." But that really needs to be tested ongoing, because what you assume might work is the baseline, but you have no idea where you are going to fall if you switch it up. Then navigation, a lot of people, they know when the navigation is working well and they are afraid to touch it. I think it is a real injustice to not try to revisit your navigation and say, "Maybe we should really swap this around a little bit."

These are all things that I think you really need to think about beyond these really common basic landing page optimization tactics. The whole point of it is that you are really supposed to be able to look at it and say, "I think we're making a difference. I think we're testing some really big philosophies around our site." If you can just nail one of those, you are going to feel the impact across all your channels.

I did leave you guys with a really quick action list here that we can hopefully touch on, and that is just rethinking your goals as a company often really helps you hit some of these bigger things out of the park, because when you see that the goals change and they always do from quarter to quarter, it can help you steer what you should be testing for. That and connecting with other teams I think is really important. We do a lot of it here. We go into the Help Team. We ask them what is the trouble for them, and what they resonate to us is usually those bigger philosophical changes that we should address.

This last part is just get started, and I think it is because all of it is great in theory as always, but if you don't actually go try to test it or if you don't set up a new test, you are never going to know. Hopefully, that has helped you out, and I will see you next week for another Whiteboard Friday.

Video transcription by Speechpad.com

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Building Awesome Relationships For Links, Likes, and Love

Posted: 29 Mar 2012 04:43 AM PDT

Posted by Fryed7

This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc.

Link building isn't really link building. It's relationship building. Links are just the proof of the relationship, as are the tweets, likes, sales… relationship building is link building. Your social graph is your linkerati.

Tom Critchlow encapsulates this with one of these Distilled Pro Tips:

Here's a few tactics and strategies to build and leverage relationships that lead to links, likes, sales and more. Outreach is for tomorrow. Relationships are for life. Let's go!

**First, Work Out Why You Do What You Do**

The single most important concept in SEO, marketing, business and life can be summed up with Simon Sinek's talk here. His theory of 'The Golden Circle' is central to everything you and I do, and yet is remarkably simple to understand.

Watch the following TED talk, if not now then today at lunch.... (I promise, it's worth it!)

Read more at Start With Why.

Everyone knows what they do. Some people know how they do it, whether that be a unique selling point, proprietary process or secret tactic. But very few people know why they do what they do. Very few people know why they get out of bed in the morning (it's not to make money or profit: that's a result). People who know why they do what they do prove their belief in what they do.

Rand and the folks at SEOmoz believe in making the internet, and internet marketing better. They firmly believe this is possible by advocating inbound marketing. They so happen to make and promote SEOmoz PRO software
Apple was built around the idea of challenging the status quo. They do this by creating products that are beautifully designed, easy-to-use and user friendly. They so happen to make computers.
37signals believe in simplicity. They do this by creating software that anyone can use and understand "out of the box". They so happen to make productivity software.

What do you believe in?

It's incredibly frustrating working with people, doing SEO or anything, who don't know why they do what they do. It's also incredibly frustrating working with link prospects who don't know what they do!

This is your big action point before you move forward. Find your why. Use your why to identify other people and organisations who share your why. Find people who share your beliefs, and if you clearly understand your why, you don't necessarily need Followerwonk, Buzzstream or any of these link prospecting tools to find people who share your belief. Connect with people who share your why, who share your mission.

You need a reason to get in touch that isn't totally selfish ("gimme a link" just doesn't cut it). Find something they believe in and orchestrate a message, event or project around that. An interview for a blog post or guide, product review or maybe just some advice on a project? Of course, you could get your in by pointing out broken links to a webmaster. Ask yourself, if they knew what you were doing and knew you didn't reach out to them, would they be upset?

So, how to get in touch with these people...?

First Touch Contact Methods That Work A Charm

First touch methods

Your first touch needn't be as weird as this...

First touch methods should never interrupt or inconvenience your prospect, so I'd avoid cold calling (no matter how successful folks say it is, it ain't long haul!). Don't pin your prospects to the spot when you barely know them. Become respected by respecting your link prospects. Remember, you're building the relationship now. The links all come later :)

So...

Don't use email. Not for your first touch. Your inbox is bomb-proof fortress, as is your link prospects. Email from relatively unknown senders is just as bad as anonymous email (why should they care?). With email, it's too easy to be lazy and become less authentic.

As Gary Vaynerchuk puts it, it's as if we're all 19-year old dudes in a bar. We try to close on the first encounter. Don't. You've got to put a ring on it. You've got to get in the long haul game. Get their respect as well as their attention.

That was an extract from Gary Vee's Q&A at Inc500 Seminar 2011. You should *totally* watch the full thing here :)

Of course, events are a great way to acceptably meet your link prospects, without appearing as an unknown contact. To casually introduce oneself over a drink is not just acceptable, but welcomed. Of course, this is even better is to have already had your first touch.

In the SEO world, attending events like LinkLove London has been incredible for building relationships. It's not too often you get to casually talk SEO with a guy like Wil Reynolds (and all the speakers really loosen up at the after parties! :D). But that's where relationships were formed...

LinkLove 2011 was in March. September 1st 2011, the Distilled Linkbait Guide went live and I called back upon those relationships to help get the word out. That's the not-so-amazing secret to getting links from places like Seth Godin's blog!

Pssst! If you're coming to LinkLove London and want to build deep and meaningful relationships with dozens of other smart SEOs showing up there (seriously, that's half the reason for going) then do what I do and try hovering around the registration desk where Distilled SEOs tend to gravitate to, and the nearest door to the main congress hall where speakers tend to stand between sessions. The Distilled guys will really thank me for that... :p

Oh, and at the after party, just make sure you're the first guy to get a drink into the hands of whoever you want to talk to, and you're away. You really can get one-on-one time with a speaker... you just have to be the one in front of them. See you there! ;)

There are plenty of opportunities where people are reaching out publicly for a response; there's a goldmine of relationship building opportunities at search.twitter.com. (You've read the awesome diet coke story on SEOmoz? And the response?) As a link building professional, you need to get as familiar with Twitter advanced search as you are with Google advanced search. There's a goldmine of relationship building opportunities on Twitter, and you don't have to be huge to make it work. Anyone can do this!

Alternatively, you can try an "inside job". Scour your Facebook friends, LinkedIn Contacts and Twitter followers for useful names and organizations to be introduced to. Names that share the same beliefs you do, then politely ask for the brief introduction. Again, make sure you have a reason, be it an interview, business deal or some way you can help them out.

When was the last time you checked where all your Facebook friends worked (oh, and your non-facebook "real life" friends too)...? I discovered a cousin of mine had ended up at Google. Through various Facebook messages, phone calls and emails I managed to fix a lunch in their London Victoria office with the Head of University Programmes there. Eating deliciously seasoned steak and ice cream whilst talking with folks at Google.

As an SEO, you're conditioned to spotting all sorts of link building opportunities... now you need focus yourself on relationship building opportunities. Think long haul :)

You can do this!

But if you really are out of ideas to get a 'strangers' attention...

...like, if I put a gun to your head and asked you if you had ANY other way of contacting this person...

Then try some of these tricks....

Invariably, you've got to initiate the conversation and the relationship. And for that you've got to send something physical.

Send a box. Yes, a box. A package in the mail. Spend your link building budget with FedEx. You can ignore emails… You can hang up the phone… You can shred letters… But it's really, really hard to ignore a box. People simply can't ignore a mysterious package marked "express delivery" sitting on their desk. *ooooh* shiny package!

So long as they don't think it's a bomb (!!), it's brilliantly effective for getting positive attention. Put something in the box that proves your belief, and don't ever be afraid to go bold with your budget here. You're making friends for life, remember? I tested this with Distilled last year, by shipping a 3D-printed model of their logo with messages in the package. Here's a (bad!) picture of it still in production...

Distilled 3D logo

This was produced via a 3D-printer before the final lacquer was added.

The great thing with couriering goods is you know whether or not they've received it (tracked delivery for the win!). The big bonus of a box is you get the *WOW!* effect. Naturally, surrounding people will come and have a look for themselves. Suddenly, you've sparked a conversation which will only lead to them reading your message with that degree of fascination.

Letters I've found to be less effective, since they can quite literally be mistaken for spam and you don't get the "WOW! Gather Round!" factor of a box. You'll have to make your letter stand out such that it doesn't look like a commercial too.

Take a leaf out of direct marketers books and try handwriting your addresses rather than mass-mailing, mass-printed stickers. Try varying the size, colour and shape of your envelopes. And please try my personal favourite - origami envelopes - just make sure you print onto good thick paper!

Don't mislead your prospects. "Traditional" outreach etiquette that Mike King talks about here still applies. Make sure you indulge in sharing your beliefs - prove your why - and show some enthusiasm for what you do. And since you share something in common, talk about something related, but off-topic to what you're mentioning.

Heck, you're an SEO consultant so maybe something to help them out with their marketing. That's a really easy win to show you care about them, what they do and are kind and human enough to offer help. You care about them, remember?

And of course, always make sure you personalise each method of outreach and give a very, very clear call-to-action with ideally just a yes/no decision needed from them. Something like "if you're interested in meeting on 1st April at 9am at The Epic Sandwich Shop, drop me an email at ... or call me at ...". Do the thinking for them, and people love it.

Next, use these relationship building tools.

Once you've established a relationship with someone, its kinda rude to use form letters. You don't form letter your mum, so don't form letter your link prospects. We live in a world where authenticity rules. It cuts through the noise and clutter. Caring about people and relationships really does build links! So throw out your f-ing form letters and start writing some real messages and building a real relationship.

Nothing… nothing beats a real face-to-face meeting. Meet someone for lunch or a coffee. They'll relax and you'll be able to have a casual conversation about whatever. Don't call it a meeting if you don't have to.

Why not ask if you can spend some time in their offices or with them actually working? Ask to help them out some day… you share the same beliefs and mission, and you have the rest of your working life to seal these kinds of relationships, don't you? Besides, it's fun!

Go out of the way for your new friends. My favourite link building tools aren't Google Docs or Buzzstream, but train tickets and a telephone. I travel the length of the country, and these days you can still get work done whilst travelling (gotta love midday off-peak first class fares!). Yes, this can be practical too!

Link building with trains

This is how I build links (and yes, those trains are supposed to tilt!).

For busier people, this may be difficult, but assuming you've identified people who share your why and your beliefs, the only resistance should be the logistics of where and when. If you run out of options, there are always relevant industry events to take people to.

Even better, if you've got many link prospects in one location, then run an event and meet them face to face. Spend budget on hosting an awesome party, and your link prospects will never, ever forget you. I think this was one of Tom Critchlow's tips again, but for $5k (about the budget of a decent infographic project?) you could put on a really, *really* awesome party!!

Keep in touch. Write (short!) emails now and again. Banter over Twitter. Share interesting links. Keep people in mind, like you do your friends.

Writing for Likes is Writing for Links

Remember, your social graph is your linkerati. Keep them happy by writing content they'll read and love sharing over time. Don't count on them "just reading it" either... ask them what they thought. Solicit comments from them. Get them involved, in a follow-up or response post or something. How can you provoke regular, positive responses?

The big point to building relationships is the benefits over time. You're not just shooting for one link like you might in your previously outreach emails, but hundreds over several years to the day you retire… and invitations to countless events. And sales. And referrals, Christmas cards, bottles of wine... you're not changing the status of a contact in a spreadsheet - you're making genuine friends!

Seth Godin sums it up...

Would your link prospects be happy putting you up for a night? And vice versa?

One of my favourite ways to create intrinsically social pages is to create pages about individual people. It's egobait, and it works. Write detailed, flattering content about people and they'll pick it up and be over the moon. They'll share it, their social graph will see it and share it and you'll begin to build momentum.

Pssst… you don't have to target the page around a person. You can still target it around a keyword, but make it about a person. Case studies like "How Barry Learnt Ruby in 4 Weeks" work well! You gain the social shares as well as the keyword focused page. Double-win :)

It's slightly more difficult to do with brands, since few brands are treated like people. Make pages about individuals. If you're targeting a bigger brand, then pick a big name from that brand. You don't know how a brand might react (there may be protocols to control tweeting etc.) but a person is much more likely to react in the way you want. It's easier to flatter a human than a brand.

Comb through your keyword lists and work out how you can make a page about a person. This can work with product pages, case studies, blog posts, landing pages, sales pages... pretty much anything :)

"Hmmmm... I'm Not Convinced..."

Maybe you can't be bothered to commit to such long term results. Maybe you've got to deliver by tomorrow to get your next paycheck, or renew your SEO contract or win budget or whatever...?

Or maybe it just sounds too much like hard work...?

Maybe, just maybe you're one of those guys who still uses comment spam, article spinning and other grey or "black hat" tactics day to day that make Rand sad. And maybe they even work! That's kinda cool, right? Covertly breaking the system?

I'll tell you what's cool. Being undisputed king of a SERP for years and years to come. Links are just one part of the signal, the signal of a relationship and approval. Google's algorithm is changing and Google's algorithm is all around us. Making friends is such a central part of what we SEOs do (and arguably, the most fun part!), but we don't pay nearly enough attention to it.

You're In It For The Long-Haul, Aren't You?

You've got to have the relationships around you that will last for years and years on end. The internet is still incredibly young (Google's just hitting puberty). And don't worry... you've got plenty of money to do this, because your marketing budget stretches for many years to come, as will your future relationships.

How long is your endgame? You've got to start thinking how you can build a system that build links. If you want to dominate in 5, 10, 20 years time then you need to set out the signals now.

You've got to start thinking long haul. If you're not "in bed", so to speak, with all folks in your industry, someone else is going to take your cake and eat it. You know your industry, so imagine your fiercest competitors cosying up with key industry figures over some joint venture, collaborative linkbait or something else.

Google+, Pinterest, Twitter...

The rise of all these social networks isn't the point. The point is you can now connect easier with these tools to people who share your why and your beliefs. You can build and maintain these incredible relationships that will make you win in the long run. Aim for where the game is going to be, not where the game is now.

This is how I build links, get jobs and make sales. These tactics and strategies will only become more effective over time, not less. Use them to chase your dream links...

...then let me know how it goes in the comments. :)

Thanks for reading!

"I've Got Seoul"

Your Daily Snapshot for
Friday, March 30, 2012

West Wing Week: "I've Got Seoul"

This week, the President traveled to the Republic of Korea to attend a nuclear security summit where he also visited the DMZ, held a series of bilateral (and one trilateral) meetings, and gave a major address to students at Hankuk University. Back at home, the kitchen garden got underway with this year's first planting.

Check out this week's West Wing Week:

Seth's Blog : "Too long"

"Too long"

You're going to hear that more and more often.

The movie, the book, the meeting, the memo... few people will tell you that they ran short.

(Shorter, though, doesn't mean less responsibility, less insight or less power. It means less fluff and less hiding.)

• Email to a friend •

joi, 29 martie 2012

Mish's Global Economic Trend Analysis

The Dating Game: Michael Pettis Challenges The Economist to a Bet on China
Obama Budget Defeated 414-0; Obama vs. Ryan Budget Showdown Revisited
Geithner Wants to Throw Still More Taxpayer Dollars Down the Fannie & Freddie Toilet
Eurozone Retail Sales Contract 5th Consecutive Month, Year-on-Year Sales Decline 10th Month
Egyptian Opposition to US Aid Hits 82%; So Why Did Obama Restore Aid, and Why Did Hillary Insist Upon It?
Question of the Day: What is the Commodities Sector Seeing that the Stock Market Doesn't?

The Dating Game: Michael Pettis Challenges The Economist to a Bet on China

Posted: 29 Mar 2012 10:54 PM PDT

The Economist says "China's GDP, measured in nominal dollars, will be the world's largest by 2018". Michael Pettis at China Financial Markets disagrees and says I would like to make a bet with The Economist.

I recently read in The Guardian an article by enthusiastic orientalist Martin Jacques in which he says that The Economist has just predicted that China's GDP, measured in nominal dollars, will be the world's largest by 2018. Earlier estimates, he says had China becoming the largest economy in the world by 2027.

I have always been a little skeptical about the 2027 claim ... given how much we would have to assume about the sustainability of Chinese growth, about the likelihood of current GDP numbers not having been vastly inflated by an over-investment boom, and about the unstable range of political outcomes. It seemed to me to be a prediction about as valuable as the world-beating predictions about the USSR in the 1960s or Japan in the 1980s.

Still, this 2018 prediction deserves I think more than a little questioning — it requires that nominal Chinese GDP growth in dollars outpace nominal US GDP growth by 12% a year.

So I am wondering whether we could set up a friendly bet — not for too large stakes. I would like to bet that by the end of 2018 China will not be the largest economy in the world.

If I win, perhaps The Economist could invite a very cool underground Chinese band of my choice to perform at their next big conference, whereas if I lose I could buy four-year subscriptions (student rates, please) to a group of Peking University freshmen. Everybody would end up feeling pretty pleased with themselves no matter who wins, right? So?

The Dating Game

Inquiring minds are looking at an interactive chart on The Economist in an article called The Dating Game.

AMERICA'S GDP is still roughly twice as big as China's (using market exchange rates). To predict when the gap might be closed, The Economist has updated its interactive chart below with the latest GDP numbers. This allows you to plug in your own assumptions about real GDP growth in China and America, inflation rates and the yuan's exchange rate against the dollar. Over the past ten years, real GDP growth averaged 10.5% a year in China and 1.6% in America; inflation (as measured by the GDP deflator) averaged 4.3% and 2.2% respectively. Since Beijing scrapped its dollar peg in 2005, the yuan has risen by an annual average of just over 4%. Our best guess for the next decade is that annual GDP growth averages 7.75% in China and 2.5% in America, inflation rates average 4% and 1.5%, and the yuan appreciates by 3% a year. Plug in these numbers and China will overtake America in 2018. Alternatively, if China's real growth rate slows to an average of only 5%, then (leaving the other assumptions unchanged) it would not become number one until 2021. What do you think?

Snapshot of The Economist Baseline Assumptions

The interactive graph is too large for my blog, but the above screen snapshot shows The Economist baseline assumptions. To play around with the numbers, click on the above link.

I share a viewpoint with Pettis that The Economist is way too generous in their estimate of real GDP growth for China.

Pettis thinks China will average 3% growth and I already posted I found that number reasonable. As far as Yuan appreciation is concerned, I am not at all convinced the Yuan is undervalued at all, yet I plugged in a nominal 2% annual appreciation.

Assuming a "Real GDP growth" of 3% and Inflation at 4% yields a chart that looks like this.

Snapshot of Mish Baseline Assumptions

Even still, I wonder if the year 2030 is still far too optimistic from the standpoint of China.

I strongly believe peak oil and energy consumption is going to put a serious damper on Chinese growth, and that is on top a necessary and very painful shift away from an entirely unsustainable growth model based on exports, housing, and fixed investment.

I share Pettis' view regarding "inflated GDP numbers, an over-investment boom, and the unstable range of political outcomes" adding my own energy concerns and yuan valuation concerns on top of it all.

Thoughts on Chinese Growth

March 23, 2012: Excellent Document on Decoupling and Global Supply Chains by ECRI; Why BRIC, and U.S. Decoupling Won't Happen
February 29, 2012: World Bank Warns of Economic Crisis in China; Only 3% Growth for Decade Says Michael Pettis
September 21, 2011: Misleading Indicators - China's Growth Won't Last; Chanos on Chinese Property Bubble and Growth
August 22, 2011: Michael Pettis on Long-Term Outlook for China, Europe, and the World; 12 Global Predictions

I find the arguments by Pettis, the ECRI, and Chanos compelling. Add to that the restraint of peak oil coupled with potential political instability and the proper conclusion is that long-term Chinese growth of 7.5% is Fantasyland material.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Obama Budget Defeated 414-0; Obama vs. Ryan Budget Showdown Revisited

Posted: 29 Mar 2012 01:01 PM PDT

Not a single Democrat endorsed the budget proposed by president Obama. The scorecards reads as follows Obama budget defeated 414-0.

President Obama's budget was defeated 414-0 in the House late Wednesday, in a vote Republicans arranged to try to embarrass him and shelve his plan for the rest of the year.

The vote came as the House worked its way through its own fiscal year 2013 budget proposal, written by Budget Committee Chairman Paul D. Ryan. Republicans wrote an amendment that contained Mr. Obama's budget and offered it on the floor, daring Democrats to back the plan, which calls for major tax increases and yet still adds trillions of dollars to the deficit over the next decade.

But no Democrats accepted the challenge.

Senate Democrats have said they will not bring a budget to the floor this year, though Republicans in the chamber have talked about trying to at least force a vote on Mr. Obama's plan there as well.

Last year, when they forced a vote on his 2012 budget, it was defeated 97-0.

National Debt vs. Public Debt

In my post Obama vs. Ryan: Budget Showdown - Deficit and Total Debt Projections Through 2021 - Interactive map one reader caught a mislabeling of public debt as national debt.

Mislabeling is corrected. Here is the Budget Showdown once again, this time with the corrected word change.

Note: Tableau has a server issue right now and the interactive buttons may not be working properly. This should be corrected shortly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Geithner Wants to Throw Still More Taxpayer Dollars Down the Fannie & Freddie Toilet

Posted: 29 Mar 2012 11:29 AM PDT

Not satisfied with wasting close to $200 billion of taxpayer dollars bailing out holders of Fannie and Freddie Bonds (notably PIMCO and China), Geithner is back at it with another proposal sure to cost US taxpayers plenty if adopted.

The proposal this time is for taxpayers to pick up 63% of the cost of mortgage principal reductions. Geithner made the offer to Edward J. DeMarco, Fannie Mae and Freddie Mac's overseer.

Bloomberg reports Geithner's Math Puzzle Beyond Numbers for DeMarco

Geithner, the U.S. Treasury secretary, is offering new incentive payments to the two government-supported mortgage financiers if DeMarco drops his opposition to principal reductions for homeowners whose loans are backed by the companies.

It's not just a question of whether the numbers add up, DeMarco said in an interview at Bloomberg's headquarters in New York yesterday.

"We've got to consider all of the ramifications of principal forgiveness relative to other tools."

Proponents from Martin Feldstein, a chief economic adviser to the late President Ronald Reagan, to activist groups such as MoveOn.org have called on DeMarco to allow writedowns. Congressional Democrats including Rep. Elijah Cummings of Maryland have accused him of blocking a recovery and called on him to resign.

FHFA is not yet convinced principal reductions are the best answer, DeMarco said, in part because the agency still must examine how offering loan writedowns would affect the behavior of underwater borrowers who are still making their payments on time. Until now, the agency hasn't specifically focused on the issue of whether loan forgiveness would create a moral hazard by providing an incentive for borrowers to default. That's because without the extra incentives offered by the government this year, debt forgiveness was more costly than forbearance as most underwater borrowers would stay in their homes if given a low enough payment, according to its analysis.

Violating Legal Responsibility

The U.S. government has spent $190 billion to shore up the companies since they were taken into federal conservatorship in 2008 after their investments in risky loans soured. DeMarco said adding to the firms' costs would be a violation of his legal responsibility to restore them to financial health.

Using principal forbearance instead of forgiveness so far has been better for taxpayers, DeMarco said. Forbearance reduces monthly payments while requiring borrowers to pay back the full amount of the loan when they sell the house.

"If the borrower is successful on the modification, allows them to stay in their house and they stay in their house and start making mortgage payments, the taxpayer gets to share in the upside of that borrower's success," DeMarco said in the Bloomberg Television interview. "If we forgive the principal up front and the borrower is successful, that upside all goes to the borrower and is not shared with the taxpayer."

Vote Buying

This is not about doing what's right for taxpayers. It's about doing what's right to help Obama's reelection chances. Of course Hedge Funds and PIMCO like the buyback idea because it immediately puts a bid in for Fannie and Freddie bonds they hold.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Eurozone Retail Sales Contract 5th Consecutive Month, Year-on-Year Sales Decline 10th Month

Posted: 29 Mar 2012 09:28 AM PDT

Eurozone retail sales fell only slightly this month, but it was the 5th consecutive month, and the worst quarter since the 1st quarter of 2010.

Please consider Markit Eurozone Retail PMI® March 2012.

Retail sales in the Eurozone fell only marginally at the end of the first quarter, according to Markit's latest PMI® surveys. The average rate of decline over the first quarter matched that seen over the final three months of 2011, which was the worst quarter since Q1 2010. The survey data again highlighted marked disparity between growth in Germany and falling sales at Italian retailers, while sales in France were again broadly flat.

The Eurozone Retail PMI is a single-figure indicator of changes in the value of sales at retailers. The PMI is adjusted for seasonal factors, and any figure greater than 50.0 signals growth compared with one month earlier. The PMI remained below 50.0 in March, signalling a fifth successive monthly drop in sales revenues. Sales have fallen ten times in the past 11 months. But the index rose for the second successive survey, recovering further ground from January's 35-month low of 42.9 to post 49.1. The latest figure signalled only a marginal decline in sales revenues. The latest PMI figure suggested that the pace of decline in retail sales as measured by the EU's statistical office Eurostat (on a three-month-on-three-month basis) will ease in the coming months.

Eurozone retail PMI figures are based on responses from the three largest euro area economies. March data signalled that the Italian retail sector remained mired in a steep downturn, posting a thirteenth successive monthly drop in retail sales. The rate of contraction was slower than January's record low, but still marked nonetheless.

German retail sales continued to rise in March, extending the current sequence of growth to 18 months. This is the longest period of expansion since monthly sales data were first collected in January 2004. The rate of growth slowed since February, but was broadly in line with the average for 2011.

Year-on-Year Sales Decline 10th Month

Retail sales in the Eurozone continued to fall on an annual basis in March. Year-on-year sales have fallen for the past ten months, the longest sequence since that registered from June 2008 to March 2009. Moreover, the rate of decline accelerated since February, reflecting a sharp reversal in the year-on-year sales trend in France. German retail sales registered the fourth-fastest annual increase in sales since the series started, but Italy posted another substantial decline.

Other indicators from the latest surveys underlined the ongoing weakness of market conditions in the retail sector. The value of purchasing activity fell for the eighth month running, while retail employment was broadly flat for the second successive month. Retailers' gross margins remained under substantial downward pressure, and original sales plans were missed again.

Commenting on the retail PMI data, Trevor Balchin, senior economist at Markit and author of the Eurozone Retail PMI, said:

"Across the Eurozone, retail sales fell only marginally during the month but were down sharply compared with one year ago. Compounding retailers' difficulties, wholesales prices continued to rise at a steep rate, squeezing margins which have already been under intense pressure from the need to offer discounts to stimulate sales."

Markit Clings to Hope

Once again Markit clings to every bit of hope that things are about to get better. Here is the key sentence: "The latest PMI figure suggested that the pace of decline in retail sales as measured by the EU's statistical office Eurostat (on a three-month-on-three-month basis) will ease in the coming months."

Why?

Why are sales in Europe going to get better? Once again I propose it is far more likely for German sales to slip as its vaunted export machine takes a hard tumble.

I said the same thing two months ago regarding Manufacturing PMI when Markit was hoping Germany could keep Europe out of recession.

The no-recession idea bit the dust on March 22 as noted in "Eurozone Slides Back Into Recession" Says Markit PMI News Release; Sharp Decline in German Export Business; Misguided Decoupling Theories.

Markit then shifted its stance from hoping for no recession in the Eurozone, to hoping for no recession in Germany and I responded with:

What's with the Markit "Pollyanna" Forecasts?

This month Markit is talking about Germany avoiding a recession. Even more amazingly, just last month Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

"A retreat back below the 50.0 no-change level for the Eurozone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession.

That "risk of recession" became a sure thing as Markit threw in the towel on non-recession hopes as noted above.

On February 22, in Eurozone PMI "Worse Than Expected" and Back in Contraction; Expect German-Periphery Divergence to Resolve to the Downside for Germany I stated:

Expect German-Periphery Divergence to Resolve to the Downside for Germany

The idea that Europe can avoid a recession is complete silliness. Europe is clearly in a recession already.

The amazing thing is things have not deteriorated more than they have. Unlike the Chief Economist at Markit, I expect the divergence to resolve to the downside for Germany, not for the divergence to continue for some time. Given conditions in Europe and Asia, the odds that Germany is immune from the global slowdown are essentially zero.

Sure enough, German exports took a dive in March, and it's reasonable to assume another dive in April.

Conditions in Europe are deteriorating badly, and a general strike looms in Italy. Spain, Greece, and Portugal are basket cases. The odds that weakness does not spill over into Germany are near-zero.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Egyptian Opposition to US Aid Hits 82%; So Why Did Obama Restore Aid, and Why Did Hillary Insist Upon It?

Posted: 29 Mar 2012 08:26 AM PDT

A Gallup Poll in Egypt shows 82% of Egyptians Do Not Want US Aid.

Egyptians' opposition to U.S. economic aid continued to climb in early 2012. More than eight in 10 Egyptians in February said they opposed U.S. economic aid, up 11 percentage points since December and up 30 points since April 2011 when Gallup first posed the question.

Poll Question

So Why Did Obama Restore Aid?

The New York Times reports Once Imperiled, U.S. Aid to Egypt Is Restored.

An intense debate within the Obama administration over resuming military assistance to Egypt, which in the end was approved Friday by Secretary of State Hillary Rodham Clinton, turned in part on a question that had nothing to do with democratic progress in Egypt but rather with American jobs at home.

A delay or a cut in $1.3 billion in military aid to Egypt risked breaking existing contracts with American arms manufacturers that could have shut down production lines in the middle of President Obama's re-election campaign and involved significant financial penalties, according to officials involved in the debate.

Since the Pentagon buys weapons for foreign armed forces like Egypt's, the cost of those penalties — which one senior official said could have reached $2 billion if all sales had been halted — would have been borne by the American taxpayer, not Egypt's ruling generals.

The companies involved include Lockheed Martin, which is scheduled to ship the first of a batch of 20 new F-16 fighter jets next month, and General Dynamics, which last year signed a $395 million contract to deliver component parts for 125 Abrams M1A1 tanks that are being assembled at a plant in Egypt.

Mrs. Clinton's decision to resume military assistance, which has been a foundation of United States-Egyptian relations for over three decades, sidestepped a new Congressional requirement that for the first time directly links arms sales to Egypt's protection of basic freedoms. No new military aid had been delivered since the fiscal year began last October, and Egypt's military has all but exhausted funds approved in previous years.

Mrs. Clinton's decision provoked sharp criticism from lawmakers across the political spectrum, as well as human rights organizations. Senator Rand Paul, Republican of Kentucky, criticized it as "beyond the pale."

Referring to Egypt's recent decision to prosecute four American-financed international advocacy organizations, Mr. Paul added, "It sets a precedent that America will not punish its aggressors but instead give them billions of our taxpayers' dollars."

The M1A1 components are built in factories in Alabama, Florida, Michigan, Ohio and Pennsylvania, several of them battleground states in an election that has largely focused on jobs. Because the United States Army plans to stop buying new tanks by 2014, continued production relies on foreign contracts, often paid for by American taxpayers as military assistance.

Senator Patrick J. Leahy, Democrat of Vermont, who added the certification requirements to legislation authorizing military aid to Egypt, called the decision to waive them regrettable, and the resumption of aid "business as usual."

Let's piss away billions of dollars on aid to countries that don't even want it.

Note that Mrs. Clinton waived a requirement that she certify Egypt's protection of human rights as a condition of aid.

Yes indeed, this is "business as usual", so much so that even Democrat senators are complaining about it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Question of the Day: What is the Commodities Sector Seeing that the Stock Market Doesn't?

Posted: 29 Mar 2012 12:26 AM PDT

Please consider a series of chart my friend "BC" put together of various indices vs. the Morgan Stanley Commodity Related Equity Index ($CRX).

$SPX vs. $CRX

click on any chart for a sharper image

$CYC vs. $CRX

$TRAN vs. $CRX

$DJUSRR vs. $CRX

What is the Commodities Sector Seeing that the Stock Market Doesn't?

The answer from my friend Pater Tenebrarum who also saw these charts is "the coming economic bust in China - which has likely already begun."

That idea is in-line with several of my recent posts ...

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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vineri, 30 martie 2012

The New On-Page Optimization - Whiteboard Friday

The New On-Page Optimization - Whiteboard Friday

Video Transcription

**First, Work Out Why You Do What You Do**

First Touch Contact Methods That Work A Charm

But if you really are out of ideas to get a 'strangers' attention...

Next, use these relationship building tools.

Writing for Likes is Writing for Links

"Hmmmm... I'm Not Convinced..."

You're In It For The Long-Haul, Aren't You?