miercuri, 4 februarie 2015

Posted on: Wednesday 04 February 2015 — 01:16

"Man, I'm sorry. You guys weren't ready to adopt the brands as publisher mindset. I suspected you'd never be ready to do it successfully. I knew it; I could sense you knew it. I wish I'd spoken up when I saw the intra-departmental debates waging. That's on me. My bad."

Those were my words to the executive of a midsize lifestyle brand I worked with in 2014. It took me months to get up the nerve to reach out and make it right, even though I'd done nothing wrong.

He seemed to understand. But he did have a question that stopped me in tracks and continues to haunt me.

"If we couldn't get it right, with all of our resources, what does it say about the feasibility of becoming a brand publisher?" he inquired. "Does that make content marketing [in and of itself] a bad idea?"

A fair question, to be sure, and one I did not have a sufficient answer for. But in looking back, I realized this exec, like so many others before him, made the mistake of thinking he could do quickly what he had not yet learned to do well. Content marketing wasn't the missile that sank his boat. The decision to do content marketing at warp speed and with little direction was his brands' albatross.

Four things doomed his efforts from the start, and each was self-induced:

He drank the brands-as-publishers Kool-Aid
He chose the wrong goals for his brand
He attempted to execute a plan that wasn't meant for his business
He attempted to do content marketing by skipping the small but important steps

Any one of these could have led to failure. Facing them all at once is akin to content marketing suicide. I see these same four elements dooming content marketers so frequently that I've resorted to naming them the four horsemen of content marketing failure.

For the purposes of this post, I want to illuminate how attempting to be a brand publisher is a lofty, needless goal for all but a handful of brands. Then I will highlight how to make steps 2, 3, and 4 work for your brand, not against it.

Before I begin, however, I want to make one thing abundantly clear: The ideas shared in this post have been formed through working with hundreds of brands over more than a decade, either as a writer, business strategist, content strategist, product marketing consultant or in a PR/media relations capacity.

I'm under no illusion that each (or any of them) will apply to everyone, but experience has shown me that these elements play an invaluable role in the success (or failure) of most brands embarking on the content marketing journey.

Where content marketing went off course

(image source)

The web is rife with examples of marketers sharing the "wisdom" of brands becoming publishers, and no less common are the examples of brands who've done just that, adding content publisher to the laundry list of services they already provide. Here's the problem with that logic: You're not a publisher, and attempting to become one is fraught with risks that more often than not lead to failure.

The logic of brands as publishers

Brand publishing refers to brands attempting to behave as media companies, specifically with regard to content breadth and frequency. Also, and most important, it requires a mindset wholly different from that of a typical content marketer: These brands view publishing as part of their business model.

That's where the confusion comes in. A lot of very knowledgeable people say any brand that publishes blog posts or adds updates on social media is a brand publisher. But that's akin to saying anyone who runs is a marathoner. It's about scale. While content marketing's goal is to attract and retain customers through the creation and distribution of content, being a brand publisher means you have layers of staff, strategic insight, vision, resources to build platforms for sharing new content and, most important, the ability to produce content at a rate that rivals, well, publishers.

If content marketing is a single-family dwelling, brand publishing is a city of one-million-plus.

It's not that being a brand publisher is a bad idea all by itself. It's that too many companies, who are barely ready to do content well, now think being a publisher is a sound idea.

As brands continue to bite off more than they can chew, the realities are tough to stomach, and have led to some interesting conclusions:

Brands who have and who can successfully make the transition to being a publisher can be very successful (e.g., seeing increased links and traffic, greater organic visibility, a significant lift in paid search and enviable social traction).
The number of brands who can successfully pull off being publishers is miniscule.

After months spent developing content strategies for clients looking for content marketing help, I decided that, in good conscience, I would never again that brands become publishers.

Instead, I adopted a strategy that's as far away from one-size-fits-all as possible.

Good for business doesn't mean good for your business

First, I refrained from using the term brand publisher. Next, I became a vocal proponent of the good-for-business-doesn't-mean-good-for-your-business philosophy, which meant that in meetings with managers, directors and C-Suite execs, I had the courage of my convictions in sharing that while content marketing is a sound practice, becoming a full-fledged publisher is something that requires a minimum of three things to be successful:

Near-limitless resources: Take a look at the companies crushing it as true brand publishers, and you very quickly see why there aren't many like them. Red Bull, consistently singled out as the leading brand-as-publisher, invests in the full gamut of content, including movies, books, TV shows, magazines and more. The privately held company doesn't release figures related to those activities, but it's likely in the tens of millions. "[The expense is] something we grapple with on a daily basis," says Werner Brell, head of Red Bull Media House, the content arm of the brand. "It's obviously expensive."
Come-hell-or-high water commitment: If you choose the brand-as-publisher route, understand that you'll get up close and personal with the word commitment. Aside from the financial commitment, including staff and the cost of producing content, you'd better be prepared for publish or perish to become part of your brand's DNA. There is no "This isn't working. Let's change tactics." This is your horse and you'll keep riding it. It's the lot you've chosen.
A change in your brand's overall corporate philosophy: This is the big, hairy gorilla that (fortunately) saves many brands from dooming themselves from choosing the brand publisher route. Few C-Suite denizens are willing to disrupt their corporate model and add publishing to their mantle. And if you're the VP of content or CMO, you're wise to accept this level of restraint.

If your company is ready to shoulder such a commitment, then by all means dive right in. If not, there's a better way to do content marketing, one that is no less effective but does not require you to mortgage your future in the process.

A better way: content marketing for your brand

Instead of attempting to become a publisher, or even a content marketer, focus your efforts on becoming a brand that consistently creates content that puts the needs of prospects and customers first, while simultaneously providing meaningful solutions to their problems.

I've been a very vocal haranguer of content marketing, though not because of its inefficacy.

I'm simply not a proponent of brands thinking of themselves as anything other than what they are in the minds of their prospects and clients.

Hopefully, at the core of your business is a product or service customers clamor for, not a content engine.

That's why becoming a customer-first brand that has meaningful content as part of its DNA is the safest, surest, easiest-to-adopt model for brands with the desire to do content marketing right but who aren't willing to re-org the business to get it underway.

In this way, you keep the main thing the main thing. That main thing in this case is serving your core audience.

At this point, I'm hoping you see the light, realizing that becoming a brand publisher isn't necessary for your company to be successful at content marketing.

If you're ready to chart a solid, more reliable path to success, it begins with turning away the four horsemen of content marketing failure.

We've banished the first horsemen. Let's do the same with the other three.

Choose the right goals for your business

Whenever I sit down with a prospect to discuss their business, I open up my notebook and write down the following three phrases, including a checkbox next to each, on a sheet of paper:

"...Be successful."
"...Rank No. 1 in Google."
"...Increase...conversions."

Then I ask "What are your goals for the business?" all the while knowing full well the answer will be one of the three things I've written down.

The followup question, too, is canned: "What are you doing to get there?" That answer, too, is typically never a surprise: "That's what you're here for, right?"

Wrong!

After I've apprised them that the shortest path to failure is not having a clear view of their goals, I have their attention and they are ready to begin the goal-setting process.

Here's the catch: Only you and your team can decide what those goals are/should be. It's important that the goals take into account the entirety of the business, not just SEO, content, social media, etc.

Also, I've found it helps if the metrics assigned to measure a business's success toward their goals are meaningful (e.g., a sincere help to the overall business) and clearly communicated (e.g., everyone involved is aware of what they're working for and being judged against).

(image source)

No matter what specific goals you decide on, applying the principle of "HAS," as in holistic, adherable (er, sticky) and sustainable, can be a huge help:

Holistic—Content marketing success requires that a lot of moving work parts in unison. Your goals must take into account the entirety of the business, though not all at once.
Adherable—How likely are you to stick with the goals, seeing them through to fruition? It won't matter how sound your goals are if they don't make sense for your business, or don't make sense for your business at a given time.
Sustainable—Will you be able to maintain the needed level of effort for the goals to reach maturity?

I've found that keeping these principles top of mind helps to order a brand's steps, ensuring that everyone is aware of the goals and of their role in working toward them.

As an example, let's say you're a small business ready to jump into the murky waters of content marketing, but you don't yet have a website.

The right goal would be to launch a new website. To make the goal as HAS-friendly as possible, you could assign a timeframe—say, 90 days—then break out the associated tasks by order of importance (see image below).

(image source)

I'd even suggest keeping a checklist in a Google Doc where team members can stay abreast of what's going on, in addition to seeing who's responsible for what and having a better understanding of where the team is in terms of completing each task related to their goals.

Execute a plan that's right for your business

If I had to single out the No. 1 reason content marketers I've worked with have failed it would be that they based their goals on what the competition was doing instead of what's best for their own business.

Seeing a competitor rank higher for their main keywords; having thousands of web pages indexed by Google; spending mad cash on paid media; and having brand pages on Google Plus, Facebook, Twitter, Instagram and Pinterest, these businesses attempt to do the same.

Sounds comical, right, until you realize it happens all the time and to businesses of all sizes.

So we just had a new client shut down our social strategy to instead "copy anything and everything their competitors are doing" #brilliant

— Greg Gifford (@GregGifford) January 26, 2015

Problem is, no two businesses are entirely alike and, well, "You aren't them," as the saying goes.

Aside from having little idea of how much real success the competition is enjoying from their search, social and content efforts, these brands are taking their eyes off the main prize: their own business.

An approach that works well and is easy to carry out entails taking an inventory or where you are in relation to where you want to be while keeping a keen eye on the competition.

With your goals solidly in hand, begin by sketching out a plan based not on where you are, or on what the competition is doing, but on those actions that would likely lead to success for you.

(image created by author)

In the graph above, created in Google Docs, you can see that I mainly focused on the content-related activities that would have the biggest impact over the next 90 days. (Caveat: This is simply a high-level overview of one area of the business, but it's plenty thorough enough for a team to begin working from.)

The key is to take the time to get to know (a) what success looks like for your business, then (b) focus on specific, actionable elements that can be done in the allotted timeframe.

Sweat the (seemingly) small but important stuff

(image source)

"Why do you hate content marketing?" I get asked these words at least once a month. The answer is always the same. I don't hate content marketing. I hate most brands' approach to content marketing.

There is so much more to the making it a success than we're typically led to believe there is.

The focus is always on produce, produce, produce. Outreach, outreach, outreach. Produce more. Outreach evan more. Rinse and repeat.

As marketers, we've seemingly trained a generation of brands that the focus should be on doing fast (and often) what they barely know how to do at all.we never learn to do well.

Yeah, I know it works...for some. But is it scalable over the long-term? Better yet, will it remain scalable into the future?

If you want to position your brand for success in content marketing, make sweating the small but oh-so-important steps a priority.

This process starts with clarity.

Begin by defining who you are and who you desire to be in the minds of your prospects and clients. I can see the eye-rolling. But without answers to these questions, you're wasting your time and, likely, money. Devote the time to having weekly brainstorming sessions with your core team. During these meetings, keep the air open, relaxed and free-flowing, allowing ideas to bounce freely around the room. The goal is to start each meeting with a big question. Then let it "breathe." Your first big question should be "Who are we?" followed by "Who are we to our customers?" Put on your introspection hats, viewing yourselves through the words and interactions of prospects and customers, who have likely shared comments via email, phone, text, and your website.
Ask "why" a lot. During Mozcon 2014, Wil Reynolds dropped a slide that gave me goosebumps:

(image source)

Simple. Brilliant. What I loved about this slide and the line of thinking is it helps brands (and the staff who work for those brands) stay the course, focused on their already-defined objectives. For example, once you know who you are and who you are in the minds of your core prospects and customers, any actions you take should be done with this information in mind.

Therefore, if the team begins to get distracted by shiny-things syndrome, anyone has the right to ask "Why are we doing this?" or "Why does this...make sense?"

Nothing like forcing someone to defend a bad idea to provoke clarity.
Get to know your audience. The better you know your audience, the easier it is to market to them. Even if you cannot afford the fancy tools and platforms Mike King has previous talked about to develop personas, you can have staff members spend an hour each per week scouring social media, forums, discussions boards and sundry websites' comments sections looking for people who are likely interested in the products/services your business offers. Gather as much information (e.g., age, income, occupation, etc.) about these people and their needs as possible, in addition to what sites they frequent, how often and for what. In this way, you're developing personas without it feeling like an onerous task. Keep copious notes, which can be entered into a Google Doc and shared with teammates.
Build a community. I hate the term secret sauce, mainly because no such thing exists. However, if a brand wants to set itself apart from the competition, they should adopt this mentality: Get to know your audience, but build a community. An audience might read your blog, consume and share your information, and recognize your content from the rest of the pack. A community, however, is engaged and passionate, actively seeking out your content, sharing it broadly and fervently, and is easily willing to help in the creation of content for your business (e.g., YouMoz) Have your team keep a watchful eye on out for engaged, visible members of your audience, especially via social media. Share their content, answer their questions and, as resources permit, surprise them with personaliized GIFs or mail them skotskes. The audience-to-community threshold is smaller than you likely think.
Create and share meaningful content. Notice that I saved content creation until last. That's no accident. Content marketing is cruelest to those who dive in headfirst without clear goals, lacking a plan of action and who're content to simply "be on social media" or to "share some blogs." If you're committed to creating and sharing meaningful content, there are three areas you must focus on:
- Inspire. People want to feel good about themselves and the work they're doing. Why not use your content to help them and generate buzz for yourself in the process? For example, if your business sells email solutions for small business, a sizable portion of your content should cater to helping business owners "take back a part of your day." When creating content, put yourself in the shoes of your customers, and ask yourself "What can I create that'll inspire and compel them?" In this way, it's less about the action you need them to take and more about tapping the emotion needed to bring that action to reality.
- Immediacy. While evergreen content certainly deserves a spot in your quiver, make certain to offer content that speaks to the immediate needs of the community. This is when a sincere effort at thinking like a publisher comes in handy, especially if you have experts in-house who can speak, with your brand's voice, to these needs. A great example is the job Eric Enge and Mark Traphagen are doing at sharing information regarding Google's updates and important social media news. Look for ways your brands can contribute in a similar fashion.
- Indispensability. Your content needs an I-can't-do-without-this component. It's the surest path to ensure your content gets read and shared; your website retains steady traffic; your blogs always have significant eyeballs; and your brand is sought-after online. Look at the job the Buffer folks are doing in educating their community on all things social media, time management and productivity hacks. Their posts are read and shared by thousands daily, with many (including myself) seeing the blog as can't-do-without material. Same for the excellent work the Bruce Clay, Inc. content team, whose comprehensive resources add a layer of "stickiness" to the brand that's hard to beat. How can you do the same? Commit wholeheartedly to learning the needs of your community, especially those needs associated with pain points they desperately need removed. Creating content around these areas/topics is the easy part.

I can't say for certain that, if you refrain from attempting to be a brand publisher, you'll be a successful content marketer. I also cannot promise that going all-in with the three points outlined above ensures your success.

What, however, I can say is the vast majority of brands would do better if they banished "I want to be a brand publisher" from their lexicon and decided to focus on the right goals, executed a sensible plan and made the small things part of the main things.

What about you? Are you ready to do content marketing wisely? Dive into the discussion in the comments below.

(main image: licensed by the author )

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Seth's Blog : Give the people what they want

Give the people what they want

...isn't nearly as powerful as teaching people what they need.

There's always a shortcut available, a way to be a little more ironic, cheaper, more instantly understandable. There's the chance to play into our desire to be entertained and distracted, regardless of the cost. Most of all, there's the temptation to encourage people to be selfish, afraid and angry.

Or you can dig in, take your time and invest in a process that helps people see what they truly need. When we change our culture in this direction, we're doing work worth sharing.

But it's slow going. If it were easy, it would have happened already.

It's easy to start a riot. Difficult to create a story that keeps people from rioting.

Don't say, "I wish people wanted this." Sure, it's great if the market already wants what you make... Instead, imagine what would happen if you could teach them why they should.

• Email to a friend •

marți, 3 februarie 2015

Mish's Global Economic Trend Analysis

Australia Coming Apart at the Seams
Black Market in Ukrainian Currency Masks True Extent of Decline; Banks Impose 30% Foreign Exchange Fee; Freely Floating Hryvnia Announced
Smart Debt Engineering: Markets Giddy Over Greek Debt Proposal; ECB Nixes Plan Already; Party On Dudes
Gallup CEO Calls 5.6% Unemployment Rate "The Big Lie": What's a Realistic Unemployment Rate?

Australia Coming Apart at the Seams

Posted: 03 Feb 2015 11:18 PM PST

With the huge spotlight on Europe, Greece, the US Dollar, Canada, Switzerland, and China, it's easy to lose track of major things outside of mainstream attention.

Like what? Like Australia.

Australian Government on Brink of Collapse

Conservatives swept into power into Australia in September of 2013 in the biggest Labour rout in history. In December of 2013 I wrote Australia's Alleged Conservatives Surrender to Unions; Currency Madness Everywhere.

Shockingly, Australian conservatives may not last even one full term. Three days ago The Australian reported Queensland election 2015: Labor on brink of forming government.

My friend Brisbane Bear, from down under reported ...

Hey Mish,
We have experienced the biggest political earthquake I have ever seen in my home state of Queensland. The government has lost power after one term. The Queensland Premier lost his seat. This after winning the biggest landslide win in history with a mandate to fix the financial mess created by Labor. They held 79 seats to 7. And now they lost. This sort of volatility is now the norm.

People hate austerity. People know the party is over and are very surly and angry.
These are good elections to lose as there are no easy answers, only very hard, unpopular decisions. We are in for one hell of a ride.

Regards
Brisbane Bear

I asked BB what this all meant. He replied ...

Massive impact! Federal election is just under 2 years away. The Prime Minister Tony Abbottis in serious trouble and will battle to hold the top job. A leadership spill is rumored.

Meaning of Liberal

What follows may not make much sense unless one understands the meaning of "Liberal" in Australian politics.

Liberals Believe:

In the inalienable rights and freedoms of all peoples; and we work towards a lean government that minimises interference in our daily lives; and maximises individual and private sector initiative

In government that nurtures and encourages its citizens through incentive, rather than putting limits on people through the punishing disincentives of burdensome taxes and the stifling structures of Labor's corporate state and bureaucratic red tape.

In those most basic freedoms of parliamentary democracy - the freedom of thought, worship, speech and association.

In short, we simply believe in individual freedom and free enterprise; and if you share this belief, then ours is the Party for you.

Simply put, liberal means conservative to US readers. With that in mind, let's continue.

Prime Minister Leadership is Terminal

Please consider Tony Abbott Leadership Now 'Terminal'.

Former Victorian premier Jeff Kennett has unloaded on Tony Abbott's "terminal" leadership, saying he must be dumped "as quickly as possible" or risk destroying the Coalition government.

Liberal MPs Dennis Jensen and Warren Entsch last night publicly declared that the Prime Minister no longer had their support, while former Howard government cabinet minister Mal Brough vouched only "qualified support" for Mr Abbott and demanded he scrap the proposed $5 Medicare co-payment.

Mr Kennett, who led Victoria between 1992 and 1999, said Mr Abbott had lost the support of both the Liberal Party base and the broader public.

"I think sadly the realisation has dawned on most politicians that where the leadership of the party is now terminal. It needs to be resolved as quickly as possible so that the party can move on," Mr Kennett told ABC Radio.

"Now I say that sadly. I feel very sorry for Tony. He's a man of very good values. But most of where we are at the moment as a government is self-inflicted. We are 12 weeks away from the 2015 budget and we haven't passed the 2014 budget.

Liberal MP Dennis Jensen Calls on Tony Abbott to Resign

Yesterday, the Sydney Morning Herald reported Liberal MP Dennis Jensen Calls on Tony Abbott to Resign.

Tony Abbott's leadership has been rocked by a political earthquake and is under imminent threat, with backbench MPs variously calling for the Prime Minister to resign, for a party room ballot next week and expressing doubt he can revive his political fortunes.

A day after Mr Abbott used a National Press Club address to dig in and signal unhappy MPs would have to blast him out of office, backbench MPs were in open revolt at the direction of his government on Tuesday night.

Liberal MP Dennis Jensen on Tuesday became the first MP to publicly call on Mr Abbott to step aside after weeks of leadership speculation and rising panic on the government backbench about the Coalition's dire position.

Foreign Minister Julie Bishop ruled out directly challenging Mr Abbott for the leadership but has reserved the right to put up her hand if
someone else moved to force him to declare the position vacant and hold a ballot.

Other MPs join in criticism of Tony Abbott

Queensland Liberal National Party backbencher Warren Entsch told Fairfax Media on Tuesday night that he supported a party room ballot as soon as next week when parliament sits for the first time in 2015. "It [the leadership] needs to be resolved," he said.

Jensen added that he didn't believe there was anything Mr Abbott could now do to save his leadership, just a day after the Prime Minister gave a major speech at the National Press Club designed to regain support and buy him some time.

Government in Treacherous Waters

The Australian reports Government in Treacherous Waters.

The Abbott government is being destroyed before our eyes. The Liberal Party's frustrations and divisions have cracked wide open. It has taken only 17 months for a sizeable section of the party to announce that Tony Abbott has failed as PM and needs to be liquidated.

The internal chaos that ruined the former Labor government has now penetrated the Abbott government. While Abbott's chances of staging a poll recovery were unlikely, the internal convulsion makes this virtually impossible. As Abbott fights, the debate is shifting to discussion about a new leadership team.

Australia now stares down the gun barrel of a third partyroom assassination of a PM in five years. Is there anybody stupid enough to think our politics is not broken?

US Version of Story

On February 3, the Wall Street Journal reported Australia Cuts Interest Rates to Record Low.

Australia cut its benchmark interest rate to a record low of 2.25% Tuesday, joining a procession of central banks that have eased policy settings this year in response to the deflationary impact of tumbling oil prices.

The 0.25-percentage-point cut represents a dramatic shift for the Reserve Bank of Australia—which ended 2014 with a message to financial markets that interest-rate stability was likely to feature again in 2015, to help underpin certainty for businesses and support the economy as a mining-investment boom fizzles out.

Gov. Glenn Stevens said the decision to come off the sidelines for the first time in 18 months was driven by concern that Australia's resource-rich economy was facing another year of below-average growth. The Australian dollar fell sharply on the announcement of a cut, dropping to a fresh 5½-year low, while the stock market surged to the highest level since May 2008.

No Mention of Massive Political Crisis

There was not one mention in the Journal of massive, and unprecedented political turmoil. Instead we see this ...

The Reserve Bank of Australia joins the Monetary Authority of Singapore, Reserve Bank of New Zealand, European Central Bank, Bank of Canada and the central banks of India, Denmark and Switzerland in either announcing substantial policy shifts or easing monetary settings—in some cases dramatically—since Jan. 1.

Australia faces a slowing global economy, especially slowing demand of China for natural resources. A housing bust, baked in the cake is going to tremendously exacerbate Australia's woes. And icing on the ruins is the potential return of Labour.

2013 Flashback

Mish Flashback May 2, 2013: Australia Manufacturing Collapses as Commodity Supercycle Stalls; Labor and Unions Wrecked Australia.

Labor and Unions Wrecked Australia

The labor party and unions wrecked Australia. This was invisible for years because a housing boom and China-fueled commodity boom masked the untenable nature of wage and property bubble growth.

Now, it's payback time.

On September 14, prime minister Julia Gillard, leader of the Australian Labor Party will be thrown out of office in a landslide. Unfortunately, it will take years for Australia to recover from the damage caused by Labor.

Addendum - Comments from Steve Keen

Steve Keen blames both parties.

Via email, Keen says "The damage began under Labor with Hawke and Keating, was turbocharged by the Liberals under Howard, and simply maintained by Rudd/Gillard Labor. And unions have lost significant power all the way through--they've been bystanders, not active participants. It's instead been a series of distortions caused by a neoliberal philosophy that is shared by both parties."

Hmm. Parties talk differently but act the same. Where have we seen that before?

In the US, it's on war, bailouts, and spending that always goes up. Romneycare and Obamacare were the same. For political purposes people pretend differences exist when they don't, except on some social issues.

2012 Flashback

Mish Flashback September 4, 2012: By 2015 Hard Commodity Prices Will Collapse; Australia's Mining Boom Dies (and the Official Denials Start)

I have been calling for a base metals bust for some time, fueled by a slowdown in China. Michael Pettis at China Financial Markets has been saying the same thing. Indeed, it is analysis from Pettis that influenced my views in the first place.

In that post I quoted Australian prime minister (at that time) Julia Gillard who said "There is no question about whether we have a boom, the issue is whether we make it last. Let's be clear, reports of the mining boom's death are exaggerated."

I responded ...

It is not up to Australia at all whether the boom is over or not. The boom is entirely dependent on what China does or doesn't do. Moreover, there is no question the boom is over. The real question is "How big is the bust?"

Question of Faith

Some put their faith in hyperinflation, commodity supercycles, and the belief China could expand forever. I put my faith elsewhere.

Thanks once again to those who helped me reach the right conclusions. Michael Pettis and Steve Keen are in that group.

I mentioned both of them above and both of them recently in Financial Blogger Profile of "Mish" on Equities.Com.

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

Black Market in Ukrainian Currency Masks True Extent of Decline; Banks Impose 30% Foreign Exchange Fee; Freely Floating Hryvnia Announced

Posted: 03 Feb 2015 06:05 PM PST

The Ukrainian central bank publishes the official exchange rate daily.

At the time of this posting, the "official" exchange rate is 16.24 Hryvnias to one US dollar (posted as 1624 to a hundred dollars), nearly identical to the chart below.

The above chart show the Ukrainian Hryvnia is down about 50% since the beginning of 2014.

Black Market Masks Decline

That's a pretty steep decline, but the true picture is much worse. A black market has developed because the official peg is too generous.

Ukrainian citizens have crossed the border, maxed out debit cards with cash transactions at the official rate, then cashed in on the difference.

And exporters selling goods at the official rate have started to complain about huge losses.

Merchants will gleefully give you 16 Hryvnias for a US dollar, but you will lose mightily on the transaction because the black market rate is more like 21.5.

Exchange at the official rate and you immediately lose about 25%.

Freely Floating Hryvnia Announced

Ukraine wants to kill the black market, but the only way to do so is float the currency.

Yesterday, the National Bank of Ukraine posted (in English) Banking Community Advocates Shift to Market-Based Exchange Rate-Setting Mechanism.

Here's a Ukrainian source that claims the Hryvnia Will Float on February 5 but it is not an official document.

Banks Initiate 30% Currency Exchange Transaction Fee

While waiting for the free float to occur, banks needed to do something to halt the spread of debit card cash transactions at the alleged official rate.

This was the solution: Banks Impose a 30% Foreign Exchange Fee.

The article notes that in the border towns in the Ternopil region, Lviv, and Transcarpathia, that people had been running to the nearest ATM in Romania or Poland to remove currency, at the official rate.

Customers used gold class preferential commissions for ATM transactions buying dollars for 16 Hryvnias, then selling the dollars at the black market rate that is as high as 21.5 Hryvnias to the dollar.

Ukrainian banks were getting killed on debit card and other exchange transactions, thus the support for a free-floating Hryvnia.

How Low Will It Go?

From 8 to 21.5 represents a 62.7% decline. And I suspect it won't stop there. Why should it?

A plunge from 8 to 30 would be a 73% decline in just over a year. And that's my initial guess barring some quick monetary rescue by the IMF.

If and when the Ukrainian National Bank does float the currency, other sites will note the "shocking overnight" plunge.

In reality, the plunge has already taken place, over time. The charts just don't show that yet.

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

Smart Debt Engineering: Markets Giddy Over Greek Debt Proposal; ECB Nixes Plan Already; Party On Dudes

Posted: 03 Feb 2015 12:45 PM PST

Smart Debt Engineering

The markets are giddy today over a Plan to End Debt Standoff released yesterday by Greek finance minister, Yanis Varoufakis.

Varoufakis said the government would no longer call for a headline write-off of Greece's €315bn foreign debt.

Instead, Greece wants "Smart Debt Engineering" that would avoid the need to use a term such as a debt "haircut", politically unacceptable in Germany and other creditor countries because it sounds to taxpayers like an outright loss.

Apparently a haircut is OK as long as it's not called a haircut!

Varoufakis seeks a "menu of debt swaps" to ease the burden, including two types of new bonds. The first type, indexed to nominal economic growth, would replace European rescue loans, and the second, which he termed "perpetual bonds", would replace European Central Bank-owned Greek bonds.

Perpetual bonds: clearly never meant to be paid back. Gotta love the honesty of the idea.

ECB Nixes Plan Already

Today the European Central Bank Said "No" Latest Greek Bailout Plan.

Yanis Varoufakis, Greek finance minister, had proposed to European officials that Athens raise €10bn by issuing short-term Treasury bills as "bridge financing" to tide the country over for the next three months while a new bailout is agreed with its eurozone partners.

But the ECB is unwilling to approve the debt sale. It will not raise a €15bn ceiling on t-bill issuance to $25bn as requested by Athens, according two officials involved in the deliberations. "The Greek plan relies fully on the ECB," said another eurozone official briefed on the talks. "The ECB will play hardball."

Jean-Claude Juncker, the European Commission president, is expected to press Alexis Tsipras, the new Greek prime minister, to ask for a "technical" extension of the current bailout when the two men meet in Brussels on Wednesday.

Eurozone finance ministers are expected to hold emergency talks in Brussels on February 11 to discuss Mr Varoufakis's plans. The Greek finance minister is due to meet Mario Draghi, ECB president, in Frankfurt on Wednesday.

Officials who have met Mr Varoufakis say he has insisted the new government cannot ask for an extension for political reasons, since it would send a signal they are willing to go along with the current bailout — a message Mr Varoufakis reiterated at meeting on Monday in London with leading bankers.

Markets Giddy Over Greek Debt Proposal

Even though no one has agreed to the Greek plan, the markets are giddy anyway, simply over the prospect of a settlement.

The euro rose .015 to 1.150.
Yields on 3-year Greek bonds fell from 20% to 16.5%.
The safe haven of US treasuries sold off a bit.
Commodities are up across the board, except for gold. Energy is leading the way. Brent is up $3 to $57.72 and West Texas Intermediate is up $3 to $52.69.

Party on Dudes

It's all meaningless of course. Nonetheless, the Wall Street motto remains "Party On Dudes".

Yes, I have a video tribute for that.

Link if video does not play: Wayne's World at the 2008 MTV Movie Awards.

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

Gallup CEO Calls 5.6% Unemployment Rate "The Big Lie": What's a Realistic Unemployment Rate?

Posted: 03 Feb 2015 11:41 AM PST

On Linked-In, Gallup CEO, Jim Clifton proclaims 5.6% unemployment is "The Big Lie".

And it is. I have talked about this for years, but perhaps it would be interesting to hear the same thing from a CEO of a big agency. I picked this story up from ZeroHedge. Emphasis in italics is mine.

Clifton first calls the unemployment rate "extremely misleading" but later on calls it "The Big Lie", and that is the title of his Linked-In article as well.

From Gallup CEO, Jim Clifton ....

Here's something that many Americans -- including some of the smartest and most educated among us -- don't know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we're hearing much celebrating from the media, the White House and Wall Street about how unemployment is "down" to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job -- if you are so hopelessly out of work that you've stopped looking over the past four weeks -- the Department of Labor doesn't count you as unemployed. That's right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news -- currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren't throwing parties to toast "falling" unemployment.

There's another reason why the official rate is misleading. Say you're an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 -- maybe someone pays you to mow their lawn -- you're not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn't get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find -- in other words, you are severely underemployed -- the government doesn't count you in the 5.6%. Few Americans know this.

There's no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America's middle class.

I hear all the time that "unemployment is greatly reduced, but the people aren't feeling it." When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren't "feeling" something that doesn't remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.

Gallup Daily: U.S. Employment

The Gallup Daily U.S. Employment numbers look like this:

Gallup concluded the unemployment rate is 7.1% with another 15.9% working parttime who want a fulltime job. Those are daily numbers, not seasonally adjusted so cannot be compared directly with BLS monthly reports.

Let's take a look at the numbers two more ways with BLS data.

Participation Rate

The participation rate is percentage of the working-aged people (over 16) who are either employed or are actively looking for work. As you can see that number has plunged. However, the chart is skewed by two factors making it a poor choice as proof of how bad things are.

Mass entry of women into the workforce starting in the 1960s.
Willful baby-boomer retirement

Let's try one more way: Who is not working that arguably should be working?

Employment Rate of Those 25-54

Since 1999 the percentage of people aged 25-54 who are working is down quite a bit. To be sure, some of them are staying in school longer.

If you are in school and not working, you are not counted as unemployed. If you are in school and working you are counted as employed, even if you work 3 hours a week. These factors have an artificial positive bias for the unemployment rate.

Disability

Disability numbers have soared. And for extremely suspicious reasons. Disability fraud is rampant. If you are disabled, you are not in the labor force (and therefore not unemployed). Here are some links to consider:

Unemployment Rate Distortions

Because of all the distortions about what constitutes unemployment and employment, including frequent double-counting of part-time employment in the payroll survey, I believe it is purposely difficult to calculate a realistic unemployment rate.

No politician wants unemployment going up on his watch, so over time, the methodology of calculating has changed. Add in disability fraud and unwanted retirement and the number would soar.

I propose a better measure of unemployment would come from these simple questions:

Do you want a job?
Do you have a job?
Are you physically able to work a job?

In regards to number three, one would need to weed out purposeful disability fraud, but even if errors were made in this category, the numbers would be far more reflective of what's happening than the current purposeful distortions.

The above questions would pick up students in school who would rather be working, and it would also pick up people on forced retirement whom would rather be working.

I define forced retirement as people out of money, with no income, not wanting to retire, but having to retire simply to collect Social Security money.

A realistic unemployment rate would factor in

Disability Fraud
Kids (and adults) hiding out in school because they cannot find a job
Forced retirement
Those who stopped looking for a job but really want one

What's a "Realistic" Unemployment Rate?

Based on demographic trends, I suggest the real unemployment rate after weeding out disability fraud, forced retirement, kids hiding out in school for lack of a job, and those who are not counted as unemployed simply because they gave up looking. Realistically, the unemployment rate is more like 9% than 7%.

Clifton says the official unemployment rate of 5.6% is "The Big Lie". I agree. The only dispute is the attempt to figure out "Just how big a lie is it?"

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