Central Perk: 22 ian. 2012

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Mish's Global Economic Trend Analysis

Limits of Voluntary Deal Hit as Greek Bondholders Draw Line in the Sand; Separating Fact from Fiction in Selective Reporting
Australia Roundup: Oceanfront Homes for 65% Off; Chain Sales and Contingent Offers; Retailers Brace for More Job Cuts; Cusp of a White-Collar Recession
Irish Journalist Hounds ECB Official Regarding Irish Taxpayer Bailout of French and German Banks
Gingrich Blows Away Romney 40% to 28%; Victory Horrifies Republican Establishment; Looking Ahead, Who is the New Torch Bearer of Freedom?

Limits of Voluntary Deal Hit as Greek Bondholders Draw Line in the Sand; Separating Fact from Fiction in Selective Reporting

Posted: 22 Jan 2012 11:01 PM PST

The bickering over a half percentage point reduction on the discount rate continued over the weekend as Greek Bondholders Draw Line in the Sand

Private owners of Greek debt have made their "maximum" offer for the losses they are willing to accept, the bondholders' lead negotiator has said, implying that any further demands could kill off a "voluntary" deal and trigger a default.

One banker said Friday's demand by official creditors, led by the International Monetary Fund, for a further interest rate cut of 50 basis points on new long-term bonds to be swapped for existing Greek debt "may have put a voluntary deal out of reach".

Mr Dallara said the IIF's position tabled with Greek authorities on Friday night – believed to include a loss of 65-70 per cent on current Greek bonds' long-term value – was as far as his side was likely to go.

"I think it's clear we are at the limits of a voluntary deal," Mr Dallara said, recalling that eurozone heads of state had committed to keeping the restructuring voluntary at a high-stakes EU summit in October. "It is clear to me we are at a crossroads."

The IMF wants to put Greece on a path for a debt-to-GDP ratio of 120 percent by 2020. Anyone remember the original proposal a year or so ago? The idea then was austerity measures would put Greece at an 80 percent debt-to-GDP ratio by 2013-2014.

That Fantasyland proposal was soon followed by haircuts of 21% on Greek debt which I said would not work, then 50% which I said would not work, and now 65-70% which once again I suggest will not work.

Greece is in a depression and things are going to get worse. Portugal and Spain are also in depressions.

Ambrose Evans-Pritchard thinks Italy is headed for depression as well. Please see Money Supply Figures Suggests Italy Headed Into Depression; Non-Performing Spanish Loans Hit 134 Billion Euros, 7.51% of All Loans, Highest in 17 Years; Eurozone Unemployment Charts for a discussion.

Granted, 2020 is a long way off, but recall the Maastricht Treaty requires a debt-to-GDP ratio of no more than 60%.

European Debt-to-GDP Ratios

CNN has a nice interactive map of European Public Debt at a Glance.

Germany, France, Belgium, Italy, Portugal, Ireland, Spain, and Greece are all in violation. In fact, 13 out of 17 nations are in violation of the treaty. Estonia, Slovenia, Finland, and Luxembourg are the only exceptions.

The map is from 2010 and some countries such as Spain that were on the edge before are no longer on the edge.

Greek Talks Hit a Snag Over Rates

The New York Times reports Greek Talks Hit a Snag Over Rates

Greece's private creditors, which hold about 206 billion euros, or $265 billion, in Greek bonds, are resisting accepting a lower rate. They argue that they are already faced with a 50 percent loss on their existing bonds and that the lower rate would increase the hit they would take.

It would also make it more difficult to describe the deal as voluntary. A coercive deal, bankers warned, could lead to a technical default and the initiation of credit-default swaps, or insurance, an outcome that all sides were trying to avoid.

[Mish: No - not ALL sides are trying to avoid that]

With the Greek economy forecast to shrink by 6 percent this year and 3 percent next year, the ultimate goal of Greece's lowering debt to 120 percent of gross domestic product by 2020 is seeming more and more unrealistic. With G.D.P. plummeting, the International Monetary Fund is insisting that Greece's debt load — currently 160 percent of G.D.P. — be reduced more quickly and that the private sector pay its fair share.

A majority of the funds the monetary fund has disbursed so far has been paid out to Greece's bondholders as opposed to helping Greece itself. Of the close to 20 billion euros that the fund has disbursed, two-thirds has gone to repay bondholders — an increasing number of which have been hedge funds betting that this trend will continue.

CDS Holders Have Vested in in a "Credit Event" Not a Deal

Hedge funds that have plowed into Greek debt did so with credit default swaps. Those CDS holders would be made whole on any "credit event".

They have no vested interest in reaching a deal. So not "all" sides want to reach a deal as stated in the article.

Other creditors are upset that the ECB itself will not partake in haircuts. The ECB holds 55 billion of the 206 billion euros of Greek debt. The rest of the EMU according to fixed percentages are on the hook for that debt.

The Times reports ...

The [ECB's] refusal to take a loss has been regularly cited by investors as unfair, and many have said that they will sue Greece if they have to take a loss while the bank does not.

To get around this, officials are now discussing the possibility that Europe's rescue fund might lend money to Greece to allow it to buy the bonds back from the European Central Bank at the price the bank paid for them — thought to be about 75 cents on the euro. The central bank would then not have to take a loss on these holdings. By selling them back to Greece, it would remove itself as an obstacle to a broad restructuring agreement.

Separating Fact from Fiction in Selective Reporting

The proposal is for the ECB to sell its bonds back to Greece so that Greece will then take a hit.

With that in mind, look at this preposterous claim by a senior official "The bonds' rate "is the only issue," said a senior official directly involved in the negotiations. "We have to accommodate the needs of the Greek economy."

I see two sentences and two lies. Indeed the entire article is crammed pack with lies made by various IIF and EMU officials.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Australia Roundup: Oceanfront Homes for 65% Off; Chain Sales and Contingent Offers; Retailers Brace for More Job Cuts; Cusp of a White-Collar Recession

Posted: 22 Jan 2012 11:20 AM PST

Reader "Brisbane Bear" from down under sent potpourri of links on the dwindling prospects for the Australian economy.

Oceanfront Homes for 65% Off

In apples, rot starts at the periphery and spreads to the core. In real estate, rot starts in condos and vacation homes, then slowly encompasses city after city.

Please consider Investors snap up coastal property bargains in Queensland.

While prices soar in some coastal towns close to mining centres, astute buyers are managing to secure ocean- front homes in traditional tourist locations for $500,000 or more off peak prices as vendors cave after years of trying to sell.

One buyer scored an oceanfront unit in a marina development at Cardwell, halfway between Cairns and Townsville, for $157,000 - almost $300,000 less than it sold for in 2006. The unit had been on the market for three years.

A penthouse with ocean views in the same development sold for $570,000 less than its 2007 sales price.

RP Data senior analyst Cameron Kusher said buyers of the most affordable seaside holiday homes needed to be prepared for a long commute. But he said coastal market values had fallen across Queensland, meaning bargains could even be found in popular locations.

Chain Sales and Contingent Offers

When all else fails, buyers accept any offer they can get including contingent sales as noted by The Age in Risky ride on the vendor-go-round.

SELLING a home is stressful at the best of times. Failing to sell at auction in the midst of a property downturn can be its own kind of nightmare.

But imagine if it turned out that the only way to sell your home depended on the buyer having to sell theirs first.

It is a scenario Gavin and Verity Carson never considered when their Abbotsford terrace house went to auction and was passed in.

After later negotiations with a bidder broke down, they were left at a loss about what to do next. Looming was the threat of a lengthy wait in the private sale market, already flooded with thousands of unsold homes.

"All the people that had been interested were no longer interested - we had to really start the campaign from scratch," Mr Carson said, adding that they already faced a $10,000 advertising bill for the auction.

"Ideally, we would have sold at auction," Mr Carson said. "We did end up taking a lower value than we were expecting but that's really just indicative of the market at the moment. We're glad that it's over - put it that way."

In Britain, subject-to-sale transactions can often evolve into "chain" sales involving multiple properties that must all settle on the same day.

Retailers Brace for More Job Cuts

Following a dismal Christmas selling season, Retailers brace for job cuts

THE battered retail industry is bracing for a fresh wave of job cuts, with the crucial Christmas shopping season failing to deliver a much-needed surge in sales.

Analysts predict a clutch of struggling retailers will fall into administration in March, joining a list of failures over the past year that includes the booksellers Borders and Angus and Robertson, and the clothing retailers Colorado and Fletcher Jones.

At the same time as they slash costs in their stores, retailers are pouring resources into information technology - pinning hopes of a return to growth on tightening the link between physical and online shopping.

In November, a month when typically volumes rise in the run-up to Christmas, retail sales fell from a 0.2 per cent growth in October to no growth in November, while department store sales in trend terms fell 0.2 per cent.

"You've seen the Bureau of Statistics retail sales for November, and it's pretty dismal," said a David Jones spokeswoman, Helen Karlis.

"There's no sugar coating, it's just what's happening. Flat growth is probably a good thing in this environment."

The Australian National Retailers Association's chief executive, Margy Osmond, said retailers looked at the flat November retail sales with disappointment ''and concern''.

"At this stage, many retailers have chosen to reduce staff hours rather than lose valuable people, but there is a real concern in the sector about keeping jobs," she said.

Cost cutting would continue in the retail area, said the Commonwealth Bank's retail analyst, Andrew McClennan.

"But also there is no doubt there are going to be significant layoffs through further business failures," he said.

Cusp of a White-Collar Recession

Please consider Bank on white-collar crisis

AUSTRALIA is on the cusp of a white-collar recession with insiders warning that thousands of jobs are at risk in the finance sector, after it emerged yesterday that ANZ planned to cut 700 jobs.

But The Saturday Age has established the job cuts will total as many as 1000 by the end of this year, which will be more than the bank shed at the height of the global financial crisis.

They come a day after the Royal Bank of Scotland announced plans to close its investment banking business, leading to the loss of more than 200 jobs in Australia.

Economists have warned Australia is vulnerable to a recession this year with a wholesale funding squeeze in Europe raising debt costs for banks such as ANZ.

Experts say thousands of jobs will be lost from the industry this year as banks scramble to adjust to an era of low credit growth and higher funding costs.

This comes on top of cuts of 2150 jobs between March 2009 and last September in ANZ's Australian division. "We have run a policy of shedding jobs through attrition since October last year," an executive said.

"Temps have not been rehired once their contract has expired. Secondments have been stopped. We have outsourced two whole floors of operations staff from a [Melbourne] office to Manila [in the Philippines]. If you count all those jobs since October, along with what will be announced in the next week … we will lose more staff than we did as a result of the GFC."

Australia is not on the "Cusp of a White-Collar Recession", Australia is smack in the midst of a general recession affecting nearly all aspects of the economy but mining. As China slows, mining will slow as well.

Expect the real estate rot to spread to the core, sooner rather than later. The collapse in commercial real estate values, condos, and homes will be stunning.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Irish Journalist Hounds ECB Official Regarding Irish Taxpayer Bailout of French and German Banks

Posted: 22 Jan 2012 10:16 AM PST

The video below is from a European Central Bank press-conference in Ireland. Journalist Vincent Browne demands that the ECB representative explain why the ECB required the Irish people to bail out a bank's uninsured creditors. The bureaucrat mouths bland reassurances, then asserts (despite all appearances to the contrary) that the question has been answered. Browne doesn't let up.

Link if video does not play: Irish journalist humiliates EuroBank technocrat who won't stop ducking hard questions

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Gingrich Blows Away Romney 40% to 28%; Victory Horrifies Republican Establishment; Looking Ahead, Who is the New Torch Bearer of Freedom?

Posted: 22 Jan 2012 03:11 AM PST

In spite of a carefully timed announcement by Newt Gingrich's ex-wife Marianne on an "Open Marriage, Mistress Proposal", Gingrich rallied from a 16 point deficit on January 3 to a stunning 12 percentage point slaughter of Mitt Romney less than three weeks later.

South Carolina Primary Results

The Associated Press announces these South Carolina Primary Results.

This goes to show you that "It ain't over until it's over."

Dog Whistle Politics

The Financial Times reports Victory Horrifies Republican Establishment

Gingrich didn't just win the primary. He crushed Mr Romney, by more than ten percentage points, and that after the former Massachusetts governor had a lead of similar dimensions over Mr Gingrich just a week before the poll.

At least among Republicans, Mr Gingrich is so battle-scarred that no matter what dirt is thrown at him – even the fact that his ex-wife said he wanted an "open marriage" – it no longer sticks.

Mr Gingrich is also twice the natural politician that Mr Romney is, and was able to tailor his message on the campaign trail in South Carolina to rouse that state's voters.

Although he denied it, his continuous references to Barack Obama as a "food stamp president" was called out by some commentators as classic dog whistle politics in a state with a long history of racial tension.

Mr Gingrich will be thrilled with his victory. The Republican establishment, however, will be horrified, because its members think he is unelectable and tarnished in a general election.

If Mr Gingrich wins Florida, expect a huge campaign against him, not from the White House, but from within the Republican party itself.

Who is the New Torch Bearer of Freedom?

I will take flack for this but it's all over for Ron Paul. He finished a disappointing 4th. I do not like the news but I cannot ignore it.

This will not stop me one bit from pointing out the flaws of Gingrich, the flaws of Romney, and the flaws of the Republican and Democratic parties in general. Indeed I hope and expect Ron Paul to carry his message to the end in an attempt to change the Republican platform.

The Republican party needs a new torch bearer. New Jersey governor Chris Christie walked away from the opportunity. Christie was not the perfect candidate, rather he was an acceptable candidate.

Nonetheless, one thing is certain. Neither Gingrich nor Romney is the future of the Republican party. Both are failed politicians of the failed past.

A new torch bearer will not come from the existing Republican establishment. My eyes turn towards Rand Paul.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

How To Get The Equivalent Of $100K in PPC Ads For Free

Posted: 21 Jan 2012 02:48 AM PST

Posted by scanlin

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.

We launched our site in July 2010. By the end of 2011 we ranked on page one organic results for 108 relevant phrases. During 2011 we went from four phrases in the top three results to 44 phrases in the top three. Here are the SEO tactics we used to get the equivalent of $100K in PPC ads in 2011 for free.

Starting in early 2009, we took 18 months to build a subscription-based information service for investors. Half way through that process we started thinking about marketing and joined SEOmoz to learn about SEO. (First and foremost, thanks to the SEOMoz team and community for educating us on how to do SEO, as we were total novices!) Based on what we learned we made changes to our site architecture, URL naming conventions, image naming conventions, and content strategy before we launched.

Because we are a self-funded startup we knew we wouldn't have a big (or any, really) PPC budget. In our sector (financial services) many of the phrases we wanted are $10/click because we are bidding against well funded competitors (online brokers mostly). Given our conversion rates and lifetime customer value we can't make money by buying visitors at $10/click. We had to rely on organic traffic and SEO.

SEO Results

We made solid progress with our SEO in 2011. We are analytical types and like to graph the number of phrases we have in Top 3 and Page 1 organic results each week.

For Page 1 results we went from 14 phrases at the beginning of 2011 to 108 phrases at the end of 2011:

For Top 3 organic rankings in 2011 we went from four at the start of the year to 44 at the end of the year:

The impact of these ranking improvements was significant. We quadrupled our Google referred organic traffic during the year. At the start of the year we were getting 2000 visitors per month from Google organic visits. By the end of 2011 we were getting 8000 visitors per month from Google organic visits:

For us, this increase in organic search traffic helped us grow our business nicely during 2011.

Over $100,000 Of PPC Ads Equivalent

We wanted to know how much that organic traffic was worth to us in terms of equivalent PPC ad spend. So we went to the Google Keyword Tool and looked up the Exact Match estimated CPC for each phrase where we ranked. Then we multiplied that number by the actual visits we received for that Exact Match phrase.

For example, we rank for "call option" which has an estimated CPC (for Exact Match) of $13.66. We got 286 clicks from that phrase in 2011, which would have cost us 286 x $13.66 or $3907 if we had purchased those clicks via PPC. Do that same exercise for all of the phrases that sent us organic traffic during 2011 and you get a number in excess of $100,000. Those are visits we got for free because of our SEO. (Did I mention how much we appreciate our training from SEOmoz yet?)

Cool. So How Did You Get Those Rankings?

Ah, yes. The secret sauce. Because we are grateful to the community here, we are going to share our tactics. None of this is rocket science or breaking new ground. But rather than vague assurances, we can say for certain these tactics worked for us.

On-page optimization. We created an Excel file and mapped our site so we knew which phrase was mapped to which URL. We limited ourselves to one phrase per URL (okay, maybe two phrases if one was the plural of the other). Then we used the Report Card feature of the On Page tools here until we got an 'A' grade for every phrase/URL pair. We did this for about 200 phrases we care about. Yes, it took a while (a little bit of time each day spread over six months).

Internal linking. If a blog article on one concept mentions a concept we have another blog article for then we make sure the first points to the second with appropriate anchor text. We also interlink our Tutorial with our Blog. We actually repeat this process about once every 90 days, so to make sure that older content is referring to newer content (and vice versa) as we add more content pages.

New content. We add at least one page of unique content per week to the site (300-500 words written by us and relevant to our audience). We have a list of phrases we'd like to rank for that we don't currently rank for and tend to create content around one of those phrases each week.

Link building. We build deep links to every page. For some pages, optimized for long tail phrases, it only takes 1 or 2 links with appropriate anchor text to get a decent ranking. But for most of our phrases it requires many more links than that. We wrote a ton of guest blog articles and article marketing articles (non-spun, non-spammy) and posted them on themed (investment related) blogs and sites. An example is this guest post on a PR5 site.

BLU. Blogger Link Up is a free email list where people post requests for articles every day (there are a few of these kinds of sites). If you write something they will give you a link back. Before spending time creating new content for someone else we always check their traffic stats and look at their site. If their site is spammy looking then forget it. But many of them are quality, well-curated sites that will provide a decent link in exchange for quality content.

HARO. If you aren't using HARO you should be. It stands for Help A Reporter Out. You sign up (free) and then get a daily email from journalists looking for sources on articles. If you are relevant to the article they are working on and offer them some expert answers or content they may cite you in their article (and give you a link back). Major publications use HARO and we have successfully gotten links on sites like American Express's OpenForum (PR6 site) through this process. It's not the same as having an expensive PR firm, but it will give you at least some access to the same kind of publications a PR firm would.

Press releases. Never underestimate the links you will get if you issue a press release. We use PRWeb but there are others. Make sure the release is SEO optimized (put in a few links to deep pages on your site). Seems like no matter what you issue at PRWeb there are dozens of sites that will republish your release, creating dozens of new links. Yes, you have to pay for the releases. Do it a couple times a year, minimum.

Forum participation. This does not mean posting spam in forums. This means find where your audience hangs out and provide meaningful participation. After you've established yourself as credible (posted a certain number of non-spam postings) then most forums will let you have a do-follow link in your signature line for each post. Yes, it takes time to read and participate in the forums. You will not only get some link love (for the bots) but eventually but you will also get human visitors who just like what you're saying in the forums and come check you out.

YouTube videos. We weren't sure about this one until we did it, but it's totally worth it. Create a channel on YouTube (which will get you one do-follow link from a PR9 site) and post some videos. We saw a noticeable increase in rankings once we did this. We think that PR9 link really helped.

Facebook, Twitter, LinkedIn, Google+: Set up profiles and every time you write a blog entry post it to these outlets.

You Had Better Like To Write

The bottom line is we spend a ton of time writing. Writing for our own site, writing guest blogs and articles for other sites, writing to answer HARO requests, answering questions in forums, etc. We probably spend half our time on new content creation and writing in general. Yes, you can outsource the writing but (1) it costs money, and (2) much of what you get back won't be of high enough quality to use (at least, within our financial niche that has been our experience). Better to write it yourself.

We've definitely come to realize that SEO is not a sprint; it's a marathon. Even though we made good progress in 2011 we have another hundred phrases we want to rank for in 2012. That's over eight per month. Time to get back to writing!

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

Seth's Blog : Trading favors

Trading favors

Now that everyone has a media platform, look for even more of the mutual back scratching that comes from tracking favors.

The most corrosive sort of this network amplification goes like this: I do something for you unasked. Then I do something again. Perhaps I even tout you or your work a third time. Then I come to you, point out how generous I've been and ask for you to do something for me. Or I network my way to one person and then use that platform to reach three more, and repeat until I've worked the entire digital room.

Humans have a natural openness to reciprocity. It's a time-honored survival technique, one that allowed us to live together in villages for millenia. Someone who doesn't reciprocate is less likely to be protected by his peers, right? Not only have we been taught reciprocation since birth, but it feels right. It's baked in.

The problem occurs when the trading of favors become mercenary, when alert individuals start manipulating the system for personal gain. Suddenly, every favor is suspect, measured and not at all generous. Suddenly all the likes and links and blurbs become nothing but currency, not the honest appraisals of people we can trust. It means that bystanders have trouble telling the difference between honest approval and the mere mutual shilling of traded favors.

Yes, you can trade your way up, but at some point, the very people who were influenced by all your trades start to realize that you can't be trusted.

Mutual funds deserve to be rigorously measured and relentlessly traded. Favors and taste and allegiances, though, not so much. Like is too important to be something you do because you have to.