luni, 23 aprilie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Public Unions Bankrupt Illinois: Unpaid Bills Top $9 Billion as Comptroller Reports "State Treading Water"; Mish's Eight-Point "Bold" Plan to Save Illinois

Posted: 23 Apr 2012 12:54 PM PDT

Governor Pat Quinn rammed through the largest tax hikes in Illinois history last year. On January 13, 2011, Governor Pat Quinn signed off on a 67% hike in personal income taxes and a 46% hike in corporate taxes.

The result is not what the governor thought. Businesses have fled, more have threatened to leave and Quinn responded with sweeteners. Moreover, Illinois pension plans are still the worst funded in the nation, and the state is still struggling to pay bills.

Bloomberg reports Illinois 'Treads Water' as Unpaid Bills Top $9 Billion
Illinois's backlog of unpaid bills has risen to more than $9 billion because of pension costs and falling federal aid, leaving the state "essentially treading water," Comptroller Judy Baar Topinka said.

While revenue grew from higher personal and corporate taxes, "Illinois' financial position has not improved," Topinka said in a report today. The combination of unpaid bills to vendors and Medicaid obligations, estimated at $8.5 billion in January, means payment delays will persist, according to the report.

While tax increases boosted revenue by about $7 billion, or 3.9 percent in the first three quarters of the fiscal year that began in June, the gains were undercut by the loss of federal funding and financing of pension contributions directly, rather than through bonds as in the past two years, Baar Topinka said.

Democratic Governor Pat Quinn has proposed a voluntary 3 percent increase in pension contributions from current employees and a cut in cost-of-living increases for retirees.

"Bold action" is required to save the retirement systems, the governor told reporters in Chicago April 20. In fiscal 2010, Illinois had the lowest-funded state pension in the U.S., with assets equal to 45.4 percent of projected obligations, according to data compiled by Bloomberg.
Public Unions Bankrupt Illinois

Just where was this "bold plan" when Quinn was running for Governor?

Nowhere in sight. And now he wants "voluntary" contributions. Give me a break.

Illinois is bankrupt and corrupt politicians like governor Quinn, Speaker of the Illinois House, Mike Madigan, and all the union panderers in Chicago ruined the state by giving into "collective bargaining" demands from public unions.

Voluntary 3% contributions by unions is not a "bold plan" and will not do a damn thing. Illinois needs to scrap its defined benefit plans immediately and claw back on promised benefits under threat of default.

Moreover, Illinois needs to scrap prevailing wage laws and end collective bargaining of public unions immediately if not sooner.

Illinois desperately needs a "Bold Plan" before the entire stat looks like Central Falls or Providence Rhode Island, or Detroit Michigan.


Mish's Eight-Point "Bold" Plan to Save Illinois

  1. Immediately kill public defined benefit plans going forward
  2. End collective bargaining of public unions
  3. Scrap prevailing wage laws
  4. Tax at an 85% rate all defined benefits above $80,000
  5. Claw back all pension-spiking
  6. Lower corporate tax rates to previous levels to attract businesses. 
  7. Set long-term pension plan assumptions at 5% or the 30-year Treasury rate, whichever is lower (currently 3%).
  8. Default, if necessary on pension benefits above a certain level, whatever it takes to make the state solvent within 10 years, using conservative pension plan assumptions.

The $80,000 cap is s suggested starting point for discussion. It may be higher or lower based on point number eight.

Now that's a bold plan, and a badly needed one at that.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Eurozone Manufacturing PMI Hits 34 Month Low; German Manufacturing Hits 33 Month Low; Orders Drop Steeply Across the Board

Posted: 23 Apr 2012 09:55 AM PDT

Today, European data shattered two long held beliefs by Markit and in general, unthinking economists everywhere.

Shattered Myths

  • European recession would be mild
  • Germany would continue to diverge from the rest of Europe

Markit reports Eurozone sees stronger rate of decline at start of second quarter
  • Flash Eurozone PMI Composite Output Index(1) at 47.4 (49.1 in March). 5-month low.
  • Flash Eurozone Services PMI Activity Index(2) at 47.9 (49.2 in March). 5-month low.
  • Flash Eurozone Manufacturing PMI (3) at 46.0 (47.7 in March). 34-month low.
  • Flash Eurozone Manufacturing PMI Output


The Markit Eurozone PMI® Composite Output Index fell to a five-month low in April, according to the preliminary 'flash' reading which is based on around 85% of usual monthly replies. The index fell for the third month in a row to 47.4, down from 49.1 in March, to signal a faster rate of decline of private sector economic activity. Output has fallen seven times in the past eight months.



Output fell at the fastest rates for five months in both manufacturing and services, with the former seeing the steeper rate of decline.

France meanwhile saw output fall for the second month in a row, with the rate of decline accelerating to the fastest since October. Falling manufacturing output was accompanied by a steep deterioration in service sector activity.



Incoming new business fell for the ninth month in a row, registering the steepest decline since October. Manufacturing new orders fell particularly sharply, down for the eleventh month running and falling at the fastest rate since December. New business at service providers fell for the eighth successive month, showing the largest deterioration since October. New business fell at stronger rates in Germany, France and across the rest of the euro area as a whole.

With inflows of new orders continuing to deteriorate, backlogs of work fell across the region for the tenth successive month, declining at the sharpest pace since November. Backlogs fell at similar rates in both manufacturing and services although, while the former saw a slight easing in the rate of decline, the latter suffered the largest fall since September 2009.

The deteriorating pipeline of work led companies to cut staffing levels for the fourth straight month, with the rate of job losses running at the fastest since February 2010.
Eurozone Reality

Markit Finally accepts reality, albeit with a huge understatement "Prospects do not look good."

Really? After 5 months of making silly statements about "short, weak recession" complete with Germany bucking the trend, that is acceptance of reality, sort-of.

As Goes Europe, So Goes Germany and France

As I have been saying for at least six months, the Eurozone recession will be neither short nor mild. Spain, Greece, and Portugal are in outright depressions and Italy may head there.

Take a look at that chart above on the periphery vs. France and Germany. France has now caught up on the downside with the rest of Europe and Germany will follow.

Coupled with a huge slowdown in China, and a feeble and faltering recovery in the US,  there is zero chance that France and the vaunted German export machine will decouple from the rest of Europe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Eight of Ten Largest Stocks in Spanish Ibex Index Below Liquidation Value; Madrid Rejects Regional Budgets Representing 32.5% of GDP; Treasury Warns of "Immediate" Intervention

Posted: 23 Apr 2012 08:37 AM PDT

The Spanish hit parade keep right on rolling. Courtesy of Google Translate, please consider a trio of articles forwarded by my friend Bran who lives in Spain.

Madrid Rejects Regional Budgets Representing 32.5% of GDP

El Economista reports Treasury Rejects Budgets Submitted by Catalonia and Andalusia
The Ministry of Finance and Public Administration has returned the draft budget to the regions of Andalusia and Catalonia because it considers its budget rebalancing plan does not fit within the deficit target regions set for this year, 1.5% of GDP.

The newspaper El Pais said today that two of those affected are Catalonia and Andalusia, two of the larger communities, who number between 32.5% of Spanish GDP.
Treasury Warns of "Immediate" Intervention

Going one step further, Treasury warns that Any Autonomy may be Subjected to an "Immediate" Intervention"

Forced Austerity in the regional governments is coming right up.

Spanish IBEX Index



The Spanish stock market has now given back nearly all of its gains since March 2009.

Eight of Ten Largest Stocks in Spanish Ibex Index Below Liquidation Value

Please consider Eight of Ten Largest Stocks in Spanish Ibex Index Below Liquidation Value

The article states it is "ludicrous" that eight of the ten heavyweights trade below their book value.

I suggest book values are inflated and the Spanish banking system is insolvent. Certainly credit default swaps on sovereign debt are not encouraging.

Check out this nonsense by JP Morgan.
"The banking problem is not liquidity, but mainly of confidence," says JPMorgan Pellón mentioning that pointed in recent days that Spanish banks retain about 90,000 million from the program LTRO European Central Bank. Enough money to meet all funding requirements for the remainder of the year.

The balance of mid-cap banks is less oprtimista yet. For example, trades at 0.29 times Bankia the value of its assets and the rest is between 0.4 and 0.5 times.

The banking sector is the one that is suffering the deterioration of its balance sheet, but some utilities and Repsol also find it impossible to trade above its liquidation price. Among the utility companies with greater capitalization is Iberdrola which has a lower book value after the sale of 3.7 percent of its stake ACS take her to make minimum contributions since 2003 this week.
Inflated Book Values, Insolvent Banks

Banks may have LTRO funding but it would be nice if the clowns at JPMorgan would advise exactly how Spanish banks are going to pay back those loans.

The problem is not confidence nor liquidity, but rather solvency. In the absence of further bailouts, many European banks have negative value.

What About the Euro?

Moreover, JP Morgan missed another crucial point, best expressed by the question: What happens in a eurozone breakup when Spain exits the Euro?

Since that is a significant possibility (I believe likelihood), anyone in Spain with any money and any common sense should get their money out of Spain right now.

Capital flight is indeed underway and that flight will continue to pressure Spanish equities until it stops.

Capital controls may be just around the corner.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Publicat de 1 la 23:23 0 comentarii

Damn Cool Pics

Damn Cool Pics

Movie Mimicking

Posted: 23 Apr 2012 11:23 AM PDT

Allen Fuqua likes to travel just as much as he likes movies. Two hobbies combined resulted in the series of amazing pictures where he recreates the shots from famous movies taken at various locations around the globe.

Movie: Fast Times at Ridgemont High
Actor: Robert Romanus
Location: Van Nuys High School, Van Nuys, CA


Movie: Love Actually
Actor: Liam Neeson
Location: South Bank, London, United Kingdom


Movie: You Don't Mess with the Zohan
Actor: Adam Sandler
Location: Cabo San Lucas, Mexico (Cabo San Lucas, México)


Movie: Drive
Actor: Ryan Gosling
Location: MacArthur Park, Los Angeles, CA


Movie: Rise of the Planet of the Apes
Actor: Richard Ridings
Location: Twin Peaks, San Francisco, CA


Movie: 40 Days and 40 Nights
Actor: Josh Hartnett
Location: Crepes on Cole, San Francisco, CA


Movie: Late Spring
Actor: Chishu Ryu
Location: Tsurugaoka Hachiman-gū, Kanagawa, Japan


Movie: Train Man
Actor: Takayuki Yamada
Location: Akihabara, Tokyo, Japan


Movie: Whisper of the Heart
Actor: Esimi Nakajima
Location: Temple Konpira, Tokyo


Movie: Tokyo Sonata
Actor: Teruyuki Kagawa
Location: Tokyo, Japan


Movie: 28 Days Later
Actor: Cillian Murphy
Location: Westminster Bridge, London


Movie: Before the Dawn
Actor: Ethan Hawke
Location: Paris


Movie: The Beginning
Actor: Leonardo DiCaprio
Location: Yes Stutstsi, Paris


Movie: The Beginning
Actor Joseph Gordon-Lyuitt
Location: Paris


Movie: Midnight in Paris
Actor Owen Wilson
Location: Versailles, France


Movie: Casanova
Actor: Heath Ledger
Location: Venice


Movie: The Talented Mr. Ripple
Actor: Matt Damon
Location: St. Mark's Square, Venice


Movie: Perfume: The Story of a Murderer
Actor Ben Whishaw
Location: Barcelona


Movie: Fanatic
Actor John Cusack
Location: Chicago, IL


Movie: Source Code
Actor: Jake Gyllenhaal
Location: Millennium Park, Chicago


Movie: Spider-Man
Actor Tobey Maguire
Location: Columbia University, New York


Movie: The Hangover
Actor: Ed Helms
Location: Las Vegas, NV


Movie: Vicky Cristina Barcelona
Actress: Rebecca Hall
Location: National Art Museum of Catalonia, Barcelona, Spain (Museu Nacional d'Art de Catalunya, Barcelona, Espanya)


Movie: As It Is in Heaven
Actor: Michael Nyqvist
Location: Cathedral of St. Jakob, Innsbruck, Austria (Dom zu St. Jakob, Innsbruck, Österreich)


Movie: Midnight in Paris
Actor: Owen Wilson
Location: Notre Dame Cathedral, Paris, France (Cathédrale Notre-Dame de Paris, Paris, France)

Via: Moviemimic

Just How Big Is Apple [Infographic]

Posted: 23 Apr 2012 10:40 AM PDT



It is the first company to successfully pivot from computer maker to device maker. And its devices are now ubiquitous, its annual new product releases are among the most anticipated in the world and it recently announced it would begin issuing a dividend to its stock owners expected to generate $10 billion in the first year alone. There is also speculation that Apple will enter into the payments market in the near future (allowing its handheld products to serve in the same fashion as a credit card). This alone would turn them into a trillion dollar company.

But how do Apple's eye-popping statistics translate to the real world?

Apple's total sales in 2011 were $128 billion which is more than the gross domestic product of about 160 nations around the world including New Zealand, Iraq and Syria.

Apple's current market capitalization is $508 billion making it the largest company in the world.

Apple's release of its latest iPad was massive: the company sold 3 million devices in the first 72 hours of release.

695 iPads are sold every minute. 11 iPads are sold every second.

But how do Apple's eye-popping statistics translate to the real world?

Click image to see a larger version.

Via: Bestcomputersciencedegrees
Publicat de 1 la 19:08 0 comentarii

Modern Business and Content Guidance from Bell Labs

Modern Business and Content Guidance from Bell Labs

Modern Business and Content Guidance from Bell Labs

Posted: 22 Apr 2012 02:27 PM PDT

Posted by Kate Morris

I've been reading The Idea Factory, the history of the innovation that came out of Bell Labs around WWII. Innovation, invention and ideas are things that we don't get to talk much about in SEO. It's all about keywords, links, and content, but I want you to take some time today to think about ideas, inventions and innovations. Why? Because we all want to be millionaires (oh hush, yes you do), and while that might not happen to all of us, idea generation is central to our jobs in search marketing.

Bell Labs was born out of a technology being invented (the telephone) and the problems AT&T faced building a communications infrastructure in the United States (and how to connect overseas). We are talking serious problems like wood decay, birds and wires, distance and signal strength. Things we take for granted today. 

The men and women at Bell Labs strove to find the best materials, to make products and services better. We can learn from the team at Bell Labs. Use the ideals of hard work, research and development, invention, and innovation to drive us to make our websites, products, and services better. 

That's how you win on the internet. Be better than everyone else. 

Innovation is a Lengthy Process

The term "innovation" dated back to sixteenth-century England. Originally it described the introduction into society of a novelty or new idea, usually relating to philosophy or religion ... an innovation defined the lengthy and wholesale transformation of an idea into a technological product or process meant for widespread practical use. 

This portion of the book really hit home with me. Innovation is a lengthy process of taking an idea to a product or process for widespread practical use. There are no overnight successes, just people that worked really hard behind the scenes pouring their blood, sweat and tears into an idea.  

The same should be true with your business and website. Innovation in your space is not just putting up a website and knowing the right keywords to target. It's about waking up at 5:30 in the morning to be at a networking breakfast at 8am a few times a month for a few years. Success is about determination, dedication and hard work. 

The time you take to discuss your idea, how you plan to be different with members of your target market, will pay back not only in the refining of that idea, but also in friends and allies when your business or website launch. Choosing the connected people is a strategic process; if they are there at 8am, they are dedicated too and have met others that are of the same breed. Now does that mean that everyone needs to go to 8am networking breakfasts? No. I hate them. But you get the idea.

Want your website to be a success? Then spend the time in the following areas:

  • Business Idea - don't copy someone else's idea unless you can be better than them and everyone else in the space doing the same
  • Website Copy - Develop the copy for your site, and if you have products what you'll let others use. Write into affiliate contracts that your product descriptions are not to be used elsewhere. Treat website content like a white paper, protect it, don't allow others to copy it. 
  • Promotion - I am not talking online promotion, I'm talking the whole marketing umbrella. This is not something you buy/outsource and leave alone. It's your baby, own it! 

Make Goals, Not Hard Timelines

Inventions are a valuable part, but invention is not to be scheduled or coerced. Harold Arnold, Bell Labs

Need $10k by next year? Don't build a website, add products, pay someone in another country to write copy and do SEO and think you can do that. Good ideas don't fit in timelines. You cannot rely on keyword research tools to tell you what product area has low competition and can make you millions. 

What you can do is find an area, a business idea that you really love: something that you can get lost talking about for hours and not mind. Your first goal should be to find that idea. Once you have that (and most of you do as you have clients or work in-house for someone that has that idea already), then you need to set goals for what you want to accomplish. 

The goals should be:

  • Lofty but attainable (one viral infographic a month is not an attainable goal, an increase in sales from organic search by 20% is attainable)
  • Developed around making the customer happy (the happier they are, the more you sell, simple)
  • Tied to your boss's goals (even if your boss is your wife)

Once you know what you want to do, the end result, that drives how to get there. Now you have a purpose, but you can't rush it. You will fail, content will flop sometimes, there will be a keyword that you just have a hard time ranking for. Things will go wrong but things will also go amazingly right if you focus on a good goal.

Do Something

When you don't know what to do, do something!" Jim Fisk, Bell Labs

This is my new favorite motto. Do something. As Will Critchlow says all the time, fail faster. Come up with as many ideas as you can to meet your goal, no matter how far out of the park they are. Execute. Try things, be risky, and fail (sometimes). I can almost guarantee you that even if you fail; you'll learn something you can apply to your next attempt.

studying sharks

Studying Sharks

Jim Fisk proposed a $50,000 study of sharks to help naval warfare. It made it to the top and the lead of Bell Labs finally killed it. How cool a story would that have made? I would have linked to it, what about you?

Dare You

Don't know what to do? Here are some ideas for every SEO out there. I dare you to try one.

  • Data Mining. Take a half-day, look into the data you have in your company about clients, about the industry. If you were to clean it all up, could you show trends about your industry? Get creative and find a way to share that information in a resource, a white paper, blog post or infographic. And then do a marketing campaign around it. If it works well, make it an annual update about the industry.
  • Content Revisit. Find your top 10 products or services pages. Revisit the content, when was it last written? Update it! Add resources; make it the page to go to for that product or service. Think from the perspective of a potential customer, what would make that page better than all of your competitor's pages? Consider new images, a video, new resources, reviews. 
  • Page 2 Revamp. Take 5 pages that rank on page 2.  Revisit the title tag and meta description of those pages. Is the title tag over optimized? Does the meta description really pull you to the page? Rewrite them to be real, accurate and descriptive!
  • $5000 Challenge. Ask for a budget that is normal for a project in your company or for a client and do something that is way out in left field. You in finance? Pay off someone's car loan. Don't give away a iPad, donate 100 to a school that teaches computer science to under-privileged kids. 

So would you do with $5000 to help your site? What is your shark bait?

Shark Stock Photo from Shutterstock


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Publicat de 1 la 09:47 0 comentarii
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