miercuri, 6 iulie 2011

SEOmoz Daily SEO Blog

SEOmoz Daily SEO Blog


Experiments on Google+ and Twitter Influencing Search Rankings

Posted: 05 Jul 2011 03:57 PM PDT

Posted by Cyrus Shepard

The mystery began on July 3rd when Google Realtime Search went dark. The next day we learned that the underlying cause was Google losing access to its special Twitter data feed.

The source of the disagreement is unclear, but the effects have been immediate. Realtime Search disappeared - all of it, not just the part that relied on Twitter. This included Realtime results from Google News, Blog Search links, Facebook fan page updates and more.

No Realtime results? What if it took the world hours, instead of minutes, to learn about the tweet below?

Twitter Realtime

To gain perspective on what's at stake, consider the example of journalists and protesters staying abreast of current events during the recent government upheavals in the Middle East.

Yes, this s#&t matters.

For the past two years Google used Twitter not only to power Realtime results, but also for faster indexation of content and, we believe, to calculate Author Authority for use in their ranking algorithm. Google says they plan on reinstating Realtime with the power of Google+. But the network will have to grow significantly before this works.

In the absence of the Twitter Firehose, can tweets still influence rankings? What about Google+?

Test 1: Firehose On

Last week, before this happened, we had the pleasure of working with Shari Goetsch of SeeYourImpact.org on a social media campaign for their terrific nonprofit organization. SeeYourImpact is a hardworking and unique charity that SEOmoz has worked with in the past.

The goal of this campaign was to create buzz around a single, previously unindexed URL on the target website using only Twitter. A tweet was created and followers of SeeYourImpact were encouraged to retweet as much as possible.
 

Twitter Experiment

Within a few short hours of the campaign kickoff, the URL was tweeted 300+ times. As a secondary effect, the URL also received a handful of additional Facebook likes and LinkedIn shares.

By early afternoon the page ranked #2 in Google for its targeted phrase, “Assist a Mom.” The URL reached #1 status by day’s end. As of this writing it remains the number one ranked page for this target keyword phrase.

Ranked Number One In Google

The Twitter effect was in full power.

Test 2: Firehose Off

After Google announced that they no longer used direct Twitter data, Rand created a previously unindexed webpage and tweeted it to his followers.

Rand Tweet

Within 10 minutes, Google picked up a tweet scraper, but not the original post.

After an hour we realized a mistake. We had inadvertently included a meta NOINDEX tag in the head of the webpage. Doh!

After quick removal of the tag, it took Bing a full 6 hours to index the original URL, but still no Google. Not until 8 hours after the original tweet did Google index our URL. Eventually it ranked #1 for its targeted keyword phrase.

scrapers-twitter

Even with our mistake, Google appeared significantly slower than it used to.

Test 3: Twtter vs. Google+

Twitter

The next day we created two unique pages to test the ranking power of Twitter vs. Google+. Rand then shared one page on Twitter and the other on Google+.

This time, the Twitter URL performed much better and faster in the SERPs. Within 13 minutes it ranked #1 for its keyword phrase "Euclidean Taeniasis of Galapagos".

Number One Ranking

Rand noted that the ranking coincided very neatly with our URL's appearance in Topsy, which may be where Google found it. It makes sense that the Topsy 100 is crawled and indexed much more frequently than Rand's Twitter profile.

Even more revealing was how tweets not only helped indexation, but also appeared to boost rankings. The first hour the page appeared in search results, it ranked 10th for the phrase Euclidean Perry and number 8 for EuxliswN Darwin. In the time it took for the number of tweets to double, the rankings rose from 8 and 7 respectively.

Tweets still help with indexation, although maybe not as fast as they used to. And tweets appear to boost rankings, although the exact degree is unclear.

Caveat: We noticed the URL was shared through several Linkedin accounts. Many people, including Rand, have their Twitter profile set up to automatically post to LinkedIn whenever they share. We believe this had a minimal influence on the experiment, but can't be discarded.

Google+

Rand shared the second page through his Google+ profile. He likewise encouraged folks to share it through Google+, but not through Twitter, Facebook, direct linking, etc. Within minutes the post was shared dozens of times.

Shared with Google Plus

Two hours later, this test URL ranked #1 for it's keyword phrase in Google search results - this time without a single Twitter scraper in the results.

google-plus

A check of shared count shows it was tweeted 0 times, although there were 4 Google Buzzes that appeared. Is this the effect of the +1 button?

No topsy

Two hours is a long time to wait for real time results. If Google wishes to replace Twitter with Google+ in a meaningful way, they have a long road ahead of them.

At this time, I haven't found direct evidence of improved rankings with Google+ beyond basic indexation, but I wouldn't be surprised if the phenomenon existed.

Twitter is Still Relevant: 4 Takeaways

Even without the Twitter firehose, it seems the Twitter effect still finds ways of maneuvering into Google's search results.

1. Aggregators & Scrapers Play an SEO Role

Without Topsy and the countless Twitter scrapers, it's unknown how fast our pages would have been indexed. The aggregators and the scrapers contain two features which undoubtedly helped our URLs to rank in each Twitter experiment:

  • Optimized Title Tags for the target phrase, i.e.
    <title>SeeYourImpact.org » Assist a mom, change the world – english | Twitmunin</title>

  • A prominent followed link to the target URL near the top of the page.

Topsy Twitter
 

2. Retweet – Retweet, Repeat

The more retweets a link receives, the better it seems to perform in search results and the more visibility it obtains with the social media aggregators referenced above.

With Topsy, for example, a URL that makes it into their top 100 list achieves much more visibility than a single tweet.
 

Rand Fishkin retweets


3. Social Authority = Ranking Potential?

“Who” tweets your content used to be just as important, or more so, than the number of people retweeting your content. Can Google still calculate this in any meaningful way?

It's interesting to note that Google still shows Twitter sharing data in personalized search results, as seen below.

author authority with twitter?

Whether this sharing data translates into author rank remains to be seen.

4. Traditional SEO Still Rules - For Now

Lately, I’ve talked to a lot of folks who are genuinely confused about the new role of social factors in search engine optimization. We in the SEO industry have contributed to this with our wall-to-wall coverage of Facebook likes, Google+ and articles like this one about Twitter. Ian Laurie wrote an excellent article on the topic. This attention has caused some people to believe that social media has displaced traditional SEO. This is far from the truth. Let me be clear:

Social media doesn't replace traditional SEO. It helps it.

Each of these tests contained a URL optimized for the targeted keyword phrase and the target page was optimized for the keyword, including the URL, title tag and on-page text. All of these factors undoubtedly helped it to rank.

Traditional SEO practices including content creation, external link building and on-page factors still lay the foundation for long-term ranking success. Take a look at Rand's SEO Pyramid below, where social media rests atop the other bases. Although the social aspect may be larger today than depicted in the past, we need to be careful not to flip the entire pyramid on its head.

SEO Pyramid
SEO Pyramid created by Rand Fishkin for SEOmoz

Tweets or Google shares alone don't yet equate to long term ranking nirvana. Employing a synergistic combination of social media and technical SEO savvy provides the best recipe for success.


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How to Build Website Trust and Authority Graywolf's SEO Blog

How to Build Website Trust and Authority Graywolf's SEO Blog


How to Build Website Trust and Authority

Posted: 05 Jul 2011 10:08 AM PDT

Post image for How to Build Website Trust and Authority

While Google’s Panda update has many different aspects, one thing is certain: Google is looking for signals of trust, authority, and real branding. They are looking for signals that thin content mfa sites and thin content affiliates will have a hard time building. If you are a website or business owner, what are some thing you can do to send these signals to Google? In this post I’ll give you a few ideas.

Speaking
Public speaking is a huge step in showing Google that you are a trusted and authoritative source on the web with nothing to hide. How does Google know you are speaking? They see your business name and domain on the web. It doesn’t matter if you are speaking at your local library, chamber of commerce, lions club, seminar at a community college, or industry conference. All of these events will have a page where they list who is speaking. Now, hopefully these pages will give you a link but, even if they don’t, just a citation of your domain counts in my opinion. Now you do have to balance and justify the time spent preparing, traveling, and speaking, but if you do this regularly, the value adds up over time.

Help a Reporter Out
Hopefully you have heard of HARO (help a reporter out). It’s a daily email list of reporters looking for industry experts to quote or interview for stories they are working on. You probably aren’t going to come across any requests from New York Times or Wall Street Journal reporters, but small- to medium-sized regional, industry specific journals, magazines, newspapers, or websites still have value. Again, getting a link is ideal, but even a citation of your business name and URL is IMHO a good thing

Blogger linkup
Blogger linkup is another daily email newsletter. Every day, an email goes out of blogs looking for guest posts and bloggers with guest posts looking for websites to accept them. Now, I will be honest, this can be a bit hit or miss as some of the sites are a bit dodgy and on the MFA side of the tracks, so take a look before committing to anything. Try to think outside of the box here. If you run a travel website and see a request for guest articles on a healthy eating website, write an article on eating healthy while traveling. Some of the biggest mistakes I see with guest articles is re-using the same bio box over and over and creating an unnatural focus of inbound anchor text. Don’t go there, ok?

Educational links
Let’s get one thing clear–links from a .edu website aren’t worth more because they are on an .edu TLD. They are worth more because, generally speaking, .edu websites have more trust than other websites. Wordstream published an excellent post on creating science projects and giving them away for schools and libraries to use. If you want links from .edu websites, create content that .edu websites would find valuable. Hire a premium research style writer and produce content that is considered valuable by professors, teachers, or expert content curators. Put this content on a different template than your normal content, strip out the ads, strip out the commercial links, and strive to make this content as encyclopedic as possible. Here’s a bonus tip: create content and release it into creative commons. Put it in a PDF that anyone can download, build upon, and re-use as long as they credit you. Try to embed a link to your website in the footer of the document, or at the bare minimum have your URL listed in the document.

Press Releases
Hopefully you are doing press worthy things on a regular basis, and you are putting out press releases about it. For example, did you create 12 science project PDFs for schools about fresh and salt water marine ecology for your online aquarium supply store? That is a press worthy event. If you get a guest blog post on a “green” or “Eco-friendly” blog, mention/link to it there too. This is how you make the most of content that cost you a lot of time/money/resources to create. Don’t obsess over whether the press release site passes link equity or not (it usually doesn’t), but think of the links as pointers. If your press release is picked up and your URLs are linked, the search engines will crawl through them. That’s why I strongly recommend including 1 or 2 deep links in a press release.

So what are some takeaways on this post on how to build website trust and authority

  • Concentrate on getting links or citations on other websites with higher trust and authority that are legitimate sources for news, information and research.
  • Engage in public speaking as often as is feasible. Try to make sure you have a speaker bio with your website listed or linked.
  • Look for opportunities to speak with or be interviewed by reporters about your area of expertise. Try to have your website listed and linked whenever possible.
  • Look for guest blogging opportunities on quality or upcoming websites.
  • Create content that educational facilities would find valuable and let them know about it.
  • Create content for educational use and distribute it under creative commons. Make sure to link or mention your domain in the PDF you distribute.
  • Do press worthy things on a regular basis and issue press releases about them. Try to include deep links if possible.
  • Look for ways to combine these efforts whenever possible so you can get the maximum value.
  • Don’t think of this as something requiring a lot of concentrated effort. You need to do these slowly and continually over time for maximum benefit.

photo credit: Shutterstock

tla starter kit

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How to Build Website Trust and Authority

Watch it Live: First ever Twitter Town Hall Today @2 p.m. EDT

The White House Your Daily Snapshot for
Wednesday, July 6, 2011
 

Watch it Live: First ever Twitter Town Hall Today @2 p.m. EDT

At 2 p.m. EDT, President Obama will participate in the first Twitter town hall at the White House to discuss the economy and jobs with Americans across the country. The entire event will be streamed live at WhiteHouse.gov/live.

Right now, thousands of people are talking about the event and asking questions on Twitter, using the #AskObama hashtag. Take a moment to join the conversation and ask your own question.

We've put together an overview of the event and a link to some more information about how to get started from Twitter here.



In Case You Missed It

Here are some of the top stories from the White House blog.

President Obama Addresses the Status of the Deficit Negotiations
President Obama delivers remarks to discuss the status of efforts to find a balanced approach to deficit reduction.  

Mile High City with Mountains of Ideas
Agriculture Secretary Tom Vilsack meets with business leaders from across Colorado at a White House Business Council roundtable in Denver to discuss innovative ideas to help create jobs.

Video: Fourth of July Celebration at the White House
The First Family hosts military families on the South Lawn for an Independence Day with a viewing of the fireworks over the National mall.

Today's Schedule

All times are Eastern Daylight Time (EDT).

10:15 AM: The President and the Vice President receives the Presidential Daily Briefing

10:45 AM: The President meets with senior advisors

11:15 AM: The President and the Vice President meet with Secretary of the Treasury Geithner

12:30 PM: The President and the Vice President meet for lunch

2:00 PM: The President hosts a Twitter Town Hall WhiteHouse.gov/live

4:30 PM: The President and the Vice President meet with Secretary of State Clinton

WhiteHouse.gov/live Indicates events that will be live streamed on WhiteHouse.Gov/Live

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Seth's Blog : Every successful case is a special case

Every successful case is a special case

It's easy to dismiss strategies or plans or people who succeed by pointing out how they have something special, something irreproducible, some sort of advantage that makes their success special.

Special as in, "not available to me."

They went to Harvard, they're public, they're not public, they have a great fundraising team, they have a powerful partner, they didn't go to Harvard, they already have a reputation, they have no reputation to risk...

This is silly, as all success is special. That's what makes it success. We don't consider breathing a success, since, fortunately, we all can breathe.

The trick is learning about what the special cases have in common, in understanding how maybe, just maybe, you have some of the very same attributes that others have used in a new way.

 

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marți, 5 iulie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Moody's Cuts Portugal Debt Four Levels to Junk, Warns of Second Bailout; Reflections on "Political Will"

Posted: 05 Jul 2011 09:31 PM PDT

It can't be contagion because we all know "Greece Has Been Saved". Nonetheless Moody's cuts Portugal to junk, warns of second bailout
Moody's Investors Service slashed Portugal's credit rating by four levels, to Ba2, causing the debt-laden Iberian country to follow Greece into junk territory below investment grade. Greece is rated much lower, at Caa1.Moody's said there is an increasing probability Portugal will not be able to borrow at sustainable rates in capital markets in the second half of 2013 and for some time thereafter.

There was a "growing risk that Portugal will require a second round of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a pre-condition," Moody's said.

Some economists think Ireland may also need additional support, and investors worry Spain and Italy could be next in line for aid.

"It goes to show that this whole crisis isn't over just yet," said Jay Bryson, global economist for Wells Fargo Securities in Cape Hatteras, North Carolina. "Even if they cough up some more money for Greece, and that looks like it's a done deal, it's not over."

Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto, said Moody's move was "a bit extreme" and was likely to exacerbate concerns over Portugal's debt.

"Either they don't believe in the power of the political will by the European Union to avoid default, or they are underestimating this political union," he said.
Political Will vs. Reality

There would never have been a sovereign default in history if "political will" was a guaranteed savior.

Greek 2-year bonds are trading at 26.91%. They opened today at 26.03%.

The market does not think much of "political will" and neither do I.

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


Bill Gross' Fatally Flawed Plan to Fix the Education System and the Fractured U.S. Job Market; Mish's 8-Point Alternative Plan

Posted: 05 Jul 2011 12:19 PM PDT

Bill Gross has a Plan to Fix the Fractured U.S. Job Market.

However, before you can fix any problem you have to understand what the problem is. Interestingly, Gross seems to have a handle on some aspects the problem. Here are two key points from the article on which I agree with Gross.
If we are to compete globally while maintaining a higher wage base, we must train for "middle" in addition to "high" tech. Philosophy, sociology and liberal arts agendas will no longer suffice. Skill-based education is a must, as is science and math.

The private sector is the source of long-term job creation but in the short term, no rational observer can believe that global or even small businesses will invest here when the labor over there is so much cheaper. That is why trillions of dollars of corporate cash rest impotently on balance sheets awaiting global – non-U.S. – investment opportunities. Our labor force is too expensive and poorly educated for today's marketplace.
Gross also cites several facts about the cost of education in the US that also hit the mark.
Fact: College tuition has increased at a rate 6% higher than the general rate of inflation for the past 25 years, making it four times as expensive relative to other goods and services as it was in 1985. (Click here for a list of the ten most expensive colleges and universities in the U.S.)Subjective explanation: University administrators have a talent for increasing top line revenues via tuition, but lack the spine necessary to upgrade academic productivity. Professorial tenure and outdated curricula focusing on liberal arts instead of a more practical global agenda focusing on math and science are primary culprits.

Fact: The average college graduate now leaves school with $24,000 of debt and total student loans now exceed this nation's credit card debt at $1.0 trillion and counting (7% of our national debt). Subjective explanation: Universities are run for the benefit of the adult establishment, both politically and financially, not students. To radically change the system and to question the sanctity of a college education would be to jeopardize trillions of misdirected investment dollars and financial obligations.

Conclusion to ponder: American citizens and its universities have experienced an ivy-laden ivory tower for the past half century. Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace.
5-Point Summary of the Problem

  1. U.S wages are out of line
  2. U.S. education is too expensive
  3. U.S. universities are run for the benefit of teachers, teachers' unions, and administrators, not for the benefit of students
  4. Student loan programs make life-long debt slaves out of students
  5. U.S. tax policy encourages flight of capital and jobs overseas


Bill Gross' Proposed Solution
"We need a program as ambitious as the GI Bill," but one that focuses on retraining existing unemployed workers and redirecting our future students.

Government must step up to the plate, as it should have in early 2009. An infrastructure bank to fund badly needed reconstruction projects is a commonly accepted idea, despite the limitations of the original "shovel-ready" stimulus program in 2009. Disparate experts such as GE's Jeff Immelt, Fareed Zakaria, Jeffrey Sachs and Paul Krugman believe an infrastructure bank to be an excellent use of deficit funds: a true investment in our future.

In the end, I hearken back to revered economist Hyman Minsky – a modern-day economic godfather who predicted the subprime crisis. "Big Government," he wrote, should become the "employer of last resort" in a crisis, offering a job to anyone who wants one – for health care, street cleaning, or slum renovation. FDR had a program for it – the CCC, Civilian Conservation Corps, and Barack Obama can do the same. Economist David Rosenberg of Gluskin Sheff sums up my feelings rather well. "I'd have a shovel in the hands of the long-term unemployed from 8am to noon, and from 1pm to 5pm I'd have them studying algebra, physics, and geometry."

Those who advocate that job creation rests on corporate tax reform (lower taxes) or a return to deregulation of the private economy always fail to address dominant structural headwinds which cannot be dismissed: 1) Labor is much more attractively priced over there than here, and 2) U.S. employment based on asset price appreciation/finance as opposed to manufacturing can no longer be sustained. The "golden" days are over, and it's time our school and jobs "daze" comes to an end to be replaced by programs that do more than mimic failed establishment policies favoring Wall as opposed to Main Street.
Pure Keynesian Nonsense

Gross correctly cited college expense as a problem. He also correctly cited global wage arbitrage as a problem. What proposal did he make to fix either of them?

The answer is he didn't. Instead he cited self-serving clean-energy nonsense from GE.

Of course GE's Jeff Immelt wants a massive energy build-out. Such a program would benefit GE and the value of Immelt's stock options.

Of course Krugram always wants more fiscal stimulus because he is a Keynesian clown, and that's what Keynesian clowns always want.

The golden days are indeed over, but Bill Gross' solution is pure Keynesian nonsense. Neither Gross, nor Immelt, nor Krugman ever say how we are supposed to pay for their proposed "infrastructure bank.

Time to Scrap Davis-Bacon, End Public Union Collective Bargaining

Unlike Krugman, Gross seems to understand one key point: the "U.S. labor force is too expensive".

Logically, that must be the starting point for any discussion.

Before any project can be economically viable, labor costs must be addressed, and that is exactly why we need to scrap Davis-Bacon and all prevailing wage laws. We also need to eliminate collective bargaining of public unions, preferably getting rid of public unions in entirety.

Unless and until we do that, we will dramatically overpay for infrastructure projects and taxpayers will pay through the nose for them.

Government should strive to provide the most services at the least cost. Public unions strive to provide the fewest services at the most cost. Is it any wonder cities and states are broke?

Killing Collective Bargaining the Single Best Thing for Education

The results are in: Union-Busting is a "Godsend"; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids
Congratulations to Governor Scott Walker for sticking to his guns. The state of Wisconsin is far better off because of it. So are taxpayers. Most importantly, so are the school kids.

Please consider Union curbs rescue a Wisconsin school district
The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous.

In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health insurance coverage and none of their pension costs. Now, they'll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and also contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board President Todd Arnoldussen.

"The monetary part of it is not the entire issue," says Arnoldussen, a political independent who won a spot on the board in a nonpartisan election. Indeed, some of the most important improvements in Kaukauna's outlook are because of the new limits on collective bargaining.

In the past, Kaukauna's agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums.

Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes.
Ridiculous Cost of Education

Nowhere does Gross address the cost of education other than to cite it as a problem.

The student loan program is a huge price of the problem. It does nothing but make students debt slaves for life. Student loans should be scrapped entirely. Education costs will drop dramatically once that happens.

Moreover, pension benefits of teachers and administrators are outrageous, especially at the university level. Salaries for sports coaches are outrageous.

All of those excesses need to be reined in.

Corporate Tax Law Changes

Every few years one or both parties proposes a corporate tax holiday to repatriate profits held by corporations overseas. Such actions must stop. All repatriation holidays do is encourage more outsourcing of jobs and capital, while corporations bide their time, waiting for the next tax holiday.

US companies that only do business inside the US are at a huge disadvantage to large corporations who can shift profits overseas.

GE is a prime example. Please consider G.E.'s Strategies Let It Avoid Taxes Altogether.

In 2010, GE reported $14.2 billion in profit, $5.1 billion in the US. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

Gross has high praise for GE.

The only thing GE deserves high praise for is an army of lawyers and lobbyists to reduce its tax bill to the detriment of struggling small businesses who cannot compete and get no such breaks.

If we are going to have a corporate tax, we should have a fair one.

Mish's Proposed Plan for Jobs and Education

  1. Scrap Davis-Bacon and all prevailing wage laws
  2. Enact national right-to-work laws
  3. Kill defined benefit plans for public workers
  4. Scrap student loan programs entirely
  5. End all support for for-profit colleges
  6. Revise corporate tax laws
  7. Stop corporate tax repatriation holidays
  8. Slash military spending. The US can no longer afford to be the world's policeman.

Those ideas will increase corporate tax revenues, end corporate tax unfairness to small US businesses, lower infrastructure costs, lower education costs, allow more public workers to be hired at the same costs as before thereby lowering the unemployment rate.

A key reason we have a jobs problem and an education problem is costs are too high. Gross purports to fix the problem via more government spending.

The solution cannot be the same as the problem, yet Gross proposes just that. Unions, untenable wages and benefits, and excessive government spending caused Greece to go bankrupt. Massive public works programs put Japan in a very precarious situation, with nothing but debt to show for its efforts.

History has proven time and time again that public spending proposals cannot and will not work. Gross and Krugman are blind to history. Immelt is talking about what is good for GE, not America.

The bond market forced Greece's hand. If we listen to Gross, Krugman, and Immelt, the US will soon be in the same spot.

Addendum:

Reader "Brian"comments
1. Government doesn't create jobs. Government jobs come at the expense of private sector jobs.

2. Bill Gross' comment "I'd have them studying algebra, physics, and geometry" is wrong. Not everyone needs to learn algebra, physics, and geometry. If money is to be spent in education, it should be where it is needed in trade tech schools. Americans are brainwashed into thinking that getting a four year degree is a path to financial success when a highly skilled tradesman makes more money and is more in demand today than a student with a fluff degree working in an office. We are creating a nation of unskilled workers in debt and ill prepared for the necessary jobs in a diverse economy.

3. Bill Gross won't speak poorly of educators or unions so long as endowments and pension funds make up a large portion of PIMCO investors

Thanks again for the article!
Brian
Regarding point number 1 above: Much government "work" is makeshift, and not needed at all.

Regarding point number 2 above: How many math majors do we need? How many PhDs do we need? If everyone has a PhD, then by definition, Walmart greeters and trash collectors will be PhDs. As Brian suggests, much is to be said for learning a trade instead.

Regarding point number 3 above: Clearly PIMCO suffers from the same credibility problem as GE. Of course, one has to look at ideas presented instead of making Ad Hominem attacks, but Gross' proposal was very weak as noted. One cannot help wondering if Gross purposely strove to avoid offending unions and pension plans.

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


Credit Crisis in Brazil: Consumer Loan Rates Hit 47%, Defaults Soar, Debt Service Tops 50% of Disposable Income

Posted: 05 Jul 2011 09:01 AM PDT

Those looking for inflation and high interest rates can find them in much beloved emerging markets, especially Brazil.

Reader Otavio, from Brazil writes ...
Hello Mish

Otavio here, a Brazilian follower of your blog. Today I want to express my satisfaction as I read you latest post entitled Preposterous Statements - Jim Rogers: "No Food at Any Price"; Barton Biggs: " U.S. Needs Massive Infrastructure Program".

When I hear statements like these, it feels like the move up in commodity prices might be near the end. I cannot stress more the fact that high prices fueled by zero interest rates in developed and many emerging markets (for many years now) are a fruit of rampant speculation.

We have our own credit bubble here, which in my opinion has a good chance of busting sooner rather than later, via one or more of the following:

  1. Central Bank over-tightening local rates
  2. Slowdown in China, which would change our terms of trade and contract global capital flows to EM and Brazil (as we are suppliers of commodities to China), tightening monetary conditions here as a result
  3. Deterioration of credit crisis in Europe (and US), would also contract global capital flows and tighten monetary conditions here


I took the liberty of forwarding you a FT article about Brazil.

I think you might appreciate this as maybe a topic for future posts of yours, since you are keen in identifying and warning readers and investors of potential bubbles around the world that may be close to busting. For the record, I will say that in my opinion, Brazilian real estate, many local stocks, and our currency (the Real), are extremely overvalued as well.

Cheers
Otavio
Brazil Risks Tumbling From Boom to Bust

With thanks to Otavio, please consider a few highlights from the Financial Times article Brazil risks tumbling from boom to bust

Cash Flow Burden Astronomical and Rising

  • Average rate of interest on consumer loans 47%, up from 41% in 2010
  • Consumer debt service burden was 24 per cent of disposable income in 2010, slated to rise to 28 per cent in 2011. This compares with 16% for an "overburdened" US consumer and a mid-single digit reading for other emerging markets such as China and India.
  • Debt service burden for the so-called "middle class" in Brazil has now breached 50% of disposable income
  • Delinquencies in Brazil (defaults in excess of 15 days) have begun to move up rapidly, from 7.8 per cent to 9.1 per cent of total loans between December 2010 and May 2011.
  • Delinquencies are now rising at a very hectic rate. They have risen at 23 per cent in the first five months of this year in absolute terms or at an annualised rate of 55 per cent.
  • Normally credit indicators cyclically lag the economic cycle. When they begin to deteriorate before any economic weakness it usually represents a structural problem relating to underlying cash flow or underwriting weakness in the quality of credit – Brazil has both problems.


In light of facts elsewhere around the globe, it's really quite humorous to hear repeated chants of hyperinflation every time US treasury yields inch up slightly.

Brazil Targets Currency Speculators

Brazil's Finance Minister, Guido Mantega Mulls New Currency Measures
Brazil will continue to act to curb the strength of its currency, with restraining excess speculation in the futures and derivatives markets among possible options, the country's finance minister said on Tuesday.

"The government will continue to take measures to contain the over-valuation of the exchange rate ... We've taken measures on reserve requirements, we can take measures on derivatives and futures. But these are not measures we will pre-announce," Mantega told reporters.

Despite aggressive measures to curb the strength of its currency, including taxes on fixed-income inflows, the real is trading close to its strongest level against
the dollar in 12 years.

In recent weeks, foreign investors have raised their bets that the real will continue rising to record levels.

Last year, Mantega accused governments around the world of deliberately weakening their currencies to boost their export competitiveness, warning of an "international currency war."

But for Alberto Ramos, Latin America economist at Goldman Sachs in New York, Brazil is "no passive victim."

Near-zero rates in developed markets and high rates in emerging economies are drawing investment to countries like Brazil. At the same time, though, Brazil has failed or refused to contemplate measures that could ease flows, such as cutting
government spending, which makes up a whopping 40 percent of gross domestic product, he said.
No Passive Victim

I am inclined to agree with Otavio who says the Real is "extremely overvalued".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Jobs, Income Data Show Right-To-Work States Have Advantage

Posted: 05 Jul 2011 12:06 AM PDT

Investor's Business Daily reports Jobs, Income Data Show Right-To-Work States Working
The business world is abuzz over the National Labor Relations Board's complaint vs. Boeing's new South Carolina production line. For NLRB critics, the case boils down to one thing: "right-to-work" laws.

Right-to-work states have generally lower unemployment, higher job growth, lower taxes and better business climates. They have growing populations and have been attracting businesses from other states.

In most states, once a workplace is unionized, employees are required to join the union or they can't work there. But 22 states, including South Carolina, have passed laws that give employees the right not to join. Hence the term "right-to-work."

Between 1977-08, employment grew 100% in right-to-work states vs. the national average of 71% and 56.5% in non-right-to-work states. That's according to a January study that Ohio University economics professor Richard Vedder did for the Indiana Chamber of Commerce.

In this period, real per capita income in the right-to-work states grew 62.3% vs. the national average of 54.7% and 52.8% for non-right-to-work states.

Vedder has studied right-to-work laws for decades and argues that this success is not a coincidence.

" I've been looking for ways to show that these laws don't really (impact) anything. But I haven't found it yet," Vedder said.

Right-to-work fans concede that a variety of factors go into the relative success of a state's economy. But the labor laws are a strong indicator, they argue.

"Nobody is saying that right-to-work is the only factor, but if the bottom 14 states for personal income growth (between 1999 and 2009) are all non-right-to- work states, that's a pretty strong negative correlation," said Stan Greer, senior research associate for National Right to Work's National Institute for Labor Relations Research.



I support national right-to-work laws for the simple reason it is the right thing to do. Forcing people to belong to unions to get a job is forced slavery. Dictating what people can and cannot do with their free time is also slavery.

Sadly, unions even dictate what non-union members can do with their free time.

Want to donate time to your school, cleaning classroom or planting shrubs? It's likely you can't because of unions. Want to be a volunteer fire-fighter? You may not be able to do that either.

For further discussion of the slavery issue, please see


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