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vineri, 19 octombrie 2012

The Death of Link Building and the Rebirth of Link Earning - Whiteboard Friday

Posted: 18 Oct 2012 07:59 PM PDT

We've all known someone who got hit by Google's algo updates. Whether you've personally been affected or you know someone who has, it's not fun to bounce back from and can can impact your SEO efforts if not addressed appropriately

This week, Rand discusses the egress of old link building practices and the ingress of new (old) link earning strategies that will help your site stay relevant in the SERPs and drive your traffic with a better user experience.

Video Transcription

"Howdy, SEOmoz fans. Welcome to another edition of Whiteboard Friday. This week I want to talk a little bit, philosophically, about something that's happened with the Web, that's happened as a result of how Google is keeping up with webspam and how their algorithms are evolving.

You've likely seen that this year has been an incredibly active year from Google's Webspam Team, specifically focused on a lot of linking stuff with Penguin, now the exact match domain updates. We saw some other updates that look link related that weren't specifically Penguin, but appear to be penalizing certain types of links. Article marketing, article directories getting hit. A bunch of the directories, like general web directories and pay for submission directories and SEO friendly directories getting hit earlier this year.

And, because of all this, I am really getting the sense that what Google is trying to say is, "Stop link building and start link earning." Literally, I feel like the message coming out of Google is, "If this is a link that you go out onto the Web and acquire as an SEO person trying to build a link in the way that links have classically been built or gotten, we don't want you to have that link, or more likely, we don't want to count that link, and if that's all you do, we might actually be penalizing you through an algorithm filter like Penguin.'

So I'm kind of seeing this as a return, a rebirth of the link earning ways of the Web. Remember, early on in the Web, sort of mid to late '90s, before search engines became huge and link building was a big part of SEO, so you can kind of think like '94 to '97, '98, that kind of thing, it was really about earning links that are going to bring me relevant traffic. That's the only thing that mattered, because search was bringing some valuable stuff, but most of the search engines had some directory bases or it was a lot of keyword stuff.

So getting traffic from those relevant sites that could send me people who would actually convert or do something on my website that I wanted them to do, that was what the game was all about. Then, Google comes out, Alta Vista and some of the other search engines kind of switch over to this link model, and now it's, "Oh, I really want high PageRank links. I'm looking for that little green bar that's filled up all the way. When I see that in the toolbar, I know that if I just get some links on there to my page, I can start ranking for all sorts of stuff."

So Google gets a little smarter, right, and now it's, "Oh, yeah, anchor text." That really started emerging early 2000's. Now as they're getting more sophisticated, it's sort of, "Well, we have to get certain types of authority links with the right balance of anchor text," and these kinds of things. Now, really the last 12 to 18 months, and even more heavily the last 9 months since that first Penguin update, we've been sort of seeing a return to this, "Man, I better get good links that I've earned, rather than acquired or gotten, because if I don't, those acquired, those gotten, those built links seem to be able to hurt me and that's dangerous stuff."

Let's try to imagine this. I want to go link building. These are sort of the old-school link building tactics and their equivalent in a link earning world, a world where we are going out and trying to earn the links that we acquire rather than building them, buying them, getting them, forcing them, pushing them, dropping them, all these kinds of things.

So imagine, like, link exchanges and reciprocal links, which happen a lot. To my mind, the new version of that is the cross promotion, the partnership, where I say essentially, "Oh, you know, SEOmoz has a partnership with Distilled, and so there are lots of links happening back and forth in a very sort of natural, non-manipulatively SEO sense." No one's dropping anchor text. No one is putting links on specific pages. It's, "Where does it make sense, and how can we drive traffic back and forth in the right kinds of ways? If we promote DistilledU and they say,
'This is a really good blog post by one of our consultants,' then great."
That stuff sort of naturally happens, and it's that relevant traffic story.

E-mail blasts, you still get them, sadly. I'll tell you a funny story. Story time. So funny story, we got an e-mail from one of our PR people. We do some PR where we've actually hired a PR company, a company called Barokas here in Seattle, and they sort of do these PR pitches. So they were pitching some people, I think this was for our funding back in April, and the crazy part was that they got back responses from a couple of, I'm not going to name them because I'm not sure if Barokas would be upset with me if I did name them, but a couple of big press outlets that you've definitely heard of here in the United States that said, "We don't write about SEO companies." Oh, okay, don't write about SEO companies.

I think, I'm pretty sure that the reason for that is because they get so many press releases and e-mail blasts that are like, "Oh, write about this latest SEO company. SEO-blahblahblah." Junkie stuff and so they associate it with low quality. The new e-mail blast for links is social sharing for links. I share things socially. I hope that message gets magnified across social and that will lead organically to links. I will earn the links that I get by sharing them socially across my network and across the social platforms. People will see them and hopefully link back to me if that's relevant and interesting.

Buying links directly. Yeah, that's dumb. Just don't do that. You shouldn't have done that for many years. That's been gone for a long time. But I think the new way to do this is earn links directly with content. You can earn links very, very directly if you create the kind of content that you know someone wants to share, wants to link to, would embed, would write about or blog about or include in their press or their research or in something that says something nice about them. Yeah. That testimonial, right? All that kind of stuff can be directly earned with content. That's the new buy directly with dollars.

Submitting to directories. Yeah, well, that also hasn't been smart for a little while now, and Penguin has made that situation much worse. There was an interesting interview - you'll find it on inbound.org - with an ex-
member of the Webspam Team, the team that Matt Cutts is head of at Google. This guy is in Australia now, working on a new site, new project. There was an interview of him by an SEO guy, and he asked some questions about this. He said, "Yeah, you know, there's this myth that directories are entirely dead. If it's a curated list, where someone is maintaining a resource and something is included there, I still think those are very valuable."

I would agree, if you can get on to those curated lists. So think of, like, the Inc. 500 Fastest Growing Companies in the US list or the Better Business Bureau directory in your area or Yelp's list of "Thai restaurants in Seattle." Those are curated lists and portals. That's a great place to get onto.

The article directories and article marketing. So this was never a particularly excellent idea, but it did work. Tragically, it totally worked for a while. Now it's actively hurting people like many of these other link building techniques. I think the link earning way to do that is to get a guest post featured on picky sites and blogs. This is very important. When I say "picky," what I mean is, people who care a tremendous amount about what's being put on their sites as opposed to those who accept nearly every type of guest post or guest article. That's really the article directories/article marketing world, and it's dangerous, bad stuff. They got hit by Panda first, then they got hit by Penguin later and just ugly. You don't want to mess around with that. But, if you can get your stuff featured on picky sites and blogs, what's beautiful is one link from a great blog in your industry or a news site in your industry, this is worth a hundred, maybe a thousand of these, even back in the day.

Old-school, super old-school link building tactic was leaving links on guestbooks, forums, open comments, do follow blogs, do follow links, all that kind of stuff. Obviously, you can see the results of that today, which are not good. I think the new version of that is participating in communities like these that are active and authentic and have real participation and real membership, in such a way that members of those networks, of those communities will notice you and then link to you organically. They'll find your stuff. They'll be like, "Oh, this Randfish person looks interesting. I'm going to check out his content. His content looks interesting too. I could use some of this stuff, or I'm going to reference this or I'm going to write about something, and I'll pull in a reference to something, a citation of something that he's made in the past." Great. That's terrific. But you better be authentically participating, or they'll think you're spam, and you better have that great content to back it up or you're not going to be earning those links.

Mining competitor's backlinks. I would not say, "Don't do this anymore." I still think this is valuable stuff, but if you just go through your competitor's backlinks and you try and get all of those links, a lot of the time, particularly in SEO heavy sorts of industries, you're going to see a ton of the rest of this stuff. A lot of people have a lot of these links from the classic days when these sorts of things were how people got links.

Now, the new thing that I always think about is going to Open Site Explorer or Topsy and looking at, "What is the content that's gotten the most links from my competitors or from people who are competitive in my field?" They don't necessarily need to be directly overlapping businesses. Looking at Topsy and seeing what's the most socially shared content, what's getting hot from this site, this blog, this research, this market leader, whoever it is, and then doing it better, oh, that's beautiful. When you do this, then I think it pays to go look at, "Hey, who was it that was linking to the interesting content that that site produced?" So mining in that fashion is valuable.

There used to be this practice where people would build up private networks of websites that could be called link farms sometimes. Or they built up public networks that were called link rings and link circuses and blog carnivals. I remember blog carnivals, which weren't always spammy, but then got used in very spammy ways for SEO. Those network links of sites, the new way to do that is to build a social network, building a social network that is actually made up of influencers, of people who can link to you, the linkerati, the people who own websites and who have a presence in Twitter, Google+, Facebook that can influence other people, that will get people paying attention to you. If you build this up, you'll accomplish far more than what this would do for you today.

So I am not saying that all of the link building tactics of yore are gone. There are certainly some that still exist. I mean, directory stuff, there could be some curated lists that still make sense. But, by and large, Google is trying to end the practice of link building and renew the practice of link earning. I think that's why you see so many SEOs embracing content marketing, and I think this shift is going to happen even more heavily over the next 6 to 12 months. So if you get ahead of the curve now, you're going to be in a good place next year.

All right everyone. I hope you've enjoyed this edition of Whiteboard Friday. See you again next week and take care."

Video transcription by Speechpad.com

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The Anatomy of Tomorrow's Inbound Marketing Strategy Today

Posted: 18 Oct 2012 04:35 AM PDT

Posted by Slingshot SEO

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.

There are many schools of thought and methodologies defining what inbound marketing should look like. Most of them position content marketing, social media marketing and SEO as the core of inbound marketing. From a 20,000-foot view, this has definite merit. However, with the right technology, enough content, well-developed personae and a good understanding of the brand, inbound marketing strategy can be much more stratified and robust.

The anatomy of a robust inbound marketing campaign has similarities to the human spine. The human spine has five ordered sections – cervical, thoracic, lumbar, sacrum and coccyx – all of which are required to be in working order to live a pain-free, normal and productive life.

An inbound marketing strategy has five ordered sections, too – owned and earned media, landing pages, lead nurturing, sales interaction and retention. And all of them are required to widen the sales funnel, create acceleration through it and to optimize Marketing’s impact on revenue. If there’s a problem with any of the sections Marketing’s impact on revenue will not be optimized and the inbound campaign will be in poor health.

Owned and Earned Media

This is the section that most marketers equate with inbound marketing – publish lots of owned and earned blog posts and articles frequently, organically distribute them through social media and watch Google drive traffic from its SERPs. This process produces lots of benefits, but without a strategy for the other sections it will be difficult to show real ROI.

Purpose: Generate traffic, educate prospects, grow brand, produce thought leadership, build community, produce outside advocates, reduce churn

Tip: Publish blog posts with frequency and consistency. According to Kuno Creative’s Content Marketing Manifesto, publishing five to ten posts per week led to a 633% increase in leads versus just two to three posts per week.

Landing Pages

This is a critical aspect of an inbound marketing campaign. Having lots of good free content is great, but morally bribing website visitors for their email and IP address using gated content is just as important. Once this information is captured, the visitor is no longer anonymous and their content consumption can be tracked and scored. It also allows for future email communication.

Purpose: Capture email and IP addresses

Tip: Analyze and value the inbound and outbound marketing channels that led to conversion with attribution modeling. Use this data to adjust tactics in the first section.

Tip: Deploy A/B or multivariate testing to optimize call to action click-through rates and landing page conversions.

Lead Nurturing

With email addresses captured and other attributes known (other form fields, website behavior, social media profiles, IP address, etc.) lead nurturing, segmentation and scoring can begin. Delivering the right content on the correct channel at the best time separates the wheat from the chaff and empowers the wheat to organically identify themselves as sales qualified leads over time. It also creates an efficient method for identifying and removing unqualified leads from the funnel.

Purpose: Generate more sales qualified leads faster (widens the sales funnel while creating acceleration through it).

Tip: If lead nurturing is a new or unrefined tactic access Eloqua’s Lead Nurturing Toolkit for tactical refinement.

Sales Interaction

Marketing should only deliver leads that are worthy of a sales person’s time. Analyzing and adjusting lead score criteria over time is critical to ensure this happens. However, just as critical is the open flow of communication and lead feedback between Marketing and Sales.

If the inbound marketing strategy is effective, Sales should find their prospects to be highly educated, qualified and ready to do business.

Purpose: Efficiently generate customers

Tip: Connect marketing automation tools with a CRM to help facilitate closed-loop marketing and open communication between Sales and Marketing.

Retention

A big portion of the retention initiative is accomplished by producing copious amounts of earned and owned media, building passionate communities in social media and being highly visible online. These are all activities that should already be deployed if the inbound marketing campaign is healthy.

In addition, Marketing can produce and deliver advanced content created specifically for current customers. This content can be in the form of surveys, guides, cheat sheets, training videos, process infographics, etc. However, this can all be for not if deliverables aren’t fulfilled and expectations aren’t met or exceeded.

Purpose: Reduce churn

Tip: Marketers should keep open communication with fulfillment and account management in order to feel the pulse of current customers. This can help identify possible future churn to target with content before it’s too late.

In high school, anatomy class was a place for students to giggle about the curriculum. However, understanding and implementing the entire inbound anatomy presented above is no laughing matter. In today’s ultra-competitive environment getting inbound right can mean the difference between business success and mediocrity. Getting it right tomorrow may mean the difference between business success and failure.

About the Author: Chad H. Pollitt is Director of Marketing at Slingshot SEO. Since 2002, he has played an integral role in designing, developing, deploying, executing and tracking robust web marketing strategies for hundreds of companies and organizations and is an internet marketing expert. He holds a BS in Entrepreneurship from the Indiana University Kelley School of Business, an Internet Marketing Masters Certification from the University of San Francisco's prestigious School of Business and Management and is a Certified HubSpot Partner.

West Wing Week: 10/19/12 or "The Power of We"

Your Daily Snapshot for
Friday, October 19, 2012

West Wing Week: 10/19/12 or "The Power of We"

This week, the President reflected on the state of the auto industry, the White House opened its garden to the public for its annual tours, and marked Blog Action Day -- while Bill Allman spoke on the history of the Presidential Seal.

Watch this week's edition of West Wing Week.

How Out of Date is the Learning Center and AdWords Exam?

How Out of Date is the Learning Center and AdWords Exam?

Posted: 18 Oct 2012 07:27 AM PDT

AdWords has changed a bit over the years. The interface changes, functions come and go, new settings appear…

The problem is that not everything changes at the same time, meaning AdWords Help might not immediately reflect shiny new features. The AdWords exams – and the Exam Study Learning Center – are always behind on something.

It's possible that some things are left out for simplicity. For example, it's possible they left out some of the many and varied targeting methods for the Display network in the Fundamentals sections to avoid over-complicating things. But some things are just plain wrong.

If you use AdWords quite a lot but are just studying for the AdWords exams, it's useful to know what the exam thinks is the case and what actually is the case. Or if you're using the Learning Center to teach yourself about AdWords, you may be wondering why what you're reading doesn’t match the real thing. Here’s a rough guide to where the Learning Center and exams are behind.

The Networks Tab

This has, more or less, been replaced by the Display Network Tab. The Networks tab used to give an overview of traffic on the different networks, as well as a list of automatic and managed placements. The Display Network tab doesn't have that overview, and covers all targeting options (keywords, topics, interests, and now age and gender).

Devices

Section 4, Device Platform Targeting mentions "desktop and laptop computers" and “iPhones and similar mobile devices”, but neglects to mention tablets (which have been an option since July 2011).

Also, it claims statistics are available only in aggregate: “If you’d like to see performance statistics broken out by device platform type, we suggest creating two separate, identical campaigns and targeting them to different device platforms.” This is wrong; to see performance broken out by device, use the Device segment.

Close Variants

This might be left out to keep things simple; it's easiest to explain exact match as the ad appearing "only on a query that precisely matches the keyword". But, seeing as the "include plurals, misspellings and other close variants" campaign setting is turned on by default, this actually isn't how exact match works on most campaigns. You'd think they'd mention this somewhere.

On the subject of match types, there isn't any mention of broad match modifier either, even though it's been around for about two years. Not sure why embedded match would make the cut but BMM wouldn't…

Demographic Performance

Section 11.2, AdWords Reporting will tell you there is a 'Demographic' view in the Dimensions tab "packed with information about the gender and age groups of your users". There isn't. There hasn't been since March.

Before March, if you were on the Display Network, there were campaign settings to exclude age groups or specify a percentage by which to alter bids for particular age groups. Now you can't alter bidding, although you can exclude ages and genders at ad group level (in the 'Gender' and 'Age' parts of the Display Network tab). You just can't see your performance data split by demographics any more.

The section also says the Geographic Performance report in the Dimensions tab shows the 'geographic origin' of searches. This isn't quite accurate; the 'User locations' report shows where searchers actually are, the Geographic report shows either their location or the location they're searching for.

Wonder Wheel

Not actually part of AdWords, the Wonder Wheel was an option in the sidebar of Google Search. It would show your search term, with spokes sticking out showing closely related concepts. You could click on a concept and it would expand, gaining spokes and related concepts of its own.

This one went away in July 2011.

(If you miss the Wonder Wheel, or want to find categories Google thinks are related to your keyword, try the Contextual Targeting Tool – it uses the same engine.)

The Video Targeting Tool

There used to be a standalone tool for finding suitable placements on YouTube. Now there's just the Placement Tool. There are Placement Types in the sidebar, and you can uncheck them all except Video to get YouTube placement ideas.

Report Center

The Reporting lessons sometimes mention the Report Center. It was retired two years ago. It used to be where you could download a variety of reports, which nowadays you get from the Campaigns tab or Dimensions tab. Some things – like the Conversions page – have moved to the Tools and Analysis menu.

Anything Else?

I’m sure there are many more things that I’ve missed – if you can think of any (or just fancy a rant on how inaccurate the exams are), feel free to comment!

Image credit: Alexandre Dulaunoy.

joi, 18 octombrie 2012

Mish's Global Economic Trend Analysis

Graphical Look at Trends in Weekly Unemployment Claims
Philly Fed Rises But Details Very Weak; Future Expectations Plunge
Brookings Institute On Looming Fiscal Cliff: Little Room for Optimism
China’s Economy Slows, Power Output Falls to Four-Month Low but Premier Upbeat on Economy; Enormous Headwinds

Graphical Look at Trends in Weekly Unemployment Claims

Posted: 18 Oct 2012 08:34 PM PDT

As expected, weekly unemployment claims bounced sharply higher this week, up a whopping 46,000 from last week's revised figure of 342,000.

Last week, recall that the Labor Department reported a four-year low of 339,000 first-time claims. It was not a real number.

As I noted a week ago in So Much For Today's Surprising "Drop" In Weekly Jobless Claims; California Forgot to Report 30,000 Claims ...

I still think Friday's jobs report will be revised away, but I am positive today's "surprising" report will be (for the simple reason California forgot to report 30,000 claims).

Actually, the report isn't worthless, it's simply erroneous. Add back in 30,000 claims and the number is 369,000 right about where it has been for some time.

Economists were thus expecting about 370,000 claims this week, but amusingly claims shot all the way back to 388,000.

So much for conspiracy theories regarding unemployment claim numbers.

To better understand real trends we need to look at the 4-week moving averages of claims to help smooth out things like weather-related incidents (and California ineptitude).

4-Week Moving Average Trends 2009-2012

To put trends into a visual perspective, I asked Doug Short at Advisor Perspective for a year-by-year breakout, as shown above.

Note that weekly claims headed sharply lower in April of 2009 two months prior to the official end of the recession. There was a slow but relatively steady improvement in 2010, and a choppier improvement in 2011.

In 2012, there is has been no improvement since mid-February, and minimal improvement since the start of the year.

Weekly Claims 2005-2008

The four-year moving average of claims was 331,000 when the recession started. It is 365,500 today.

At no point has the 4-week average of claims dropped below 360,000 since early 2008.

Where To From Here?

If you are expecting a big jump in weekly claims prior to the recession, I doubt you get it. Indeed, if you stake the claim as I have, that the recession has already started, you already didn't get it.

Moreover, corporations are running pretty lean employee-wise and housing starts are bottoming (if not already bottomed), so one should not expect to see a similar spike in claims as we saw in mid-2008 and 2009.

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

Philly Fed Rises But Details Very Weak; Future Expectations Plunge

Posted: 18 Oct 2012 12:38 PM PDT

Inquiring minds digging into the latest Philly Fed Manufacturing Report will quickly discover the rise from last month is really a mirage.

click on chart for sharper image

Index and Details

The previous overall diffusion index rose from -1.9 to +5.7.

However ...

New orders fell into from +1 to -.6
The number of employees sunk further into contraction
The average work week fell further into contraction
Prices paid rose substantially vs. prices received. This shows inability to pass on costs, thus reflects a squeeze on profit margins
Inventories are up, but shipments are still in contraction following an enormous plunge in shipments last month

6-Month Expectations

I recently said expectations looking six month out were wildly optimistic and they were (and still are).

Note the plunge in expectations from 41.2 to 21.6.
New Order expectations fell from 49.4 to 21.1
Shipment expectations fell from 42.9 to 20.6
Number of employees fell from 21.4 to 8.0

Doug Short at Advisor Perspectives has an interesting series of Philly Fed Charts. For example, here is a graph of current vs future expectations.

click on chart for sharper image

Doug writes "The average absolute monthly change across this data series is 7.9, which suggests that the 7.6 point change from last month is not highly significant .... The latest Future reading has shown a substantial decline of 19.6 points following last month's 28.7 point surge."

This was a very weak report but billed as "stronger than expected".

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

Brookings Institute On Looming Fiscal Cliff: Little Room for Optimism

Posted: 18 Oct 2012 09:46 AM PDT

Brookings Institute Senior Fellow Ron Haskins discusses the Looming Fiscal Cliff in the following video.

About 30 seconds in, Haskins' stated "the fiscal cliff is kind of the opposite of Keynesian economics". I was thinking here we go again, another person thinks we cannot do anything about this "now".

Having played it entirely, it is clear Haskins is not supportive of the Keynesian view, rather, he is disgusted as to why we are where we are, blaming Congress, the president, an partisan politics.

He failed to address the role of the Fed or fractional reserve lending, but he is against can-kicking exercises.

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

China’s Economy Slows, Power Output Falls to Four-Month Low but Premier Upbeat on Economy; Enormous Headwinds

Posted: 18 Oct 2012 01:25 AM PDT

A rally in Asia is underway this morning as Wen Jiabao, China's premier is upbeat on China's economy

Wen Jiabao, China's premier, has given his most optimistic assessment of the Chinese economy since the start of the year, saying that it had stabilised and that the government's target of 7.5 per cent annual growth was well within reach.

Mr Wen's comments, published in a statement on the government's main website on Wednesday, came a day before China releases its third-quarter GDP data. The data are widely expected to show growth slowing from the 7.6 per cent recorded in the second quarter and marking the country's seventh straight quarterly slowdown.

Before previous data releases this year Mr Wen warned that the Chinese economy faced "downward pressure" because of the lingering impact of the global financial crisis.

But in the comments released on Wednesday he struck a more upbeat tone: "The economy in the third quarter was quite good. We can now say with confidence that the growth of the Chinese economy is basically stabilising . . . As policies are implemented and hit their mark, the Chinese economy will stabilise further."

He added that he was sure the economy would achieve the government's full-year target of 7.5 per cent growth.

Power Output Drops As Growth Slows 7th Quarter

Bloomberg reported China Power Output Falls to Four-Month Low Amid Slowing Economy

China's power output in September fell to the lowest level in four months as economic growth slowed for a seventh quarter.

Electricity production was 391 billion kilowatt-hours, the least since 390 billion in May, data from the National Bureau of Statistics showed today in Beijing. The figure was down 11 percent from August and up 1.5 percent from a year ago, according to the data.

The world's second-biggest economy expanded 7.4 percent from a year earlier in the three months ended September, the statistics bureau also said today.

Enormous Headwinds

China has massive property bubbles, an infrastructure building bubble, and is overly committed on exports with the EU in a massive recession and the US in recession as well (at least by my estimation, slowing by other estimates).

Moreover, numerous shadow-banking and ponzi loan schemes have collapsed this year. Worse yet, the bubble-busting collapse of shadow-banking schemes is likely just getting started.

In response, China has announced various infrastructure stimulus measures, but all that does is prolong the inevitable collapse in the unsustainable infrastructure-building model.

Infrastructure building in China is already at the point of malinvestment. The projects will never be economically viable.

China's move to a consumption model away from exports and fixed investment is going to be painful. The collapse of shadow banking and the breakup of state-owned-enterprises will be key issues in the coming decade.

Power Struggle of a Different Order

Yet, China can stimulate for a while just as the US can and did (increasing headaches down the road), but do not expect much more with a major regime change coming up.

Please consider the New York Times article In China, a Power Struggle of a Different Order.

As the Communist Party in China prepares for a once-in-a-decade leadership transition next month, it is also planning to take a giant step — to break up the monopolies enjoyed by its gargantuan state-owned enterprises.

Prime Minister Wen Jiabao vowed in a speech this year that Beijing would pursue breaking up state monopolies. "We must move ahead with reform of the railway, power and other industries," Mr. Wen said, "complete and implement policies and measures aimed at promoting the development of the nonstate economy, break monopolies and lower industry thresholds for new entrants."

All signs indicate that the next leaders of China — Xi Jinping is widely expected to replace Hu Jintao as president and Li Keqiang is poised to succeed Mr. Wen as prime minister — will stick to that script. Critics say that the sheer size and market dominance of state-owned enterprises creates a drag on the Chinese economy, with vast opportunities for corruption and waste and higher costs for consumers.

Once the new party leadership is in place, it will be under enormous pressure to break the grip of inefficient state companies and to reinvigorate China's three-decade economic miracle. But there is a deep division within the party on such economic policies.

The increasingly powerful state-owned companies are a monster of the party's own creation. After languishing through the 1990s, China's state sector came roaring back over the past decade to take control of vast swaths of the economy.

Today, state companies and affiliated businesses account for more than half of China's economic output and employment. Of the 70 companies in mainland China that are on the 2012 Fortune Global 500 list , 65 are state-owned.

The NYT article is well worth a read in entirety. It discusses many of the issues and battles raised long ago by Michael Pettis at China Financial Markets.

Huge Battle Brewing

Pettis has been on top of the SOE issue for quite a long time. Here are a few more links worth reviewing regarding the battle looming over the SOE breakup as well as future expected growth of China.

Whether or not China meets its full-year (revised lower) target is essentially irrelevant. What happens over the next few years is what matters. And on that score I think China bulls will be shocked how anemic Chinese growth will be.

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

"Wine Country" Economic Conference Hosted By Mish
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vineri, 19 octombrie 2012

The Death of Link Building and the Rebirth of Link Earning - Whiteboard Friday

The Death of Link Building and the Rebirth of Link Earning - Whiteboard Friday

Video Transcription

West Wing Week: 10/19/12 or "The Power of We"

How Out of Date is the Learning Center and AdWords Exam?

How Out of Date is the Learning Center and AdWords Exam?

The Networks Tab

Devices

Close Variants

Demographic Performance

Wonder Wheel

The Video Targeting Tool

Report Center

Anything Else?

joi, 18 octombrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Pagini

Persoane interesate

Arhivă blog

vineri, 19 octombrie 2012

The Death of Link Building and the Rebirth of Link Earning - Whiteboard Friday

The Death of Link Building and the Rebirth of Link Earning - Whiteboard Friday

Video Transcription

West Wing Week: 10/19/12 or "The Power of We"

How Out of Date is the Learning Center and AdWords Exam?

How Out of Date is the Learning Center and AdWords Exam?

The Networks Tab

Devices

Close Variants

Demographic Performance

Wonder Wheel

The Video Targeting Tool

Report Center

Anything Else?

joi, 18 octombrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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