How the NY FED’s Critics Helped Promote The Idea They Attacked


“There is no such thing as bad publicity”

In the internet age, bad publicity can quickly turn into a favorable search engine position for an idea or company that is being attacked. While critics think they are hurting or discrediting an idea or company, the criticism often times disappears into the deep recesses of the web. However, the object of their attack is often left with an enhanced search engine ranking (getting more favorable placement on the Google, Yahoo) when people do web searches.  As a result, more people get exposed to the “bad” idea as a result of the criticism.

The New York Federal Reserve Got A Great Search Engine Ranking For The Term Municipal Bonds

Municipal Bonds” is a fairly competitive term on Google. Learn Bonds has been working on improving our search engine ranking for this term for many months. Our site is now the last listing on the second page of search results. Eight places higher up on the page is the posting Liberty Street Economics on municipal bonds. The difference is that they did not make any efforts to improve their search engine ranking. Their critics, including a piece here at Learn Bonds, did it for them.

On August 15th, 2012, the New York Federal Reserve published, “The Untold Story of Municipal Bond Defaults”.  The article’s premise was that municipal bond defaults were over thirty times more common than previously thought.  As one of the main reasons for the popularity of municipal bonds among investors is their safety (low default rate), this article had the potential to undermine confidence in municipal bond market.

The article triggered an immediate and strong reaction. As the report was being issued by the Federal Reserve, it carried an instant air of credibility. Furthermore, the market still had a strong memory of the last time that the safety of municipal bonds had been questioned by a well respected source.  A couple years ago, Meredith Whitney had predicted that there would be 100s of billions of municipal bond defaults . While the prediction never turned out to be true, her pronouncement ended up reducing interest in buying municipal bonds for almost a year. Municipal bond market participants were eager to avoid a repeat of the situation.

Almost immediately, bloggers including Cate Long (Reuter’s Muniland) , Dave Merkel (Aleph Blog), Bond Girl (Self Evident) and many others, criticized  the article as misrepresenting the level of defaults in municipal bond market. They all made a similar argument. The authors of the Liberty Street Economics blog included the defaults of unrated bonds in their numbers. Unrated bonds make a very small portion of the overall market and including the smallest and most risky bonds issues. In other words, the FED’s numerical number of defaults gave the same weight to a $400,000 default as $400,000,000 default. In responding to the FED’s blog, the bloggers all referenced and linked to the article they were criticizing.

The links from these respected bloggers helped improve the “importance” for search engine viewpoint. Search engines (at least for now) don’t discriminate between a link from a positive or negative article. The search engines saw that the report from the FED was getting lots of links which included the term “Municipal Bonds” from sites that it considered authorities on the topic. The conclusion was obvious; the fed had written and important article on municipal bonds.

The article criticizing the FED’s article may have gotten some links to back to them. However, these links were distributed among over a dozen articles. No single article received even close to the number of links as the FED’s. As a result, none of them got the same high search engine ranking.

The Long Term Consequences

Ultimately, this encourages bloggers and writers to write more controversial pieces. A higher search engine ranking will result in more traffic. Around 50% of the traffic to Learn Bonds comes from search engines. While this number may be on the high side, most large news sites receive a large portion of their traffic from search. As revenue for a site very closely tracks a site’s traffic, there is a heavy incentive to write articles which will do well on search engines. In the end this means less balanced reporting, more sensational headlines and opinionated articles.


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  1. I get the same problem writing about promoted penny stocks — my criticisms usually hit their targets, but it serves to raise their profile. (Then I see penny stock ads from Google at my blog. Da noiv!)

    It’s the nature of the beast, and it can’t be fought… sad, but true.


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