On Bernanke’s Legacy

Ben Bernanke is concerned about his legacy.

 

Any why not? After all, he’s all but destroyed capitalism to benefit the largest banks in the financial system.

 

Capitalism means failure if you screw up. But under Bernanke’s watch, “capitalism” meant giving trillions in taxpayer money to those who screwed up.

 

It also meant a massive drop in median incomes, diminishing purchasing power for every American, increasing costs of living, inflation abroad leading to bloody revolutions, and funneling US funds overseas to bankrupt European entities.

 

The man and his policies, in a nutshell, have been a disaster for the world. We would all have been better off if he’d never left Princeton but had simply remained in the classroom where he’d simply corrupt young minds, rather than bet the US Dollar and the republic on his misguided theories.

 

So how did those theories work out?

 

Under Bernanke’s watch…

 

·      The US has never experienced 3% GDP growth.

·      The labor participation rate has fallen to levels not seen since the ‘70s.

·      Inflation-adjusted median incomes have fallen 7%.

·      The US’s debt load has risen from $8.4 trillion to over $16 trillion.

·      The Fed’s balance sheet has increased from $800 billion to over $4 trillion (larger than the economies of Brazil, France and even Germany).

·      Food prices have hit record highs fomenting revolutions in the Middle East and untold suffering around the globe.

·      The Fed has funneled trillions of Dollars into both US banks and European banks.

·      The Fed has allowed fraud, insider trading, and corruption.

 

And so on.

 

So now, Bernanke is trying to begin polishing his legacy by tapering $10 billion a month. Somehow this is supposed to show us that he can make decisions other than leaving a paperweight on the printing press (the Fed has engaged in money printing in over 90% of months since the Crisis hit in 2008).

 

We all know how this will eventually end… with the system Crashing down yet again, thanks to his creating the largest bubble in history: that of the bond market today. But by that point it will be someone else’s mess to clean up and we the taxpayers will be the ones who pick up the tab, whether it’s through more bailouts, bail-ins, or a Dollar collapse.

For actionable market insights on how to play bull runs and bear corrections, swing by:

 

http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3UOJrrN8gwg/story01.htm Phoenix Capital Research

On Bernanke's Legacy

Ben Bernanke is concerned about his legacy.

 

Any why not? After all, he’s all but destroyed capitalism to benefit the largest banks in the financial system.

 

Capitalism means failure if you screw up. But under Bernanke’s watch, “capitalism” meant giving trillions in taxpayer money to those who screwed up.

 

It also meant a massive drop in median incomes, diminishing purchasing power for every American, increasing costs of living, inflation abroad leading to bloody revolutions, and funneling US funds overseas to bankrupt European entities.

 

The man and his policies, in a nutshell, have been a disaster for the world. We would all have been better off if he’d never left Princeton but had simply remained in the classroom where he’d simply corrupt young minds, rather than bet the US Dollar and the republic on his misguided theories.

 

So how did those theories work out?

 

Under Bernanke’s watch…

 

·      The US has never experienced 3% GDP growth.

·      The labor participation rate has fallen to levels not seen since the ‘70s.

·      Inflation-adjusted median incomes have fallen 7%.

·      The US’s debt load has risen from $8.4 trillion to over $16 trillion.

·      The Fed’s balance sheet has increased from $800 billion to over $4 trillion (larger than the economies of Brazil, France and even Germany).

·      Food prices have hit record highs fomenting revolutions in the Middle East and untold suffering around the globe.

·      The Fed has funneled trillions of Dollars into both US banks and European banks.

·      The Fed has allowed fraud, insider trading, and corruption.

 

And so on.

 

So now, Bernanke is trying to begin polishing his legacy by tapering $10 billion a month. Somehow this is supposed to show us that he can make decisions other than leaving a paperweight on the printing press (the Fed has engaged in money printing in over 90% of months since the Crisis hit in 2008).

 

We all know how this will eventually end… with the system Crashing down yet again, thanks to his creating the largest bubble in history: that of the bond market today. But by that point it will be someone else’s mess to clean up and we the taxpayers will be the ones who pick up the tab, whether it’s through more bailouts, bail-ins, or a Dollar collapse.

For actionable market insights on how to play bull runs and bear corrections, swing by:

 

http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3UOJrrN8gwg/story01.htm Phoenix Capital Research

Video: Negative Divergences

Negative divergences are popping up on key price charts. Negative divergences occur when prices move higher but the indicators, which are used to measure that price action, move lower. Our research shows that negative divergence bars tend to signify slowing upside price momentum, and often the highs and lows of the negative divergence price bar will serve as a range for prices going forward. Isolated negative divergences do not necessarily indicate a market top, but negative divergences are often seen at market tops. However, a clustering of negative divergence bars is a sign of an intermediate term market top, and this is a consistent finding across asset classes and through time.

Video of the Week

 To view the graphs used in this video see below.

Graphs

Figure 1. NASDAQ Composite/ weekly

nasdaq.comp

Figure 2. $TNX.X/ weekly

tnx.x

Figure 3. TIP/ weekly

tip

 

Graphs

Figure 4. Russell 2000/ weekly

r2000

Figure 5. DJIA/ weekly

indu

Figure 6. NASDAQ100/ weekly

ndx


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4V4aTe5D2HI/story01.htm thetechnicaltake

Chart Of The Day: The Taper In Perspective (And What We Learned Today)

What did we learn today?

  • We learned that the repeated pleadings of the TBAC (starting in May and continuing throughout the year) for a Taper, did not fall on deaf ears, and the Fed finally became aware that it is monetizing US debt at too feverish a pace resulting in an acute lack of liquidity in the bond market.
  • We learned that despite the arrival of the taper, Bernanke will end his tenure with the lamentable record of having been the only Fed Chairman never to have started a tightening cycle (remember: according to Bernanke “tapering is not tightening”).
  • We learned that even though the Fed has taken its first step toward balance sheet renormalization one year after launching open-ended QE, it will still inject $75 billion in “Flow” into the capital markets, if not the economy, on a monthly basis, an amount which still means the Fed will consume about 0.25% of all outstanding and newly-issued 10 Year equivalents on a weekly basis (and more if the deficit declines further). The side effect of that will be that as Dealers scramble for the last piece of capital appreciation, even more capital will be sequestered into the US capital markets, leading to even more asset inflation, and even more core CPI deflation (which eventually will result in the Untaper).
  • We learned that even the Fed does not give much credit to the BLS’ definition of inflation, because while the Fed has now repeatedly observed that the unemployment rate is sliding due to the collapse in the participation rate and hence labor improvements are simply a mathematical mirage, its core lament was the very subpar, and outright disinflationary CPI readings. Readings, however, which if taken seriously, would not have allowed the Fed to taper right here and right now.
  • We learned that good news will continue to be bad news, and vice versa, as the faster the economy relapses into a sub-2% growth rate (and Obamacare will promptly help out in that department in the new year), the faster the Fed will take a long, hard look at returning to its baseline $85 billion (or more) per month liquidity injection. Because “data dependent” means that the stronger the data, the faster the Fed’s crutches go away: crutches that have been responsible for 100% of the market upside since March 2009. Or maybe this time the Fed has actually timed the economic recovery flawlessly and indeed a virtuous cycle is emerging. Maybe, maybe not: ask Jean-Claude Trichet who hiked rates at the ECB a few months before the sharpest European crisis flare up forced Bernanke to once again bail out the Old World.
  • We learned that over the past year – based on the pace of security monetization – the panic at the Fed regarding the economy has been greater than during QE1 and QE2. The minimal reduction to $75 billion in QE per month, or $900 billion per year, shows that the panic is still as acute and as pressing as ever, even as the cost of balance sheet expansion gets larger, even as the Fed now owns one third of all 10 Year equivalents, and even as the incremental benefits of QE to the economy – if any – decline with every month. The “good” news (if only for corporate insiders and the 1%): in the absence of capex spending, and organic growth, corporate PE multiples will continue to expand in lockstep with the Fed’s balance sheet, pushing the S&P into ever greater, and ever more unsustainable bubble territory.
  • Perhaps most importantly, we learned that courtesy of very dovish forward guidance, the thresholds for further flow reduction will be very steep, and the unemployment rate will have to drop to 6% before QE ends let alone unleashes the start of a tightening cycle. Of course with unemployment benefits ending, the US may have an unemployment print of 6.5% as soon as February/March. More importantly, it means that without a firm flow reduction schedule, the current monthly liquidity injection amount will remain unchanged for a long time, as the last thing Janet Yellen will want to do as she carefully settles into her new job will be to accelerate what is already a tightening (because, yes, Flow matters, not Stock, and tapering is tightening) monetary regime.

* * *

  • Finally, we learned what the difference between $85 billion and $75 billion is in the grand scheme of things. Or, in case we haven’t, here is a chart showing just how “vast” the impact of today’s announcement will be on the Fed’s balance sheet at December 31, 2014 when instead of printing well over $5 trillion at its old monetization pace, the Fed’s balance sheet will be only $4.9 trillion.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BuBxuQtstco/story01.htm Tyler Durden

Who Knew What 50 Seconds Before The FOMC Release?

Last time it was trading faster than the speed of light in gold and stocks. This time, 50 seconds before the FOMC statement was officially released to the great unwashed, Nanex notes that the market exploded with activity reaching levels higher than during the actual FOMC news release. As they show in the charts below, approximately $106 Million of SPY and 3,700 eMini Futures contracts traded in 1 second. Gold – while less voluminous – was just as berserko in the minutes and seconds leading up the news release. What is going on here?

 

See also this image of eMini liquidity during this time.

 

For clairfication, here is S&P 500 Futures price and volume… (1-second bars)

 

And Gold…

 

And Nanex shows the incredible surge in activity…

1. Trades per second in NMS Stocks and ETFs (2,200 of approximately 8000 symbols traded).
Note the peak occurred about 50 seconds before the FOMC announcement.



2. Dollars traded (thousands) per second in NMS Stocks and ETFs.
Note the peak occurred about 50 seconds before the FOMC announcement.



3. Symbols traded per second in NMS Stocks and ETFs.



Nanex Research


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XrNoMzevN4M/story01.htm Tyler Durden

Guest Post: Keeping It Real

Submitted by Jim Quinn of The Burning Platform blog,

“One only needs to reflect on the dramatic decline in the value of the dollar that has taken place since the Fed was established in 1913. The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00. Another way to look at this is from the perspective of the purchasing power of the dollar itself. It has fallen to less than $0.05 of its 1913 value. We might say that the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentlessly inflationary policy.” Ron Paul – End the Fed

 

The BLS reported the CPI yesterday morning. They tell me that inflation is well contained and has only risen by 1.2% in the past twelve months. Our beloved Federal Reserve chairman is worried inflation is too low. It is fascinating that the only people worried about inflation being too low are Ivy League educated economists and bankers whose wealth depends upon the middle class sinking further into poverty. As a person who lives in the real world, I can honestly say I like it when the things I need to buy cost less today than they did last year. When did inflation become a good thing for the average American? Our country was somehow able to grow from a fledgling new country to a world power in just over a century while experiencing mild deflation, except during times of war. The fallacy that inflation is beneficial to the common man has been peddled by bankers since 1971 when Nixon and his cronies closed the gold window and unleashed the inflationary boogeyman in the form of feckless politicians, captured Keynesian academics, and greedy soulless bankers.

It is no coincidence inflation accelerated the moment politicians, academics and bankers were unleashed to spend your money at will in order to obtain votes, Nobel prizes in economics, and ill-gotten obscene levels of wealth. David Stockman described Nixon’s dreadful sellout of the American people in his brilliant new book:

“Nixon’s estimable free market advisors who gathered at the Camp David weekend were to an astonishing degree clueless as to the consequences of their recommendation to close the gold window and float the dollar. In their wildest imaginations they did not foresee that this would unhinge the monetary and financial nervous system of capitalism. They had no premonition at all that it would pave the way for a forty-year storm of financialization and a debt-besotted symbiosis between central bankers possessed by delusions of grandeur and private gamblers intoxicated with visions of delirious wealth.”  –David Stockman – The Great Deformation: The Corruption of Capitalism in America

The USD has lost 83% of its purchasing power since 1971. The moment Nixon began playing politics with the USD and bullied the Federal Reserve Chairman into pumping up the money supply prior to the 1972 election, the inflation genie got out of the bottle and led to the miserable stagflation of the 1970′s. It took extreme measures by Paul Volcker to get it back under control in the early 1980′s. Since Volcker we’ve had nothing but academics and toadies who have chosen to change the definition of inflation in order to mislead the average American regarding how badly they are getting screwed. Every refinement, tweak, adjustment, or revision to the calculation of CPI has been designed to produce a lower figure. Why control inflation when you can just change the calculation to suit your purposes?

Over the proceeding decades, the BLS has sliced and diced the CPI in such a way that they can make it say whatever TPTB want it to say. They need to keep the mushrooms (you) in the dark regarding your standard of living deteriorating, while the beneficiaries of inflation (bankers, politicians) see their standard of living soaring. They have made hedonistic “adjustments”, quality “adjustments”, substitution “adjustments” and geometric weighting “adjustments”, all with the sole purpose to reduce the level reported to the American people on a monthly basis.

CPI was supposed to measure a common basket of goods and services that Americans needed to purchase in order to live their lives. If the price for this basket rose, you had inflation. If the price for this basket fell, you had deflation. The politicians, academics, bankers  and government bureaucrats decided if the price of steak went up by 10%, you would switch to chicken, therefore the price of steak did not go up by 10%. They decided if the price of a new car went up 5%, but you now had heated seats, the price didn’t really go up 5%. They now want to change to a chained CPI, which will further depress the reported figure. CPI no longer represents the increase in price of goods and services you need to live your day to day life.

Even the composition of the index doesn’t match the true cost picture for the average American. Somehow they bury the energy component within multiple categories and have the gall to argue that energy costs only comprise 9.6% of the average American expense budget. Tell that to the suburban two worker family that drives 30,000 miles per year and has to heat and cool a 2,000 square foot home. I doubt that too many families only spend 7% of their money on medical care. Housing accounts for 41% of the CPI calculation, but it is again a made up calculation called owner’s equivalent rent. Only an Ivy League economist could explain the calculation. The fact that home prices have risen by 12%, rents have risen by 4% and mortgage rates have risen from 3.25% to 4.5% in the last year somehow results in a 2.4% annual rate of inflation for housing.

 

If you have the feeling your standard of living has been falling  for the last few decades even though your owners tell you the economy is expanding, inflation is contained, unemployment is falling, the stock market is rising, and consumer spending is growing, then you might be smarter than a 5th grader. The financial elite ruling class are counting on the dreadful public education system, along with their mainstream corporate media propaganda arms, to keep the techno-distracted math challenged masses from understanding how the financialization of the country has resulted in their demise.

Being a skeptical sort, I decided to verify the accuracy of the CPI propaganda issued by the Bureau of Lies and Scams. The combination of the internet and memories from my youth provide a powerful and accurate assessment about the truthfulness of our government. I decided to create a chart of goods and services that average Americans have spent their hard earned wages on for decades. In a matter of minutes I was able to obtain prices from 1971 for various items common t
o most people. I was eight years old in 1971, being raised in a middle class one earner household on the salary of a truck driver. The chart below provides the proof the government CPI data is a bad joke and the American people are the butt of that joke.

         
Category 1971 2013 % Change  
Average Price of New Car $3,470 $31,252 800.6%  
Average Price of New Home $26,000 $245,800 845.4%  
Gallon of Gasoline $0.36 $3.50 872.2%  
Natural Gas $0.35 $4.00 1042.9%  
Loaf of Bread $0.20 $2.20 1000.0%  
Sirloin Steak per pound $1.19 $7.00 488.2%  
Dozen Eggs $0.25 $1.90 660.0%  
Box of cereal 12 oz $0.36 $3.50 872.2%  
Pack of Cigarettes $0.32 $6.00 1775.0%  
College Tuition – Private  $1,832 $30,094 1542.7%  
Monthly Rent $150 $1,073 615.3%  
Baseball ticket – Phila $2 $23 1050.0%  
Movie ticket $1.50 $9.00 500.0%  
Maximum Social Security Tax $406 $8,950 2104.4%  
Median Household Income $9,028 $51,017 465.1%  
Median wage per worker $6,497 $27,519 323.6%  
Average Hourly Earnings  $3.60 $20.31 464.2%  
CPI 40.5 232.0 472.8%  
Consumer Credit Outstanding (tril.) $0.14 $3.07 2092.9%  
Mortgage Debt Outstanding (tril.) $0.51 $13.18 2484.3%  
         

The BLS tells me the CPI has risen by 473% since 1971. The very same agency also tells me average hourly earnings have risen by 464% since 1971. This means the average worker is earning less than they did in 1971 in real terms. The median wage per worker has lagged CPI dramatically, as the averages have been skewed by those making outrageous compensation in the financial world. Median household income has barely kept pace with inflation even though households were forced to send both parents into the workforce, with the expected consequences of higher divorce rates and children left to fend for themselves or be raised by strangers.

By the government’s own measures, the average American’s standard of living has fallen since 1971. But, we also know the government has been manipulating the CPI figure lower since the mid-1980′s. After examining the true cost increases for housing, transportation, energy, food, education and entertainment, you would have to be brain dead or an Ivy League economist to believe inflation since 1971 has only been 473%. If home prices and car prices are 800% higher, while the energy needed to power and heat them are 900% to 1,000% higher, and the cost of food is 500% to 1,000% higher, how could the CPI only be 473% higher?

There are far more people going to college today than in 1971. With college tuition 1,500% higher, how can this not be reflected in the CPI? It certainly isn’t because the education is better. Statistics show the uneducated poor are more likely to smoke. Lucky for them, cigarette prices have risen at a rate of 4 times CPI due to the government taxing the crap out of them to fund their various taxpayer boondoggles. Inflation always hurts the poor and enriches the peddlers of debt.

My dad would take me to the brand new Veterans Stadium (built for $50 million in 1971) to see the Phillies in the early 1970′s. He paid $2.00 for a general admission seat and kids got in for 50 cents. We would buy a bag of soft pretzels outside the stadium and bring them into the park. We’d get a hot dog and soda for another $1. The entire outing to see a baseball game was about $5. Today, if I wanted to bring my family of five to a Phillies game at Citizen Bank Park (built for $458 million and paid for by the taxpayer) the lowest cost for the outing would be about $200. In 1971, you could spend a vacation week at the Jersey shore for $200. Now it gets you 3 hours of watching spoiled millionaires playing a child’s game while sitting with a bunch of foul mouthed drunks.

I also found it fascinating that the most regressive tax on earth, the Social Security tax, which hammers the poor and middle class while leaving the rich virtually unscathed has gone up by 2,100% since 1971. The rate in 1971 was 5.2% and the maximum salary level was $7,800. Today, the rate is 7.65% and the maximum level is $113,700. This increased cost for every middle class American is not factored into the inflation figures. Why would the government need to increase the maximum taxable wages by 1,500% when wages have gone up by less than 500%? The hard working truck driver bears the full impact, while Jamie Dimon not so much.

So now that I’ve proved beyond a shadow of a doubt the prices of everything we need to live have far outpaced our wages and the patently false drivel published by the BLS and parroted by the MSM, what are the implications? Well that is an easy one and is summed up by the last two entries in the chart. The average American has been lured into $16 trillion of debt over the last forty years in
a pathetic attempt to keep up with the Joneses. Consumer credit (credit cards, auto loans, student loans) has gone up by 2,100% and mortgage debt has gone up by 2,500%. The American people have been sold a false lifestyle dream built on easy credit by evil bankers and Madison Avenue PR maggots.

There are those who would blame the people who have chosen to live far beyond their means. They have a point. The American people certainly haven’t shown a penchant for delayed gratification, saving for the future, or consuming less than they produce. But it takes two to tango and the lead in this dance of debt has been and continues to be the Federal Reserve and their Wall Street bank owners. It’s always reasonable to ask – Who benefits? – when trying to figure out why something has happened over time. Did the American people benefit by increasing the debt owed to Wall Street banks from $650 billion in 1971 to $16.25 trillion today? I don’t think so, based upon the visible deterioration I am witnessing in my suburban paradise.

The financialization of America; where Wall Street con artists,shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped. But it is clear to me who the real culprits in our long downward spiral have been. Lord Acton stated the obvious, many years ago:

 “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”  ? John Emerich Edward Dalberg-Acton


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/85OYL9GjU6A/story01.htm Tyler Durden

Chinese Rates Spike Most In 5 Months To Record High

As the US equity market embraces the suck of taper, the Chinese interest rate market seems a little upset. 1-Year swap-rates just spiked their most in 5 months (16bps) to an all-time high 5.065% (above the June Taper Tantrum levels). Following its enforcement actions on Bitcoin last night (and coincident DDoS attack on its website), the PBOC has decided not to inject liquidity into Chinese banks today

  • *PBOC WON’T LIKELY CONDUCT REPO OPERATIONS TODAY: TRADER

Add to that the fact that the Indonesia Rupiah just dropped to its lowest in 5 years and we suspect more than little turmoiling this evening as the rest of the world figures out why taper is risk-on.

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TNUZOo0-0lM/story01.htm Tyler Durden

What Happened The Last Time A Major Central Bank “Tapered” QE?

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.

 

 

Think 24% is ok and Fed will just rescue stocks again?… things “esclated”…


to end -75%


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iUS2Qt7U3JU/story01.htm Tyler Durden

What Happened The Last Time A Major Central Bank "Tapered" QE?

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.

 

 

Think 24% is ok and Fed will just rescue stocks again?… things “esclated”…


to end -75%


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iUS2Qt7U3JU/story01.htm Tyler Durden

J.D. Tuccille Discusses Interventionism and John McCain’s Delicate Foreign Policy Touch on RT

Sam Sacks of RT had me on to discuss John McCain’s
self-insertion into three-way trade negotiations involving Ukraine,
Russia, and the European Union (doing no favors to Ukrainian
protesters who want stronger connections with the West in the
process). We also discussed foreign policy continuity from the Bush
administration to the Obama administration, and just how we get
ourselves out of the habit of rattling sabers and playing a very
expensive game of stare-down with every tin-pot dictator on the
planet. I chime in at about the 3:00 mark.

from Hit & Run http://reason.com/blog/2013/12/18/jd-tuccille-discusses-interventionism-an
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