Landlords Face A $1.5 Trillion Bill For Interest-Only Commercial Mortgages

Landlords Face A $1.5 Trillion Bill For Interest-Only Commercial Mortgages

Authored by Mike Shedlock via MishTalk.com,

Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp…

Share of Interest Only Commercial Mortgage Backed Securities 

Commercial Real Estate Bust

A trend to walking away from commercial mortgages is just beginning. The Wall Street Journal reports Interest-Only Loans Helped Commercial Property Boom. Now They’re Coming Due.

Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp. Nearly $1.5 trillion in commercial mortgages are coming due over the next three years.

Fitch Ratings recently estimated that 35% of pooled securitized commercial mortgages coming due between April and December 2023 won’t be able to refinance based on current interest rates and the properties’ incomes and values. While many malls and hotels face high default risks, the situation is particularly dire for office owners. 

Mark Edelstein, chair of law firm Morrison Foerster’s global real-estate group, said he is seeing more lenders take over office buildings than at any point since the early 1990s. 

Oblivious to Risks

Lenders and  borrowers had widespread belief in two things, both now proven false.

  • Interest rates would stay low forever

  • Property values, already clearly in a bubble, would keep rising forever

Now a $1.5 trillion  bill is coming due, with property values, especially office space and some big city hotels, plunging like a rock.

83 Percent on Securitized Office Loans in Trouble

Xiaojing Li, managing director at data company CoStar’s risk analytics team, estimates that as much as 83% of outstanding securitized office loans won’t be able to refinance if interest rates stay at current levels.

The 1,921 Room Hilton Union Square Hotel in San Francisco Was Just Abandoned

Yesterday, I noted The 1,921 Room Hilton Union Square Hotel in San Francisco Was Just Abandoned

Park Hotels & Resorts also walked away on the nearby 1,024-room Parc 55. Park Hotels & Resorts cited the continued debt burden of the two hotels and multiple factors that have made the San Francisco market less desirable.

Well, don’t worry. Lenders who are handed back the keys can recoup their losses if they borrow money and plow it all into Nvdia and Apple with leverage. /sarcasm

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Tyler Durden
Wed, 06/07/2023 – 14:40

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Putin Slams Kiev’s “Barbaric Act” In 1st Public Comments On Dam Catastrophe

Putin Slams Kiev’s “Barbaric Act” In 1st Public Comments On Dam Catastrophe

Russian President Vladimir Putin has addressed the Nova Kakhovka dam blast in public comments on Wednesday for the first time, charging that it was a “barbaric act” of the Ukrainian government and its military forces. 

Russia’s defense and foreign ministries had already laid blame on Kiev for the “catastrophic” attack. Putin’s comments came during a phone call to Turkish leader Recep Tayyip Erdogan – the first since his reelection. Putin offered Erdogan congratulations, but the two also discussed in-depth the dam disaster which has deeply impacted both Crimea and southern Ukraine as people are flooded out of their homes and towns. Evacuations and rescue efforts continue.

Putin told Erdogan in the phone call that the breach was “a barbaric act which has led to a large-scale environmental and humanitarian catastrophe.”

The two leaders agreed to be in regular communication, with the Kremlin readout saying, “It has been agreed to maintain regular personal dialogue.” 

Erdogan on the same day held a call with Ukraine’s President Zelensky, and conveyed that he supports an independent commission to investigate the dam breach and destruction under the auspices of the UN. Regional authorities have said flooding could continue for ten more days.

“President Erdogan said that a commission could be established with the participation of experts from the warring parties, the United Nations and the international community, including Turkey, for a detailed investigation into the explosion at Kakhovka dam,” a readout said.

Meanwhile, it appears even the White House press pool has grown skeptical regarding the allegations pushed by Ukraine that Russia blew up the dam…

Here’s how the awkward exchange with White House NSC spokesman John Kirby went on Tuesday:

Journalist: Does it really seem plausible to you that Russia destroyed the dam, thereby flooding the settlements where ethnic Russians live, and at the same time cutting off the water supply to Crimea? In my opinion, there is no more logic here than in undermining your own gas pipeline, don’t you think?

Kirby: We haven’t come to a conclusion yet. We are working with the Ukrainian side and trying to get as much information as possible.

It remains that Kiev might not want a real UN investigation into the matter, for all the reasons we highlighted here. All of this also comes the same week The Washington Post produced a surprise report pointing to Ukrainian guilt in sabotaging the Nord Stream pipelines as well.

Tyler Durden
Wed, 06/07/2023 – 14:20

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14 Days To ‘Midnight’ – Greta’s Climate-Change Doomsday Clock Ticks On

14 Days To ‘Midnight’ – Greta’s Climate-Change Doomsday Clock Ticks On

Authored by Beege Welborn via HotAir.com,

We’re all done for.

Bet you forgot.

I’m trying to decide how to handle it if it goes badly for Greta’s side – you know. Like, we’re all still here?

I’d use “The Great Disappointment,” but The Millerites already stole that one. At least I have a couple weeks to think of something snappy.

In the meantime, how we lookin’?

Contrary to the hyperbole on the evening broadcast and the Weather Channel’s penchant for naming every breeze that goes by, we are not in bad shape at all.

Screencap @_ClimateCraze

Although the media has upped their graphics game to match the current CLIMATE EMERGENCY. Red makes everything more dramatic, so maybe the Luddites will pay attention to our shrieking now.

I saw that Jazz had done a piece on those poor Irish cows the climate loons want to slaughter – what happens to those touchy feely Kerry Gold commercials then?

The idea is not really catching on with the Irish themselves, either. “The Green Party’s got to go” is not a ringing endorsement for your reelection prospects.

Then I listened to Australian Alan Jones asking basically the same question.

Why? Why are we doing ANY of this?

Carbon dioxide is .04% of a percent of the atmosphere. That is over the whole world. Human beings create only 3% of that .04% over the whole world. In Australia human beings, manufacturers, factories, cows breaking wind, bush fires, are responsible for 1.3% of the 3% of the .04%. Is anyone seriously suggesting that we should stand the economy on its head, force up energy prices, damage businesses, jeopardize employment because .04% of the atmosphere is carbon dioxide?

Well, yes, they are, all over the world, and they want your cows dead, too. For Science™ that two papers as recently as a year and a half ago said was pretty much manufactured bunk.

Two important papers have recently been published that question the extent to which humans are causing global warming by burning fossil fuel and releasing carbon dioxide into the atmosphere. The works will of course be ignored by mainstream media outlets, but they represent further evidence that a more nuanced view of human-caused or anthropogenic warming is gaining traction among scientists, tired of working within the political constraints of ‘settled’ science.

In a paper to be published next month in the journal Health Physics, three physics professors led by Kenneth Skrable from the University of Massachusetts examine the atmospheric trail left by CO2 isotopes and conclude that the amount of CO2 released by fossil fuel burning between 1750 and 2018 was “much too low to be the cause of global warming”.

Three carbon isotopes are found in the atmosphere, 12C, 13C and 14C. The latter is produced by cosmic rays and is in a constant state of activity but the other two are contained in the gas entering the atmosphere. The carbon in living matter has a slightly higher proportion of 12C. Although only about 4% of CO2 entering the atmosphere every year is produced by human activity, it is said very slightly to alter the balance of the other atmospheric isotopes. As a result it is often used as ‘proof’ that rising CO2 levels are primarily the result of fossil fuel burning.

But the Massachusetts team found that claims of the dominance of anthropogenic fossil fuel in the isotope record have involved the ‘misuse’ of 12C and 13C statistics to validate such suggestions. They conclude that the assumption that the increase in atmospheric CO2 is dominated by or equal to the anthropogenic component is “not settled science”.

Furthermore, they go on to state: “Unsupported conclusions of the dominance of the anthropogenic fossil component of CO2 and concerns of its effect on climate change and global warming have severe potential societal implications that press the need for very costly remedial actions that may be misdirected, presently unnecessary, and ineffective in curbing global warming.”

Yet, here we are. And “ignored” by the media? They never saw the light of day. When you’re going as far as controlling people’s thermostats remotely, choosing their mode of transportation when you allow them to travel, and killing their livestock at will, oh, hay-yull, no! No one gets to read anything remotely like those papers from reputable actual scientists (without a ™). Narrative, narrative, narrative whilst crush any and all dissent.

The fellow in this video was fired by Al Gore for basically asking, “Where’s the beef evidence?”

It’s a cabal.

Speaking of mainstream media outlets taking their climate marching orders, I saw the neatest course offering from AFP, the European news bureau today. I am so tempted…

Sounds like me, doesn’t it?

I can see me now, introducing myself in my best Bond voice to all those Bond villains at Davos,

WELBORN – BEEGE WELBORN. CLIMATE DISINFORMATION DETECTIVE

Maybe I could take the course and even make up a Mary Poppins song about it.

I’ll clear it with Ed first.

But I’d better hurry – we only have two weeks left.

Tyler Durden
Wed, 06/07/2023 – 14:00

via ZeroHedge News https://ift.tt/y8ENuQo Tyler Durden

Yuan Tumbles To 2023 Low After Chinese Exports Collapse Amid Speculation Unrigged Numbers Are Much Worse

Yuan Tumbles To 2023 Low After Chinese Exports Collapse Amid Speculation Unrigged Numbers Are Much Worse

It’s been a while since the market considered the possibility of a yuan devaluation: after the latest Chinese trade data it’s time to start seriously thinking about it once again.

Overnight, China reported May trade data which revealed that exports again slowed sharply and missed market expectations, while imports also contracted but modestly beat expectations:

  • *CHINA MAY EXPORTS -7.5% Y/Y IN DOLLAR TERMS; EST. -1.8%
  • *CHINA MAY IMPORTS -4.5% Y/Y IN DOLLAR TERMS; EST. -8.0%

Although it was partly due to base effects, the underlying momentum has clearly slowed after a resilient 1Q. As SocGen notes, the disappointing export data helps explain the weakness in the manufacturing sector as the latest PMI data showed.

And despite the French bank’s call for near-term growth resilience in DMs, exports remain a key headwind to China’s manufacturing sector. More importantly, the data clearly reinforces expectation for more easing from the PBoC.

Some more details:

  • May exports slowed sharply from +8.5% in April to -7.5% in USD terms, partly due to base effects as exports recovered in May 2022 after the Shanghai lockdown. The weakness was broad-based. By product, machinery and electrical equipment (MEE) products plunged from +10.4% to -2.1%. Within that, electronic products remained in deep contraction in yoy terms: mobile phones deteriorated again from -13% to -25%; IC plunged by 26% after a 7% decline; but the slowdown in PC and parts seems to have stabilized. Autos also slowed from +83% to +55% but remained strong.
  • Outside MEEs, there was an even more pronounced deceleration in traditional consumer goods, such as apparel, footwear and furniture, reflecting normalising consumer demand in DMs. By destination, the slowdown was mainly driven by exports to ASEAN economies, which slowed from +5% to -16%. Exports to the US and the EU also moderated, from -7% to -18% and from 4% to -7%, respectively.
  • Meanwhile, after the disappointment in April, imports improved slightly from -7.9% to -4.5% but remained at a weak pace, reflecting sluggish domestic demand. Among commodities, there was a notable rebound in oil (from -1% to +12%, in volume terms) and copper (from -13% to -5%), while iron ore eased slightly from +5% to +4%, as high-frequency data show that construction activities remained soft in May. The contraction in MEE imports eased somewhat from -16% to -14%, led by ICs, but remained weak due to stagnant export demand for electronics

While China’s economy has had a dreadful post-covid “recovery”, at least trade was solid. Well, not anymore, which is why we asked yesterday if yuan devaluation was coming (China suddenly needs a far weaker yuan to boost its exports, which account for roughly 40% of China’s GDP).

But wait, there’s more, because while China’s exports are clearly slowing, the real picture could be far worse. Why? Because as everyone has known for years, China has been rigging its trade data to make its economy appears stronger than it is, similar to what the Biden admin is doing with labor data.

In a recent piece from Goldman “Analyzing recent puzzles on China trade data” (available to pro subs in the usual place), the bank wrote in late May that despite weakening external demand, “China’s exports have beaten consensus expectations for four consecutive months now” (but not five months as the latest trade data showed).

But, as we have observed frequently in the past, Goldman cautions that different trade-related data seem to send conflicting signals and some trading partners’ reported imports from China appear inconsistent with China’s exports to these countries. This has prompted “many client questions on the reliability of Chinese trade data” according to the bank’s strategists. Here is Goldman’s punchline:

Our “outside-in” measure does not show systematic divergences between China’s import data and trading partners’ exports to China in Q1. However, trading partners’ data released so far suggest significantly lower year-over-year growth than China’s export data in March.

A chart showing just how glaring the trade discrepancy has become:

Nowhere is the trade discrepancy more obvious than in bilateral “trade” with Singapore: here, the gap between China-reported exports to Singapore and Singapore-reported imports from China has become laughable.

Goldman then writes that “some of the discrepancies may be related to re-exports and transshipment, but disguised capital outflows are also a potential explanation.”


But whatever the reason for the staggering divergence between China’s export data and everyone else’s, the conclusion is that China’s true exports are far, far weaker than the officially reported. And while China’s fake export “data” was stronger than expected for 4 months in a row, now that even Goldman pointed out just how fake the Chinese data is, reality may be coming home to roost. Which is also why the market is now starting to frontrun what comes next: a powerful impulse to weaken the currency, because while Beijing may not feel the heat to stimulate as long as (fake) exports are growing and are coming stronger than expected, once China’s mercantilist engine begins to sputter, even Xi has to pay attention. And sure enough:

  • *OFFSHORE YUAN WEAKENS TO 7.1479 PER DOLLAR TO FRESH 2023 LOW

And one China aggressively pursues quasi (or full) devaluation, the race to the currency bottom will restart with a vengeance.

Tyler Durden
Wed, 06/07/2023 – 13:40

via ZeroHedge News https://ift.tt/Dx9rtEp Tyler Durden

Liberalism Isn’t Rule by Elites


Deneen2

A third of the way through Regime Change (Sentinel), a table appears. The top two quadrants are “Progressive Liberal” and “Classical Liberal.” The lower left is “Marxist.” The lower right is blank.

That open spot will soon be filled by the author’s proposed alternative. Like Marxism, he says, his approach is “deeply critical of the resulting alienation of humans from the fruits of their labor, from knowledge of how their work contributed to a common good, and from each other.” But unlike Marxism, this system is fundamentally conservative rather than revolutionary, prizing stability, continuity, and order above all. It is economically leftist, socially reactionary, and unapologetically anti-liberal.

Students of history may be relieved to hear that University of Notre Dame political scientist Patrick Deneen is not—despite what the schematic just described might suggest—arguing for fascism. Instead, the fourth quadrant represents what he refers to throughout the book as “common-good conservatism.”

Deneen, who taught at Princeton and Georgetown before landing at Notre Dame, is one of the more prominent intellectuals on what is often called the New Right. He’s best known for articulating the idea that liberalism—not just the modern political faction but the broad philosophical tradition emphasizing individual liberty, limited government, personal responsibility, and the rule of law—has failed America. An earlier book of his on that subject even appeared on former President Barack Obama’s reading list in 2018. Today, along with Harvard Law School professor Adrian Vermeule and a couple of lesser-known academics, he pens the Postliberal Order newsletter, which explores the system they hope will eventually take liberalism’s place.

Given Deneen’s influence, the incredible sloppiness of the writing in Regime Change is a surprise. Many of his sentences are ambiguous if not incomprehensible, many of his paragraphs internally contradictory. There are places where the literal meaning of the words on the page are precisely opposite to what he plainly intends to convey. (When he says that it was “not uncoincidental” that two related things coincided, I doubt he means they happened together merely by chance.)

Even going to great lengths to puzzle out the strongest versions of the arguments Deneen seems to be making will get the reader only so far. Every one of his major claims disintegrates under scrutiny. You’re left with the impression that he barely understands his own ideas, and that he misunderstands entirely the thing he’s arguing against.

Deneen’s case rests almost entirely on the idea that left-progressive liberalism and classical liberalism, far from representing opposing worldviews, are in fact “identical, monolithic, and eager to deploy power in the name of enforcing individual expressivism.” What unites them, he says, is a commitment to unrelenting progress. Classical liberals (including many American conservatives) might emphasize economic dynamism, innovation, and wealth creation, while progressives are focused on liberating people from lifestyle constraints by clearing away what they see as outdated social institutions such as religion and the traditional family. But Deneen thinks these are really two sides of the same coin. Liberalism is progressivism, full stop.

What’s more, he argues, upper-class members of the two camps have secretly combined to form a “power elite” or “party of progress,” which perpetuates its position by demolishing the legal and social “guardrails” that once allowed regular people to flourish. “Primary [to liberalism] was a belief in self-making,” he writes, “demanding a social order that allowed the greatest possible freedom—even liberation—from unchosen commitments.”

Somewhere in here, there is arguably a fair critique. Markets really are disruptive, and those disruptions really do have costs. Community ties may be weakened, for instance, when people marry later, have fewer children, and settle at a distance from extended family members and close friends. Most people benefit from a growing economy, but the benefits are never equally disbursed. Dizzying change can be destabilizing.

But Deneen is not satisfied with the suggestion that liberalism has negative side effects; he insists the destruction wrought by liberalism is the point. “Modern thought rests on a core assumption: transformative progress is a key goal of human society,” he says. Liberalism “is a revolutionary doctrine that aims at the constant transformation of all aspects of human social organization,” he says. Its “aim,” he says, is “unceasing instability.”

This is a wild claim—not just uncharitable but entirely unsubstantiated in the text. It evinces little familiarity with the theoretical underpinnings of liberalism, which, as the name conveys, gives pride of place to liberty, not progress. And while classical liberals may have a higher degree of tolerance for creative destruction than Deneen does, it’s rare to find one who desires social upheaval for its own sake, particularly among the classically liberal conservatives who are Deneen’s philosophical rivals.

Just how “identical” and “monolithic” are progressives and classical liberals, anyway? Deneen’s own description of the liberal/progressive power elite includes four key characteristics, half of which don’t even apply to classical liberalism.

First, he notes that the new elites are “managerial,” or members of what is sometimes called the laptop class. Second, he says “this class arose specifically in opposition to…the old aristocracy” and is thus “fiercely opposed both to the principle of hierarchy and the inheritance of status.” (This despite being at the top of America’s social and economic hierarchy.)

Third, Deneen says elites use tyrannical identity politics to demonstrate their commitment to egalitarian principles without actually having to do anything to help the less well-off. Through claims of subjective harm (think of microaggressions), “the ruling elite seeks to limit and even oppress or extirpate remnants of traditional belief and practice—those especially informing the worldview of the working class—while claiming that these views are those of the oppressors.” Imagine how students at a top-ranked college would react to a speaker saying there are only two genders and you’ll get the picture.

Finally, he says, “the main locus through which today’s elite exercises control” is not the state. It’s through centers of cultural production such as academia and Hollywood, as well as through woke corporate governance.

Do either of those last two features sound like they apply at all to classically liberal conservatives and libertarians? Of course not. The power elite described above is obviously not a melding of left- and right-liberalism. This is a garden-variety complaint about left-progressives.

In fact, classical liberals have been on the front lines of the fight against Deneen’s third characteristic, which they recognize as a product of illiberal progressivism. Public interest law firms such as the Foundation for Individual Rights and Expression defend religious liberty and free speech against militant political correctness. For that matter, libertarians are practically obsessed with eliminating occupational licensing and similar barriers that make it hard for people outside the laptop class to make a living on their own terms.

Another big idea in Regime Change is that different regime types are characterized by the way the people relate to the elites. Marxism, he writes, sees the masses as inherently revolutionary and wants them to have power, overthrowing the bourgeois upper class violently if need be. Technocratic progressivism, on the other hand, sees the people as inherently conservative and wants progress-oriented technocrats to rule over the masses, tyrannically if necessary. Common-good conservatism, Deneen’s preferred system, agrees with the progressives that the people are naturally conservative and agrees with the Marxists that the people should be in control.

Or does it? Actually, this is one of the many things about which Deneen can’t make up his mind. Initially, he says both Marxism and conservatism favor the people over elites. Later, he admits political movements always “claim to speak in the name of ‘the people’ against an elite that seeks to oppress and circumvent the popular will” while really empowering an elite to do the governing. But while “Marxist strains sought to deny their reliance upon elites,” he writes, conservatism has at least been open about its belief that the people need good elites to support them. Except—wait—one sentence later he reverses himself again, now saying that “conservatives have been generally unwilling to make explicit the claim” that elites are necessary to their vision.

Eventually, Deneen rolls out the concept of a “mixed regime,” which for some reason he decides to call a “mixed constitution.” This is the goal of common-good conservatism, he says: a system in which the elites don’t have to dominate the people and the people don’t have to overthrow the elites, because the people and the elites are conveniently aligned. (Assume a harmony of interests, and most of the challenges of governance disappear!)

According to the Greek historian Polybius, ancient Rome had a mixed constitution. Instead of choosing between the rule of one (monarchy), the rule of the few (oligarchy), or the rule of the many (democracy), it combined all three. “The benefits of kingship were manifested in the unitary rule of the emperor,” Deneen summarizes, “but the tendency of the monarch to become overbearing and tyrannical was restrained by the political power of the common citizens. They in turn were ennobled by the aristocracy—gathered in the Senate—who in turn were balanced by the other elements of the government.” In theory, this “mixing” will produce the sought-after alignment between the people and the elites.

At this point, you may be wondering what distinguishes the modern American regime from what Polybius is describing. After all, we have universal suffrage (rule of the many) paired with a Senate and “expert”-staffed bureaucracy (rule of the few) and a unitary president (rule of one). But if we already have a mixed constitution, to what does this book’s titular “regime change” refer?

It seems that a true mixed constitution isn’t just a system in which the few and the many share governing responsibilities. A true mixed constitution is one in which the few, like the many, are in wholehearted political agreement with Deneen. “The answer,” he writes, “is not the elimination of the elite (as Karl Marx once envisioned), but its replacement with a better set of elites”—that is to say, a governing cohort that prioritizes conservative values such as stability and order. “Existing political forms can remain in place,” he writes, “as long as a fundamentally different ethos informs those institutions and the personnel who populate key offices and positions.”

Deneen wants conservative views to be “the price of admission to elite status itself,” with people fearing that “not conforming to the regnant ethos” will disqualify them from positions of power (emphasis his). But those are wishes, not plans. How does one bring about such a “regnant ethos” where it clearly does not exist? The closest he comes to an answer—”the raw assertion of political power by a new generation of political actors inspired by an ethos of common-good conservatism”—raises at least as many questions as it resolves.

Even when he finally turns to policy, Deneen seems oblivious to the distinction between structural reforms that might theoretically help bring about a greater alignment between the people and the elites, on the one hand, and the kinds of ideologically conservative policies that his side would already need to hold power in order to implement.

The book calls, for instance, for dramatically increasing the number of U.S. House districts so each member of Congress represents fewer constituents; for “breaking up” D.C. by moving the federal agencies to other parts of the country; and for switching from primaries to caucuses. These are the sorts of suggestions around which it might be possible to build a transpartisan consensus on good-government grounds, and which might then lead to reduced estrangement between the upper and working classes (although Deneen couldn’t be bothered to make those arguments explicit).

But Deneen’s agenda also includes socially reactionary ideas (“renewed efforts to enforce a moral media”) and half-baked industrial policy (“domestic manufacturing in certain sectors should simply be mandated”). Often, his own means and ends aren’t even aligned. At one point, he names as a goal that “university education could be substantially reduced” and then, in the same paragraph, asserts that “vocational schools or tracks ought to be supplemented by required introductory courses in a university-level general education”—a proposal that would force people who want to pursue careers in the trades back into the classroom.

Deneen’s arguments frequently fall apart in just this way. Near the end of the book, he makes the case that a hallmark of liberalism is “separation” (e.g., between church and state) while a hallmark of conservatism is “integration.” Of course, economic liberalism includes a default commitment to allowing goods and people to flow across borders. Deneen waves this away, writing that “the ultimate logic” of globalization is “disintegration, the weakening and outright elimination of all cultural, geographic, traditional forms of membership,” apparently hoping readers won’t notice that the barriers to trade and immigration that he supports are ways of keeping us forcibly separated.

The thing Deneen most takes for granted in this book is also the thing his entire argument turns on: an assumption that the American people are ideologically with him, and that their democratic power can thus be used to force “an ennobling” of the elite.

That the masses are with them is also, you’ll recall, an assumption of Marxists, who are continuously discovering that they’ve deluded themselves on that point. Deneen knows as much, writing that “false consciousness among the proletariat about what they should really want and how they should authentically act” forced Marx to turn his hopes “to the cultivation of a revolutionary elite….The people were simply not good enough for the anticipated utopia—and would have to be pressed into its service if they refused to follow the playbook.”

Yet the possibility that he too could be wrong about what the public wants does not appear to have occurred to Deneen. He treats as a given that the U.S. is undergoing a political realignment that will pit the liberal party of progress against a much larger conservative party that will be socially traditionalist but economically of the left.

There is indeed some evidence for a partisan realignment based on educational attainment. Much harder to believe is that the new conservative coalition supports anything like what Deneen has in mind. Many observers assumed that Donald Trump’s success was a sign that the American working class had rejected economic liberalism, for example, but an Ethics and Public Policy Center survey taken after the 2020 election found that just 35 percent of Trump’s own voters thought the United States should reduce foreign trade.

The “Barstool conservative” phenomenon identified by journalist Matthew Walther suggests that Deneen would have trouble building a consensus for his social agenda as well. Yes, people are ticked off about woke overreach by the progressive left. But the idea that most Americans favor a crackdown on pornography or a reintroduction of Sabbath laws or any of Deneen’s other post-liberal fantasies is comical.

Interestingly, some of his associates on the New Right accept what Deneen is in denial about. His co-blogger Vermeule has called for a small number of activists, who may represent only “a tiny minority of the population,” to reshape the culture from the top down by, say, obtaining positions within the administrative state. “It is a useless exercise to debate whether or not this shaping from above is best understood as coercive,” Vermeule has written, “or rather as an appeal to the ‘true’ underlying preferences of the governed.” All that’s missing is a reference to false consciousness.

Perhaps Deneen’s least defensible claim is that liberalism, like progressivism, is a philosophy that wants the elites to rule over the masses. As if brandishing a trump card, he observes that classical liberals are “suspicious of majoritarian democracy” and supportive of “constitutional constraints” that “insulat[e] the economically successful few from the average and ‘querulous’ many.” Yet he also admits that liberalism developed in opposition to the aristocracy, an arrangement under which the few held all the political and economic power.

Sure, liberals worry about tyranny of the majority. That doesn’t mean they favor tyranny of the minority. The liberal throughline is a desire to stop either from dominating the other, a goal liberalism seeks to accomplish by limiting the power of the state through which both groups are tempted to exert control.

Contrary to Deneen’s clever schematics, liberalism is not about empowering the few vs. the many; it’s about empowering the individual vs. the collective. Classical liberals think people, whatever their station, should get to make as many decisions as possible for themselves. Instead of a government—whether elite-dominated or mass-dominated—imposing its vision of the common good on us, we should all have the freedom to decide what a good life looks like and how best to pursue it.

The post Liberalism Isn't Rule by Elites appeared first on Reason.com.

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Mississippi Court Rejects Tort Claim Over Wife’s Leaving Husband “Without Any Notice or Warning”

From Justice Lawrence’s opinion in Herbert v. Herbert, decided in April 2023, but only recently posted on Westlaw:

In the complaint’s first count, Mark asserted a claim of intentional infliction of emotional distress. In the complaint Mark stated, “On or about November 7, 2018, without any notice or warning whatsoever, the [d]efendant left the parties’ marriage.” Mark alleges that despite his efforts at “reconciliation,” Nina has “refused all communication.” The complaint continued that since November 7, 2018, the defendant engaged in “numerous intentional actions or communications” that caused “severe emotional distress to the [p]laintiff.” …

{In Mark’s affidavit attached to his response in opposition to summary judgment, he alleged the following testimony as further “examples of facts” that support his claims for intentional infliction of emotional distress, verbal assault, fraudulent misrepresentation, and defamation and slander: “When I called to tell [Nina] that my mother, to whom she was close, had died unexpectedly, she offered no sympathy, but yelled repeatedly and loudly that I had been mean to her and refused to come to [my mother’s] funeral because [Nina] was not my wife. We were still married at the time.” Nina “intentionally email[ed] me a photograph of my being charged with a BUI,” “scream[ed] out in front of gathered people that [I] was a ‘motherf*****’ and flipped [me] the middle finger,” “l[ied] to me [concerning] where she was on November 9, 2018,” and “[o]n November 14-18, 2018, remov[ed] property from the couple’s joint storage unit and empt[ied] [the] marital home.”} …

To prevail on a claim for intentional infliction of emotional distress, a plaintiff must prove

[(1)] [t]he defendant acted willfully or wantonly towards the plaintiff by committing certain described actions; [(2)] the defendant’s acts are ones “which evoke outrage or revulsion in civilized society“; [(3)] the acts were directed at, or intended to cause harm to, the plaintiff; [(4)] the plaintiff “suffered severe emotional distress as a direct result of the acts of the defendant”; and [(5)] “such resulting emotional distress was foreseeable from the intentional acts of the defendant.”

Mississippi’s standard for a claim of intentional infliction of emotional distress is “very high” and focuses “on the defendant’s conduct and not the plaintiff’s emotional condition.” … [A] defendant’s conduct must be “wanton and wilful and [such that] it would evoke outrage or revulsion.” To prevail on a claim and be entitled to recover damages for intentional inflection of emotional distress, the defendant’s conduct must have been “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Liability does not extend to “mere insults, indignities, threats, annoyances, petty oppression, or other trivialities.” …

Mark stated, “Nina has engaged in numerous actions or communications which she either intended to cause severe emotional distress to Mark or which were done by her with willful and total disregard of the impact and emotional distress such actions would cause Mark.” But Mark failed to describe the instances that prove Nina’s actions were anything more than an adult choosing to leave a relationship. While there was no doubt that Mark was distressed that Nina had decided to leave the marriage, we must focus on the behavior of the defendant, not the “consequences.” Mark has failed to show any behavior on Nina’s part that is “so extreme in degree, as to go beyond all possible bounds of decency.”

Assuming Mark’s allegations that Nina left “without any notice or warning,” refused to go to his mother’s funeral, or emailed him when he was “charged with a BUI” are true, none of those actions “go beyond all possible bounds of decency” or “evoke outrage or revulsion in a civilized society.” Nina’s acts stem from ending the marital relationship. While those acts may have caused emotional discomfort to Mark, they are not actionable under a claim of intentional infliction of emotional distress….

In his complaint, Mark alleged a single event as proof of his verbal assault claim. Mark claimed that on November 5, 2018, the couple attended a concert. “While standing outside in the parking garage for the concert, Nina screamed at Mark in public and in the presence of passersby and called him a motherf*****.” Further, Mark alleges that Nina “flipped her middle finger” toward him and that those actions amounted to a “verbal assault.” Nina admitted these actions in her answer. In her memorandum in support of her motion for summary judgment, Nina argued verbal assault is not a viable cause of action in Mississippi.

Mark attached his affidavit to his motion in opposition to summary judgment. He alleged the following as further “examples of facts” which support his claim for verbal assault, as well as several of his other claims: “When I called to tell [Nina] that my mother, to whom she was close, had died unexpectedly, she offered no sympathy, but yelled repeatedly and loudly that I had been mean to her and refused to come to [my mother’s] funeral because [Nina] was not my wife. We were still married at the time.” Nina “intentionally email[ed] me a photograph of my being charged with a BUI,” “scream[ed] out in front of gathered people that [I] was a ‘motherf*****’ and flipped [me] the middle finger,” “l[ied] to me [concerning] where she was on November 9, 2018,” and “[o]n November 14-18, 2018, remov[ed] property from the couple’s joint storage unit and empt[ied] [the] marital home.”

In his memorandum in opposition to summary judgment, Mark argued, “To prevail on a claim for verbal assault, the plaintiff must show an intentional act of using abusive, insulting or offensive words or acts. It must be unreasonable and outrageous to the intended target. The perpetuation must have foreseen that the assault would cause some sort of negative impact.” Mark alleged that Nina’s assertion that verbal assault is not a cause of action “is incorrect.” Mark provided no citation for this definition, no law recognizing verbal assault as a cause of action, and no reasoning as to how Nina was wrong in her assertion.

It does not appear that [a tort cause of action for] verbal assault has been recognized to exist in Mississippi. The potential erosion of the freedom of expression under the First Amendment to the United States Constitution weighs heavily against recognizing mere insulting words as actionable when the law already has a vehicle for infliction of emotional distress. That law is well established and, in an effort to balance the right to free speech enshrined in the First Amendment with a cause of action based in part on words, requires liability not extend to “mere insults, indignities, threats, annoyances, petty oppression, or other trivialities.” …

In his complaint, Mark alleged Nina “repeatedly told [him] she loved him, was obsessed with him.” Further, he alleged that Nina told him that she “loved us” as a couple and that “she wished other couples had the kind of relationship she and Mark had.” Mark alleged that based on Nina’s “current conduct and her leaving him without notice or warning, these representations now appear to be false, fraudulent and intentionally misleading.” As discussed above, Mark attached his affidavit to his response in opposition to summary judgment. In his affidavit, Mark alleged several “additional examples of facts” he claims support his claim for fraudulent misrepresentation….

[But Mark’s] complaint did not even allege actual fraud but merely asserted that in light of the then-current circumstances, the representations “now appear to be false.” Although Mark argued these statements “now appear to be false,” the mere possibility of fraud can never meet the requirements of pleading with particularity.

Further, Mark provides no authority to show that someone telling their spouse, “I love you,” could under any circumstances rise to the level of materiality required to sustain a cause of action for fraudulent misrepresentation under Mississippi law. Mark’s allegations are insufficient to support a claim for fraudulent misrepresentation.

{Essential elements of civil claims are for courts to discern. The affairs of people’s hearts and why they tell others they love them are simply not actionable as fraud without more particularized allegations in the complaint supported by clear and convincing evidence.}

The court also held that Nina should be awarded some of her attorney fees:

Under the factors listed above, a substantial portion of this lawsuit was clearly frivolous. After Nina left the marriage, Mark sent a text message to Nina, which was attached to her motion for summary judgment, telling her, “You will face at least two years of pain and embarrassment …. And remember we signed a prenuptial agreement. You are exposing yourself to serious financial issues.” It can be argued the present case was commenced to cause some of that “pain and embarrassment” to Nina. Considering the extent to which the party prevailed with respect to the amount and number of claims, Mark asserted six causes of action and succeeded in none. Some claims were clearly frivolous, and some were not even recognized under Mississippi law. All claims failed to plead facts that would survive legal scrutiny.

At the hearing on the motion for attorney’s fees, counsel for Nina explained, “[T]his lawsuit was filed out of pure spite.” After an examination of the record and consideration of the factors above, a portion of this lawsuit appears frivolous. The circuit court abused its discretion by denying in total Nina’s motion for attorney’s fees. Which claims justify an award of attorney’s fees and how much to award are matters for the circuit court to decide. The order denying attorney’s fees is reversed, and this case is remanded for a determination of appropriate attorney’s fees after the circuit court determines which claims warrant sanctions….

Presiding Justice Carlton and Justice McDonald disagreed as to the attorney fees, and would have deferred to the trial court’s judgment on the matter.

The post Mississippi Court Rejects Tort Claim Over Wife's Leaving Husband "Without Any Notice or Warning" appeared first on Reason.com.

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Encouraging Readers to Harass Person for Alleged Sexual Misconduct Creates Jurisdiction in Person’s Home State

From Lord v. Smith, decided last Friday by Judge Virginia Kendall (N.D. Ill.), reaffirming an earlier decision:

Both Lord and Smith are professional online gamers with millions of followers on streaming platforms and social media. They use the handles Ohmwrecker and H2O Delirious, respectively. Lord alleges that Smith began a defamatory online harassment campaign, accusing him of sexual misconduct with a minor and of releasing revenge porn against a different, adult partner. He also claims that Smith promoted harassment and stalking of Lord among Smith’s 4.4 million Twitter followers. He says Smith encouraged his fans to threaten Lord with violence and “repeatedly assisted his fans getting access to [Lord’s] home address.”

Lord is an Illinois citizen, and Smith is a citizen of North Carolina. Lord brings claims against Smith for portraying him in a false light, defamation, tortious interference with prospective economic advantage, and intentional infliction of emotional distress.

Smith moved to dismiss for lack of personal jurisdiction. He submitted an affidavit affirming that he lives and conducts his business in North Carolina, has never set foot in Illinois, and has directed none of his videos, business, or online posts specifically to residents of Illinois. In response, Lord submitted an affidavit that Smith “directed his fans to my home address in Illinois and encouraged his fans to contact and harass me, even when his fans commented on these posts with threats of violence against me.”

Lord also averred that Smith contacted Lord’s ex-girlfriend, an Illinois resident, about the defamatory allegations. Smith replied with a supplemental affidavit denying that he contacted Lord’s ex-girlfriend or communicated directly with anyone in Illinois about Lord. Smith further denied encouraging his fans to harass Lord, and he likewise denied posting, emailing, or direct messaging Lord’s home address to anyone or mentioning it in any public online forum.

In Lord’s sur-reply, he reiterated his averments that Smith posted Lord’s name (linked with the handle Ohmwrecker), Illinois home address, and photograph “across the internet while encouraging violence and harassment from his followers numbering upwards of 13.3 million on social media (known as the ‘Delirious Army’).” The brief included screenshots embedded in a direct message that Smith—under an alternative Twitter handle—sent to a fellow gamer. The screenshot in the direct message derived from kiwifarms.net (“the Kiwifarms screenshot”) and contained Lord’s personal information….

The plaintiff bears the burden of demonstrating personal jurisdiction once the defendant moves for dismissal under Rule 12(b)(2). When the court rules on such a motion without an evidentiary hearing, the plaintiff need only make out a prima facie case for personal jurisdiction. The court may weigh affidavits submitted on the issue of personal jurisdiction, but “in evaluating whether the prima facie standard has been satisfied, the plaintiff is entitled to resolution in its favor of all disputes concerning relevant facts presented in the record.” …

This Court found personal jurisdiction over Smith because Lord alleged in his complaint and averred in his affidavit that “Smith also outed Ryan Lord as Ohmwrecker to millions of Smith’s followers, and he then published Lord’s home address [in Illinois] and directed those who saw his posts to threaten Lord.” Smith argues that the Court based its ruling on Lord’s “misleading and false allegations,” which were insufficient to show personal jurisdiction. Smith characterizes the Court’s ruling as a misapprehension of the facts.  He attributes this misapprehension to the Kiwifarms screenshot from Smith’s direct message that Lord included in his sur-reply, to which Smith had no opportunity to respond or challenge. But as required at this stage, the Court resolved factual disputes in Lord’s favor when they conflicted with Smith’s affidavits and declarations. Lord’s asserted facts must be assumed true for now ….

Smith focuses on the Kiwifarms screenshot embedded in Lord’s sur-reply as insufficient to establish personal jurisdiction, both because it purportedly mischaracterizes the nature of Smith’s communications and because it is inadmissible as evidence. Smith maintains that other than the deficient screenshot, Lord failed to submit any evidence to support his “insufficient conclusory allegations” in the Complaint and affidavit…. But Lord made specific factual assertions—not legal conclusions—in his Complaint and affidavit. (See Dkt. 1 ¶ 138 (Smith “encouraged his fans threats of violence [sic] against Plaintiff and even repeatedly assisted his fans getting access to Plaintiff’s home address.”); Dkt. 15-1 ¶ 21 (Smith “directed his fans to my home address in Illinois and encouraged his fans to contact and harass me, even when his fans commented on these posts with threats of violence against me.”)). Even without considering the sur-reply and Kiwifarms screenshot, then, the Court had sufficient factual basis from the Complaint and Lord’s affidavit—which must be assumed true—to find that Smith directed his suit-related conduct at Illinois.

Smith further rejects the Court’s finding that Smith purposely directed his conduct at Illinois because: (1) Lord’s real identity already existed online so Smith could not have “outed” him to his followers; (2) Smith did not originally create or contribute to the content on Kiwifarms that disclosed Lord’s address; and (3) Lord was already in disputes with other gamers who referenced the Kiwifarms content in social media posts, so threats or other backlash he received cannot be attributed to Smith. These arguments all miss the point.

The purposeful-direction prong of the personal-jurisdiction analysis “focuses on the relationship among the defendant, the forum, and the litigation.” Only Smith’s conduct matters in this context. It does not matter that others in Lord’s and Smith’s online community could have found out Lord’s/Ohmwrecker’s identity and address on their own or through others’ social media posts. By directing fans and followers to Lord’s Illinois address in connection with the alleged defamation campaign against Ohmwrecker, Smith intended his conduct to have effects in Illinois. He thus created sufficient minimum contacts with the forum state for this Court to exercise personal jurisdiction over him. The Court’s ruling showed no manifest error of law or fact at this stage in the proceedings.

{The Court’s ruling at the motion-to-dismiss stage, however, necessarily occurs without the benefit of a full record. Smith is not precluded from challenging Lord’s evidence supporting the Court’s exercise of personal jurisdiction at a later stage.}

Congratulations to Max Goodman and Ryan Jacobson (Amundsen Davis LLC), who represent Lord.

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Court Preliminarily Enjoins Minority Business Development Agency Race- and Ethnicity-Based Funding

The case is Nuziard v. Minority Business Dev. Agency, decided Monday by Judge Mark Pittman (N.D. Tex.); here’s the summary of the program:

To qualify as a “minority business enterprise” [under the MBDA], a “socially or economically disadvantaged individual” must manage the business’s operations and own at least 51% of it. An individual is presumed to be a “socially or economically disadvantaged individual” if they are Black, African American, Hispanic, Latino, American Indian, Alaska Native, Asian, Native Hawaiian, Pacific Islander, Puerto-Rican, Eskimo, Hasidic Jew, Asian Indian, or a Spanish-speaking American. But any other race or ethnicity is not considered “socially or economically disadvantaged” and thus ineligible for the center’s services….

And here’s the court’s opening paragraph:

The Constitution demands equal treatment under the law. Any racial classification subjecting a person to unequal treatment is subject to strict scrutiny. To withstand such scrutiny, the government must show that the racial classification is narrowly tailored to a compelling government interest. In this case, the Minority Business Development Agency’s business center program provides services to certain races and ethnicities but not to others. Because the Government has not shown that doing so is narrowly tailored to a compelling government interest, it is preliminary enjoined from providing unequal treatment to Plaintiffs….

Note that the challenge was just to race- and ethnicity-based funding, so it might be that the preference for Hasidic Jews isn’t covered. The term “Jews” can refer both to an ethnic group and a religious group, depending on the context; but “Hasidic Jews” seems to me to refer just to a religious group (albeit one whose self-identification tends to turn ancestry as well as religious practice). Nonetheless, the court’s analysis suggests that this preference is as unconstitutional as the others.

Congratulations to Richard M. Esenberg, Daniel P. Lennington & Cara M. Tolliver of the Wisconsin Institute for Law & Liberty, and to Jason C. Nash, all of whom represent plaintiffs.

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The Bull Case For Banks Looks Good Only On Paper

The Bull Case For Banks Looks Good Only On Paper

By Michael Msika, Bloomberg markets Live reporter and strategist

Europe’s banking stocks are cheap and are supported by some of the strongest fundamentals since the global financial crisis, with elevated rates and solid capital buffers. But worries that it may not last long is spoiling the bull case.

Valuations and cash returns look appealing, balance sheets are robust and there are few threats to the earnings trend, according to Morgan Stanley strategist Graham Secker. That hasn’t stopped him from downgrading the sector this week to neutral in the view that lenders will struggle to outperform in the current environment. “Right place, wrong time,” he writes in a note.

Secker says the best part of the macro cycle has now passed, and sees reasons to be cautious. He cites slowing economic growth, the coming end of the rate-hiking cycle and lower bond yields  — a key factor in determining how much money banks make on lending.

While underperforming the broader market by just two percentage points this year, European banks have only recouped a third of the losses induced by the US banking crisis and the Credit Suisse collapse. The sector is down 12% since the end of February in a flat market.

Yet from a bottom-up view, the sector looks cheap. With a forward P/E of 6, it trades at a 50% discount to the broader Stoxx 600 and offers the highest dividend yield of all industry groups at 7.6%. It’s also the sector offering the most upside based on analysts’ price targets, with 32% returns expected over 12 months.

Still, analysts see headwinds building, including the risks brought by the lagged impact of higher rates plus the ongoing tightening of credit standards. Liberum analyst Nick Anderson points to weakness in US banks as regulators could raise capital requirements by 20%, while noting some lenders are offloading commercial real estate loans at a loss while returns on equity may be peaking as rising deposit costs squeeze net interest margins.

Meanwhile in Europe, there were some cautious comments from UniCredit‘s CEO saying rising deposit costs will start to erode NIM from the second quarter onward. The UK was said to consider a reform of the deposit system that could require larger fees from banks to fund it.

Some investors are keeping a positive view. “We still have a bit of a tilt toward European banks as we think the full impact of higher interest rates is yet to feed through,” says Helen Jewell, deputy CIO for BlackRock EMEA Fundamental Equities. She acknowledges the need to be selective given recent banking sector volatility.

Investors are unlikely to gain more confidence until regulators release industry-wide stress tests at the end of July, according to Christophe Boucher, CIO at ABN AMRO Investment Solutions.

“I would rather be cautious,” Boucher says in interview. He notes that while most banks do well amid higher borrowing costs, the proportion of lenders struggling to maintain comfortable capital buffers in the stress tests will be closely monitored.

Tyler Durden
Wed, 06/07/2023 – 13:20

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PGA Tour And Saudi-Backed LIV Golf Deal Attracts Antitrust Scrutiny

PGA Tour And Saudi-Backed LIV Golf Deal Attracts Antitrust Scrutiny

There are growing concerns among US and European antitrust enforcers over PGA Tour and Saudi Arabia-backed challenger LIV Golf’s proposed merger that ends the divide that has dominated the golf world for the last year, according to Bloomberg, citing people familiar with the matter.

The parties said that the agreement combines the golf-related business from Saudi Arabia’s sovereign wealth fund with the commercial and business rights of the PGA Tour and European Tour into a new, collectively owned for-profit entity. However, antitrust enforcers view the move as riddled with red flags, such as creating a monopoly in the golf world that just recently gained a competitor, said the people. 

“The new for-profit entity involves three of the biggest golf tours in the world proposing to coordinate key aspects of their business on which they currently compete,” the people pointed out. They added:

Competition enforcers are likely to want to know how the proposed partnership will impact players, sponsorships and broadcast rights, they said. The US and United Kingdom — where DP World Tour is based — are certain to ask questions and the European Union’s competition authority may want information as well. 

Instead of the US Federal Trade Commission, the US Justice Department has been investigating PGA Tour’s year-long conflict with LIV. The people said the DoJ would be responsible for reviewing the proposed deal.

According to people familiar with the deal, no antitrust lawyers were involved in the PGA-LIV meetings, which concentrated on how to grow the sport and attract a younger audience. 

The person, who spoke about the confidential negotiations, expects the merger of the three leagues won’t require traditional merger review. 

Antitrust experts say the merger details will be under review by DoJ officials. 

On Tuesday, PGA Tour Chairman Jay Monahan dismissed questions on CNBC about possible antitrust concerns:

“Every single player in men’s professional golf is going to have more opportunity and more growth.

“We are going to grow our industry. This is all positive.”

However, Bloomberg pointed out not everyone agrees with this view:

“The PGA-LIV merger is another in a long line of successful efforts by entrenched monopoly organizers of sporting competitions to maintain their dominance through predatory behavior directed toward rivals, followed by swallowing them up.

“Jay Monahan is no different than John D. Rockefeller, putting independent gas stations out of business and then folding them into Standard Oil,” said Stephen Ross, a professor at Penn State Law. 

Ross expressed uncertainty regarding how the DoJ will come down, stating that it is difficult to predict the outcome without complete details of the deal.

Jodi Balsam, a professor of sports law at Brooklyn Law School, said antitrust lawyers might request changes to some parts of the deal, but it’s likely the partnership will go through:

“People don’t want to see this battle continue, including the regulators — they want to see golfers compete with each other without any barriers,” said Balsam, a former lawyer for the National Football League.

Even though the deal with PGA and LIV will resolve their legal battle, another could be brewing with the DoJ. 

Tyler Durden
Wed, 06/07/2023 – 13:00

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