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Post by kwestfarms on Oct 27, 2011 16:26:59 GMT -5
Frytownfarmer : Just a bunch of day traders finding an excuse for jacking the market around....... remember , they can't make any money if the market doesn't move!!! Your sum it up sounds about right , will not take long to find out!! John
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plove
Hired Hand
Posts: 227
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Post by plove on Oct 27, 2011 17:27:20 GMT -5
@ kwestfarms ...
Yup, I agree. The PPT manipulated equities higher today.
Not much future in equities, bonds, and dollars IMHO.
Only precious metals, paid-for land, and oil can survive the clowns running this asylum.
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Post by linsal on Oct 28, 2011 7:55:35 GMT -5
Yeah...and 10 year Italian bonds just topped 6%....everything is coming up roses....
The following prolly belongs in the doom thread, but I'll put it here...enjoy it with your morning cup of joe...
Have you heard the good news? Financial armageddon has been averted. The economic collapse in Europe has been cancelled. Everything is going to be okay. Well, actually none of those statements is true, but news of the "debt deal" in Europe has set off a frenzy of irrational exuberance throughout the financial world anyway. Newspapers all over the globe are declaring that the financial crisis in Europe is over. Stock markets all over the world are soaring. The Dow was up nearly 3 percent today, and this recent surge is helping the S&P 500 to have its best month since 1974. Global financial markets are experiencing an explosion of optimism right now. Yes, European leaders have been able to kick the can down the road for a few months and a total Greek default is not going to happen right now. However, as you will see below, the core elements of this "debt deal" actually make a financial disaster in Europe even more likely in the future.
The two most important parts of the plan are a 50% "haircut" on Greek debt held by private investors and highly leveraging the European Financial Stability Facility (EFSF) to give it much more "firepower".
Both of these elements are likely to cause significant problems down the road. But most investors do not seem to have figured this out yet. In fact, most investors seem to be buying into the hype that Europe's problems have been solved.
There is a tremendous lack of critical thinking in the financial community today. Just because politicians in Europe say that the crisis has been solved does not mean that the crisis has been solved. But all over the world there are bold declarations that a great "breakthrough" has been achieved. An article posted on USA Today is an example of this irrational exuberance....
Investors — at least for now — don't have to worry about a financial collapse like the one in 2008, after Wall Street investment bank Lehman Bros. filed for bankruptcy, sparking a global financial crisis.
"Financial Armageddon seems to have been taken off the table," says Mark Luschini, chief investment strategist at Janney Montgomery Scott. Wow, doesn't that sound great?
But now let's look at the facts.
You can't solve a debt problem with even more debt. But that is what this debt deal is trying to do.
The politicians in Europe did not want to raise more money for the EFSF the "hard way". Voters in Germany (and other European nations) are overwhelmingly against contributing even more cash to a fund that many see as a financial black hole.
So what do you do when more money is needed but nobody wants to contribute?
You borrow it.
Essentially, this debt deal calls for the EFSF to become four or five times larger by "leveraging" the existing funds in the EFSF.
But isn't that risky?
Of course it is.
There are some leaders in Europe that recognize this. For example, an article in The Telegraph notes the reservations that the president of the Bundesbank has about this plan....
Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot. He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds. So who is going to fund all of this new debt?
Well, it turns out that the Europeans are counting on the same folks that the U.S. government is constantly borrowing money from.
The Chinese.
French President Nicolas Sarkozy has already spoken directly with Chinese President Hu Jintao about funding this new bailout effort.
So is borrowing money from the Chinese to fund bailouts for Greece and other weak sisters in Europe sound policy?
Of course not.
And the sad thing is that this expanded EFSF is still not going to be enough to solve the financial problems in Europe.
According to an article in The Telegraph, a recent survey of economists found that most of them do not believe that this new plan is going to raise enough money....
The plan to increase the European Financial and Stability Facility to €1 trillion on paper was attacked by economists as not enough to “stave off” worsening debt problems in Italy and Spain.
In a survey of economists, 26 of 48 thought the firepower was not enough. But the worst part of this new plan is the 50 percent "haircut" that private investors are being forced to take.
This is essentially a partial default by the Greek government. A lot of folks are going to get hit really hard by losses from this. Instead of making financial institutions in Europe stronger, these losses are going to make a lot of them even weaker.
Normally, in the event of a default, credit default swap contracts would be triggered. But apparently because this was considered to be a "voluntary" haircut, that is not going to happen in this instance.
A Bloomberg article explained this in greater detail. The following is a brief excerpt....
The EU agreement with investors for a voluntary 50 percent writedown on their Greek bond holdings means $3.7 billion of debt-insurance contracts won’t be triggered, according to the International Swaps & Derivatives Association’s rules. That means that investors and financial institutions all over the world are just going to have to eat these losses.
Greek Prime Minister George Papandreou is already acknowledging that a number of Greek banks will have to be nationalized because of the severity of this "haircut". A recent CNBC article detailed this....
The haircut is expected to impose big losses on the country's banks and state-run pension funds, which are up their necks in toxic Greek government bonds of about 100 billion euros.
The government will replenish pension funds' capital, but banks may face temporary nationalisation, Papandreou said.
"It is very likely that a large part of the banks' shares will pass into state ownership," Papandreou said. He pledged, however, that these stakes will be sold back to private investors after the banks' restructuring. So where will the Greek government get the funds to "replenish" the capital of those banks?
That is a very good question.
But we haven't even discussed the worst part of this "debt deal" yet.
If you don't remember any other part of this article, please remember this.
The debt deal in Europe sends a very frightening message to the market.
The truth is that Europe could have totally bailed out Greece without any sort of a "haircut" taking place.
But they didn't.
So now investors all over the globe have got to be thinking that if they are holding Portuguese bonds, Italian bonds or Spanish bonds there is a really good chance that they will be forced to take a massive "haircut" at some point as well.
At this time last year, the yield on two year Italian bonds was about 2.5 percent. Now it is about 4.5 percent. As investors begin to price in the probability of having to take a future "haircut" on Italian debt, those bond yields are going to go much, much higher.
That means that it is going to become much more expensive for the Italian government to borrow money and that also means that it is going to become much more difficult for the Italians to get their financial house in order.
In essence, the haircut on Greek debt is a signal to investors that they should require a much higher rate of return on the debt of all of the PIIGS. This is going to make the financial collapse of all of the PIIGS much more likely.
Remember, about this time last year the yield on two year Greek bonds was about 10 percent. Today, it is over 70 percent.
As I wrote about in a previous article, the western world is in debt up to its eyeballs right now and trying to kick the can down the road is not going to solve anything.
Our leaders may succeed in delaying the pain for a while, but it most definitely is coming.
Greece, Portugal, Ireland and Italy all have debt to GDP ratios that are well over 100% right now. Spain is in a huge amount of trouble as well.
When you add up all the debt, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.
If Italy or Spain goes down, the rest of Europe is going to be helpless to stop it. There simply is not going to be enough money to bail either one of them out.
That is why this "debt deal" is so alarming. All investors in Italian or Spanish debt will now have to factor in the probability that they will be required to accept a 50 percent haircut at some point in the future.
If the markets behave rationally (and if the ECB does not manipulate them too much), it appears inevitable that bond yields over in Europe are going to rise substantially, and that will put tremendous additional financial strain on governments all over Europe.
Basically, we have got a huge mess on our hands, and this debt deal just made it a lot worse.
Yes, a financial collapse has been averted in Greece for the moment, but the truth is that there is no real reason to be celebrating this deal.
A massive financial storm is coming to Europe, and this "debt deal" has made that all the more certain.
Once again, politicians in Europe have tried to kick the can down the road, but in the end their efforts are only going to lead to complete and total financial disaster.
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plove
Hired Hand
Posts: 227
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Post by plove on Oct 28, 2011 10:22:40 GMT -5
Goals of the Zionist Manifesto: expressed 1776 ... same year as start of American Revolution. Looks like the Zionists are winning.
The abolition of all ordered governments. The abolition of private property. The abolition of inheritance. The abolition of patriotism. The abolition of the family. The abolition of religion. The creation of a world government.
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Post by linsal on Oct 28, 2011 11:27:59 GMT -5
Goals of the Zionist Manifesto: expressed 1776 ... same year as start of American Revolution. Looks like the Zionists are winning. The abolition of all ordered governments. The abolition of private property. The abolition of inheritance. The abolition of patriotism. The abolition of the family. The abolition of religion. The creation of a world government. Frankly, I wouldn't give the Zionists that much credit. I think this whole thing can be laid at the feet of stupid politicians pandering to voters so they can be reelected...."Who cares about tomorrow as long as I can get reelected today?"
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Post by Grainbelt on Oct 28, 2011 13:29:20 GMT -5
Frytown, you think the Chinese are communists? I think they are damn good capitalists. Something Americans used to be really good at. Now we are reduced to choosing between Democratic and Republican socialism.........
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Post by linsal on Oct 28, 2011 20:08:00 GMT -5
This whole thing is going to get more than interesting....
Once the euphoria of the initial announcement faded and as people have begun to closely examine the details of the European debt deal, they have started to realize that this "debt deal" is really just a "managed" Greek debt default. Let's be honest - this deal is not going to solve anything. All it does is buy Greece a few months. Meanwhile, it is going to make the financial collapse of other nations in Europe even more likely. Anyone that believes that the financial situation in Europe is better now than it was last week simply does not understand what is going on. Bond yields are going to go through the roof and investors are going to start to panic. The European Central Bank is going to have an extremely difficult time trying to keep a lid on this thing. Instead of being a solution, the European debt deal has brought us several steps closer to a complete financial meltdown in Europe.
The big message that Europe is sending to investors is that when individual nations get into debt trouble they will be allowed to default and investors will be forced to take huge haircuts.
As this reality starts to dawn on investors, they are going to start demanding much higher returns on European bonds.
In fact, we are already starting to see this happen.
The yield on two year Spanish bonds increased by more than 6 percent today.
The yield on two year Italian bonds increased by more than 7 percent today.
So what are nations such as Italy, Spain, Portugal and Ireland going to do when it costs them much more to borrow money?
The finances of those nations could go from bad to worse very, very quickly.
When that happens, who will be the next to come asking for a haircut?
After all, if Greece was able to get a 50% haircut out of private investors, then why shouldn't Italy or Spain or Portugal ask for one as well?
According to Reuters, German Chancellor Angela Merkel is already trying to warn other members of the EU not to ask for a haircut....
Chancellor Angela Merkel said on Friday it was important to prevent others from seeking debt reductions after European Union leaders struck a deal with private banks to accept a nominal 50 percent cut on their Greek government debt holdings.
"In Europe it must be prevented that others come seeking a haircut," she said. But investors are not stupid. Greece was allowed to default. If Italy or Spain or Portugal gets into serious trouble it is likely that they will be allowed to default too.
Investors like to feel safe. They want to feel as though their investments are secure. This Greek debt deal is a huge red flag which signals to global financial markets that there is no longer safety in European bonds.
So what is coming next?
Hold on to your seatbelts, because things are about to get interesting.
Around the globe, a lot of analysts are realizing that this European debt deal was not good news at all. The following is a sampling of comments from prominent voices in the financial community....
*Economist Sony Kapoor: "The fact that a deal has been agreed, any deal, impresses people. Until they start de-constructing it and parts start unravelling."
*Economist Ken Rogoff: "It feels at its root to me like more of the same, where they’ve figured how to buy a couple of months"
*Neil MacKinnon of VTB Capital: "The best we can say is that the EU have engineered a temporary reprieve"
*Graham Summers of Phoenix Capital Research:
First off, let’s call this for what it is: a default on the part of Greece. Moreover it’s a default that isn’t big enough as a 50% haircut on private debt holders only lowers Greece’s total debt level by 22% or so.
Secondly, even after the haircut, Greece still has Debt to GDP levels north of 130%. And it’s expected to bring these levels to 120% by 2020.
And the IMF is giving Greece another $137 billion in loans.
So… Greece defaults… but gets $137 billion in new money (roughly what the default will wipe out) and is expected to still be insolvent in 2020. *Max Keiser: "There will be another bailout required within six months - I guarantee it."
The people that are really getting messed over by this deal are the private investors in Greek debt. Not only are they being forced to take a brutal 50% haircut, they are also being told that their credit default swaps are not going to pay out since this is a "voluntary" haircut.
This is completely and totally ridiculous as an article posted on Finance Addict pointed out...
We now know that private holders of Greek bonds will be “invited” (seriously–this was the word used in the EU summit statement) to take a write-down of 50%–halving the face value of the estimated $224 billion in bonds that they hold. This will help bring the Greek debt-to-GDP ratio down from 186% in 2013 to 120% by 2020. The big question–apart from how many investors they will get to go along with this, given that they couldn’t reach their target of 90% investor participation when the write-down was only going to be 21%–is whether this will trigger a CDS pay-out.
That this is even up for discussion is mind-boggling. These credit default swaps are meant to be an insurance policy in case Greece doesn’t pay the agreed upon interest and return the full principal within the agreed timeframe. If they don’t pay out when bondholders are taking a 50% hit then what’s the point? European politicians may believe that they have "solved" something, but the truth is that what they have really done is they have pulled the rug out from under the European financial system.
Faith in European debt is going to rapidly disappear and the euro is likely to fall like a rock in the months ahead.
The financial crisis in Europe is just getting started. 2012 looks like it is going to be an extremely painful year.
Let us hope for the best, but let us also prepare for the worst.
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Post by linsal on Oct 28, 2011 21:44:07 GMT -5
Copy and paste from theeconomiccollapseblog.com/I wish I was that smart..I'm just trying to figure out where this whole "thing" is going to go....to me, it looks like bond interest rates have only one way to go and that is up. I'm expecting US bond interest rates to follow the European's lead---especially if the Congressional super committee doesn't come up with the necessary budget cuts. Then we'll prolly be looking at another downgrade on US debt...bond holders will start to demand higher interest rates, and away we'll go....The Federal Reserve is trying to "manage" interest rates, but they will be sidelined as being useless in that arena....all they'll be able to do is print more money....
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Post by linsal on Oct 29, 2011 5:38:02 GMT -5
I think this thing is going to be like a slow motion train wreck for some time to come. Bond interest rates all over the world will go up which will effectively force many gov't's (including the US) into soveign default. Greece is going to be the first interesting test of whether the credit default swaps on Greek debt are going to pay out or not. Read more here: globaleconomicanalysis.blogspot.com/If the CDS's pay out, then I think the dominos will fall more quickly (we've all heard about how there are trillions in CDSs which are largely unregulated financial instruments---several Wall Street firms are no longer around today b/c of what happened to them in 2008---CDS's played a role in their demise). If the CDS's don't pay out b/c the haircuts (soverign defaults) are "voluntary", interest rates on bonds issued by bonds are going to go up, and go up rather fast. I think we're going to see both deflation and hyper inflation at some point. Deflation is going to continue to happen in real estate markets (housing, commercial, etc.). Hyper inflation will happen in the day to day things we buy. And I think Looter and Thirsty are right about Peak Oil and it's consequences...that "concept" is going to also play a major role in the destruction of the middle class here in the US. Here's another interesting blog I watch: theautomaticearth.blogspot.com/
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Post by linsal on Oct 29, 2011 5:43:22 GMT -5
And now it looks like the property bubble is starting to burst in China...from Yahoo... ..Hundreds of angry home buyers launched a series of protests in China's commercial hub of Shanghai this week, as owners decried falling prices for their properties, state media said Thursday. Hit by weak demand and lack of funding, developers have slashed prices for some new projects in the city by more than 20 percent, the China Business News said, causing an outcry among those who bought at higher levels. Analysts said the sometimes violent protests signalled that government measures designed to cool the red-hot property market were working and they warned developers in other parts of the country were starting to cut prices. In the latest incident, some 200 home owners on Wednesday besieged the sales office for a project of leading developer Greenland Group, demanding refunds. "We require a refund because the loss we are suffering now is too great for us to afford," the Shanghai Daily quoted a protestor as saying. He paid 17,000 yuan ($2,678) per square metre last year and claimed the developer had cut the price by around 30 percent to boost sales. In a another incident, 30 home owners stormed the sales office of a project of Hong Kong-listed China Overseas Land & Investment Ltd. on Wednesday, the Global Times said, repeating a similar protest from over the weekend. In at least one case, protests have turned violent. Home owners smashed a glass door over the weekend at a sales office of Hong Kong-listed Longfor Properties Co. Ltd. for another project in a Shanghai suburb. A property analyst said developers had started to cut prices in other parts of China, which could potentially lead to similar protests elsewhere. "Property developers may be under pressure to sympathise with home buyers but if they have significant funding problems, they will opt to cut prices regardless," Su Yan of E-house China R&D Institute told AFP. She added buyers had little legal basis to demand refunds. "We can understand them on an emotional level, but actually the contract law does not support the demands by home owners." Shanghai has responded by ordering developers who cut prices by more than 20 percent to report the change, but the local government had no plans to intervene for now, spokesman Xu Wei told a news conference Thursday. Demand for apartments has been falling after authorities, fearing a property bubble, banned the purchase of second homes, increased minimum downpayments and trialled property taxes in some cities -- including Shanghai. At the same time, property developers have been hit by a lack of funds, as the government hiked interest rates and restricted bank lending to rein in surging inflation and bring real estate prices into line. Ratings agency Standard & Poor's expects China's property prices to fall by 10 percent nationwide over the next year as the measures take effect. "The Chinese government is unlikely to roll back its measures to control property prices in the next six months," S&P credit analyst Bei Fu said in a research report this week. Nationwide, prices of new homes in Chinese cities actually remained resilient in September from August despite government efforts to cool the property market, with prices in 24 out of 70 Chinese cities rising. Another 29 cities recorded stable prices in September, while only 17 cities recorded price falls, the government said. .. news.yahoo.com/protests-hit-china-property-prices-fall-062027680.html;_ylt=Aspv7z_CIKaTRBrmXByHIaJvaA8F;_ylu=X3oDMTNjMDlrYTlkBG1pdAMEcGtnAzQwYmJiYjg3LWY3YWYtM2E4ZS1iMGYxLTQ5MTllNmFkNmEyYwRwb3MDNQRzZWMDbG5fQXNpYV9nYWwEdmVyAzBjZGI1YWMwLTAwODgtMTFlMS1iZmZiLTliOWY4ZGRhNTdiMQ--;_ylv=3China has an advantage over the rest of the world in that they have paid cash for the development of their unused cities, airports, etc. and the purchasing of debt from other countries. But, they have done this at the expense of their natural resouces (air, water, land).
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Post by thirsty on Oct 29, 2011 7:32:10 GMT -5
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Post by linsal on Oct 29, 2011 8:03:14 GMT -5
Ok...I read the article in the link...US treasury paper is getting sold by foreign entities...who are they buyers? I hope not the Fed....
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Post by linsal on Oct 29, 2011 13:53:39 GMT -5
And now the mainstream is figuring out that CDS's might be in peril and/or useless... LONDON - The future of the Credit Default Swap (CDS) market -- used to hedge against the risk of a country defaulting -- may be at risk if these derivative instruments do not pay out after this week's rescue deal for Greece. An implosion of the sovereign CDS market could lead investors to buy fewer government bonds because they feel they cannot protect themselves, and risks pushing up borrowing costs for governments, especially in the euro zone. Private sector creditors such as insurers, banks and funds will take losses of 100 billion euros on their Greek debt holdings under a new bailout pact struck this week, sharing the burden of the costly rescue with taxpayers. But the International Swaps and Derivatives Association (ISDA) -- a bank lobby that also decides whether an event triggers the CDS -- has said it's not likely that the restructuring would lead to a pay-out. "The CDS market is being keelhauled. This certainly isn't going to help, because why would you buy a CDS if there will never be a payout?" said one well-placed industry source, referring to the Greek situation. He projected the sovereign CDS market -- a small corner of the $25 trillion overall market -- could die out in the next year, echoing some bankers' fears. CDS contracts are a form of protection that entitle bondholders to a pay-out in case of a default. They are also often used by investors who do not own the underlying bonds to bet on the market -- so-called "naked" CDS. This has made them unpopular among politicians, who have blamed speculators for exacerbating Europe's debt crisis. IT'S VOLUNTARY The European Union agreed last week to ban naked CDS on sovereign debt, in a rule that will come into force from November 2012, already putting pressure on the sovereign CDS market even if there will be some exceptions. A non-payout of the CDS would further take away the credibility of the market -- even if its relevance for Greece is limited: economists have estimated the net payout on Greece CDS, would only be $1.85 billion. European politicians struck a deal with the banks in the early hours of Thursday after a night of hard-nosed negotiations, that will see them write off 50 percent of the value of their Greek government debt holdings. The agreement with banks paved the way for a second bailout of Greece, and comes along two other measures: a forced recapitalization of Europe's banks and bigger financing powers for Europe's EFSF bail-out fund. The International Institute of Finance (IIF) that leads the talks from the industry side said that the deal they struck was voluntary, and that an involuntary deal could have caused a "true calamity." "There is the unknown risk of what happens with contagion. You could have hedge funds looking at Spain or Italy after that, which could pile on pressure there and precipitate the quest for assistance," said David Watts, an analyst at CreditSights. Banks had initially agreed to an offer for a debt exchange that would see them take a 21 percent cut. At the time, politicians and bankers also insisted that the deal had to be voluntary, to avoid a hard Greek default. But that deal was torn up as it became clear that the conditions in Greece had rapidly deteriorated. The elements of the new agreement are unclear, and will probably have to be hammered out in the coming weeks. The CDS market still has value for other uses, such as an insurance against a company or bank default. Sovereign CDS are also used as a proxy hedge, for instance for companies that are too small to have their own CDS in a given country. That has been one of the main drivers of a rise in liquidity. In France, the volume was up 21 percent in the third quarter, according to data from Markit. In Germany, the rise was 14 percent, while volumes in Italy dropped 11 percent. The problem banks and investors face is that the risk of sovereign defaults in the euro zone -- once inconceivable -- has grown more real in the past two years. And if one of the main hedging tools disappears, that inevitably means they will be under even more pressure to reduce their exposure and start selling the bonds, pushing up the yield and therefore the financing costs for governments. www.cnbc.com/id/45086793
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plove
Hired Hand
Posts: 227
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Post by plove on Oct 29, 2011 16:44:50 GMT -5
China isn't the 800 pound gorilla in the room nor is it likely to be. It's a Chink Chimp at best ... IMHO.
I've been predicting for 2 years that Germany, Russia, and China are going to do a deal. Not only for mutual protection, but to protect themselves from the Zionist NWO ... the Brit Empire and USA.
China has labor and technology, Russia has energy and technology, and Germany has the discipline and technology. Both China and Germany need lots of imported energy.
It's a natural fit for those three countries living side by side.
As the NWO sinks slowly in the West.
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Post by linsal on Oct 30, 2011 5:55:11 GMT -5
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