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Posts Tagged ‘William Black’

WILLIAM BLACK: THE EURO COULD COME UNDONE IN 3-4 YEARS

Courtesy of CULLEN ROCHE, The Pragmatic Capitalist 

William Black of UMKC believes the Euro could unravel in the coming 3-4 years as the political tension continues to increase and ultimately creates a divide between the core and periphery.  Black says the economies on the periphery are likely to remain very weak and will lead to civil unrest and political overhaul.  In the end the strains will be too much for the region to overcome.

Black also discusses the imbalances in China and why the Chinese are likely to experience their own crisis in the coming years.  (Video here.)

Source: Bloomberg


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Bill Black On Foreclosuregate

Bill Black On Foreclosuregate: Calls For The Immediate Termination Of Bernanke, Geithner And Holder

Courtesy of Tyler Durden

Bill Black, who will soon, together with Neil Barofsky, be a guaranteed shoe-in for the POTUS/VP position (both as independents, of course), was on the Ratigan show today, following on his op-ed from last week (here and here) calling  for the long-overdue nationalization of Bank of America, and discussing the rampant fraud at the heart of mortgage gate. And contrary to ongoing lowball estimates from the like of JPM and Goldman, Black provides numbers about the bank liability that are simply stunning: "Credit Suisse says that by 2006 49% of all mortgage originations were liars loans. When independent folks study fraud, it is in the 80-90% fraud range. That means there were millions of acts of fraud. Those loan frauds occurred because the banks created incentive structure for the loan brokers to bring them the absolute worst of the worst loans, and to lie on the application forms… These frauds came from the banks, and they propagated through the system through a series of echo epidemics…This fraud spread through the system and that’s why we have a crisis in foreclosures. This stems from the underlying fraud by the lenders in mortgage loans to the tune of well over a million cases a year by 2005."

Furthermore, Black points out the glaringly obvious, that the Fed should not be in charge of any investigation into mortgage fraud, due to its "massive" conflict of interest, to the tune of $1.5 trillion in MBS/agencies held on the Fed’s books, which would be immediately null and voided if rampant MBS fraud is indeed uncovered. Which is precisely why the entitlement of the Fed as supreme regulator (as inspired by the financial generosity of the Wall Street lobby) as part of Frank-Dodd was the one single most destructive decision ever made, and equivalent in many ways with electing America’s very own tyrannical despot, whose only interest is making the multi billionaires, into trillionaires, and leaving everyone else in the cold through the eliminating of the savings class and the destruction of the reserve currency.

And it goes much further… to the very top of the US ruling oligarchy in fact. Which is why, as we have claimed from day one, nothing less than a complete reset of the entire kleptocratic system…
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Former Bank Regulator William Black: U.S. Using “Rally Stupid Strategy” to Hide Bank Losses – Will Produce Japanese Style Lost Decade

Former Bank Regulator William Black: U.S. Using "Rally Stupid Strategy" to Hide Bank Losses – Will Produce Japanese Style Lost Decade

William K. BlackCourtesy of Mish 

Aaron Task has a nice interview with former bank regulator William Black on our "Really Stupid Strategy" to Hide Bank Losses"

109 U.S. banks have failed so far this year, 23 in this quarter alone. These failures may not cost depositors, but they do come at a steep cost to the FDIC. As discussed here with ValuEngine’s Richard Suttmeier, the FDIC Deposit Insurance has already spent $18.93 billion this year, “well above the $15.33 billion prepaid assessments for all of 2010.”

The situation is likely even worse than the FDIC portrays, says William Black Associate Professor of Economics and Law at the University of Missouri-Kansas City.

“The FDIC is sitting there knowing that it has both the residential disaster and the commercial real estate disaster [and] knowing it doesn’t have remotely enough funds to pay for it,” he says.

William Black with Aaron Task Video

Partial Transcript

Aaron Task: Should we be surprise there are not more bank failures?

William Black: Not Surprised,we should be upset there are not more bank failures. The industry has used its political muscle to get Congress to extort the financial accounting standards board to gimmick the accounting rules so that banks do not have to recognize their losses.

Aaron Task: In practical terms, what does the gutting of that rule mean for the banks?

William Black: Capital is defined as assets minus liabilities. If I get to keep my assets at inflated bubble values that have nothing to do with their real value, then my reported capital will be greatly inflated. When I am insolvent I still report that I have lots of capital.

Aaron Task: You are saying the FDIC is intentionally keeping foreclosures down because it knows it does not have enough money to pay off depositors who are insured by the FDIC?

William Black: That is correct and that is going to make ultimate losses grow. It also means we are following a Japanese type strategy of hiding the losses and we know what that produces – a lost decade, which is now two lost decades. Your listeners and viewers if they are stock types, look at the Nikkei. It lost 75% in nominal terms and has stayed that way for 20 years. I…
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William K. Black on Bill Moyers’ Closing Show

William K. Black on Bill Moyers’ Closing Show

William talks about fraud, or "control fraud" and the criminogenic environment of the Wall Street-Washington world. The regulators themselves were a huge problem because when regulators who hate regulation are appointed, it leads to a self-fulfilling prophecy of failure, "anti-regulation." There’s much more in this interview, click on the picture to watch.  Transcription’s below. - Ilene 

H/tip Barry Ritholz


 

April 23, 2010

BILL MOYERS: Welcome to the JOURNAL. We’ll get to two big battles in Washington in just a moment — financial reform and the future of the internet. But first, I want to thank those of you who wrote after you heard me say last week that the JOURNAL will come to an end with next Friday’s broadcast. It’s true, and all of us here were touched by your messages of regret.

I will miss the virtual community of kindred spirits that has grown up around this broadcast — viewers like you, as we say, whose unseen but felt presence reminds me of why I have kept at this work so long. But it has been a long time, and that’s why I can assure you that my departure is entirely voluntary. Many of you wrote to say you were alarmed at the possibility that we are being pushed off the air — that higher ups or dark powers pointed to the door and said, “Go.”

You can relax; it didn’t happen. I’m leaving for one reason and one reason alone: it’s time. Believe me, it wasn’t an easy decision: I like what I do, cherish my colleagues and enjoy your company. But I’ll be 76 in a few weeks, and there are some things I want to do that the deadlines and demands of a weekly broadcast make impossible. So for me, it’s now or never. I informed public television of my decision more than a year ago, intending to leave back in December. But my colleagues at PBS asked me to extend the series four more months to give them time to prepare a new public affairs series. More on that next week.

Now to the big rumble of this week — and I’m not talking about that volcano in Iceland. I’m talking about the fight to reform our financial system.

PRESIDENT BARACK OBAMA: There…
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Control Frauds HyperInflate and Extend Bubbles Maximizing Damage – A Control Fraud at Work in the Silver Market Short Positions?

Control Frauds HyperInflate and Extend Bubbles Maximizing Damage – A Control Fraud at Work in the Silver Market Short Positions?

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Here is a working paper by William K. Black about ‘control frauds’ and how they relate to the most recent credit crisis in the United States, a breakdown of stewardship that has placed the rest of the world’s financial sector at risk as well.

Control frauds are by their very nature conspiratorial in that they involve the suborning of regulators, ratings agencies, exchanges, the media, and legislators to ignore and facilitate misrepresentation that enable white collar crime. They are difficult to prosecute because by their nature they involve twisting the legal into the extra-legal on a broad basis to achieve a particular financial effect, while limiting many specific aspects to the letter of the law, or at least the gray areas.

By and large they operate in the shadows, hiding behind secrecy and a general mindset towards short term greed and lapses in ethics. Investigations following the Crash of 1929 and the S&L crisis demonstrated that the existence of such pervasive lapses in stewardship do exist.

Personally I think the significant short positions in the silver market may be a form of control fraud. This is why so much effort and care is being taken by some individuals and groups to discover the extent and nature and holders of the short positions that are dominant. And this is why the participants are so vociferous and secretive regarding their activities.

To those who say that the commodity markets are too large, and too well regulated for this sort of thing to occur, this is the sort of fraud that Enron used to manipulate the energy markets, to the extent that they were able to cause significant social and commercial disruption to the state of California.

More on this another time. For now understanding how these frauds work is enough to study in instruments such as home mortgages. And most people do not need to understand this. But here is a good point for the average person to keep in mind.

Light is a good disinfectant. Fraud cannot bear exposure. While some confidentiality must be maintained in trading, obsessive secrecy regarding significantly large positions and collateral matters is often an indication that something is not right, that it is hidden from the market participants view for…
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Lehman’s Liar’s Loans and Other Cons

Lehman’s Liar’s Loans and Other Cons

William Black and Bill MoyersCourtesy of MIKE WHITNEY at CounterPunch 

Prof. William Black submitted a 24-page report on the Lehman bankruptcy to the House Committee on Financial Services on Tuesday. It is the best analysis of the underlying causes of the financial crisis to date. Black, who is a former government regulator and white-collar criminologist, shows that the crisis was not an unavoidable disaster, as Wall Street apologists suggest, but the result of large-scale fraud perpetrated by financial institutions like Lehman Brothers. The incidents of fraud were numerous, blatant, extreme and premeditated. In making his case against Lehman, Black exposes the omissions, failures and negligence of the primary regulators, particularly the Fed. Had the Fed not been derelict in its duties, the cyclical downturn would not have turned into a near-Depression. 

"Lehman’s failure is a story in large part of fraud," Black said in his testimony before the House. "Lehman was the leading purveyor of liars’ loans in the world. For most of this decade, studies of liars’ loans show incidence of fraud of 90per cent. … If you want to know why we have a global crisis, in large part it is before you." 

Man with toy gun

 As the Litigation Director of the Federal Home Loan Bank Board during the S&L crisis, Black knows what he’s talking about. He was so dogged in his investigation that Charles Keating "directed his chief political fixer that his ‘Highest Priority’ was to ‘Get Black … Kill him Dead.’” But Black didn’t buckle or give ground. He shrugged off the threats and continued to expose unsound practices and illegal activity. His team faced the same challenges that regulators face today, "elite frauds"  by powerful institutions that wield tremendous political power.

Black’s statement cuts through much of the ideological claptrap surrounding the crisis and shows that deregulation is really the decriminalization of fraud.  The notion that the market can "regulate itself"  has been jettisoned altogether and public support for reform is  gaining momentum. 

"It is insane to withdraw accountability for negligence," says Black. "Doing so encourages negligence."

Financial institutions have used "laisser faire" dogma for their own aims. It’s the mask behind which the voracity and predations remain hidden. To a large extent, that’s the story of Lehman, an institution that paid no attention to rules and regulations. Anything went. It’s a philosophy that was embraced by the nation’s chief regulator,…
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Bill Black: Lehman’s demise is “a story of fraud”

Bill Black: Lehman’s demise is "a story of fraud"

Courtesy of Edward Harrison at Credit Writedowns 

Veteran regulator believes Lehman Brothers is a case of fraud and believes the Feds need to bring charges.

But, more than that, Black hones in one the mortgage fraud which underlies much of the speculative fervour in the market by citing the 60% of GSE eligible Citi loans which Citigroup executives indicated did not conform to Freddie and Fannie’s standards.

Very short interview. I would like to have heard more.

Update: Below Black goes into some detail in his later testimony before Congress. Good stuff.


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Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman’s Bad Assets

Important (i.e. share it) article by Mish on William Black’s account of how Tim Geithner and the NY Fed covered up Lehman’s inflated asset values and lack of liquidity, long before the financial meltdown in 2008. – Ilene 

Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman’s Bad Assets, by Senior Regulator During the S&L Crisis

Courtesy of Mish 

Inquiring minds are digging into a 27 page statement made by William Black before the Financial Services committee. Black is an Associate Professor of Economics and Law, at the University of Missouri.

Professor Black’s statements regarding the collapse of Lehman and the role the Fed played in that collapse are refreshingly candid.

Please consider "Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner". Emphasis, highlighting, and subtitles are mine.

I begin with a short description of my background that is relevant to your questions. My primary appointment is in economics. I have a joint appointment in law. I am a white-collar criminologist. My research specialization is financial fraud by elites and financial regulation. I was a senior regulator during the S&L debacle (and had the honor of testifying many times before this Committee).

Valukas Report Documents Three Major Deficiencies In Lehman Governance

The [Valukas] Report documents at least three major deficiencies in Lehman’s corporate governance that need to be addressed globally. First, it points out that Lehman, and many other Delaware corporations, have eliminated the fiduciary duty of “care.”

… Alan Greenspan has admitted that he had a similar view and that events have falsified this naïve account. It is insane to withdraw accountability for negligence. Doing so encourages negligence. Congress should mandate that corporate officers and directors be subject to the fiduciary duties of care and loyalty. They will still, of course, have the very substantial protection of the business judgment rule.

Second, the same individual should not serve as the CEO and Chair of the Board of Directors of a large corporation. The imperial CEO is a consistent problem in this and prior crises.

Third, Lehman ignored its stated risk “limits” and simply increased its limits retroactively to accommodate its violations of its risk limits. In plain English, that means it had no meaningful limits. ….

I have a different view than Mr. Valukas about the overall state of Lehman’s


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DID GOLDMAN OPEN PANDORA’S BOX?

DID GOLDMAN OPEN PANDORA’S BOX?

Courtesy of The Pragmatic Capitalist 

William Black, a former bank regulator discusses the potential implications of the Goldman lawsuit and whether this is the beginning of a witch hunt on Wall Street:


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Is the Fed Likely to Act If There Is Another Stock Market Bubble?

Is the Fed Likely to Act If There Is Another Stock Market Bubble?

Stock prices luring goldfish

Courtesy of JESSE’S CAFÉ AMÉRICAIN

That title is a bit of a rhetorical question, because I think the stock market bubble has already arrived, and the Fed is pumping the bellows. But let us not allow that detail to impede the progress of our discussion. Let’s assume that only the next leg up in this monetary experiment will be breaching the limits of the bubblesphere.

Mark Thoma has ‘reblogged’ a review of Dean Baker’s book False Profits from Brad DeLong Site at his own, The Economist’s View.

Brad, the blogging professor from Berkley, takes issue with Dean Baker’s book, concluding:

"But let me start by saying how I disagree with the book. I think that its story of the linkages between our current crisis and Federal Reserve policy is significantly overstated. Its argument about how excessively-low interest rates caused the housing bubble is exaggerated. I think that its belief that the Federal Reserve could have taken much more action to curb the housing bubble while is underway is also exaggerated…"

Well, at least he is consistent. In censuring my criticisms of Mr. Greenspan’s monetary policy back in 2004 which I made as comments on his blog, Mr. DeLong said that Greenspan "never made a policy decision with which I disagreed." Although I was incredulous, I took him at his word.

Not even Greenspan apparently is willing to say that anymore. Although he is very willing to forget the activist role he took in promoting banking deregulation and the expansion of leverage and derivatives, and the rough treatment measured out to those who dared to disagree with the powerful bureaucrats at the Treasury and the Fed. Reich Levels Broadside at Greenspan, Rubin, Summers and Phony Financial Reform

But the comments to this blog were quite interesting and led me to another review of Dean Baker’s book by ‘Daniel’ over a Crooked Timber.

I found the first comment after Daniel’s review to be particularly interesting.

kevincure: 04.03.10 at 6:21 PM

"I was at the Fed in 2006. Everybody at the Fed


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Chart School

Population-Adjusted Real Retail Sales: Another Perspective on the Economy

Courtesy of Doug Short.

In real, population-adjusted terms, Retail Sales are at the level we first reached in December 2004.

Earlier this month, the Advance Retail Sales Report showed that sales in September declined 0.3% month-over-month, as I reported in my real-time update.

With the subsequent release of the Consumer Price Index, we can now dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.

The first chart shows the complete series from 1992, when the U.S. Census Bureau began tracking the data in its current format. I've highlighted recessions and the approximate range of two major economic episod...



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Zero Hedge

ISIS Claims It Hit US Embassy In Baghdad's Green Zone

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

"They know Baghdad. They've lived in Baghdad," said Lt.Col Oliver North, warning over the weekend that sources in Iraq believed ISIS was planning a "major attack" against the embassy in Baghdad. Yesterday we get some confirmation - via ISIS - that they did in fact reportedly strike the U.S. embassy in Baghdad. As Inquisitr reports, on Tuesday the Islamist militant group took credit for a mortar attack against the embassy in Baghdad. The group bragged about the attack on social media, claiming that there were likely casualties - “Four rockets strike Green Zone in #Baghdad; helicopters hovering over the Green Zone; ambulances heading that way after strikes!!” one ISIS mil...



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Phil's Favorites

Poster Children

Poster Children

Courtesy of 

IBM, Coca-Cola and McDonalds are three of America’s largest corporations and most well-known brands. They are true multinationals in every sense of the word and they dominate their industries both at home and abroad. They are numbers 23, 58 and 106 on the Fortune 500 list, respectively. Together, they make up 12 percent of the Dow Jones Industrial Average’s total weighting.

And all three are plagued by the same problem – they’re shrinking. More than this, their shrinkage is finally being recognized on The Street, now that investors are peeling back all of the layers of buybac...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Sabrient

Sector Detector: Sharp selloff in stocks sets up long-awaiting buying opportunity

Courtesy of Sabrient Systems and Gradient Analytics

Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.

Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...



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Digital Currencies

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby's Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...



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OpTrader

Swing trading portfolio - week of October 20th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Promotions

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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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