Archive for 2009

Blame it on the Gipper?

Was Reagan’s free-market zealotry an early cause of the current financial crisis?

Blame it on the Gipper?

Courtesy of Leo Kolivakis at Pension Pulse

 

Before getting into this weekend’s food for thought topic, I think you should all watch Secretary of the Treasury Tim Geithner’s interview on ABC’s This Week and the roundtable discussion where Paul Krugman expressed his concerns with the plan.

Interestingly, Krugman thinks the U.S. government is not doing enough to combat the crisis and that the plan will lead to another Japanese-style lost decade. I agree and I also agree that deficits do not matter in times of crisis because if you don’t get the economy working again, the deficits will only get worse in the future.

But I want to take a step back this weekend and look at the historical events that laid the foundation to this global crisis. On Friday morning, I listened to an excellent interview on CBC Radio’s The Current with Bill Kleinknecht, author of the new book, The Man Who Sold The World: Ronald Reagan and the Betrayal of Main Street America.

Ever since the global economic crisis took hold, people have been looking for a place to park the blame for it. Over-extended homeowners. Greedy bankers. Lackluster regulators. Inept elected officials.

Mr. Kleinknecht has another idea. He says the roots of this crisis go all the way back to the early 1980s and land at the feet of U.S. President Ronald Reagan. Click here to listen to the interview (scroll down to part 3).

Here is a review from Joe Conason published in BuzzFlash Reviews:

From the Nation:

The myth of Ronald Reagan’s greatness has reached epic proportions. The public rates him as one of the most popular presidents, and Republicans everywhere seek to cast themselves in his image. But award-winning journalist William Kleinknecht shows in this penetrating analysis of his presidency that the Reagan legacy has been devastating for the country—especially for the ordinary Americans he claimed to represent.

So much that has gone wrong in America—including the subprime mortgage crisis and the meltdown of the financial sector—can be traced directly to Reagan’s policies. The financial deregulation launched in the 1980s freed banks and securities firms to


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Madoff’s World

Here’s a captivating behind-the-scenes look at Bernie Madoff’s life of betrayal and deceit.  With friends like that, who needs enemies? - Ilene The lit-up duplex penthouse apartment of Bernie and Ruth Madoff, on East 64th Street, foreground, where he is under house arrest. Photograph by Stephen Wilkes, Vanity Fair

Madoff’s World

By Mark Seal in Vanity Fair

Among Bernard Madoff’s many dupes were his closest friends, including two tycoons he loved as surrogate fathers: the late Norman F. Levy—whose girlfriend, supermodel Carmen Dell’Orefice, would lose her life savings—and the prominent philanthropist Carl J. Shapiro. Amid the sobs, screams, and curses in Aspen, Palm Beach, and New York, with victims sharing their stories, the author gets behind Madoff’s affable façade, to reveal his most intimate betrayals.

Over dinner in New York one night in January, I was airing my frustration concerning Bernard Madoff. Everybody had read about the losses he had inflicted on foundations associated with Steven Spielberg, Elie Wiesel, and Mort Zuckerman, I told my dinner companions, but after having interviewed nearly 40 of his other financial victims, I still couldn’t get a picture of what the man was like. “If you want to know about Bernie Madoff,” said Mary T. Browne, the renowned psychic and author, who counsels many heavy hitters on Wall Street, “you need to talk to my friend Carmen Dell’Orefice.” She was referring to one of the original supermodels, the platinum-blonde beauty who had posed for Richard Avedon, Irving Penn, Francesco Scavullo, and Norman Parkinson, and who had been a muse to Salvador Dalí. She had first appeared on the cover of Vogue in 1946, when she was 15. “Nobody can give you better insights into the Madoffs than Carmen,” Browne told me. “I’ll see if she’ll talk to you.”

Read on ->

 





GM CEO Wagoner, a Visionless Dinosaur, Forced Out

 End of the line for GM’s CEO Rick Wagoner…

GM CEO Wagoner, a Visionless Dinosaur, Forced Out

Courtesy of Mish

Far too late to matter for GM’s viability, CEO Rick Wagoner Said to Step Down.

General Motors Corp. Chief Executive Officer Rick Wagoner will step down after more than eight years running the largest U.S. automaker, people familiar with the situation said.

The Obama administration asked Wagoner, 56, to leave the company and he agreed, an administration official said. Wagoner said March 19 that he didn’t plan to resign. The likely replacement, unless the government hires from outside the company, would be Chief Operating Officer Fritz Henderson, said John Casesa, managing partner at New York-based consulting firm Casesa Shapiro Group.

“If they go to someone inside, Fritz is the obvious choice,” Casesa said. “He’s run every region, he’s been number two and he knows where all the bodies are buried.”

The departure of Wagoner comes as President Barack Obama prepares an address tomorrow morning on his plans for the future of the U.S. auto industry. GM is surviving on $13.4 billion in U.S. loans and is asking for as much as $16.6 billion in additional aid to survive. Wagoner was asked to step down as part of the company’s restructuring, the official said.

“It’s very hard for the government to write a big check without giving some evidence of change,” Casesa said. “This will also give the government moral authority with the other stakeholders to make them sacrifice.”

Wagoner has repeatedly argued he knows the company better than most who could take his job. He joined GM in 1977, as U.S. automakers were fending off Japanese competitors who recognized the need a decade earlier to build fuel-efficient vehicles.

As CEO, the former Duke University freshman basketball player and Harvard University MBA early on bet against gasoline-electric hybrid vehicles, focusing research on hydrogen technology. GM offered its first full-scale hybrids in 2007, a decade after Toyota introduced the Prius.

Wagoner kept GM focused on trucks and sport-utility vehicles, only to press for development of the Volt plug-in electric car when gasoline prices soared.

Wagoner a Visionless Dinosaur

Wagoner is an aging dinosaur with no vision. He made bad bets on the wrong technology. He bet on Hummer,


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Dave’s Daily

MARKET COMMENT

Dave Fry at ETF Digest, March 29, 2009

Dave and Greg Newton discuss last week’s market activity and various controversial hedge fund issues.

 





G20 Summit Our Last Chance, says Soros

George Soros sees the upcoming G20 summit as a "make-or-break occasion."

G20 Summit Our Last Chance, says Soros

Courtesy of StockJockey at 1440 Wall Street

George Soros is famous for lower back pain…and while his son like to tease him about it, his back seem to be a better trading tool than anything developed by rocket scientists on Wall Street. And he is finally explaining why his back tends to ache at inflection points in the market:

…he has psycho-somatic illnesses – backaches and pains – that tip him off to changes in the market. “It’s as if you’re a jungle animal, and you see another animal facing you. You have to make a decision: fight or flight? Your hair stands up and you growl and you decide, ‘Am I going to attack because I’m stronger or am I going to run away because otherwise he’s going to eat me?’ You are very tense. And that’s the tension that gives you the backache.” Times Online

George thinks next week’s G20 summit in London is the last chance for policy makers to pull a rabbit our of their hat and pull us out of this spiral…but he is not holding his breath:

“The odds would favour that it fails because there are such differences of opinion. It’s difficult enough to get it right in your own country let alone with 20 governments coming together, but if it’s a failure I think then the global financial and trading system falls apart.”

If the G20 is nothing but a talking shop then he thinks we are heading for meltdown. “That could push the world into depression. It’s really a make-or-break occasion. That’s why it’s so important.” The chances of a depression are, he says, “quite high” – even if that is averted, the recession will last a long time. “Look, we are not going back to where we came from. In that sense it’s going to last for ever.”

Food for thought for those you you who have been chasing stocks – a big crowd, given that we just posted a two week stretch that was the fiercest rally in 78 years, at least in the U.S.

George Soros, the man who broke the Bank, sees a global meltdown
TimeOnline

Read more:  George Soros, the man who broke the Bank, sees a global meltdown

 





Vast Computer Spy System Tracked Back to China

Big Brother sent from China?spies2.jpg

Vast Computer Spy System Tracked Back to China

Courtesy of Dan Colarusso at ClusterStock

Researchers are the University of Toronto have tracked back to China a computer spying operation that’s infiltrated machines in more than 100 countries, according to The New York Times.

The investigation, which doesn’t point at the Chinese government specifically, said the so-called GhostNet system had stolen documens from almost 1,300 computers, including those in offices of the Dalai Lama. It has also monitored a NATO computer system and the Indian Embassy in Washington, D.C.

The article says the sytem was the most-ranging one ever discovered and had Big Brother-type capabilities:

"It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed."

Read more->

Source:  Vast Spy System Loots Computers in 103 Countries by John Markoff, NY Times

See also: 

Spy chiefs fear Chinese cyber attack by Michael Smith, Times Online 

INTELLIGENCE chiefs have warned that China may have gained the capability to shut down Britain by crippling its telecoms and utilities.

They have told ministers of their fears that equipment installed by Huawei, the Chinese telecoms giant, in BT’s new communications network could be used to halt critical services such as power, food and water supplies.

The warnings coincide with growing cyberwarfare attacks on Britain by foreign governments, particularly Russia and China.

A confidential document circulating in Whitehall says that while BT has taken steps to reduce the risk of attacks by hackers or organised crime, “we believe that the mitigating measures are not effective against deliberate attack by China”.

Read more here->.

 





Money creation and the Fed

Using a variety of colorful charts, James D. Hamilton examines whether the explosive growth of the monetary base implies uncontrollable inflationary pressures.

Money creation and the Fed

Courtesy of James D. Hamilton at Econbrowser

A lot of people have seen this picture of the recent behavior of the monetary base and wondered what it means.

Figure 1. Adjusted monetary base. Source: FRED.
mon_base_mar_09.jpg


To understand the explosion in the monetary base since September, let’s begin with a little background. The Federal Reserve has the ability to purchase assets or make loans with funds (money) that are created by the Fed itself. To buy a billion dollars worth of assets, the Fed doesn’t show up with new cash in a wheelbarrow. Instead the Fed pays for any assets it purchases or loans it extends by crediting the funds that the recipient bank has in an account with the Fed, known as reserve deposits. A bank can later withdraw those deposits in the form of green currency, if it chooses, and that’s the point at which an armored truck from the Fed would be involved with physical delivery of cash.

The monetary base is essentially the sum of (1) the currency that’s been withdrawn from private banks and is being held by the public, (2) the currency that’s sitting in the vaults of private banks that could potentially be withdrawn by the banks’ customers if they wanted, and (3) banks’ reserve deposits, which you could think of as electronic credits for currency that the banks could ask for from the Fed any time the banks choose. Historically, newly created reserve deposits have usually shown up pretty quickly as currency withdrawn by banks and then by the public. Choosing a pace at which to allow that supply of currency to grow so as to accommodate the increased currency demands from a growing economy without cultivating excessive inflation is one of the main responsibilities of the Fed.

Figure 2 below plots the assorted "factors absorbing reserve funds" from the Fed’s H41 release during the halcyon period from 2003 to the middle of 2007. At that time, currency held by the public was by far the biggest component in the liabilities side


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What Goes Around, Comes Around

A Lesson in Karma?

What Goes Around, Comes Around

Courtesy of Michael Panzner at When Giants Fall

It’s a source of secret (and not so secret) pleasure and the plotline of many books and movies: seeing the tables turned — and the abuser getting abused.

While Americans might not see it that way, no small number of countries have long resented the haughty and overbearing approach that the U.S. and other instruments of American hegemony, including the International Monetary Fund, have taken when they (and other nations) have gotten into financial difficulties.

Under the circumstances, it’s likely that some of them are looking at how things are unraveling in the United States and muttering to themselves: "What goes around, comes around."

In a Washington Post commentary, "Re-emerging As an Emerging Market," Desmond Lachman, a fellow at the American Enterprise Institute and former deputy director of the International Monetary Fund’s Policy and Review Department, helps put those sentiments into context.

Back in the spring of 1998, when Boris Yeltsin was still at Russia’s helm, I led a group of global investors to Moscow to find out firsthand where the Russian economy was headed. My long career with the International Monetary Fund and on Wall Street had taken me to "emerging markets" throughout Asia, Eastern Europe and Latin America, and I thought I’d seen it all. Yet I still recall the shock I felt at a meeting in Russia’s dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia’s economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia’s economic czar at the time.

At the time, I could not imagine that anything remotely similar could happen in the United States. Indeed, I shared the American conceit that most emerging-market nations had poorly developed institutions and would do well to emulate Washington and Wall Street. These days, though, I’m hardly so confident. Many economists and analysts are worrying that the United States might go the way of Japan, which suffered a "lost decade" after its own real estate market fell apart in the early 1990s. But I’m more concerned that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in


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Fraud in the desert and the “Disabler”

Note: the wordpress backup site is back, with apologies, so now there are two more Favorites sites. The original one has the blogroll, which can’t be exported/imported.

Below, Tim Iacono reports on the cat and mouse game in the auto sales industry… fraud and arson, meet the "Disabler." – Ilene  

Fraud in the desert and the "Disabler"

Courtesy of Tim Iacono at The Mess That Greenspan Made

Two reports in the Wall Street Journal tell the tale of how automobile ownership is hitting the skids in the U.S. in an eerie parallel to home ownership – people are walking away from what they promised to pay for and lenders are taking steps to assure they are repaid.

In Signs of Stress, Fraud on Roadside, Las Vegans are abandoning their cars in record numbers to get out from under the monthly payment – if you don’t want to take it out to the desert and torch it yourself, the going rate is only $500 for someone else to do it.

Police detective Mark Menzie drove 55 miles into the desert Sunday to inspect the charred remains of a formerly silver Ford Expedition.

Later, he sat in a kitchen on the city’s south side where a 19-year-old man confessed to torching his girlfriend’s Chrysler PT Cruiser.

At noon Monday, Mr. Menzie was picking through the smashed windshield of a 2008 Land Rover in a desert canyon. His police radio crackled as he worked; another car was spotted burning southwest of the city.

Years of no-money-down car loans followed by sinking home values and rising unemployment has made many people desperate over car payments they can no longer afford. For some, the answer is to ditch the car, report it stolen and collect the insurance money to pay it off without hurting their credit.

Well, at least their intentions are good – to preserve their credit in order to borrow another day. The fact that they are committing a crime is apparently less important.

On the bright side, this is one more growth area for our new economy – more jobs in insurance fraud investigation and vehicle storage.

Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were


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Weekend Reading

Where do we go from here?

Dylan Ratigan is going somewhere, off CNBC because THEY didn't like the direction he's been taking lately – going after the mechanism of Wall Street that led to this crisis and may well lead to the next one.  Dylan wants to do more investigative reporting and thinks CNBC should take on a watchdog role – as he says in this clip re. Wall Street bonuses "it's not capitalism, it's stealing."   CNBC, on the other hand, wants Dylan to look pretty and lob softball questions at CEOs while parent GE et al feed at the government trough while Dylan wants to tell people "capitalism is broken" and needs to be fixed and regulated.  I don't know where he's going to find a job pushing that agenda but he can certainly find a forum here!

The official G20 kicks off in earnest on Wednesday (the underlings have been going at it for 2 weeks already) and our President is going to make a real World Tour out of it:  Stopping by to see th Queen for tea ahead of the G20, at the meeting all day Thursday, having a Town Hall meeting in Strasboug on Thursday ahead of Friday's Nato Summit.  Saturday it's off to Prague for a speech at the EU-US summit, Sunday he negotiates with Turkey on troops and trade and Monday he'll be in Istanbul before heading home.  So what will you be accomplishing next week?  "President Obama has been talking for many months, if not a year or more, about the need to restore U.S. leadership around the globe," said Reginald Dale, a senior fellow at the Center for Strategic and International Studies' Europe program. "This trip is the first chance, actually, to start doing something about that."

While Obama's away, the bears may play next week and we have tons of data coming:  Tuesday we have Consumer Confidence, which has been below 30 since the Fall, The Case-Shiller Home Price Index, down about 18% since last year and the Chicago PMI, which should give us a small upside surprise from 36 expected.  Wednesday we have the dreaded ADP report, which showed just under 700,000 Jobs lost in February and better be under 650K for March.  We also have Construction Spending and the ISM and Pending…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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