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Battered Britain hovers on the edge of double-dip recession OFFICIAL: Double dip!!!

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Oct 16, 1999
10,497
3
0
The studies on the fiscal multiplier (a core component of Keynesian economics) are all over the map, but skew toward disproving Keynes' ideas. Furthermore, New classical economics uses just as much math as Keynesian economics, it's just different math. Considering Tom Sargent just won the Nobel prize for work in this area I wouldn't be so quick to dismiss it.
If those studies are based on the fiscal multiplier from government spending in its entirety I have no doubt they are all over the map or even skewed towards the negative. Not all government spending will have a stimulus effect. I'm not saying that, Keynes didn't say it either. In fact the only ones who are saying it seem to be Austrians in order to "disprove" Keynes.
 

the DRIZZLE

Platinum Member
Sep 6, 2007
2,956
1
81
If those studies are based on the fiscal multiplier from government spending in its entirety I have no doubt they are all over the map or even skewed towards the negative. Not all government spending will have a stimulus effect. I'm not saying that, Keynes didn't say it either. In fact the only ones who are saying it seem to be Austrians in order to "disprove" Keynes.
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Book 3, Chapter 10, Section 6 pg.129 "The General Theory.."
 
Oct 16, 1999
10,497
3
0
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Book 3, Chapter 10, Section 6 pg.129 "The General Theory.."
That demonstrably increases aggregate demand. In fact since the treasury notes are recovered that example clearly has a positive multiplier too.

Since that example was meant to counter a lack of gold to mine, let's look at the Austrian solution for those out of work miners. They are all allowed to starve and die, thus removing their unproductive bodies from the labor pool, thus keeping taxes low and unemployment constant for everyone else.
 
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BoberFett

Lifer
Oct 9, 1999
37,587
9
81
Why are the miners starving? Are they unable to grow their own food? If they aren't able to take part in the economy then they need to take care of themselves.

Or are you going to argue that paying the unemployed to break windows is better than nothing?
 

Jhhnn

No Lifer
Nov 11, 1999
61,851
14,002
136
Keynes' banknotes in a coalmine example was drawn to show the silliness of the gold standard. He pointed out that it would be far more sensible just to pay people to build houses or whatever.

He was right, of course, although people who think they understand what he said often aren't.
 

LunarRay

Diamond Member
Mar 2, 2003
9,993
1
76
Keynes advocated for deficit spending by Government to address the shortfall in the aggregate demand but he placed some parameters on the time period... He called it an Economic Cycle where the net effect of that spending would be zero. He knew that to simply increase the debt without creating surplus would result in an eventual weakening of the economy.

We cannot simply look at the history of economic activity and conclude that one general philosophy is preferred over another. Today we have a 'world wide' economy where as in the '30s and until the WWII we had an isolated (for all practical purposes) economy. The economic benefit of increasing the household debt ratio is always in the past and when it hits a wall or drops as it is today business is not about to invest to create supply because the demand capability is not there. There will always be a point where some basic financial decisions favor constriction rather than maintaining capacity or expansion. We are in the constriction stage within US companies with a twist being the move 'off shore' of some aspects of production needs.

Whatever economic plan whichever political side wishes to employ it must consider all of the relevant factors.
From my view all perched atop this tree I can see but one viable economic strategy that will move the US toward economic strength in our lifetime... Isolate! Regulate! And, let the rest of the world be what ever their resources can construct.

I see the US as being taxed to the beegeebers while the rest of the world are the middle and lower class draining our capability... Only problem is the strength a nation has resides in their manufacturing base, their internal resources and the integrity of their economic system. The US probably cannot produce to its demand so there will always be imports but if they are selected based on our needs and not some NAFTA deal we can quickly move up and out of our dilemma.

Cutting mandates or taxing changes are not really the answer because it does not consider the psychology of the population nor the societal needs we espouse. It simply creates more issues than what its intended benefits provide. Reduce government spending in this climate you reduce demand capacity. But there is that third way...

Entities like our friends in Grand Britannia can no longer sate their needs from their Imperialistic endeavors... they sink or swim like the rest of the world.

I hope the day comes when my great-grand kids (who are 4 and 2) will ask their parents (well... hopefully me) 'What was Walmart?' and I can say, 'A store what sold cheap stuff from China but was renamed when they went to selling only made in America stuff out of stuff from America.'
 
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LunarRay

Diamond Member
Mar 2, 2003
9,993
1
76
I should add that I don't mind how many billionaires there are so long as even the least of us can live reasonably on what we earn in what ever profession or work we perform.... And, the disabled and elderly are cared for. A bit of sharing is not bad... and not an issue in a thriving economy.

Those who seemingly don't want to work and simply want to hang out also need our help... they are no doubt disabled in some manner. We must care for all our citizens as we care for ourselves.... Our borders, however, ARE our borders...
 

Zebo

Elite Member
Jul 29, 2001
39,408
2
81
So, this debate isn't going to be any higher quality than 'austerity doesn't work' and 'spending money like a drunken sailor doesn't work', is it? Useless. Ideology again.

Why don't we just go back to only land-owning white males can vote, repeal every law in the last century, increase poverty and starvation and call it utopia? No drunk sailor there.

To have a discussion you can't just say 'Greece sucks therefore we should adopt the Ryan budget' to make the rich richer. That's clueless and harmful.

Let's see, the last time we had such a bad economy, we had the New Deal, which build massive Dams (the biggest things the world had ever built), the Golden Gate Bridge, energy, infrastructure, sidewalks, all kinds of things that paced the way for prosperity - that we 'couldnt afford' and should have just not spent the money and left the country in dire straits, hungry, sick. So, let's try THAT approach this time. Good plan. Greece sucks!

This is a good example of when democracy is limited by ignorant, gullible citizens who are vulnerable to the propaganda of the wealthy interests, to prefer bad policy.

People don't understand that the wealthy always want to shift more wealth from the people to themselves.

If the US were a third world country, the rich would still be singing the same song about those greedy citizens asking for a bit of rice to eat, the selfish pigs.

Problem is, the wealthy are able to MISSPEND the money we spend by controlling the government and elections with their money - so people say 'government sucks'.

Plays right into the hands of the wealthy who don't want the people to have any power against them.

How has austerity worked historically? Well, it's a decades-long policy the IMF and World Bank used on countries - that they now admit was very destructive. Hmm.

I can point you at countries who spend a hundred times on their interest to foreign lenders as their education budget - money borrowed under pressure from the powerful countries to hire those countries for needless projects to enrich politically powerful companies and industries, such as Bechtel. Done them a lot of good! But hey, better than spending the money on the people of the country. Austerity, good idea!

You know what I can't remember from one right-wing poster here in a long time? One single post saying 'hey, this trend we're on benefiting the wealthy is a bad one, let's change it'.

All you have to do is show a right-winger a picture of a poor black buying a steak on food stamps, and they'll scream for more right-wing policies. SCREW THOSE PEOPLE!!

One of the news channels pointed out how the $800,000 GSA scandal - and it is a scandal - was awfully tiny compared to the literally billions stolen by Halliburton/KBR.

Which is the public hearing more about, which are they being told to be worried about? So they'll scream 'I hate the government' instead of 'I hate corrupt interests controlling the government'? Because the people behind the Halliburton/KBR billions ARE the right-wing policies that are put in power when they hold up the poor person buying the steak.

And call for austerity - by the people. No need to invest in the people - just give the money to the corrupt interests. The job creators hoarding record-setting wealth.

But you can't talk to so many of these right-wingers. They think 'Greece Sucks' is a valid position to our economy. Put the wealthy in charge!

Reminds me a little again of how street gangs turn these members into little more than people obsessed with hating and killing the other gang, who is very much like them.

No talking sense to such people, and no talking sense to the 'austerity' crowd who hate other citizens and don't want them getting 'any free money'. Irrational.

$800,000 or billions, which is larger? They sure think the $800,000 is larger. It seems to have had a lot more press and Congressional hearings. Who resigned over the billions?

I'm not defending the $800,000 waste, I'm pointing out how public opinion is so absurdly misguided when it ignores the billions - and supports austerity for the people over good investments in the country. During the Great Depression, the explosion of infrastructure; in the 1960's, we created Medicare, Medicaid, permanently lowered the poverty level by a third in the War on Poverty, had a major tax cut fought for by the Democrats as good Keynesian economics (propsed by Kennedy, passed by Johnson), increased education and much more, all while spending up to 5% of the budget on the Moon project and Vietnam - with a roughly balanced budget.

Which party has brought us the prosperity and balanced budgts, and which has brought us economic crashes, massive shifts of wealth to the wealthy and huge debt?

Save234
Really good post Craig - however I feel we give them righties ammo with no work requirements. When hallibuton drives a truck 100 miles accross Iraq for $100,000, they'll say they are at least working for it no matter how much graft is going on. Welfare person does nothing for that steak but exist and rubs many wrong way.
 

Zebo

Elite Member
Jul 29, 2001
39,408
2
81
Keynes advocated for deficit spending by Government to address the shortfall in the aggregate demand but he placed some parameters on the time period... He called it an Economic Cycle where the net effect of that spending would be zero. He knew that to simply increase the debt without creating surplus would result in an eventual weakening of the economy.

We cannot simply look at the history of economic activity and conclude that one general philosophy is preferred over another. Today we have a 'world wide' economy where as in the '30s and until the WWII we had an isolated (for all practical purposes) economy. The economic benefit of increasing the household debt ratio is always in the past and when it hits a wall or drops as it is today business is not about to invest to create supply because the demand capability is not there. There will always be a point where some basic financial decisions favor constriction rather than maintaining capacity or expansion. We are in the constriction stage within US companies with a twist being the move 'off shore' of some aspects of production needs.

Whatever economic plan whichever political side wishes to employ it must consider all of the relevant factors.
From my view all perched atop this tree I can see but one viable economic strategy that will move the US toward economic strength in our lifetime... Isolate! Regulate! And, let the rest of the world be what ever their resources can construct.

I see the US as being taxed to the beegeebers while the rest of the world are the middle and lower class draining our capability... Only problem is the strength a nation has and does reside in their manufacturing base, their internal resources and the integrity of their economic system. The US probably cannot produce to its demand so there will always be imports but if they are selected based on our needs and not some NAFTA deal we can quickly move up and out of our dilemma.

Cutting mandates or taxing changes are not really the answer because it does not consider the psychology of the population nor the societal needs we espouse. It simply creates more issues than what its intended benefits provide. Reduce government spending in this climate you reduce demand capacity. But there is that third way...

Entities like our friends in Grand Britannia can no longer sate their needs from their Imperialistic endeavors... they sink or swim like the rest of the world.

I hope the day comes when my great-grand kids (who are 4 and 2) will ask their parents (well... hopefully me) 'What was Walmart?' and I can say, 'A store what sold cheap stuff from China but was renamed when they went to selling only made in America stuff out of stuff from America.'
We never followed Keynes. Only the easy part, the spending. The hard part done in good times was forgotten.
 

LunarRay

Diamond Member
Mar 2, 2003
9,993
1
76
Really good post Craig - however I feel we give them righties ammo with no work requirements. When hallibuton drives a truck 100 miles accross Iraq for $100,000, they'll say they are at least working for it no matter how much graft is going on. Welfare person does nothing for that steak but exist and rubs many wrong way.
How does a person become a Welfare person? And, what is the alternative? Are there programs in place that are effective in transitioning Welfare folks from welfare to self sustaining work? Does the economic situation render any such program, if they exist and are viable otherwise, nugatory (and all of that words synonyms).

I suppose there are programs and there are ill feelings toward those steak eating do nothing lazy folks... But, how many of these folks are hard core welfare types? I think that is or should be the focus. The folks who have given up or may never have even started to join the rest of us.

I lived in an area filled with the poor as a youth... No one had anything. But everyone talked about how they were going to get out of this place and the first thing they'd get was a TV... Not one family, and often it was not really a family but the remainder of what once was one, wanted to be there in that condition... Not even hot water! Many of the kids saw Vietnam and the military as their ticket out while the older parents and grandparents... mostly women, knew they had no chance but hoped for their kids...

Folks seem to settle into a 'funk'. They see no hope and believe there to be none. What can we do to show them hope and change their thinking?

I think the folks of today are just like the folks back in my youth. Kids go to substandard schools where passing a class is simply attending the class once in awhile... They learn nothing to apply to their future aside from where to hang out.

We as a people need to first provide the means... the ladder... to climb out of the hole and then look back into that hole and see who is left in there and maybe even jump in and give them a push up... Something but to do nothing but give them money solves no problem.
 

Zebo

Elite Member
Jul 29, 2001
39,408
2
81
How does a person become a Welfare person? And, what is the alternative? Are there programs in place that are effective in transitioning Welfare folks from welfare to self sustaining work? Does the economic situation render any such program, if they exist and are viable otherwise, nugatory (and all of that words synonyms).

I suppose there are programs and there are ill feelings toward those steak eating do nothing lazy folks... But, how many of these folks are hard core welfare types? I think that is or should be the focus. The folks who have given up or may never have even started to join the rest of us.

I lived in an area filled with the poor as a youth... No one had anything. But everyone talked about how they were going to get out of this place and the first thing they'd get was a TV... Not one family, and often it was not really a family but the remainder of what once was one, wanted to be there in that condition... Not even hot water! Many of the kids saw Vietnam and the military as their ticket out while the older parents and grandparents... mostly women, knew they had no chance but hoped for their kids...

Folks seem to settle into a 'funk'. They see no hope and believe there to be none. What can we do to show them hope and change their thinking?

I think the folks of today are just like the folks back in my youth. Kids go to substandard schools where passing a class is simply attending the class once in awhile... They learn nothing to apply to their future aside from where to hang out.

We as a people need to first provide the means... the ladder... to climb out of the hole and then look back into that hole and see who is left in there and maybe even jump in and give them a push up... Something but to do nothing but give them money solves no problem.
We need more community organizers. Not joking. You're a smart man lunar, lending your business and life knowledge to these ppl would help immensely. But other than that - yes we need massive public works project (like high speed rails among other things) that give ppl hope, and middle class wages - while redistributioniust it actually builds this country up like IKE and FDR did and creates wealth and new fortunes. What would auto industry or agriculture look like w/o building all those HWYS?

Right now I feel this country is in rape mode. Rich rape it and hide themselves behind 10 ft off-duty police guarded block walls and summer homes in Switzerland. Poor rape it with entitlement. Just the other day at home depot as I was getting a new water heater for a rental we have this kid working there is like "you know how to get a free water heater everytim? Just take it back a few days before warranty is out and say it leaks" We have a cultural problem more than a money problem. Everyone needs to give a little more.

PS we didnt have a TV until I was 13 like 1985. Parents didn't believe in it. I still don't believe in it. The new, Opium for the masses.
 
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Svnla

Lifer
Nov 10, 2003
17,842
1,326
126
I don't care if you are R or D or I or whatever, we can NOT continue the same rate of spending or even more. It can not continue forever with the same projection/rate/trend. Just look at SS/Medicare/Mediaid/Defense/Interest amounts and the projection of growing for those entities. There is no way we can get the house in order if we don't do anything about those entities. We can cut everything down to zero and it would not cut it.

The US is just like an extrem obese, not just fat, person and both the D and R are just kicking the can down the road.

One more thing. On tonight CBS 60 minutes, there was a story about Lehman Brothers bankruptcy. The report stated that there were evidences to prosecute. It was over 3 years ago but there is nothing about prosecute the fat cats at LB and Wall Street. I thought Democrat party is about fair play/anti Wall Street, and for the poor. So much for that. Both parties are in the pockets of the stinky rich.
 
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Craig234

Lifer
May 1, 2006
38,584
345
126
I don't care if you are R or D or I or whatever, we can NOT continue the same rate of spending or even more. It can not continue forever with the same projection/rate/trend. Just look at SS/Medicare/Mediaid/Defense/Interest amounts and the projection of growing for those entities. There is no way we can get the house in order if we don't do anything about those entities. We can cut everything down to zero and it would not cut it.

The US is just like an extrem obese, not just fat, person and both the D and R are just kicking the can down the road.

One more thing. On tonight CBS 60 minutes, there was a story about Lehman Brothers bankruptcy. The report stated that there were evidences to prosecute. It was over 3 years ago but there is nothing about prosecute the fat cats at LB and Wall Street. I thought Democrat party is about fair play/anti Wall Street, and for the poor. So much for that. Both parties are in the pockets of the stinky rich.
That's some of the corruption of money - both sides pretty much need it to get elected.

So you can have a party refuse the money - and lose. Bring back, say, a landlide like Reagan's re-election. Or, they can take the money, and have a chance to win.

Which is what both parties are doing. The progressive caucus does the right thing on policy - and look how they are hammered by the money in advertising.

Neither party (Republicans, obviously) has any progressives for president. Howard Dean was the closest we had in a long time, and look how he got killed by propaganda.

Oh, no, he yelled loud to a young audience - he can't be president!
 

Double Trouble

Elite Member
Oct 9, 1999
9,276
103
106
It's always funny to me to see people who understand so little about economics arguing about economics as if they were experts. :D

I don't see how anyone can claim any result of austerity at this point because austerity is not intended to make everything bounce back instantly. The reality is that short term pain in the form of economic contraction is to be expected. In the long term, bringing spending more in line with income is critically needed, and if short term pain is needed to accomplish it, then so be it.
 

Jhhnn

No Lifer
Nov 11, 1999
61,851
14,002
136
It's always funny to me to see people who understand so little about economics arguing about economics as if they were experts. :D

I don't see how anyone can claim any result of austerity at this point because austerity is not intended to make everything bounce back instantly. The reality is that short term pain in the form of economic contraction is to be expected. In the long term, bringing spending more in line with income is critically needed, and if short term pain is needed to accomplish it, then so be it.
And if that's true, then it needs to come in the form of shared sacrifice. What sacrifice should the wealthy make for the good of the country?
 

Ronstang

Lifer
Jul 8, 2000
12,427
10
81
And if that's true, then it needs to come in the form of shared sacrifice. What sacrifice should the wealthy make for the good of the country?
You people keep talking about shared sacrifice but you are such liars because what you mean is the rich get to pay for everything. The rich already pay the overwhelming majority of tax revenue. You talk like the bottom 50% are somehow sacrificing as it is. So are all the people getting more money back on their tax return then they paid in going to have to give up their disguised welfare even though they have a decent job?
 

Craig234

Lifer
May 1, 2006
38,584
345
126
You people keep talking about shared sacrifice but you are such liars because what you mean is the rich get to pay for everything. The rich already pay the overwhelming majority of tax revenue. You talk like the bottom 50% are somehow sacrificing as it is. So are all the people getting more money back on their tax return then they paid in going to have to give up their disguised welfare even though they have a decent job?
Ronstang, you aren't a hypocrite right? Then you will take this offer:

I'll cut your taxes to ZERO. You come work for me, and not only will you get ZERO in taxes (or salary), I'll pay for you to have a bed and food.

So, you will be there being a leech not paying taxes, and demanding I pay for your bed and board, it's your lucky day! Great deal, by the asinine argument you make.
 

Nebor

Lifer
Jun 24, 2003
29,586
11
76
Ronstang, you aren't a hypocrite right? Then you will take this offer:

I'll cut your taxes to ZERO. You come work for me, and not only will you get ZERO in taxes (or salary), I'll pay for you to have a bed and food.

So, you will be there being a leech not paying taxes, and demanding I pay for your bed and board, it's your lucky day! Great deal, by the asinine argument you make.
That was an awful analogy, even for you.
 

fskimospy

Elite Member
Mar 10, 2006
71,818
21,990
136
You people keep talking about shared sacrifice but you are such liars because what you mean is the rich get to pay for everything. The rich already pay the overwhelming majority of tax revenue. You talk like the bottom 50% are somehow sacrificing as it is. So are all the people getting more money back on their tax return then they paid in going to have to give up their disguised welfare even though they have a decent job?
That's absurd. Do you believe that the top 10% of earners in the United States create 50% of all national production? (if you do, I have a bridge to sell you) They don't create 50% of all national production, but they take home nearly 50% of all income.

This is a really bizarre case of Stockholm Syndrome that the American right wing has, where the top earners in the US are obviously being rewarded significantly in excess of their contribution to our national production, but you think that having the system require some of that back from them is a horrible imposition, that they are 'paying for everything'. You pay for it, we all pay for it when we produce things. It's incredibly naive to believe otherwise.
 

Jhhnn

No Lifer
Nov 11, 1999
61,851
14,002
136
You people keep talking about shared sacrifice but you are such liars because what you mean is the rich get to pay for everything. The rich already pay the overwhelming majority of tax revenue. You talk like the bottom 50% are somehow sacrificing as it is. So are all the people getting more money back on their tax return then they paid in going to have to give up their disguised welfare even though they have a decent job?
They gave up their jobs so that our capitalists could offshore production, and they pay all the other taxes that the rest of us pay, but they're being asked to sacrifice their meager benefits for the good of the country. Payroll taxes comprise about the same % of federal revenues as income taxes, for example, and everybody who earns less than the cutoff amount pays those in full measure.

Maybe the Rich need to suffer through another tax cut for themselves, huh, so that they'll, uhh, create jobs, yeh, that's it...
 

epidemis

Senior member
Jun 6, 2007
797
0
0
Austerity just enhances the position of the Wealthy over everybody else. Being rich when everybody else is broke is the best time to be rich. In the land of the blind, the one eyed man is king.
When you have no money to borrow what would you do?
 

Genx87

Lifer
Apr 8, 2002
41,086
493
126
This is another example of 'conservatism does not fail, it is only failed'. The lesson that the right will take from the failure of austerity is that they weren't austere enough. When cuts by governments depress revenues due to a shrinking economy, they just figure they must cut more.

I believe there would be a silver lining to this if I actually thought conservatives would take the abject failure of their economic policies as a lesson, one they would learn from. I see no evidence that this will take place. Sometimes I wonder exactly how much evidence conservatives will need before they admit they were wrong.
Britain, the bastion of conservative economics. :D Austerity is an undesired result of liberal economic policy. Govt overspending for years or decades. At some point even the govt runs out of political capital to keep printing. Clearly liberals cant see their own policy failure and sure as hell wont admit they are wrong. It will always be conservatives fault their policies shit the bed. Because, we didnt spend or expand govt enough. You have said it yourself.
 
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fskimospy

Elite Member
Mar 10, 2006
71,818
21,990
136
Britain, the bastion of conservative economics. :D Austerity is an undesired result of liberal economic policy. Govt overspending for years or decades. At some point even the govt runs out of political capital to keep printing. Clearly liberals cant see their own policy failure and sure as hell wont admit they are wrong. It will always be conservatives fault their policies shit the bed. Because, we didnt spend or expand govt enough. You have said it yourself.
This is simply factually incorrect.

Austerity in this case is the result of changing economic circumstances. If you are running 'conservative' policies, we can fairly presume that means a balanced budget, correct? If you are faced with a severe economic contraction of this sort, that will cause both higher social safety net costs as well as dramatically lower revenues. (even if you eliminate all social spending, you will have decreased revenues.) Without any overspending whatsoever you will find yourself in a place where you must decrease government expenditures, hence austerity.

Decreasing government expenditures in the face of economic depression is proving the world over to be a catastrophe.
 

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