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Author: Subject: Half a Million Jobs Cut in November

Zen Peach





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  posted on 12/5/2008 at 09:16 AM
And they wonder why retail sales are down...

quote:
Employers cut 533K jobs in Nov., most in 34 years

WASHINGTON Skittish employers slashed 533,000 jobs in November, the most in 34 years, catapulting the unemployment rate to 6.7 percent, dramatic proof the country is careening deeper into recession.

The new figures, released by the Labor Department Friday, showed the crucial employment market deteriorating at an alarmingly rapid clip, and handed Americans some more grim news right before the holidays.

As companies throttled back hiring, the unemployment rate bolted from 6.5 percent in October to 6.7 percent last month, a 15-year high.

Job losses were widespread, hitting factories, construction companies, financial firms, retailers, leisure and hospitality, and others industries. The few places where gains were logged included the government, education and health services.

The loss of 533,000 payroll jobs was much deeper than the 320,000 job cuts economists were forecasting. The rise in the unemployment rate, however, wasn't as steep as the 6.8 percent rate they were expecting. Taken together, though, the employment picture was dismal.

The job reductions were the most since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession.

Job losses in September and October also turned out to be much worse. Employers cut 403,000 jobs in September, versus 284,000 previously estimated. Another 320,000 were chopped in October, compared with an initial estimate of 240,000.

Employers are slashing costs to the bone as they try to cope with sagging appetites from customers in the U.S. and in other countries, which are struggling with their own economic troubles.

The carnage including the worst financial crisis since the 1930s is hitting a wide range of companies.

In recent days, household names like AT&T Inc., DuPont, JPMorgan Chase & Co., as well as jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., and mining company Freeport-McMoRan Copper & Gold Inc. announced layoffs.

Fighting for their survival, the chiefs of Chrysler LLC, General Motors Corp. and Ford Motor Co. will return Friday to Capitol Hill to again ask lawmakers for as much as $34 billion in emergency aid.

Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.30 in November, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven't stretched that far because of high prices for energy, food and other items.

Worn-out consumers battered by the job losses, shrinking nest eggs and tanking home values have retrenched, throwing the economy into a tailspin. As the unemployment rate continues to move higher, consumers will burrow further, dragging the economy down even more, a vicious cycle that Washington policymakers are trying to break.

Federal Reserve Chairman Ben Bernanke is expected ratchet down a key interest rate now near a historic low of 1 percent by as much as a half-percentage point on Dec. 16 in a bid to breathe life into the moribund economy. Bernanke is exploring other economic revival options and wants the government to step up efforts to curb home foreclosures.

Treasury Secretary Henry Paulson, whose department oversees the $700 billion financial bailout program, also is weighing new initiatives, even as his remaining days in office are numbered.

President-elect Barack Obama, who takes office on Jan. 20, has called for a massive economic recovery bill to generate 2.5 million jobs over his first two years in office. House Speaker Nancy Pelosi, D-Calif., has vowed to have a package ready on Inauguration Day for Obama's signature.

The measure, which could total $500 billion, would bankroll big public works projects to create jobs, provide aid to states to help with Medicaid costs, and provide money toward renewable energy development.

The U.S. tipped into recession last December, a panel of experts declared earlier this week, confirming what many Americans already thought.

At 12 months and counting, the recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns. The current recession might end up matching that or setting a record in terms of duration, analysts say.

The 1981-82 recession was the worst in terms of unemployment since the Great Depression. The jobless rate rose as high as 10.8 percent in late 1982, just as the recession ended, before inching down.

Given the current woes, the jobless rate could rise as high as 8.5 percent by the end of next year, some analysts predict. Projections, however, have to be taken with a grain of salt because of all the uncertainties plaguing the economy. Still, the unemployment rate often peaks after a recession has ended. That's because companies are reluctant to ramp up hiring until they feel certain the recovery has staying power.

http://news.yahoo.com/s/ap/20081205/ap_on_bi_ge/financial_meltdown


 

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Maximum Peach



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  posted on 12/5/2008 at 09:29 AM
quote:
And they wonder why retail sales are down...

One of the things that surprises me in all the business reporting is the focus on housing versus job stability. The talking heads, along with all those wizards in congress, all talk about housing being the root of the problem. "Once housing gets moving again, everything else will begin to loosen up" is heard over and over again.

But who's going to worry about buying a house - no matter the price or low interest rate - if they feel their jobs are not secure. Today's numbers certainly don't help that.

The morons in Washington keep giving away money to the financial industry, now they want to set mortgage rates down to 4.5%, when what they really should do is lower business, corporate, and capital gains taxes. Get rid of them entirely if they really want to do the right thing. That will give businesses something to get excited about, which will stop the job bleeding, promote the sense of security, and send the stock market soaring.

If people don't feel secure about their jobs, they won't spend money. Seems simple to me.

 

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Zen Peach



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  posted on 12/5/2008 at 09:35 AM
quote:
quote:
And they wonder why retail sales are down...

One of the things that surprises me in all the business reporting is the focus on housing versus job stability. The talking heads, along with all those wizards in congress, all talk about housing being the root of the problem. "Once housing gets moving again, everything else will begin to loosen up" is heard over and over again.

But who's going to worry about buying a house - no matter the price or low interest rate - if they feel their jobs are not secure. Today's numbers certainly don't help that.

The morons in Washington keep giving away money to the financial industry, now they want to set mortgage rates down to 4.5%, when what they really should do is lower business, corporate, and capital gains taxes. Get rid of them entirely if they really want to do the right thing. That will give businesses something to get excited about, which will stop the job bleeding, promote the sense of security, and send the stock market soaring.

If people don't feel secure about their jobs, they won't spend money. Seems simple to me.


I agree to a point. There has to be more responsibility taken on the consumer level. Perhaps retail sales are down because for the first time in a long time, people aren't making holiday purchases with credit cards that they can't (or won't) make the payments anyway.

I know that you can't expect the government to fix every problem, but I don't think you can blame them for every problem, either.

 

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  posted on 12/5/2008 at 10:03 AM
What I do blame them for is gross hubris.

Actions taken so far underline their belief that they can manipulate portions of the economy like a chef would ingredients in a meal. They think they are wise enough to pick the winners, focusing governments gifts on specifc areas as if they are skilled enough to understand how everything works. They are not - not even close.

They redefine hypocrisy as they lecture business leaders on how to run their businesses. The spectacle of them grilling the auto execs about their planes - while Pilosi and Reid do the same on taxpayer funded Air Force jets - should be reason enough to distrust, if not run them from office. In the age of professional politicians, almost none of them have experience running anything other than an election.

Between Federal, State, and Local governments, approximately 1/3rd of GDP is now consumed by government. Tell me any politician in the leadership who's stood before a camera and said we should cut government during this crisis?

The best they can do is lower taxes and cut government so that the benefits of those actions are distributed to everyone equally. Business taxes need to be eliminated entirely, since we are already almost the highest in the world, and businesses doesn't pay taxes anyway. None of these guys are smart enough to manage the economy, individually or collectively. The best they can do is lighten the load government places upon the economy and then get out of the way.

 

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  posted on 12/5/2008 at 10:06 AM
quote:
Business taxes need to be eliminated entirely, since we are already almost the highest in the world, and businesses doesn't pay taxes anyway.


Not to cherry-pick, but, huh?

 

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  posted on 12/5/2008 at 10:18 AM
Three of the major players in my industry have either already started or announced plans to reduce their work forces substantially. Seimens, GE and Philips Healthcare. The GE Healthcare CEO released a press statement yesterday from RSNA which is the largest medical equipment trade show held every year in Chicago stating GE Healthcare was going to down size. Spoke to a few of my friends at GE and they expect it to be a big lay off.

 

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Zen Peach



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  posted on 12/5/2008 at 10:20 AM
quote:
quote:
I know that you can't expect the government to fix every problem, but I don't think you can blame them for every problem, either.


How can we expect the people that caused this problem to be able to fix it? The government and the derregulation that they enacted is at the root of the problem. They aren't going to police themselves. I just laugh when they ask the auto industry to come back with a working plan? If that isn't the pot calling the kettle black, I don't know what is.


I'm just not down with placing 100% blame on any one entity. It still took people to take advantage of that deregulation to cause the damage.

 

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  posted on 12/5/2008 at 10:33 AM
My job was cut this month.

 

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  posted on 12/5/2008 at 11:14 AM
quote:
quote:
Business taxes need to be eliminated entirely, since we are already almost the highest in the world, and businesses doesn't pay taxes anyway.


Not to cherry-pick, but, huh?
I knew this statement would raise eyebrows

In reality, businesses don't pay taxes. Whatever tax burden is placed on them must by defination be part of the pricing in their products and services. Consumers pay the tax. The business, as an entity, doesn't really pay them. They just transfer money paid by their customers to the government.

And consider the billions in savings to business by not having to file taxes and comply with all the insane IRS regulations.

I've heard estimates that as much as 20% of the price of items that we buy are to pay for business taxes. Get rid of those taxes, and competition would cause item prices to fall. Not to mention all the interest worldwide in setting up businesses here.

If we can deficit spend ourselves into oblivion with all this bailout nonesense, we can do essentially the same thing by cutting business taxes. Of course; no politician wants to foster the belief that taxes can be cut. That would errode the perception of their power. Better that they sit on their lofty committee chairs and dispense gifts to those they deem worthy, like Olympian gods deciding the fates.

How we ever let these jerks get so much power is shameful.

 

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Ultimate Peach



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  posted on 12/5/2008 at 11:17 AM
quote:
quote:
And they wonder why retail sales are down...

One of the things that surprises me in all the business reporting is the focus on housing versus job stability. The talking heads, along with all those wizards in congress, all talk about housing being the root of the problem. "Once housing gets moving again, everything else will begin to loosen up" is heard over and over again.

But who's going to worry about buying a house - no matter the price or low interest rate - if they feel their jobs are not secure. Today's numbers certainly don't help that.

The morons in Washington keep giving away money to the financial industry, now they want to set mortgage rates down to 4.5%, when what they really should do is lower business, corporate, and capital gains taxes. Get rid of them entirely if they really want to do the right thing. That will give businesses something to get excited about, which will stop the job bleeding, promote the sense of security, and send the stock market soaring.

If people don't feel secure about their jobs, they won't spend money. Seems simple to me.


The only problem a decline in your home's value REALLY matters is when you are forced to sell it. Job loss is a primary cause of that. So I agree 100%, the job situation is a key driver for housing.

 

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  posted on 12/5/2008 at 11:26 AM
quote:
quote:
quote:
Business taxes need to be eliminated entirely, since we are already almost the highest in the world, and businesses doesn't pay taxes anyway.


Not to cherry-pick, but, huh?
I knew this statement would raise eyebrows

In reality, businesses don't pay taxes. Whatever tax burden is placed on them must by defination be part of the pricing in their products and services. Consumers pay the tax. The business, as an entity, doesn't really pay them. They just transfer money paid by their customers to the government.

And consider the billions in savings to business by not having to file taxes and comply with all the insane IRS regulations.

I've heard estimates that as much as 20% of the price of items that we buy are to pay for business taxes. Get rid of those taxes, and competition would cause item prices to fall. Not to mention all the interest worldwide in setting up businesses here.

If we can deficit spend ourselves into oblivion with all this bailout nonesense, we can do essentially the same thing by cutting business taxes. Of course; no politician wants to foster the belief that taxes can be cut. That would errode the perception of their power. Better that they sit on their lofty committee chairs and dispense gifts to those they deem worthy, like Olympian gods deciding the fates.

How we ever let these jerks get so much power is shameful.



I understand where you are coming from, Rich. I do. But the problem I have always had with complete non-governement involvement, total free market theory is that like all other cultural/societal theories, people screw it up. You don't trust the government to do the right thing. I don't trust people to do the right thing either. I had a front row seat for the lying, cheating and stealing that went down in the mortgage industry. For the "market to sort it out" demands the existence of a true and fair market. We're talking about money here. Ther have been crooks, liars, snakes and thieves for as long as there has BEEN money.

And what is government, anyway? A large group of people.

 

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Zen Peach



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  posted on 12/5/2008 at 11:56 AM
quote:
The government was pushing for these bad loans to be made.


No they weren't. Not all of them. No. Wrong. Sorry. 60% of subprime loans were made by private lenders. Private lending was/is regulated on a state-by-state basis.

Private lenders that were publicly traded were pushed to make loans, swell origination values and dividends if the lender was a REIT by shareholders in the company. As a publicly traded company, your first and foremost responsibility is to the shareholders, NOT the government.

[Edited on 12/5/2008 by Bhawk]

 

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  posted on 12/5/2008 at 12:05 PM
With the amount of money being thrown around in the bailout, it makes more sense for the economic recovery to begin at the bottom and move up. Defaulted mortgages are ruining the property values all over the country. I think they should be renegotiated so people can stay in their homes. As for the car companies, there have been some interesting proposals about that. I wouldn't mind seeing people get vouchers to buy a new hybrid car from the big three that would only be good for a hybrid American car. That would infuse the money into their system and the people could pay back the voucher loan to the government.

One of the continuing reasons for this mess is that people are losing their jobs, other people are holding on to their money and the retailers are suffering and laying off more people. One thing that's becoming apparant....the banks getting the bailout are hanging on to the money instead of putting it back into circulation.

What a mess.

 

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  posted on 12/5/2008 at 12:12 PM
quote:
As far as Fannie/Freddie are concerned, the Government was pushing for these loans to be made to people that they knew could not pay them back.


That would be true if 100% of subprime loans have defaulted. That's not true.

 

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  posted on 12/5/2008 at 12:55 PM
Actually, I'd go further. Why does government have to guarantee mortgage loans in the first place?

I know these institutions have been in place for decades, and worked prety well. But they were an accomodation to the finance industry, giving them insurance from the ultimate source of money: the guy who owns the printing press. Like all things in government; its only a matter of time before some politician gets the idea to tweak the program in some way. And those ways are never to cut - its always to expand.

But what if these programs didn't exist? The lenders would require very solid buyers with good credit before they would bet their own money. That's as it should be. Having the taxpayers and government's printing presses backing you your decisions is a luxury that only bankers have been able to depend upon. At least that's the way it's been till the recent bailout madness - and look who's received all the money so far: financial institutions.

I realize that you saw all the worst in business greed Bhawk. But politicians put the programs in place allowing the greed to exist in the first place. Politicians not understanding what they are doing, or doing favors for selected parties, created this mess. I'm not saying there shouldn't be some regulations. But it seems like far more is needed everytime government gets involved.

 

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  posted on 12/5/2008 at 12:58 PM
I'm expecting a REALLY big sale at Guitar Center soon.

 

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  posted on 12/5/2008 at 01:35 PM
quote:
I realize that you saw all the worst in business greed Bhawk. But politicians put the programs in place allowing the greed to exist in the first place. Politicians not understanding what they are doing, or doing favors for selected parties, created this mess. I'm not saying there shouldn't be some regulations. But it seems like far more is needed everytime government gets involved.


I am going to scream.

Private banks extened lines of credit. Not government money.
Lenders extended non-conforming loans, not covered or regulated in any way, shape or form by Fannie, Freddie, FHA, HUD, none of it. Most lenders steered clear of FHA and HUD loans because there was too much paperwork and guess what? Higher underwriting standards! Gasp! Not the government!

A nearly total and completely unregulated "free market" was just was much of a cause of this mess as anything else. Fannie/Freddie entered into the picture after the loans were made through securitization, but not all loans were securitized, either.

I just don't get it. You seem to blame the government for absolutely everything while always denying that there are no shortage of crooks that will always test the principles of the free market. I'm beginning to think you are actually an anarchist!

The government didn't make crooked appraisers cahoot with crooked LOs to artificially inflate values for higher commissions.

The government didn't extort hundreds of millions of dollars in improper loan fees collected by LOs and lenders.

The government didn't extort hundreds of millions of dollars in improper title/closing fees collected by title companies...which are completely and totally unregulated.

The government didn't place ungodly pressure on underwriters on the 30th of every month to close as many deals as possible so everyone would make their deals for bonuses and commissions.

The government didn't force home inspectors to speed through inspections so they could make as many inspections and therefore, money, as they could.

The government didn't force private lenders to fudge their balance sheets in an unholy shell game.

The government didn't force thousands of LOs to license-hop using aliases to lie, cheat and steal wherever they went.

The government didn't force one lender to make cut-and-paste signatures to change income docs a regular course of business.

I could go on all day.

When it comes to regulation, I think alot of people would be stunned at just how unregulated it all was. I've never posted any details because I've always thought people would find it boring. That's why I'm so vehement about this. It. Was. Not. Regulated. With. Any. Teeth. Until. It. Was. Way. Too. Late.

Now as far as the bailout(s), that's a different after-the-fact issue...I'm talking about the causes.

 

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  posted on 12/5/2008 at 01:51 PM
Nice overview bhawk, very informative.

 

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  posted on 12/5/2008 at 01:59 PM
Well said Hawk, and as I've mentioned to you before, you've corrected my mistaken assumption about government's role in this - it's far less than I thought.

 

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  posted on 12/5/2008 at 02:22 PM
quote:
I am going to scream.

Private banks extened lines of credit. Not government money.


Are you saying that all the discussion of the subprime mess, and everything spawned and based from those loans, were not guaranteed under Fannie/Freddie?

 

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  posted on 12/5/2008 at 03:13 PM
quote:
quote:
I am going to scream.

Private banks extened lines of credit. Not government money.


Are you saying that all the discussion of the subprime mess, and everything spawned and based from those loans, were not guaranteed under Fannie/Freddie?


Fannie/Freddie, as GSEs, were only allowed to buy conforming loans, or, as it turned out, right about half of the total. The other half was private. The standards were lowered on conforming loans, yes. On that, the point is valid. However, the GSEs only guarantee mortgages they sell as MBSs (mortgage backed securities). A vast majority of Fannie/Freddie loans are prime. The housing collapse is not limited to subprime.

Fannie/Freddie effed up too. I'm not sitcking up for any one entity. But there was a whole other side to it as well.

I worked in a world where we would, as an example, draw off a line of credit from a Deutsche Bank and turn around and package a pool of loans to sell to a Goldman. No government involvement.





[Edited on 12/5/2008 by Bhawk]

 

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  posted on 12/5/2008 at 03:43 PM
Interesting Bhawk - thanks for that. Obviously the majority of the reporting didn't focus on the private stuff.

 

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  posted on 12/5/2008 at 03:44 PM
quote:
quote:
I am going to scream.

Private banks extened lines of credit. Not government money.


Are you saying that all the discussion of the subprime mess, and everything spawned and based from those loans, were not guaranteed under Fannie/Freddie?


FNMA and FHLMC did not guarantee mortgages. They bought them from lenders (banks, originators, brokers etc.) pooled them and sold interests in the pools. Any level of "guarantee" was implied by the market because they are gov't sponsored entities.

FHA, HUD etc. did have loan guarantee programs, but I don't believe these were widespread enough to cause the meltdown.

Programs like Community Reinvestment Act etc. created products making it easier for buyers that would not qualify in the traditional sense to obtain mortgages. These products were further bastardized by the industry to become the really shoddy lending we hear so much about. Again, government sponsorship, but nowhere a financial link to anything like a guarantee.

Freddie and Fannie provided liquidity and risk diversification to the market. A good example is the first bank I worked for in the late '80s. We had a very narrow geographry - 8-10 towns and limited capital. But, we were very active mortgage lenders. By selling our loans to Freddie, we got liquidity to make new loans, retained the servicing for a nice fee. They took our loans, concentrated in Fairfield County, CT and pooled them with loans from around the country, diversifying the geographic risk out of a pool of mortgages and everyone was happy.

Now, in those days, the Fred/Fan underwriting guidelines were relatively conservative and adopted by the entire secondary market of loan buyers. Because lenders wanted most of their loans to be saleable to this secondary market, they made most loans "conforming".

Congressional pressure, the CRA etc. forced Fred/Fan to push the limits and undewriting became "looser" to allow less qualified buyers to obtain loans that were now considered "conforming" - sub prime lenders took this to another degree. But again, there's no real guarantee from Fannie or Freddie.

 

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  posted on 12/5/2008 at 06:42 PM
I'm a partner in a steel manufacturing company. We've got seventy employee's. And unless something happens in the next sixty days we'll be laying off half of those. I've been down this road before,but this time I don't see a light at the end of the tunnel. We do manufacture a product that will keep the doors open. But without any outside work there's no way we can continue to employee these people. I refuse to do it before Christmas, but sometime mid January it's got to happen. Unless, something changes.

And believe or not, but there's no bailout in my future from the Government.

 

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  posted on 12/5/2008 at 06:58 PM
quote:
I'm a partner in a steel manufacturing company. We've got seventy employee's. And unless something happens in the next sixty days we'll be laying off half of those. I've been down this road before,but this time I don't see a light at the end of the tunnel. We do manufacture a product that will keep the doors open. But without any outside work there's no way we can continue to employee these people. I refuse to do it before Christmas, but sometime mid January it's got to happen. Unless, something changes.

And believe or not, but there's no bailout in my future from the Government.
It's happening all over like this Clay. I work for a large corp and we've had 100's laid off and I'm just hoping I can keep my job for a few years and retire. My sis works for a small privately owned company and they just laid off 6 from a staff of 21. No bailouts here either. It's a sad, sick feeling that's going around.

 

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"Come on down to the Mermaid Cafe and I will buy you a bottle of wine, and we'll laugh and toast to nothing and smash our empty glasses down..."

 
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