Shoeshine Boys are Long the Eurozone - Short! Short! Short!

ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

When six out of five economists (thanks to the magic of Keynesianism... and self promotion from general counsel to general expert) all agree on the same topic, and the very definition of groupthink is that the Eurozone will survive, the glaringly obvious call is precisely the opposite. If there was ever an argument to say that 2012 is the year the Eurozone finally dies, the below video is it.

Peace

Dollar: Fat Lady Hasn't Yet Sung, But the Violins are Already Rocking the House

World's Second And Third Largest Economies To Bypass Dollar, Engage In Direct Currency Trade | ZeroHedge

i) that the dollar's hegemonic control over the world is ending, and ii) that the mercantilist relationship so long sustained between China and the US, may be shifting and reversing, and in its next metamorphosis will see Japan buying the bonds of... China (although probably not for long - see next post). As Bloomberg reports, "Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said. Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday." And before someone blows it off as merely more foreign relations posturing, "“Given the huge size of the trade volume between the Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,

Bucket List: Buy Private Greek Island (check), Next on List: Buy Gaudi Cathedral and Convert Into Condos

Mish's Global Economic Trend Analysis: Spanish Implosion Coming Up; Deficit Up, Receipts Down, a Need to Cut 40 Billion in Expenses from 90 Billion; Spain's "Hidden Deficit"

The simple translation is Spain's budget deficit is bigger than they say and revenues are expected to drop next year by 4%. Bran writes ... "This article tells us that the new government cannot afford to bring out all the debt into the open because when Greece did so, the markets abandoned the country. For each 1% the deficit is off target, another 10 billion must be cut from 2012. People are placing the deficit for 2011 at 7 or 8% as opposed to the planned 6%. FUNCAS gave the 40 billion cut needed mentioned above based on 8% deficit this year." The Prime Minister apparently thinks if he does not admit the debt and the worsening deficit, the market will ignore the problem. We will soon find out for how long.

Hyperbole about Hyperbolic (Gold Prices and Inflation) Simply Logical not Hyperbole at All

GoldMoney

I recently posted an article for GoldMoney showing how US True Money Supply (TMS) appeared to be growing at a hyperbolic rate, and that gold was also on a hyperbolic course. The difference between hyperbolic and exponential is a hyperbola’s rate of growth increases with time, while exponential growth does not. Hyperbolic growth in the quantity of money ends with hyperinflation, while exponential growth can go on for ever. Both TMS and the dollar price of gold are pointing to a hyperinflationary outcome. This article explains why this might be so.

"[Good News]...is fundamentals are about to take front and center stage once again. The bad news is that it is likely to be negative." ~ Morgan Stanley

Morgan Stanley On Why 2012 Will Be The "Payback" For Three Years Of "Miracles" And A US Earnings Recession | ZeroHedge

Whatever the next few weeks brings, I think it’s safe to say that everyone is sick and tired of trading headlines and trying to decipher the next statement/rumor surrounding Merkozy, central bank policies, Washington politics, etc.
Whatever happened to getting paid for channel checks or betting on a unique product cycle that isn’t appreciated by the market? Ironically, while all this meddling by the authorities has helped prop up  asset prices, it has also made it harder to trade and invest. In my view, this is one reason why volatility remains so elevated. According to our Quantitative and Derivative Strategies team, 5, 10, 22, and 60 day realized volatilities are all in the 26-29% range. This is unusual historically, as realized vol has typically fallen by this point in the year.It’s quite possible this higher volatility has compressed multiples and raised correlations, both of which are counterproductive to central banks’ objectives.  
The good news is that the fundamentals are about to take front and center stage once again. The bad news is that it is likely to be negative.
Specifically, there has been a distinct increase in negative earnings results, preannouncements and/or guidance…..ORCL, RHT, GIS, BBY, WAG, ACN, TIF, ANF, DRI, NTAP, TXN, XLNX, ALTR, AMZN, CRM just to name a few.
This is very much in line with my thesis for 2012 that we are likely to avoid an economic recession in the U.S., but we are also very likely to experience an earnings recession.
Importantly, consensus estimates do  not reflect this reality with bottoms up forecasts still modeling 10% EPS growth for the S&P500 next year and top down consensus in the +4-5% range.
While it is a rare outcome to experience positive GDP and negative earnings growth in the same year, it is also just as rare to experience record margins in a world of 9% unemployment and lackluster organic revenue growth.
Think of 2012 as the “payback” year….when many of the extraordinary things that happened over the past 3 years go in reverse.
I am talking about incremental fiscal stimulus, a weaker US dollar, positive labor productivity, and accelerated capital spending.
Exhibit 7 tells the story for what to expect in 2012 assuming the situation in Europe doesn’t implode. In other words, this is not the macro bear case.
_______________
Rather big assumption I should think. ~ CrudeGoldTrader

Cheat Sheet for the Near to Mid Macro Future Scenarios

MOUNTAIN VISION
BIG PICTURE SCENARIOS FOR 2012; MOST PROBABLY, A "DEFLATIONARY DEBT TRAP"

The Moolman Prophecies: Dow 6000? or 1000? - Gold Rocketship Imminent

2012, The Dow’s Annus Horribilis and Gold’s ~ Moolman
If the current fractal continues its similarity to that of the late 60s to early 70s fractal, the Dow could have a horrible drop for most of 2012. I do not wish to speculate as to how low it will go; however, if it stays exactly true to the past fractal (fractals do not always stay exactly true), it could drop to 6000. Since my other analysis suggests that we are at the end of era (an era of the corrupt debt-based monetary system), I would really expect the worst-case scenario. That means that a drop to 1000 is very possible (not necessarily in 2012), even though it appears highly unlikely.
http://hubertmoolman.files.wordpress.com/2011/12/dow-fractal.jpg
it is possible to have a gold price of $5000, with the Dow at 1000. I do not say that we will have these levels, but it is certainly possible. All I am saying is that we have to be prepared for extremes never before seen in our lifetime.

1973-1974:  Dow Minus 50 ish Percent, Gold Up more than 300%


Dow Gold Ratio Coming Up Against Resistance



Moolman's Very Macro Charts are Not to Be Missed Click Here

Financial Stability Paper No. 13: The “Coroner’s Report” on the Death of Dollar Standard

The Death Certificate of the Paper Dollar: Where to Next?

The world dollar standard’s death certificate arrives in the mail this week. The Bank of England — “the Old Lady of Threadneedle Street” — one of the most staid, cautious, and dignified entities in the world of monetary policy — signals that the fiduciary currency standard ushered in on August 15, 1971 is, empirically measured, far inferior to the (dilute form of the) gold standard erected at Bretton Woods.
The Bank of England’s Financial Stability Paper No. 13, Reform of the International Monetary and Financial System, reported at Bloomberg BusinessWeek and reviewed here, is being seen by many monetary policy observers around the world as the “coroner’s report” on the death of the world dollar standard

Faber: If there is war in the world do you think that derivatives will be settled........Of Course Not!

Mark Faber: "I Am Convinced The Whole Derivatives Market Will Cease To Exist And Will Go To Zero" | ZeroHedge

I am ultra bearish. I think most people will be lucky if they still have 50% of their money in 5 years time.
If there is war in the world do you think that derivatives will be settled........Of Course Not!

Greece should have defaulted - it would have sent a message that not all derivatives are equal because it depends on the counterparty.

" You have to have diversification - some real estate in the countryside, some gold and some equities

....because if you think it through, say Germany 1900 to today, we had WWI, we had hyperinflation, WWII, cash holders and bondholders they lost everything 3 times, but if you owned equities you'd be ok. In equities in general you will not lose it all, it may not be a good investment, unless you put it all in one company and it goes bankrupt." As for gold: "I am worried that one day the government will take it away." As for the one thing he hates the most? No surprise here -government bonds.

Debt/GDP=100% on Dec. 21, 2011 Net cash settlement of all completed auctions: $50,777,000,000.00

It's Official: US Debt-To-GDP Passes 100% | ZeroHedge

It's Official: US Debt-To-GDP Passes 100%
One Year prior to THE Vaunted Day....

This type of strong dollar NOT Gold Bearish - 3 Weeks After Fat Euro Lady Sings Expect Dollar Attack

Jim Sinclair

There is a certain extremely important market reality that must be kept in mind as you listen to all the bearish gold predictions.   What is good for the dollar is bad for gold.   This is wrong because it depend what dollar related factors are giving a positive dollar price action.
If the good for the dollar was strong US economic activity, sound balance sheets in the US financial industry and a US consumer ready and credit able to expand, the answer would be yes if these activities were for the long term   That strong dollar would not be good for gold.   However there is only one dollar positive out there. That is the largest currency market on the planet is the dollar vs. euro market in which the so called vigilantes (International Investment Banks) are shorting the euro to infinity. That downward pressure on the euro creates a mirror image of dollar strength but give that strength no greater legs than the euro problem posses.
Within three weeks from whatever date is the final act in the euro soap opera the US dollar will be the primary focus of the vigilantes via US dollar and long bonds.

Market Manipulation Mechanics Explained, Tight Physical Silver & Silver Gold Relationship

King World

“It is so tight, the silver market is so tight that we’ve been waiting three weeks plus, before this takedown, for deliveries of size to arrive.  I’m talking about tonnage orders.  This is also key, most of the silver being delivered was refined after the orders had been placed, and again, that was before the takedown.  You can just imagine how long the wait times will be going forward.”
There isn’t enough silver for investors to buy (in large amounts) so they have been using SLV as a flywheel.  SLV is over 20 million ounces short on the silver they are supposed to have in the vaults to back the shares which have been issued.  The silver isn’t there.
Part of managing the price of silver recently has been for the central banks to attack the gold market.
So, in order for the bullion banks to maximize the effect of the physical gold they get from leasing, they add high scale paper leverage.  They then short-sell just enough tranches of COMEX contracts to surgically take out three important support pivots....
“Each of those important support pivots that everyone is watching, like the 50 day moving average and so on, each one of those are taken out in the access market in the quiet trading, overnight, on three successive days.  In other words, they take out these three important pivots, which turns the momentum buyers into sellers.  It also gets a bunch of funds to start selling as well.
So using as little ammunition (physical gold) as possible, and in thinly traded markets, they take out these pivots.  They smash the price, but leave just enough physical gold for going into the fixes because the smart buyers are saying, ‘I’ll take it at this price.’  So, as we go into the fix, they’ve provided just enough physical to satisfy as many of those buyers as they can.  They then smash it right after the fix, again, with paper.
It’s a sign of absolute desperation when central banks are willing to risk giving bullion banks gold they will never, ever receive back.
These central banks had to be in desperation to allow this borrowed gold to be absorbed by foreign entities.  They needed to raise dollars in a hurry and they are extremely afraid of gold going through the roof.  I was very, very surprised they got as far as they did (driving gold lower).  They had to use an awful lot of gold to do it.”

Decoupling - Neither the breaking up with your GF type nor something even dirtier

ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

With ES (the e-mini S&P futures contract) managing to pull over 40 points off overnight lows (bringing back memories of the 11/30 global bailout rampfest), we saw correlated risk assets disconnect one by one as the day proceeded.

SPX 1260 (200d) still the level to watch above

ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

SPX 1260 (200d) still the level to watch above – held twice in June, sliced through in August, been a consistent top in October, November, and December. SPX closes up 36 at 1241 (+2.98%)." And incidetnally as was noted here minutes ago, "Strange to see EURUSD and SPX decouple so sharply, but year-end brings funny things."

3 Stages of Inflation by Mises colleague Henry Hazzlitt

“What we commonly find, in going through the histories of substantial or prolonged inflations in

various countries, is that, in the early stages, prices rise by less than the increase in the quantity

of money; that in the middle stages they may rise in rough proportion to the increase in the

quantity of money (after making due allowance for changes that may also occur in the supply

of goods); but that, when an inflation has been prolonged beyond a certain point, or has shown

signs of acceleration, prices rise by more than the increase in the quantity of money.” ~ Henry Hazlitt

ZeroHedge Solidly in the Germany Exiting the Euro Camp

ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

Two weeks ago in "Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?" we suggested that according to recent fund flow data, "the Bundesbank wants slowly and quietly out." Out of what? Why the European intertwined monetary mechanism of course, where surplus nations' central bank continue to fund deficit countries' accounts via an ECB intermediary.
"we may be experiencing the attempt by the last safe European central bank - Buba - to disintermediate itself from the slow motion trainwreck that is the European shadow banking (first) and then traditional banking collapse (second and last). Because as Lehman showed, it took the lock up of money markets - that stalwart of shadow liabilities - to push the system over the edge, and require a multi-trillion bailout from the true lender of last resort. The same thing is happening now in Europe. And the Bundesbank increasingly appears to want none of it."

Seeking Alpha writer Agrees with the Germany to leave Euro first Thesis

The Collapse, Death, And End Of The Euro - Seeking Alpha

When the euro drops below 1.20, analysts will talk about the collapse of the euro. When the euro falls toward parity with the dollar, headlines around the world will scream about the death of the euro. But when the European financial system finally collapses, we may very well actually see the end of the euro.

 

In the end, someone is going to leave the euro. There has been a lot of talk about Greece or Italy leaving the euro, but the truth is that it is probably more likely that a strong nation such as Germany will be the first to make a move.

 

Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions

Max Keiser: Valuable Insights Into What Drives Crude Prices in Today's "Markets" in 2nd Half

Another insight that stands out (to this Political Science / Geopolitics Geek anyway) is that the MF Global situation seems to have inserted a Divide and 
Conquer reality into a segment of the social pyramid where it doesn't normally exist:  the 0.01% vs. the 1% - the super-rich vs. the fairly rich - Big Banks and Govt vs Rich traders and hedge fund managers etc.  Consciously, puposefully or not - the system is eating itself. 


PHYZZ Owners Rejoice: Forbes Makes the Case for $10,000 Gold - sort of

Central Bank Appetite And The Monetary Case For $10,000 Gold - Forbes
What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks? An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce.

China and India, have negative real interest rates sitting around negative 2 percent. Simply put, investors in those countries who have parked their savings in cash and low-yielding investments, such as Treasury bills and money market accounts in the U.S., are actually losing money due to inflation. That can be tough for any investor, but when you’re the central bank of a country with millions of dollars in reserves, it can be catastrophic. This is why central banks around the globe have sought protection by diversifying their foreign-exchange reserves into gold bullion this year.

VTB Capital’s Andrey Kryuchenkov told the Wall Street Journal last week that, “Central banks are diversifying, and it has intensified to a rate that nobody had expected.” Latest estimates predict global central banks will purchase between 475-500 tons of gold in 2011. 
 The yellow line below shows how gold would be greater than $5,000 per troy ounce if just half of global money supply were backed by gold. If all of the money supply in the world were to be backed by gold, the price of one troy ounce would need to rise above $10,000. It’s unlikely, of course, that this will happen, but it serves as a useful illustration for the disappearing value of the world’s fiat currencies.

The Euro breaking 1.30 is news. It will be bigger news if it breaks sufficiently and holds below.

Abysmal Liquidity And Other Things to Watch | ZeroHedge

The Euro breaking 1.30 is news.  It will be bigger news if it breaks sufficiently and holds below.

ILL LIQUIDITY

Abysmal Liquidity And Other Things to Watch | ZeroHedge

It is only December 14th.  We are all so exhausted it may feel later than that, but the reality is it is only December 14th.  The market is providing liquidity like it is 3 pm on December 31st.  So no, it is not normal.

When ZH Doesn't Know the Answer and "Can't Wait to Find Out" Be Afraid - Be Very Afraid

RIP Fed Dollar Swap Intervention: Central Bank Liquidity Injection Half Life Two Weeks | ZeroHedge

So just how will the Fed backstop $10+ trillion in explicit USD shorts? We can't wait to find out.

Hot Waitress Index Indicating a Depression Definitely Going on in my Hood

7 Bizarre Trends That Predict an Economic Collapse | Cracked.com

You're ordering at a coffee shop (or if you're fancy, a cafe), and you notice that the barista is surprisingly attractive. Ordinarily you would chalk that up to a nice moment in your otherwise mediocre day, but hang on a tick. As you look around, all the employees are really good-looking. What is going on? What time is it? Are you drunk already and you just forgot? There's no good reason why all this beauty should be wasted on angry caffeine junkies.

Hot Waitress Economic Index Definition | Investopedia

Definition of 'Hot Waitress Economic Index' An index that indicates the state of the economy by measuring the number of attractive people working as waiters/waitresses. According to the hot waitress index, the higher the number of good looking servers, the weaker the current state of the economy. It is assumed that attractive individuals do not tend to have trouble finding high-paying jobs during good economics times. During poor economic times, these jobs will be more difficult to find and therefore more attractive people will be forced to work in lower paying jobs such as being waiters/waitresses.

What's even more telling - I stumbled across a naked pic(for money variety for sure) of one of the hot baristas in question.

It is clear that central bank balance sheets will have increased in a completely unprecedented manner from 2008 to 2012, unless we count previous episodes of hyper-inflation ~ FT

Central banks fire the second barrel of QE | Gavyn Davies | Insight into macroeconomics and the financial markets from the Financial Times – FT.com

The scale of recent central bank action is extraordinary, by any historic standard other than that of late 2008.

The dependence of the markets on the central banks is, of course, nothing new. But nor has it ever been greater than it is now.

The financial markets are becoming ever more dependent on the continuing willingness of the central banks to use their balance sheets to rescue the global economy. The central banks are not flinching from their task. In fact, they are in the process of firing their second barrel of quantitative easing at the global crisis. It could prove to be as large as the first barrel in 2008/09.

In the graph, the low estimate for the Fed makes no allowance for Operation Twist, and assumes that there will be no announcement of QE3 in the first half of next year. The high estimate assumes that Operation Twist is the equivalent of a $600 billion increase in the balance sheet. Alternatively, the result would be the same if we make no allowance for Operation Twist, but assume that the Fed’s new programme of dollar swaps turn out to be worth $300 billion, and that the Fed also undertakes purchases of mortgage securities worth $300 billion in the first half of next year.

For the ECB, I assume that the rate of expansion in the balance sheet which has been observed since early August is broadly maintained up to mid 2012. This might prove to be too conservative, given the scale of the liquidity injections announced last week,

Only if the Bundesbank throws its body across the tracks will the estimates in the graph prove markedly too high.

All of this would amount to an enormous further increase in the overall size of central bank balance sheets. The second graph shows that the scale of this second episode of QE could rival that of the first episode in 2008/09. The calculation shows the 12-month change in the total central bank balance sheet for the four main developed economies, weighted by shares in GDP and expressed as a percentage of the normal size of these balance sheets before 2008. This method of calculation enables us to compare the size of the two monetary injections more meaningfully than the simple percentage increase in the balance sheet.

Either way, it is clear that central bank balance sheets will have increased in a completely unprecedented manner from 2008 to 2012, unless we count previous episodes of hyper-inflation

Because this behaviour is so unprecedented, it is hard to predict the medium term consequences of such a massive dose of QE. Many economists argue that, in the absence of any rise in inflation expectations, central bank balance sheets are in effect infinitely large, and can be used as needed to combat the crisis. Given the outsize scale of what the central banks are now doing, this argument needs increasingly careful examination in future blogs. But one conclusion already seems clear. If this strategy does not work, there will be little else left in the locker of the emergency services.

An Important Observation About the German Role - Buba Specifically - in the Euro Unwind Saga

ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

Because as Lehman showed, it took the lock up of money markets - that stalwart of shadow liabilities - to push the system over the edge, and require a multi-trillion bailout from the true lender of last resort. The same thing is happening now in Europe. And the Bundesbank increasingly appears to want none of it.

OMG - Check Out the Interiors on these Benz Vans - nuts!

Add a high speed satellite and some HFT machines and - lol - i think you get the picture.  No stopping the HFT hedgies from skimming the markets til the end of time.  You'll never catch em.

The Best Mercedes Benz Van Ever (24 pics)
The Best Mercedes Benz Van Ever (24 pics)
The Best Mercedes Benz Van Ever (24 pics)
The Best Mercedes Benz Van Ever (24 pics)
The Best Mercedes Benz Van Ever (24 pics)

The Most Important Difference of Opinion in the World Right Now: Faber vs. Rogers on China & Commodity Prices

Marc Faber, Jim Rogers Clash Over China and Commodities, Agree on Gold

Investment gurus Jim Rogers and Marc Faber agree to various degrees on many issues but the one thing separating them this week is the future direction of the Chinese economy and if this could have a devastating impact on commodities around the world

Marc Faber, Jim Rogers Clash Over China and Commodities, Agree on Gold

Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor, believes a Chinese slowdown is already under way. In a phone interview with CNBC Friday, he said that a hard landing for China will have a major negative impact on global commodities and risk currencies, before going as far as saying that he is "more worried about a Chinese economic downturn than a recession in Europe". For his part, legendary global investor and chairman of Singapore- based Rogers Holdings, Jim Rogers thinks Faber has got it wrong about China. "Marc still does not understand China. There are going to be several hard landings in the next few years, but China’s will be less hard overall than others such as Greece, U.S..." Rogers told CNBC Friday.

Marc Faber, Jim Rogers Clash Over China and Commodities, Agree on Gold

according to Faber. "I think a lot of people will care if china grows only at 5% rather than 10% or 0% in a hard landing case because china is the largest buyer of commodities in the world," he said. "If the Chinese economy slows down the demand for commodities slows down and then the economies of brazil, Argentina, everybody is affected and then they can buy less from china and then you have a downward spiral, Faber added. Rogers agrees the commodity market will have a correction, but rebutted Faber's view that it would be devastating. "Yes, there will be consolidations in the commodity bull market just as all markets have consolidations," he said. "In 1987, stocks declined 40%-80% worldwide, but it was not the end of the secular bull market in stocks." "If I was always bullish about commodities and completely missed out on the crash in 2008, then obviously, having tied essentially my reputation to commodities, I'd continue to be bullish," Faber had earlier said about Rogers' view on commodities. "I proclaimed repeatedly far and wide that one should not buy commodities in the run up phase", replied Rogers. "I also explained that I was not selling mine since we were [and are] in a secular bull market," Rogers stressed.

Impending Rise In Chinese Cost Structure = Gasoline on Global Inflation Fire


November 30, 2011 – BEIJING – China’s debt is about $36 trillion yuan (or $5.68 trillion USD). This number is astronomical considering that it is just a little more than one-third of the U.S. total debt, but the difference between the U.S. and China is that the U.S. national income per capita is $47,140, whereas China’s national income per capita is $4,260 – not even one-tenth of the U.S. amount. To be on par with the U.S., China’s total debt should be around $1.5 trillion USD, but it is three times that! Considering that the U.S. has an unsustainable debt position, China’s is ridiculously out of control and puts that country in extreme danger of a financial collapse of epic proportions. In reality China’s inflation is 16 percent. This is eerily similar to the United States as well. The U.S. official inflation of around 3 percent is nowhere close to unofficial inflation estimates of 10-13 percent. What does this mean for China? This means that cost of living, wages and cost of goods sold in China will have to rise, and instead of exporting deflation, China will be exporting higher priced goods, thus affecting the rest of the world that purchases its goods. The world is on the verge of an inflationary cycle like we have never seen. Additionally, central banks around the globe are printing money on a massive scale to try to stimulate liquidity and spending (this is the definition of inflation!). Add to this a rising price structure in China, the major exporter to the world, and we could be preparing for a global hyperinflation. There is an economic tsunami about to engulf China, and because of the size of China’s economy and its manufacturing might, the impact of the tsunami will be felt far and wide. The United States will feel it in the form of inflationary pressures that we can’t afford right now. Periphery countries to China may feel its military might or cower to political pressure as governments that run out of money start to do irrational things (look at the United States, or Greece, or the European Union).” –World Net Daily

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