Crossroads: Interection of Politics, Finance and the U.S. Government
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Crossroads:  Interection of Politics, Finance and the U.S. Government
Following the effect of government policy on financial markets and the economy
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Why the unemployment rate doesn't mean all that much - Phoenix Business Journal (blog)

Why the unemployment rate doesn't mean all that much - Phoenix Business Journal (blog) | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Why the unemployment rate doesn't mean all that much
Phoenix Business Journal (blog)
Heidi Shierholz, an economist for the Washington-based Economic Policy Institute, said the current U.S.
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What Might Have Been, and the Fall of Lehman

What Might Have Been, and the Fall of Lehman | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Five years ago, the government abandoned Lehman Brothers to its fate. Was that a mistake, or did it help bring the financial crisis under control?
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Bob Woodward: President Obama has ‘no plan’ - Tal Kopan

Bob Woodward: President Obama has ‘no plan’ - Tal Kopan | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Veteran Washington Post journalist Bob Woodward criticized President Barack Obama for having “no plan” and an “ad hoc” response to Syria, saying he has a tall task in front of him Tuesday night when he addresses the American...
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interesting, could move the markets

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The House Republican Debt Limit Proposal, Explained | Bipartisan Policy Center

The House Republican Debt Limit Proposal, Explained | Bipartisan Policy Center | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
...Thus, Extraordinary Measures will have to be used on May 19 to make up the difference. See http://t.co/owOiAcKJ for more info - sb
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Calling the debt-ceiling bluff - MarketWatch

Calling the debt-ceiling bluff - MarketWatch | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Calling the debt-ceiling bluff
MarketWatch
As I said on-air, I believe the debt ceiling debate will be a side show following the made-for-TV drama known as the fiscal cliff.
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Wall Street braces for an Obama win - Ben White and Anna Palmer

Wall Street braces for an Obama win - Ben White and Anna Palmer | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

NEW YORK — Mitt Romney was Wall Street’s dream candidate, a former private equity executive committed to lower taxes and less regulation who would never rip bankers as “fat cats” as President Barack Obama famously did.


But now many masters of the universe concede they may not get their man.


Across Wall Street and the broader landscape of corporate America, even strong supporters of Romney acknowledge that swing state polling numbers and the direction of economic data and markets suggest it’s time to brace for a second Obama term.

“It looks right now like it’s probably going to be Obama, so you have to start planning for that, even if it’s not what you would prefer,” said the chief executive of one of the largest companies in the United States who has criticized the president and spoke on the condition of anonymity in order to give a frank assessment of the state of the race. The executive added that plans were under way to work with a second Obama administration on selling a plan to avoid the fiscal cliff with major tax and entitlement reform that includes some new revenues.

“We don’t really care if our taxes go up a little if we can just get this done and take this threat away from the economy,” the executive said, adding that support from CEOs could give cover to Republicans in Washington concerned about supporting any new taxes and angering tea party hardliners and anti-tax advocates such as Grover Norquist.

They still go to Romney fundraisers, open their wallets and hope for the best, especially in the upcoming debates. It’s just that Wall Street and the business community tend to follow data and play percentages. And right now they favor the president.

It makes for an uncomfortable moment for Wall Street, which came out much more aggressively for Romney than Obama this year, after Obama made significant inroads with the finance sector in 2008.

The shift in tone among executives toward Obama was on display at the Clinton Global Initiative this week, where several CEOs softened their criticism of the president. Goldman Sachs CEO Lloyd Blankfein acknowledged there had been widespread “disappointment” with Obama within his firm and across Wall Street.

But he also said that it was time to move on and finally deal with rising debt and unsustainable entitlement programs. “People who have been pouting and holding their breath aren’t going to want to do that for four more years,” he said.

John Chambers, CEO of Cisco Systems and a strong Romney supporter, spoke of bridging partisan divides on taxes and spending should Obama win a second term. And in an interview with Reuters, Chambers said whoever wins should govern like Bill Clinton. “There’s a lot to learn from President Clinton. It kills me as a strong Republican saying it, but he was the most effective president during my lifetime,” Chambers said.

The Obama administration has already begun laying ground work for improving its soured relationship with corporate America in a possible second term.

To be sure, there are still plenty of Romney partisans across Wall Street and the business community who are far from giving up and dismiss talk that the former Massachusetts governor is fading.

“I don’t think donors are reacting at all,” to the negative poll numbers said Woody Johnson, owner of the New York Jets. “We had Romney here three weeks ago and had the biggest three events we’ve ever had. We raised $8 million. We had a breakfast where we would normally do $1.5 or $2 million and we did $4 million.”

Johnson added that executives know a campaign ebbs and flows and that there is time for a late comeback win. “They know in business and politics things are very fluid. I’m extremely confident and the people I talk to are cautiously optimistic.”


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Farm bill finale: Milk, mayhem - David Rogers

Farm bill finale: Milk, mayhem - David Rogers | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

Milk and mayhem are the rule this week as the House farm bill debate spirals downward and Republicans prepare to go home Friday without acting on the bipartisan five-year plan reported in July.


To save face, the GOP leadership is toying with a three-month extension of the current 2008 farm law due to expire Sept. 30. As now drafted, the same bill would include livestock disaster aid as well as new assistance for dairy farmers.

House Agriculture Committee Chairman Frank Lucas is going along in hopes of building momentum for action after the November elections. But the Oklahoma Republican told POLITICO Monday that he has no explicit promise yet of even getting floor time in the lame duck for his five-year bill. And the extension itself is in serious doubt given resistance from Democrats and a GOP whip count showing continued divisions among Republicans.
“If the whip organization determines that the votes are not there… then it becomes a high probability that there will be no bill and no vote,” Lucas said in a brief interview. “I’m not in favor of doing something that we can’t be successful on.”
Dairy interests are most in a pickle because their Milk Income Loss Contract (MILC) expires with the current law at the end of this month. But producers are still reluctant to sign onto any extension if it jeopardizes the chances for the greater security promised in the five-year bill.
Sen. Patrick Leahy (D-Vt.) is spearheading an effort to extend MILC and enrich the payments in light of the drought impacting farmers and feed prices. And the draft House bill backfills recent program cuts and extends MILC to Dec. 1.
The added cost would be about $50 million according to preliminary estimates—a clear bid to get dairy votes. But one industry lobbyist remained skeptical: “The risk is far is greater than the reward right now,” she told POLITICO.
Indeed, there has been remarkable unity thus far among commodity groups and sometimes rival farm organizations like the American Farm Bureau and National Farmers Union. The crop insurance industry –typically cautious about any political stand—most recently added its name to the same Farm Bill Now coalition. And this support has emboldened Democrats to stand firm.

Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee, told a North Dakota radio station Monday that any three-month extension is “strictly nonsense” and he intends to begin his own whip operation this week for the five year bill.
“Maybe I’ll publish the names of all these Republicans who are against it,” Peterson told his host, Joel Heitkamp, a former state legislator whose sister, Heidi Heitkamp, is running as the Democratic candidate for the Senate. “If farmers want to continue to live like Republicans, they’d better learn to vote Democrat” the talk show host joked later on the air.
In fact, Rep. Rick Berg (R-N.D.), Heidi Heitkamp’s opposition and a close ally of Speaker John Boehner (R-Ohio), has already paid a price for the speaker’s refusal to move the farm bill. Berg has signed onto a discharge petition to bring the House Ag Committee bill to the floor, but already Friday, some Republicans were peeling off, citing promises of “progress” from the leadership.
As a practical matter, the expiration of the current farm law on Sept. 30 is nothing like a government shutdown ...



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Yellen Getting Fed Hawks to Work With Doves Signals Potential - Bloomberg

Yellen Getting Fed Hawks to Work With Doves Signals Potential - Bloomberg | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

Yellen Getting Fed Hawks to Work With Doves Signals PotentialBloombergYellen's campaign for transparency has made the Fed a more effective steward of the economy, says Alan Blinder, a Princeton University economist who was one of Yellen's.

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GOP, Democrats Fiddle With Health Care as Unemployment, Tax Cut, and Debt Crises Loom

GOP, Democrats Fiddle With Health Care as Unemployment, Tax Cut, and Debt Crises Loom | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

House Republicans voted to repeal the Affordable Care Act, a symbolic gesture Obama will ignore...

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U.S. filing trade complaint against China for auto tariffs

U.S. filing trade complaint against China for auto tariffs | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Automotive News China reports the United States is set to file a complaint with the World Trade Organization against China for tariffs on American-built vehicles. The duties cover around 80-percent of the vehicles imported from the U.S. and are expected to cost U.S. automakers $3.3 billion. Interestingly enough, General Motors and Chrysler vehicles face higher tariffs than those of other automakers due to the government bailout those manufacturers received under presidents George W. Bush and Barack Obama.


Models like the Jeep Wrangler and Grand Cherokee face tariffs of around 15 percent, while the Buick Enclave and Cadillac CTS face duties of nearly 22 percent. For comparison, the Acura TL, which is built in Marysville, Ohio, gets away with a 4.1 percent tariff. Even so, The Detroit News reports the duties are somewhat symbolic, since vehicles assembled in the U.S. are already expensive to purchase in China.


The White House, meanwhile, said it is filing the complaint because "China must play by the rules of the global trading system."

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White House challenging Chinese tariffs on U.S. autos

White House challenging Chinese tariffs on U.S. autos | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
White House challenging Chinese tariffs on U.S. autos.
(TALK RADIO NEWS SERVICE) -
The Obama administration announced Thursday that it has filed a dispute against China with the World Trade Organization...
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Fiscal cliffs, multipliers, and the myth of central bank independence

Fiscal cliffs, multipliers, and the myth of central bank independence | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

THE cryptic phrase "fiscal cliff" is creeping into news reports and economic analyses (including our own). Alongside "grexit" and "hard landing" it lurks as a mysterious and malevolent force waiting to wreak havoc on the global economy.

The fiscal cliff is an American afflication...


At the end of this year several major budget items are scheduled to expire, including an extension of the Bush tax cuts, an extension of the stimulus payroll tax cut, and an extension of emergency unemployment benefits. At the same time, the "sequester" cuts to defence and health spending negotiated as part of last year's debt-ceiling compromise are also due to take effect. If all of these provisions are allowed to hit, the impact on the economy will be substantial. According to a new Congressional Budget Office analysis:

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Congress chases deal on transportation bill - Quad City Times

(New York Times)  --  Congress chases deal on transportation bill.

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What If Cyprus Left The Euro | Zero Hedge

What If Cyprus Left The Euro | Zero Hedge | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
As we recently discussed, many euroskeptics are pushing Cypriot lawmakers to default, devalue, and decouple from the Euro - understanding that the short-term pain of such a move will lead to much more sustainable gains ...
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Budget Battle

Budget Battle | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
The U.S. government entered a controversial new phase of deficit cutting Friday, as an automatic trigger begins slicing budgets in some areas while leaving programs such as Medicare and Medicaid—among the largest drivers of future debt—largely...
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Obama's GDP headache

Obama's GDP headache | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Today's news of a 0.1 percent shrink in the 4th Quarter Gross Domestic Product is ambiguous in terms of the economics -- the fall was largely due to a drop in government spending and some shuffling of private inventories.
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Dow Rises to 5-Year High Amid Debt-Ceiling Negotiations

Dow Rises to 5-Year High Amid Debt-Ceiling Negotiations | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
U.S. stocks rose, sending the Dow Jones Industrial Average to a five year-high, as House Republicans plan to vote next week on a temporary increase in the debt-limit and investors watched corporate earnings.
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Twitter / jeremy_tOS : London: "#Bloomberg utopia ...

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Fight Looms on Greek Bailout

Fight Looms on Greek Bailout | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

Either the International Monetary Fund, the European Central Bank, or euro-zone governments such as Germany will have to make painful concessions to ease Greece's debt-service burden, in order to avoid a Greek bankruptcy


A confrontation is brewing among Greece's international creditors over who will provide the financing needed to keep the country afloat.

A report by international inspectors, due in October, will state how big the funding shortfall is in Greece's bailout program, but European officials say the deficit is far too big for Greece to close on its own.

That means the International Monetary Fund, the European Central Bank, and euro-zone governments such as Germany will have to negotiate over which of them will make painful concessions to ease Greece's debt-service burden. That is intended to avoid a Greek bankruptcy that could ...

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Moody's issues 'fiscal cliff' warning

Moody's issues 'fiscal cliff' warning | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

The United States could risk losing its top-notch credit rating if Congress fails to reach a deal on the year-end fiscal cliff, one of the three major ratings agencies warned Tuesday.


Moody’s Investor Service said how the negotiations shake out on the fiscal cliff – talks that are now all but certain to come in the post-election, lame-duck session on Capitol Hill – will “likely” determine whether the agency retains its AAA rating for the United States.

“If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable,” Moody’s said in a statement. “If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.”
The so-called fiscal cliff is a major package of tax and spending changes that includes, among other provisions, the expiration of all Bush-era tax rates, the end of the payroll tax holiday, and automatic budget cuts to defense and domestic programs, called a sequester.
Another of the three ratings agencies – Standard and Poor’s – downgraded the nation’s credit rating just days following the protracted battle to raise the debt-ceiling in the summer of 2011.


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Fiscal cliff to improve debt outlook but cause recession

Fiscal cliff to improve debt outlook but cause recession | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

Fiscal cliff to improve debt outlook but cause recessionCNNMoneyAmong them, the expiration of the Bush tax cuts and the enactment of $1 trillion in automatic, across the board spending cuts that are being triggered because Congress...


NEW YORK (CNNMoney) -- If the so-called fiscal cliff takes effect in 2013, the U.S. deficit outlook will improve, but scheduled tax increases and spending cuts would push the country into recession and unemployment up to 9%.
That's one of the main takeaways from an analysis Wednesday by the Congressional Budget Office, which released its updated budget and economic projections for 2012 through 2022.


The fiscal cliff is made up of an enormous amount of tax hikes and spending cuts set to take effect starting in 2013.
Among them, the expiration of the Bush tax cuts and the enactment of $1 trillion in automatic, across the board spending cuts that are being triggered because Congress has failed to come up with an alternative debt-reduction plan.
If all the policies are allowed to go into effect, the CBO projects that the economy, as measured by GDP, will shrink by 0.5% between the fourth quarter of this year and the fourth quarter of next year. Unemployment, currently 8.3%, will rise to 9% in the second half of 2013.
The CBO's forecast for 2013 has worsened since May, when it first forecast the fiscal cliff would cause a recession.


The fiscal cliff would, however, improve the deficit picture greatly. The CBO forecasts the deficit will hit $1.1 trillion this year -- or 7.3% of GDP. But for 2013, it would fall to $641 billion, or 4% of GDP under the fiscal cliff. That would represent the biggest single year drop in the annual deficit as a percent of the economy since 1969.
Looking ahead to the rest of the decade, the CBO projects deficits would continue to fall dramatically through 2018 before starting to rise again as the costs of supporting an aging population start to take hold. Net result: the debt held by the public would fall to 58.5% of GDP by 2022, from a projected 73% this year.
By contrast, if lawmakers did not allow the fiscal cliff to take effect, the economy would continue to grow, albeit at a slow 1.7% pace. It would also create 2 million more jobs than if fiscal cliff policies were enacted, leaving the unemployment rate at 8%.
While that would result in a better economy in the short-term, over the next decade, the debt picture would worsen considerably and weigh on the economy in the later years.

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Rich and Infamous

Rich and Infamous | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it
Which countries think that the rich deserve their fortune?


SOME 39% of adults think that the rich in their country deserve their wealth according to GlobeScan, a market-research company which polled 12,000 people in 23 countries. Top earners have attracted more opprobium as their salaries and the performance of the economy have headed in opposite directions. Europeans and Latin Americans tend to have similar attitudes to the rich; the Anglo-Saxon world is a bit more forgiving. The biggest contrast, though, is between emerging economies (a group in which Russia sits, rather awkwardly). In China, where 600m people were lifted out of poverty between 1985 and 2005, about half the adults think their rich are rightfully so. But in Russia, an economy dominated by oligarchs who extract large windfall rents, only 16% do.


Via The Learning Factor
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Four fiscal cliffs ahead, and a jobs war Paul B. Farrell

Four fiscal cliffs ahead, and a jobs war Paul B. Farrell | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

Election wars are masking the fiscal cliff that America is destined to drop off in early 2013. But it’s really four fiscal cliffs, and the coming jobs war is the biggest threat of all, writes Paul Farrell...


SAN LUIS OBISPO, Calif. (MarketWatch)—Election wars are masking the fiscal cliff that America is destined to drop off in early 2013, warns the Congressional Budget Office. History tells us our politicians will slowly drive America off the fiscal cliff and into a mid-1930s-style sinkhole. Why? Because no matter who’s elected, our dysfunctional government will continue to be driven by secretive super-PAC billionaires obsessed about either holding on to or regaining the presidency in 2016.


America’s fiscal cliff is actually four cliffs. And any one can easily trigger the other three. By 2013 the public will wake up to discover America is still a political war zone facing a recession no politician can solve, igniting further rage with warring politicians and their billionaire buddies.


The fiscal cliff includes four dangerous cliffs:


The health-care cliff: Admit it, it’s a systemic failure. And repealing or tweaking Obamacare won’t stop the hemorrhaging. Costs will keep rising, no matter who’s chief.


The taxes/spending cliff: The CBO says that allowing the Bush-era tax cuts to expire, combined with agreed-upon spending cuts, would reduce GDP by 1.3%. That deal is certain to get renegotiated. But until then, uncertainty, and if politicians just kick the can down the road again, new interest costs will increase the deficit, increasing long-term problems.


The military budget cliff: Do nothing and the Pentagon automatically gets $55 billion cut in 2013, more over the next decade. In addition, Romney’s on record to increase military spending, even as two wars wind down. U.S. Representative Paul Ryan, Republican from Wisconsin, has said the same.


The social programs cliff: Along with military cuts, the same deal negotiated last year included automatic cuts to domestic social-program spending by $492 billion over the next decade. Cuts will intensify stress on the poor and middle-class jobless.


Obviously there are global threats that could kill recovery: euro-land sinking, China slowing, emerging markets stalling. But the bottom line is that America’s at war with itself, most noticeably visible in gridlocked Washington, less visible in our billionaires’ super-PAC anarchy.


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Farm bill extension seems likely - USA TODAY

Farm bill extension seems likely - USA TODAY | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

(USA TODAY)-
Farm bill extension seems likely. Lawmakers remain optimistic that Congress could still pass a bill before the current measure expires on Sept.30.

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U.S. Stocks Fall, Ending 2-Week Rally, on Growth Concern

U.S. Stocks Fall, Ending 2-Week Rally, on Growth Concern | Crossroads:  Interection of Politics, Finance and the U.S. Government | Scoop.it

U.S. stocks fell, ending a two-week winning streak by the Standard & Poor’s 500 Index, after the Federal Reserve cut its economic forecast and a bear market in commodities prices dragged down energy producers ...


Equities rose in the week’s final session as JPMorgan Chase & Co. (JPM) paced a rally in banks following a downgrade by Moody’s Investors Service that was no worse than the credit-rating firm had warned. Energy producers lost the most in the S&P 500 for the week, sinking 3.3 percent as economic reports added to signs of a global slowdown. Procter & Gamble Co. (PG) slid 4.9 percent and Bed Bath & Beyond Inc. tumbled 16 percent after disappointing profit forecasts. Facebook Inc. jumped 10 percent.


The S&P 500 slid 0.6 percent to 1,335.02, snapping a two- week rally of 5.1 percent. The Dow Jones Industrial Average declined 126.39 points, or 1 percent, to 12,640.78, trimming its advance for the year to 3.5 percent.


“We are in a low-growth environment,” David Pearl, who oversees $21 billion in assets as co-chief investment officer at New York-based Epoch Investment Partners, said in a phone interview. “If the economy around the world is slow, corporate profitability is going to be slow, so the return will be mild.”


Equities rose on the first two days of the week amid optimism that Greece’s attempts to form a government will help the nation stay in the euro and that the Fed would announce more measures to spur the economy. Global stocks tumbled on June 21, with the S&P 500 plunging 2.2 percent for its second-biggest drop of the year, after the central bank cut its growth estimate while data showed euro-area manufacturing shrank at the fastest pace in three years and a Chinese output gauge indicated contraction.

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