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Dreadnought
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AIG A Distraction From The Real Problem

Thu Mar 19, 2009 10:43 pm

While everyone was busy talking about the AIG bonus issue (a trivial insignificance which allowed Obama and the Dems to look all outraged at those greedy capitalists - until it looks like they knew all along. Ooops), the real story was happening.

http://news.yahoo.com/s/nm/20090319/bs_nm/us_markets_stocks_66

in a move that could only have been coordinated by the White House, the Treasury issued a trillion dollars worth of T-Bills yesterday, and they were all bought by the Federal Reserve.

To those of you with little knowledge of economics, that means that the government has simply created a trillion dollars out of thin air, raising the money supply again after having raised it by over 200% in the past two months.

The difference that before, the bills were being exchanged on the open market. Now, for the first time since the 60's, the Treasury is being fueled directly by the Federal Reserve.

All this is supposed to reduce interest rates so that banks can lend again.

HELLO!!! Interest rates are already at rock bottom! Banks aren't lending because 1) people don't want to borrow in a time when government is growing by leaps and bounds, and they know that times are going to be tough for some time, 2) Investors know that taxes are going up, and 2) Banks don't want to make risky loans, following the debacle caused by such lending and the impending possibility that government might write down those loans.

So this increase in the money supply is going to do exactly ZILCH apart from making the dollar worth less over time.

I hope you guys who voted for Obama are proud of yourselves. You voted in a guy who seems determined to turn a recession to complete collapse.

Meanwhile we are still talking about AIG on all the networks. Before that we were distracted by the attacks on Rush. Wanna make a bet that in the next week or two, just as AIG winds down, there is going to be another story put out their to distract us? Bill O'Reilly has a love child with Ann Coulter, perhaps?
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dragon6172
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RE: AIG A Distraction From The Real Problem

Thu Mar 19, 2009 11:04 pm



Quoting Dreadnought (Thread starter):
I hope you guys who voted for Obama are proud of yourselves. You voted in a guy who seems determined to turn a recession to complete collapse.

Eh... he will just say.."Uh... I did not set this....uh... collapse in motion. Ummm.... it was the failed policies of the last... uh... administration." Passing the buck.
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Dreadnought
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 12:06 am



Quoting Dragon6172 (Reply 1):
Eh... he will just say.."Uh... I did not set this....uh... collapse in motion. Ummm.... it was the failed policies of the last... uh... administration." Passing the buck.

 redflag  His solutions are making matters worse. It's like driving a car with one foot full on the gas (raising money supply) and the other full on the brakes (talking about tax increases and permenant government spending, inserting uncertainty in debt markets, pushing involuntary unionization, trashing the dollar)

The economy became the sole responsibility of Obama and the Democrats when they tried to use the crisis to further their agenda and push for massive spending that went far, far, FAR beyond stimulus.

You think the Chinese or anyone else is going to loan us any more money after this?

This administration has been a case of a madman at the wheel.
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stasisLAX
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 12:18 am

The United States, as a nation, is lost.

We've been lost for about 10 years. The extreme political partisanship and resulting gridlock in Washington, the lies of the previous administration about WMD to justify wars that we can never "win" in the true sense of the word and could never afford, and the Wall Street-Congressional complex (the 21st century version of Eisenhower's military-industrial complex) that breeds corruption and goes against the needs of the average American citizen.

I think that what we need in this country is the rise of a third major political party that will shake the status quo in Washington (and Wall Street) to its core and bring true reform (if not virtually a revolution) to the nation.

[Edited 2009-03-19 17:19:30]
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
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OA412
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 12:24 am



Quoting Dreadnought (Thread starter):
While everyone was busy talking about the AIG bonus issue (a trivial insignificance

You really think it's insignifcant that $165 million of our money went to pay bonuses to people who are directly responsible for AIG's collapse?
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Dreadnought
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 12:32 am



Quoting OA412 (Reply 4):
You really think it's insignifcant that $165 million of our money went to pay bonuses to people who are directly responsible for AIG's collapse?

I prefer to think about the 3 trillion dollars that have been poured down the drain after that. About 20,000 times the size of the AIG bonuses. I'd prefer to think about that first, and then find ways to put the guys who caused this mess in the poorhouse, including the authors of Mark-to-market, Chris Dodd, Barney Frank, among others.
Forget dogs and cats - Spay and neuter your liberals.
 
YWG
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 12:39 am

Keynesian economic policy is sinking the US economy and delaying the inevitable.

Let the inefficient go bankrupt, serves them right.

And as for AIG....they should have sunk a long time ago.
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flybyguy
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 1:09 am



Quoting Dreadnought (Thread starter):
I hope you guys who voted for Obama are proud of yourselves. You voted in a guy who seems determined to turn a recession to complete collapse.

I think this is a purely partisan statement. I voted for Obama because the alternative was much worse, politically... Palin would have been president in a year if McCain got elected. Palin's views alienate political moderates and her foreign policy views were too extreme-right and hawkish... we would be in nuclear holocaust before the end of her first term.

Thinking that your party or your favorite politician can do no wrong is a dangerous political folly.

Quoting Dreadnought (Thread starter):
To those of you with little knowledge of economics, that means that the government has simply created a trillion dollars out of thin air, raising the money supply again after having raised it by over 200% in the past two months.

I am seriously wondering what Obama's people are thinking. For relief of short term pain we are sure in for long term anguish. I think Obama's economic team is killing a fly with a bazooka here. I'm concerned for my financial future, but I'm willing to be in short term pain with the prospect of future prosperity... this trillion dollar "mortgage" has probably wiped out our financial autonomy for the next 5 decades. For crap sake we owe China, of all places more than a trillion dollars which now further errodes our diplomatic influence over them.

Quoting Dreadnought (Thread starter):
HELLO!!! Interest rates are already at rock bottom! Banks aren't lending because 1) people don't want to borrow in a time when government is growing by leaps and bounds, and they know that times are going to be tough for some time,

I'm not sure if I agree that people aren't borrowing simply because government has gotten bigger... (I'm sure that was just another partisan injection there).

However, I do agree that times are tough and people aren't borrowing because big ticket items aren't as important as maintaining necessities such as food and shelter in financial crisis. I think rather that bailing out failing companies, our government should focus its strength, influence and dollars on our industries asking how can they can help minimize job losses while promoting efficiency, industriousness and innovation... if that means getting our workforce educated, then so be it... I'd rather see our government spend billions sending Americans to school for free than spending trillions temporarily proping up failing corporations. An educated America will be a competitive and prosperous America... especially if we get people trained up in the tech fields.
"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
 
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:10 am



Quoting Dreadnought (Thread starter):
I hope you guys who voted for Obama are proud of yourselves. You voted in a guy who seems determined to turn a recession to complete collapse.

This "gotcha" stuff accomplishes nothing and it's precisely why straight-line partisanship is so mindless and intellectually dishonest. With only small exceptions here and there, for the GOP, the previous guy could do no wrong. For the Democrats, Obama can do no wrong. Those of us who could care less about either party know one very clear fact at this point: you've all been wrong!

Your charge about being determined to drive collapse is correct but only to a point - the same absolutely could be said of the previous President's results in terms of quelling terror, winning hearts and minds in a critical region of the world, and use of the political capital given to our nation so generously following 9/11. The previous PotUS and the current one eventually justify every single failure with: "I did what I thought is right". Well, sorry, in every case that matters, they've been flat WRONG.

It's time for an all-out popular referendum on the executive and legislative branches - we need leaders who have actually worked, actually have successful business experience, and know A from B outside of billion-page law books that have no meaning in the realia of daily life.
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:18 am



Quoting Dreadnought (Reply 5):
I'd prefer to think about that first, and then find ways to put the guys who caused this mess in the poorhouse, including the authors of Mark-to-market, Chris Dodd, Barney Frank, among others.

Funny! You mention a couple of Democratic senators but DO NOT mention those at the helm of the companies requesting bailouts, etc. It was their unbridled greed that got us into the mess that we are in. But hey, if partisan bickering and fingerpointing helps you sleep better at night, go right ahead.
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NIKV69
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:20 am



Quoting Aaron747 (Reply 8):
This "gotcha" stuff accomplishes nothing and it's precisely why straight-line partisanship is so mindless and intellectually dishonest. With only small exceptions here and there, for the GOP, the previous guy could do no wrong. For the Democrats, Obama can do no wrong. Those of us who could care less about either party know one very clear fact at this point: you've all been wrong!

It is all a matter of timing. Fact is Obama is really not equipped to lead in this kind of turmoil. He just doesn't have a clue. I think Bush did something foolish when he bailed out the banks right before he left office. He did it against his normal thinking for two reasons.

1. If he didn't and things went real bad he would be blamed.

2. If he didn't Obama would have most certainly did it anyway.

Now the AIG debacle is mostly due to the fact Obama pushed the bill through and didn't allow anyone to read it and he is also being dishonest when he said he didn't know. This has all just degenerated into the left attacking CEOs which Obama would have done anyway because part of their plan is to turn the lower class against the GOP and make them the scapegoats as to their not having healthcare etc.

Real problem is you can't interfere with people that make big money and tax their bonuses 90% because you screwed up, also you can't bail them out when they screw up and go broke. The floodgates have been open and it's has shown the ugliness in government worse than ever. Listening to Frank and Schumer talk made me ashamed to be an American. For now we blame the people that make a lot of money for our ills. When we should be asking ourselves why we elect the people we do.
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
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Dreadnought
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:49 am



Quoting Aaron747 (Reply 8):
The previous PotUS and the current one eventually justify every single failure with: "I did what I thought is right". Well, sorry, in every case that matters, they've been flat WRONG.

I believe Bush was well intentioned when he made his mistakes. I used to be convinced of the same about Obama until a few weeks ago. But the level of incompetance has been so great within his administration, it's starting to look like "creative destruction", in other words, it's intentional. Now I think he is deliberately trying to wreck the economy as badly as possible, possibly in order to have an excuse to rebuild the country the way he wants it - a socialist state. This is exactly the strategy endorsed by his old mentors in his community organizer days - it's nothing new - gain control, bankrupt the economy, blame capitalism, throw out the old rules (like the Constitution), and start from scratch.

Quoting OA412 (Reply 9):
Funny! You mention a couple of Democratic senators but DO NOT mention those at the helm of the companies requesting bailouts, etc.

They got greedy, but the central causes of the meltdown, mark-to-market and the existance of sub-prime mortgages, are 120% the creation of Congress and political hacks at the top.
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Mir
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 4:56 am



Quoting Flybyguy (Reply 7):
I think rather that bailing out failing companies, our government should focus its strength, influence and dollars on our industries asking how can they can help minimize job losses while promoting efficiency, industriousness and innovation... if that means getting our workforce educated, then so be it... I'd rather see our government spend billions sending Americans to school for free than spending trillions temporarily proping up failing corporations. An educated America will be a competitive and prosperous America... especially if we get people trained up in the tech fields.

 checkmark  If we're trying to compete with India and China on low-skilled jobs, we're going to lose, plain and simple. We still have the ability to educate our citizens to a higher level than either of those countries, and it is there that our advantage lies. If we choose to exploit that advantage, it will be a win for everyone.

-Mir
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 6:01 am



Quoting Dreadnought (Thread starter):
people don't want to borrow in a time when government is growing by leaps and bounds, and they know that times are going to be tough for some time,

If your hot water heater dies tomorrow, you'll blame it on big government.

The mantra is getting tired, Dreadnought.
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baroque
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 6:15 am



Quoting DocLightning (Reply 13):
The mantra is getting tired, Dreadnought.

I think we need to go somewhere else for a chat away from the incessant noise from those jackhammers!!  chat 
 
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 7:28 am



Quoting Dreadnought (Reply 11):
Now I think he is deliberately trying to wreck the economy as badly as possible, possibly in order to have an excuse to rebuild the country the way he wants it - a socialist state. This is exactly the strategy endorsed by his old mentors in his community organizer days - it's nothing new - gain control, bankrupt the economy, blame capitalism, throw out the old rules (like the Constitution), and start from scratch.

I'm sorry, as jaded and cynical as I am, I just can't buy anything of that sort without something more concrete than a gut feeling. I chalk it up to the inexperience that many who didn't vote for him, including myself, were concerned about. The added fun factor has been Bush-like loyalty to his newly minted staffers, regardless of how knuckle-dragged they've turned out to already be. So for me, this administration is simply more of the same, just singing a different tune badly out of key. Is it so much to ask for a leader I can like? Hated Bush foreign policy, liked his economic policy. Like Obama foreign policy, am absolutely terrified about Geithner, his handling of the banks and this wanton release of T-bills into the wind.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
geekydude
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 8:46 am



Quoting Dreadnought (Thread starter):
So this increase in the money supply is going to do exactly ZILCH apart from making the dollar worth less over time.

How can you be so sure? This is actually a great time to print money given that the inflation pressure is now very low. If not now, when? Ben Benenke is a great scholar who specializes in depression economics. He understands that the central bank needs to have ample supply of money to combat a downward spiral of unemployment and deflation as happened in the late 1920's.

Yes, printing money out of thin air is not a long term solution. A nation's economic well-being ultimately rests on the productivity of its labor force. But in the short term, monetary policies do have effects in dampening economic cycles. Well I know that those of the Austrian school of economics would beg to differ.

Quoting Dreadnought (Reply 2):
You think the Chinese or anyone else is going to loan us any more money after this?

China and the US are locked in a somewhat mutually assured economic destruction if either party acts too foolishly. As the saying goes, if you owe the bank 1000 bucks, they own you; if you owe the bank 1000000 bucks, you own them. So yeah I believe China will continue to buy US Treasury securties as long as you guys don't print too much money. A few hundred billions here and there during time of crisis may not do much harm to the value of the dollar due to the sheer size the US economy. Just don't make a habit of pumping trillions.
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baroque
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 10:10 am



Quoting Geekydude (Reply 16):
China and the US are locked in a somewhat mutually assured economic destruction if either party acts too foolishly. As the saying goes, if you owe the bank 1000 bucks, they own you; if you owe the bank 1000000 bucks, you own them. So yeah I believe China will continue to buy US Treasury securties as long as you guys don't print too much money. A few hundred billions here and there during time of crisis may not do much harm to the value of the dollar due to the sheer size the US economy. Just don't make a habit of pumping trillions.

Sums it up nicely.  checkmark 
 
ltbewr
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 10:37 am

To me, there are several problems with the extreme focus on the bonuses and AIG by the media.
One, it oversimplifies the complexity of the financial crises, create a narrow group of scapegoats. That leads to narrow ways of dealing with it.
Two, it ignores how this economic crises was caused by a wide range of people, from politicans who failed to put in or retain necessary regulations in such companies.
Three, it moves attention away from the vicitms, those losing jobs and their houses rather than finding ways to help them.
Four, you have politicans creating populist driven and possibly unconsitutional laws in a rush like to severely tax large bonues of employees at a number of companies getting TARP funds. It is such rushing that got us the bailout bills that were overly blolated to the point that they were unreadable in the time given and allowed a lack of key parts like to regulate bonus payments.
Fifth, as the inital poster noted, huge decisions with serious ramifications and questions are being done under the cover of the media obsession with AIG.
 
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casinterest
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 1:30 pm



Quoting Dreadnought (Thread starter):
So this increase in the money supply is going to do exactly ZILCH apart from making the dollar worth less over time.

This is what has to happen.

As I have been saying all along. Offshoring of our Manufacturing and Service Industries, is not only prolinging our current plight, but forbidding a recovery.


We need to either devalue the dollar or put up protectionist rulings to protect jobs in the US.
The Business world wants to be part of the world economy, therefore the US worker has to be able to compete.

So now we are going to throw as much cash as we can out there. It will cause inflation in the US and the lowering of dollar .

But that is what is needed due to everyones loving support of Free Trade and Globalization
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casinterest
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 1:34 pm



Quoting Mir (Reply 12):
If we're trying to compete with India and China on low-skilled jobs, we're going to lose, plain and simple. We still have the ability to educate our citizens to a higher level than either of those countries, and it is there that our advantage lies. If we choose to exploit that advantage, it will be a win for everyone.

We are going to loose the whitel collar jobs for the same reason.

Offshoring and Free trade mean that the dollar isn't worth what it was .

Microsoft, Intel, IBM, Accenture, JP Morgan, Citibank, and countless other companies all have people doing Highly skilled design work in locations other than Europe and the US.

The Folks that believe the US is going to educate itself to match the value of the dollar are kidding themselves.
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us330
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:01 pm



Quoting StasisLAX (Reply 3):
The United States, as a nation, is lost

I wouldn't go that far, but I would say that we have been on the wrong path for quite some time now.

Quoting StasisLAX (Reply 3):
I think that what we need in this country is the rise of a third major political party that will shake the status quo in Washington (and Wall Street) to its core and bring true reform (if not virtually a revolution) to the nation.

I've been saying that for quite some time. First people who should be forced to resign are anyone that is currently serving in Congress, or has done so within the past 10 years.
I find it incredibly hypocritical that while Congress calls for the heads of some of these companies that have screwed up (and rightfully so--I don't mean to excuse the idiot ceo's), they themselves have yet to offer their resignation, even though they were in part responsible for some of this mess (I'm looking at you, Barney Frank, Chris Dodd, and anybody else involved with Fannie and Freddie).

Quoting OA412 (Reply 4):
You really think it's insignifcant that $165 million of our money went to pay bonuses to people who are directly responsible for AIG's collapse?

It's all relative. I don't think that 165 million, by itself, is insignificant. I do think it is insignificant when compared to the billions and trillions of dollars put forth as a stimulus package.

165 million is not even 1% of 1 trillion, yet for some reason this is garnering all of the attention

Quoting YWG (Reply 6):
Let the inefficient go bankrupt, serves them right.

And as for AIG....they should have sunk a long time ago

I would normally agree with you, but the problem is that if we had let them go bankrupt, we all would have been screwed. Everybody. Our financial system would have virtually collapsed. That's the only reason why I was in favor of their bailout.

Quoting Aaron747 (Reply 8):
Those of us who could care less about either party know one very clear fact at this point: you've all been wrong!



Quoting Aaron747 (Reply 8):
It's time for an all-out popular referendum on the executive and legislative branches - we need leaders who have actually worked, actually have successful business experience, and know A from B outside of billion-page law books that have no meaning in the realia of daily life.

Agree with both of your highlighted points. The worst thing in Washington today is how blatantly partisanship influences all decisions.

Quoting Mir (Reply 12):
We still have the ability to educate our citizens to a higher level than either of those countries, and it is there that our advantage lies. If we choose to exploit that advantage, it will be a win for everyone.

Don't laugh, but our educational system, once you get past the high school level, is our greatest strength. Our undergraduate and graduate schools as a whole are the best in the world, and we need to figure out how to maximize this to our advantage. Heck, people pay to come to the U.S. to get educated!
Expand student visas and academic outreach programs. It is to our benefit to see that our own citizens are interacting with other nations' best and brightest citizens, and it is even better when it occurs on our turf, where the foreigners' spending on books, food, and living necessities and the like directly benefits American businesses.

Quoting CasInterest (Reply 19):
We need to either devalue the dollar or put up protectionist rulings to protect jobs in the US.
The Business world wants to be part of the world economy, therefore the US worker has to be able to compete.

protectionism is economic suicide, and only hurts those that it intends to help. I'd take devaluing the dollar over that option in a hearbeat.
 
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casinterest
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 2:06 pm



Quoting Us330 (Reply 21):
protectionism is economic suicide, and only hurts those that it intends to help. I'd take devaluing the dollar over that option in a hearbeat.

It's not suicide if the economy is strong enough to produce what it needs on it's own. Without protectionism, we are selling out capitalism to the Communists.

China doesn't care about workers rights, the environment, or fair trials, however the US worker constantly looses jobs to that country because CEO's find it easy to circumvent US laws by hiring slave labor.
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seb146
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 3:55 pm

I wonder if the whole bailout and AIG debacle is a set-up by the same people that want the North American Union? Someone may come out and claim that the United States can not survive on it's own and Mexico needs troops to control the drug gangs, so why don't our two countries combine? They will, somehow, figure a way to spin it so Canada wants to join as well. Didn't all the AIG payments start under the Bush administration?
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TVNWZ
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 8:13 pm



Quoting Dreadnought (Reply 11):
But the level of incompetance has been so great within his administration, it's starting to look like "creative destruction", in other words, it's intentional. Now I think he is deliberately trying to wreck the economy as badly as possible, possibly in order to have an excuse to rebuild the country the way he wants it - a socialist state.

And what type of state were the banks, exotic debt vehicle pushers and real estate loan bundlers trying to form? Chaos? Seems they are the ones pushing us up the socialistic trail. "It's all mine when things are good, but we need it to be all yours when things go bad."

If we are bailing out AIG, then we are bailing out their obligations and that would include those contracts calling for the bonuses. Don't like that, then bankrupt them.

The airlines learned a long time ago, that is a good way to reset the clock. And get rid of labor contracts you don't like. Airlines, ahead of their time.
 
Falcon84
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 8:17 pm

In the long run, the bonus issue isn't a huge deal. But AIG's continuing arrogance and spending taxpayer money to wine/dine/"reward" bigwigs IS as sign about how we got into this mess. AIG is one of the lynchpins of this economic collapse, and to say AIG is simply a "distraction" is inaccurate. One reason, despite all the anger Congress, the President and the nation have vented on them, is that if AIG goes under, it could take the economy further into the tank, so tied into everything AIG is.
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Dreadnought
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RE: AIG A Distraction From The Real Problem

Fri Mar 20, 2009 8:54 pm



Quoting TVNWZ (Reply 24):
If we are bailing out AIG, then we are bailing out their obligations and that would include those contracts calling for the bonuses. Don't like that, then bankrupt them.

One thing I've wondered the past few months - If some business tells me, "we need money" the first thing I would want to see is their financial statements - why can't the public see exactly why they needed all those billions? Paulson and Bush and Obama, Geithner, Frank, Dodd, and all the others should have been on TV every night, showing balance sheets and giving people an education in finance.

Oops. Paulson and Geithner would know what a balance sheet is - so would Bush, as he was in business. But Obama, Frank and Dodd probably haven't a clue what a balance sheet is. Never mind.

From my understanding, their huge losses stemmed from having to revalue their mortgage-based assets and securities at a time when such securities became almost worthless overnight. Obviously they are not worthless long term - they still represent real homes and should be worth at least 50-60% of their value even if a lot of them default. But for a brief span of time they were virtually untradable.

Then mark-to-market steps in (a government regulation, I might add), and wipes out the banks reserves with the losses on revaluation.

My question is this: Why did we panic with these bailouts when instead we could have simply voided the mark-to-market regulation? Yes, some of the assets would have been illiquid for a while while while Fannie and Freddy went bust (The should have been allowed to fail completely), and the secondary market would have found itself again within 3-6 months, somewhat downsized, with some losses on the books, but otherwise OK and ready to grow again.

I am convinced that this whole meltdown, the trillions of dollars of liquidity poured in fueling inflation, the trillions of dollars Obama and Congress have committed us to for decades, simply did not need to happen. All we needed to do was for the SEC to issue a statement saying that mark-to-market is put on hold for, let's say, 3 years.

But then you had the election. Republicans didn't give themselves the time to think about the problem and fix it - they went into panic mode with TARP - interesting to note that SecTreas Paulson was being bushed in that direction by the president of the New York Fed, Tim Geithner. And the Dems saw an opportunity to envigorate hatred for Wall Street and ride a populist wave to victory in November. Later, another opportunity in the vein of "Don't let a crisis go unused" is being played. I think that the Democratic leadership actually wants this economy to tank as hard and as badly as they can make it crash, blame it all on capitalism, so they can create a more fair, environmentally friendly and equitable state. People will grant them the power to rewrite the constitution if they believe the propaganda.
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RE: AIG A Distraction From The Real Problem

Sat Mar 21, 2009 3:35 am



Quoting Falcon84 (Reply 25):
But AIG's continuing arrogance and spending taxpayer money to wine/dine/"reward" bigwigs IS as sign about how we got into this mess.

The AIG bonus nightmare could deliver a double-slam to plans to help the U.S. economy. AIG's decision to pay $165 million in executive bonuses will make it vastly harder to get future bailouts through the U.S. Congress, and efforts to get the money by imposing hefty taxes on bonuses could cause other banks and financial companies to steer clear of federal government recovery programs.

This chilling effect of banks and corporations pulling out of federal bailout programs and deep-freezing the lending to smaller companies and average consumers that’s the key to restarting the U.S. economy again. We'd really be screwed then.  white 
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seb146
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RE: AIG A Distraction From The Real Problem

Sat Mar 21, 2009 5:03 pm



Quoting Dreadnought (Reply 26):
I think that the Democratic leadership actually wants this economy to tank as hard and as badly as they can make it crash, blame it all on capitalism, so they can create a more fair, environmentally friendly and equitable state. People will grant them the power to rewrite the constitution if they believe the propaganda.

Like the failure of capitalism under Eisenhower and Kennedy and Nixon and Johnson? Why is no one blaming Bush when he was telling Amerians to just keep shopping. We did and look what happened; Obama is completely to blame. Blame Obama. Obama did this. How?
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Dreadnought
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RE: AIG A Distraction From The Real Problem

Sat Mar 21, 2009 5:53 pm

Quoting Seb146 (Reply 28):
Like the failure of capitalism under Eisenhower and Kennedy and Nixon and Johnson?

Today's Democratic party have little to do with the party of Kennedy or even Johnson.

Quoting Seb146 (Reply 28):
Why is no one blaming Bush when he was telling Amerians to just keep shopping. We did and look what happened;

He said that right after an attack on American soil, and coincidentally soon after the e-stock bubble bursting, leading to the markets panicking and not knowing which way to turn. Bush told people to continue their lives and not develop a bunker mentality, which I think you would agree was the right message. That many individuals spent money that they did not have, building up credit card debt and buying cars and homes which were beyond their means is a completely seperate issue. Most people DO live within their means.

I do blame Bush for not doing enough to stop the Easy Credit and sub-prime loan business. He did try to push through legislation to fix it, and he did try to warn of the danger numerous times since 2002 - that's on record and even you can't deny it. But Democrats were able to block any reform in the Senate (60-vote rule) and Bush did not spend a lot of time and political capital to force the issue. I do blame him for that. A few years ago, few people understood the depth and potential impact of the danger.

You do realize that IF the Republicans had had a 60 seat majority and had forced reforms at Fanny/Freddy, and had put a stop to the sub-prime business, the Left would have attacked the administration as racist and discriminatory, and probably would have won in 2004, leading to an immediate reinstitution of sub-prime loans. It would have delayed the meltdown by a couple of years at best.

Quoting Seb146 (Reply 28):
Obama is completely to blame. Blame Obama. Obama did this. How?

Nobody has blamed Obama for this whole thing. But he is symbolic of the source problems that caused the meltdown - Democratic policies of pushing "Affordable Housing" with implied federal guarantees on mortgages and artificially low interest rates, and the mandating of Fanny/Freddy to make at least 50% of their loans to sub-prime candidates, these were all policies pushed by organizations like ACORN and fully supported by Obama. He didn't cause the meltdown, but he represents the political philosophy that did.

Since his election however, his responsibility becomes more clear. Unlike TARP which, for all its many flaws, was designed to be completely temporary, Obama has pushed massive spending programs that are designed to bring on permenant increases in government spending, is pushing for higher HR costs for many small and medium-sized businesses with card-check unionization, and has talked about raising taxes on those businesses and the investor class in the next couple of years (which effectively is a tax increase TODAY, because businesses operate and invest on expectations), monetizing the deficit among other gaffes.

Obama took an existing mess which admitedly he did not create, but has done nothing to fix the underlying problems because those problems are actually the foundations of his political beliefs. And he has made the problem worse with his spending and other policies that are tailor-made to smash the economy further. As a result, investors and businesses (and banks) have developed the same "bunker mentality" that Bush was trying to avoid in 2001.

Did anyone else get the irony the other week when China critisized Obama's economic policy? COMMUNIST China was lecturing Obama and the US on the importance of financial responsibility! They were saying, "guys, we have a lot of our economy dependant on yours - stop screwing around". And the amazing thing is that they are right. The Communist Chinese government has a better understanding of economic markets than our own administration!

That was depressing.

[Edited 2009-03-21 10:55:30]
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 5:53 am

And it gets even worse. The $165 million amount for AIG bonuses was completely wrong. The actual amount of the bonuses totals at least $218 million, and probably more.

Source: http://www.latimes.com/business/la-n...onuses22-2009mar22,0,2353679.story
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 10:42 am

What is wrong with pushing affordable housing? Seems mean spirited and equally mean minded not to do so.

However, suggesting it is a good idea is a far far way away from administering and regulating the system badly.

Did those pushing it suggest that it be used to push uneconomic mortgages by agents with criminal records that could be packaged up and onsold in such a cryptic manner that it brought down the whole US banking system?

No, I don't think that was part of the proposals. That seems to have been an add on while the administration was asleep at the wheel.
 
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 12:52 pm



Quoting Baroque (Reply 31):
What is wrong with pushing affordable housing? Seems mean spirited and equally mean minded not to do so.

Affordable Housing was a euphimism for an attempt to engineer the system to make housing cheaper than it really should be. The great irony is that the policy ended up creating a housing bubble that drove housing prices up instead of down. This is the unintended consequence of government trying to monkey with the markets, and it happens all the time.

The other alternative for affordable housing is called "rent" or "smaller house".

Quoting Baroque (Reply 31):
Did those pushing it suggest that it be used to push uneconomic mortgages by agents with criminal records that could be packaged up and onsold in such a cryptic manner that it brought down the whole US banking system?

I don't know about the criminal records part of your question, but for the rest, yes.
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 1:08 pm



Quoting Dreadnought (Reply 32):
Quoting Baroque (Reply 31):
Did those pushing it suggest that it be used to push uneconomic mortgages by agents with criminal records that could be packaged up and onsold in such a cryptic manner that it brought down the whole US banking system?

I don't know about the criminal records part of your question, but for the rest, yes.

Let me help you out on the criminal records part.

http://www.airliners.net/aviation-fo...ums/non_aviation/read.main/1977327

From Sept 2008

Thread start from Dougloid
From the Miami Herald.

"From 2000 to 2007, the OFR allowed at least 10,529 persons with criminal records to begin arranging and selling Florida mortgages. Of that motley throng, 4,065 somehow cleared background checks even though most had previously committed serious crimes -- including bank robbery, racketeering, extortion and fraud -- that by law should have kept them out of the mortgage business.

Other crimes of ''moral turpitude'' found on the records of newly approved mortgage peddlers: assaults, dope deals, sex offenses and at least 15 homicides."

"Take Donald Lewis Smith, for example. In 2003 he was licensed to sell mortgages in Kissimmee despite lying about his criminal record -- a 17-year sentence for strangling his wife and dumping her body into Tampa Bay.

It should be noted, however, that in five years as a broker, Smith hasn't murdered a single customer.

Then there's Scott Almeida, who forthrightly informed mortgage regulators about his federal drug trafficking conviction. In 1998 he'd been busted with two kilos of coke, two assault rifles, a stolen pistol and a drug-packaging device.

Not long after Almeida got out of prison, the state gave him a broker's license and told him to behave. He promptly went out and racked up $3 million in fraudulent loads, choosing as his victims disabled and elderly persons.

What Almeida did was truly rotten but, on the bright side, at least he gave up the cocaine trade.

Consider also the case of Anthony Hollis, an Orlando felon who was given a license to own a mortgage brokerage despite having been convicted of passing bad checks and auto theft.

Hollis used his new access to private credit histories to steal more than $200,000 from customers before he was nailed for racketeering.

Sure, it was a slimy scam, but give Hollis credit for showing ambition. Some car thieves are content to stay car thieves their whole lives. Thanks to the great state of Florida, Hollis got an opportunity to advance up the felonious ladder from street crime to white-collar crime.

Same for Richard Crowder of Miami Beach, one of 23 convicted burglars who successfully transitioned into the mortgage field. Eventually Crowder masterminded one of the state's worst frauds, setting up $37 million in bad loans by falsifying documents, lying on applications and staging phony property appraisals."

"Likewise, the OFR might have been doing us a favor by not screening aspiring loan originators such as Ronald D. Collins. He was convicted 37 times between 1983 and 2000 of assorted low-rent money crimes, including forgery and grand theft.

Yet had Collins been banned from the lucrative world of mortgages, he might have turned to more dangerous endeavors such as bank robbery or carjacking.

See, after you live in Florida long enough, you learn to look philosophically for the silver lining in every storm cloud.

That will be Don Saxon's mission as he tries to explain his agency's chronic inattentiveness to Gov. Charlie Crist and other members of the Financial Services Commission, which is scheduled to meet this week.

Maybe Saxon's been asleep at the switch, or maybe he was simply trying to keep known criminals off the streets by putting them behind desks instead. Isn't it better to be robbed over the phone than at gunpoint?"

http://www.miamiherald.com/news/colu...sts/carl-hiaasen/story/618353.html


You really do need to explain all this as part of the plan for affordable housing to lead to this debacle, or perhaps conclude that it was the administration not the concept that was at fault.

Quoting Dreadnought (Reply 32):
Quoting Baroque (Reply 31):
What is wrong with pushing affordable housing? Seems mean spirited and equally mean minded not to do so.

Affordable Housing was a euphimism for an attempt to engineer the system to make housing cheaper than it really should be. The great irony is that the policy ended up creating a housing bubble that drove housing prices up instead of down. This is the unintended consequence of government trying to monkey with the markets, and it happens all the time.

Could equally well be governments not being competent regulators, or rather more than equally.

What was unequal was Greenspan holding interest rates so low for so long after Sept 11 giving sources of cheap funds to some institutions that funded an unsustainable bubble. Stir in mortgage agents with criminal records, and bingo, AIG goes down the gurgler.
 
seb146
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 4:25 pm



Quoting Dreadnought (Reply 29):
Today's Democratic party have little to do with the party of Kennedy or even Johnson.

Likewise, today's Republican party has little to do with Eisenhower or Nixon.

Part of the "housing bubble" in Oregon is that people from California and Arizona saw the low, low prices here, bought houses, flipped them, sold them to others from California and Arizona at a huge profit and drove the prices up. Even now, people from California still comment on how cheap houses are up here. $400 000 for a four bedroom two bath house in a newer, quiet neighborhood is still a steal for them, but WAY out of reach for "natives."

Quoting Dreadnought (Reply 29):
Bush told people to continue their lives and not develop a bunker mentality, which I think you would agree was the right message.

Sure, it was the right messege after Sept 11. But, he kept at it.

Quoting Dreadnought (Reply 29):
That many individuals spent money that they did not have, building up credit card debt and buying cars and homes which were beyond their means is a completely seperate issue. Most people DO live within their means.

Why, then, was there more time spent on terrorism and war than on this issue? If this was such an important issue, why was there not more time and effort on this? Why was most of their energy focused on terrorists, terrorism, war, and fear? "Spend spend spend so the terrorists would not win" was the theme, it seemed like. Well, as I pointed out before, people spent; exactly what the Bush administration wanted. Here is the result. It does not give me much comfort to hear *after the fact* that these things are wrong: AIG bailout, and spend spend spend mentality. If both sides now see their ways are wrong, do something about it first. To empesize a mistake, take responsibility for it, and change it means much much more to the American people than attacking after the fact.
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RE: AIG A Distraction From The Real Problem

Sun Mar 22, 2009 8:08 pm



Quoting Baroque (Reply 33):
You really do need to explain all this as part of the plan for affordable housing to lead to this debacle, or perhaps conclude that it was the administration not the concept that was at fault.

Sounds like it was the Florida state regulatory authorities who were at fault there. As the article mentioned. those people should not have passed muster in the first place.

Quoting Seb146 (Reply 34):
Why, then, was there more time spent on terrorism and war than on this issue?

Forgive us for believing that acts of war against the US are damned serious.

Quoting Seb146 (Reply 34):
If this was such an important issue, why was there not more time and effort on this?

As I said before, I do blame Bush for not expending more time and political capital on the issue. However, to be fair, nobody believed his warnings. Remember Barney Frank's (and others) indignant denials that there was any danger, and that Fanny/Freddy were sound?

Quoting Seb146 (Reply 34):
To empesize a mistake, take responsibility for it, and change it means much much more to the American people than attacking after the fact.

True, but to this day, have you heard anything from our Democratic leaders that says that they have learned their lesson and that we have to stop pushing banks to hustle mortgages to people who can't afford them. Christ, just last week came news of a bank drawing fire from the Fed because they don't give enough sub-prime loans. And have we headrd them urge the people to stop using their credit cards, and to live within their means?

No, we haven't.
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seb146
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RE: AIG A Distraction From The Real Problem

Mon Mar 23, 2009 4:04 pm



Quoting Dreadnought (Reply 35):
Quoting Seb146 (Reply 34):
Why, then, was there more time spent on terrorism and war than on this issue?

Forgive us for believing that acts of war against the US are damned serious.

Right. Like all those attacks from Iraq and all those WMDs that were found in Iraq. Yes, I remember them so well. What I remember hearing most out of the Bush years was "terror, terrorism, war, and terrorist." I also remember hearing him urge people to spend and shop.

Quoting Dreadnought (Reply 35):
However, to be fair, nobody believed his warnings. Remember Barney Frank's (and others) indignant denials that there was any danger, and that Fanny/Freddy were sound?

One man made one comment one time. How many times did we hear anything at all constantly checking up on the solvency of Freddy and Fanny? I don't remember hearing it at all. I don't remember any inquiries into it at all. If this were known to be such a disaster, why did no one at the Fed or the Treasury step in early on and stop it despite what Barney Frank said? Who else had close ties to lending institutions, I wonder?

Quoting Dreadnought (Reply 35):
have you heard anything from our Democratic leaders that says that they have learned their lesson and that we have to stop pushing banks to hustle mortgages to people who can't afford them.

Actually, I have heard a few voices saying we need to stop this practice, but not many.

Quoting Dreadnought (Reply 35):
And have we headrd them urge the people to stop using their credit cards, and to live within their means?

No, we haven't.

No one has said that. Not from the right or from the left. Just on this board. Even our local FOX affiliate has been telling people to live on credit. I don't know if the national FOX network news has been saying that, since I can only stomach so much of them in a day...
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EMBQA
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RE: AIG A Distraction From The Real Problem

Mon Mar 23, 2009 4:16 pm



Quoting Dragon6172 (Reply 1):
Eh... he will just say.."Uh... I did not set this....uh... collapse in motion. Ummm.... it was the failed policies of the last... uh... administration." Passing the buck.

Eeer aah.. no it is not. It the failed policies of the Clinton Administration that pushed and allowed these weak mortages to be offered and sold to allow certain minorities the chance for home ownership. No home ownership is a great thing... but if you don't make enough money.. don't buy a house you can't afford. Also part of this problem... the Democrats refusal to look into the shady business practices at Fanny Mae and Freddy Mac back in 2003-04 that could have put a plug into this leak years ago.
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RE: AIG A Distraction From The Real Problem

Mon Mar 23, 2009 5:00 pm



Quoting Seb146 (Reply 36):
Right. Like all those attacks from Iraq and all those WMDs that were found in Iraq. Yes, I remember them so well. What I remember hearing most out of the Bush years was "terror, terrorism, war, and terrorist." I also remember hearing him urge people to spend and shop.

Again the gross oversimplification which has been the subject of hundreds of threads. Let's leave that one.

Quoting Seb146 (Reply 36):
One man made one comment one time. How many times did we hear anything at all constantly checking up on the solvency of Freddy and Fanny?

Here's some excerpts from 2004 that should make your head explode (I suggest wrapping duct tape around your head before watching). And listen to what Bill Clinton says towards the end - Democrats in Congress have been blocking any attempts by Republicans to reform Freddy and Fanny and to improve oversight since the Clinton Administration.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

Here's a more complete timeline since 2001.

http://www.youtube.com/watch?v=cMnSp4qEXNM

Here is HUD Secretary Cuomo in 1998 proudly proclaiming success in forcing banks to make mortgages with people with poor credit histories, "even if it includes more risk"

http://www.youtube.com/watch?v=ivmL-lXNy64

Sorry, but Pelosi and her syncophants can repeat over and over again how it was the evil republicans and their hatred of regulation that caused this mess. With all their helpers, they might even convince most people. But no matter how many people are convinced of a lie, it's still a lie.

Quoting Seb146 (Reply 36):
I don't remember hearing it at all. I don't remember any inquiries into it at all. If this were known to be such a disaster, why did no one at the Fed or the Treasury step in early on and stop it despite what Barney Frank said?

Because the main issue was the need for legislation, and Congress wasn't going along (remember the 60 vote rule in the Senate).
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EMBQA
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RE: AIG A Distraction From The Real Problem

Mon Mar 23, 2009 5:22 pm



Quoting Dreadnought (Reply 38):
Here is HUD Secretary Cuomo in 1998 proudly proclaiming success in forcing banks to make mortgages with people with poor credit histories, "even if it includes more risk"

I wonder how many of those 15,000 loans that were written are now in default...?
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