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  • Jim Willie,,, impossible debt growth

    The Bretton Woods agreement meant that America could use it's unlimited credit card to wage war. And wage war, we did,, with gusto!
    Hundreds of wars and we have hundreds of bases in 100? countries. The rest of the world has had enough of our feces. NOBODY is safe. GOV has even turned against it's own people. The little people, I mean,,, not the big people.
    The world is slowly closing ranks against us,,, and israel, of course.

    A few quotes from the Golden Jacka$$;
    The rogue will be the United States, in the final boomerang whiplash. The United States will succeed in isolating 85% to 90% of the community of nations, and thus win isolation for itself. The US faces deep risk of falling into the Third World
    For the first time ever, the industrial so-called developed world through their central banks are currently monetizing over 100% of global sovereign debt issuance. The major central banks are purchasing all the newly issued debt plus some rolled over debt, thus forcing bond yields lower.

    McKinsey is the largest strategic management consulting company in the world. It has begun to join the contrarian perspective. Their analysis and guidance cannot be ignored or overlooked. "Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or de-leveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points.
    In an unlikely exposure, Bloomberg has given attention to the dried up USTreasury Bond market. The USFed with its QE policy, adopted across the world, has killed the market by dominating its purchases,
    The FED has $ 4.5 trillion on it's balance sheet. Just imagine the FED balance sheet like this https://www.youtube.com/watch?v=EyBK-__fvdw
    Since 2008, the rise in public debt goes hand-in-hand with USFed purchases of Treasurys and Agency MBS bonds. Since 2009, USTreasury debt has increased by 87.5% while the USFed purchases have increased by 417%.

    The FED has bought all the treasury issuance to ensure that interest rates stay low. ALL of this BS is done to save the banks from loss and / or default.
    Debt Heaven Fallacy, not on Earth
    The bankers thought it was a good idea to save the banks. The puppeteers thought it was a good way to ensure that the crash killed a LOT of people.

    Comment


    • How much debt is too much?

      I often see claims that Americans have too much debt. How much is too much?
      "Overall, debts in the US went up in the fourth quarter of 2014 – rising $117 billion from October through December to a total of $11.8 trillion, the New York Fed reported. "
      Hmm, our debt went up $ 117 billion in 92 days. Is that too much?
      http://rt.com/usa/234811-american-fi...l-credit-debt/

      "Demand has run smack up against peak debt." Global debt now totals $200 trillion, Stockman notes."
      Read Latest Breaking News from Newsmax.com Stockman: Global Economy Is on Shaky Ground
      OK, is $ 200 trillion too much?

      The bankers say that, "if you put them in jail, it will wreck the economy".
      Making Me Pay For My Crimes Would Send “Message of Uncertainty to the Markets”: Bank President to Spanish Judge | Wolf Street
      I don't think that this is going to end well.

      Comment


      • Lets say the dollar collapses tomorrow. Would it really cause huge panic and disruption? Isn't America unique in that it mostly imports junk and not much so neccessities? So food gets cheaper, fracking oil gets cheaper, imports get expensive. How is this bad? Surely an economic collapse in America is nothing like one in Ukraine or Greece where food and energy is an import. Your input please.

        Comment


        • Bond collapse, not dollar

          Ruphus, "dollar collapse" is a misleading term. All of our credit instruments are of varying maturity. From 30 year bonds to overnight loans,, London Interbank Bank Overnight Rates (LIBOR) The only exception is the paper dollar. It is called MZM. Money of zero maturity.
          Every instrument except the dollar has a maturity date in the future. There is trust involved. In an immoral society, trust is hard to come by. People will take your cash but, refuse your check.
          FED GOV is borrowing (printing) $ 2.3 billion a day.
          Armstrong said that the sovereign (GOV) bond market will blow up in October of 2015.
          "U.S. Banks Hoard $2 Trillion of Ultra-Safe Bonds". This sounds like a lot of money BUT, the banks have exposure to about $1 quadrillion in failing derivatives. These "ultra safe" bonds have wet ink on them from the FED.
          "The Fed, Office of the Comptroller of the Currency and FDIC, require banks to hold enough high-quality liquid assets to survive a 30-day credit seizure"
          U.S. Banks Hoard $2 Trillion of Ultra-Safe Bonds - Bloomberg Business

          Just imagine a 30 day credit seizure. NOBODY will want a debt note that may or may NOT survive the bank closure. They will really want your cash. We're not really talking about a dollar crash so much as a bond crash.
          Imagine a 30 day credit seizure. How does the farmer pay for diesel fuel? He can't take a Treasury bond to the gas station. He needs MZM.

          The top banking authorities use the word, "seizure". They can't allow people to try to withdraw all their money out of the banks. They generally try to limit withdrawals to $ 50 a day. That would be AFTER the banks re-opened. The banks are insolvent and, presumable, soon to be illiquid. J. P. Morgan is reported to be the worst.
          Martin Armstrong has been doing accurate forecasting for decades. If he is correct about a sovereign bond default, this will wipe out all the banks that are heavily invested in U.S. Treasury notes.

          Obviously, The GOV is not going to announce a bank closure ahead of time. Late on a saturday, the will make an announcement of Force majeure. Monday morning the banks will not open. I seriously doubt that anybody will be processing credit card transactions.
          You will be on your own with the cash that you have in your pocket.

          GOV cheerleaders are doing their best to put lipstick on the pig that is employment. It's crashing in an aspect that they never talk about,,, natch.
          "Namely, that the US economy has been losing breadwinner jobs at a rate of 18,000 per month for 14 years running."
          Jobs Friday—-When Bubblevision Misses The Epic Failure Of The US Labor Market | David Stockman's Contra Corner
          Our aggregate national earnings are inadequate so, GOV prints $ 2.3 billion a day to keep the doors open.
          "And the data shows us the American consumer has slightly more real income than they did in 1985" "They have also taken on 150% more debt to compensate for the loss of income during that period."
          There's No Way Out Now: "That Choice Was Yours" | Zero Hedge
          About 70% of the economy relies on the consumer. The consumer has empty pockets. GOV is trying to make up the difference. 51% of Americans receive a check from GOV.
          The collapse will be in the bond market. That will close the banks. The dollar will still be good,,, if you can get any. Armstrong said that the stock market will still be alive. There is suspicion that the FED will hand out dollars to everybody as one last, desperate move.

          Comment


          • Interest, debt and war

            As everyone is well aware, the interest burden is what is making debt unpayable. Only 8% of Greek debt is for principle. The FED has driven interest down to almost nothing in a FUTILE attempt to rescue the debt structure. It won't work. This was proved a long time ago. You can't preserve the existing debt / interest load by limiting future interest. You have to negate the previous interest burden.

            "Caesar was the only person in history to solve a debt crisis amicably. He forgave all interest and required whatever interest had been paid must be applied to the principle loan. He then also appointed a board who reappraised the value of the property to when the loan was given. So none of this stuff where you borrowed $500,000 for a house, it collapses to $200,000, and then the lender demands you pay the full $500,000 plus interest.
            Caesar realized that the value of money fluctuated – a brilliant observation. The purchasing power has risen and fallen with the economy even when money was gold and silver coins. The gold promoters have misled people to think that all our trouble is tied to paper money. Sorry, money rises and falls for it has historically been on the opposite side of wages and assets from the beginning of time."
            Julius Caesar & Debt Crisis – Negative Interest Rates? | Armstrong Economics

            There you have it. "Money is on the opposite side of wages and assets."
            Debt is growing 3 times faster than GDP. Since debt grows intrinsically, GDP can never catch up.
            Hambone's stuff: Fundamentally Flawed - Chapter 1, “Advanced Economies” vs. Developing Economies
            " We need to be prepared for possible financial market outcomes that in no way fit within the confines of a historical or academic playbook experience. "
            Time To Toss The Playbook | Peak Prosperity

            This isn't an entirely new situation. Debt has run away many times before. What is the usual outcome?
            http://www.zerohedge.com/sites/defau...0debt%20_0.jpg
            They give us war,,, terrible war to fix a debt problem.
            http://www.zerohedge.com/news/2015-0...serve-currency
            Interest rates are at the lowest point in history; http://dollarcollapse.com/interest-r...st-rates-ever/
            Still, the debt burden grows. Armstrong said that 2016 is the start of the war cycle.

            Comment


            • Thank you for the informative response.

              I understand that it will be a bond issue. I just would think that if we were to have a great depression II, it would be much quicker to "reset" the dollar and continue on. With all the technology now verses the 1930's is it a real concern? Sure people will lose assets and jobs, but now there is welfare, government aide to farmers ect. in place. The USD may lose it's spending power verses other world currencies, but we have the ability to be self sufficient in every way. So we end up with a surplus of available labor plus the benefit of having a "weak" currency in the world market. Wouldn't we be in the same position we were in before after WWII?

              Comment


              • Capitalism, socialism and crony capitalism

                The long history of man is a chain of achievements where he takes something from nature and adds labor to get what he wants. This is basic capitalism. This is the name that we give to our most fundamental production system.
                Socialism is a distribution system and is INCOMPATIBLE with human nature. It has no plan for productivity. It's mantra is " from each,as to his abilities". You just can't remove competition from man. He will always be more productive when it comes to his genetic lineage. He just won't work when he sees that he is supporting others who are just laying about.

                Socialism says, "to each, as to his needs". Suppose I feel a need for a Ferrari.
                Much of our current problem is because capitalism has been severely distorted by legally granted monopolies. Socialism gives rewards to those who didn't work for them. Our present tortured capitalism does this for the rich instead of the poor. http://www.theguardian.com/books/201...m-for-the-rich
                The preferred system would be free-market capitalism. The many millions of parasites would not fare well at all with free markets.
                Then, there is "liberalism". Who knows just what liberalism is ??

                Winston S. Churchill
                “Socialism needs to pull down wealth; liberalism seeks to raise up poverty. Socialism would destroy private interests, Liberalism would preserve [them] ... by reconciling them with public right. Socialism would kill enterprise; Liberalism would rescue enterprise from the trammels of privilege and preference. Socialism assails the preeminence of the individual; Liberalism seeks ... to build up a minimum standard for the mass. Socialism exalts the rule; Liberalism exalts the man. Socialism attacks capitalism; Liberalism attacks monopoly.”
                ― Winston S. Churchill

                Well, socialism does seem to be attacking capitalism; U.N. Official Reveals Real Reason Behind Global Warming Scare - Investors.com
                Whenever capitalism gets severely distorted, socialism starts to look appealing.
                Yanis Varoufakis of Greece is trying to get a moderate party in power in Greece to avoid hard line socialism (communism) from taking hold in Europe.
                European Banks vs. Greek Labour   :  Information Clearing House - ICH
                Many of the very rich claim that they made their money legally. True, it's legal because they paid to have laws passed in their favor.
                The EU may soon force you to have collision insurance for your mobility scooter and lawn mower.
                The State seeks to grow without limits. It seeks money without limits. It passes laws without limits. It then sells licenses and prosecutes those who do not have a license to do some activity that it regulates. Like lemonade stands.
                There are thousands of worthless bureaucratic creeps dreaming up new laws for you to break. They dream up new ways to catch you breaking one of their laws.
                The Daily Bell - Creepy, Calculating and Controlling: All the Ways Big Brother Is Watching You
                This is done to preserve the privilege of the parasite. Endless millions of bureaucrats mucking up the system.

                Comment


                • The destruciveness of usury

                  Traditional capitalism involves a person taking something from nature and adding human labor to get a finished / saleable product. Industrialization has provided much excess wealth. Many people who have excess wealth rent their money out for gain. Yanis reports that 1/3 of the population in Europe live off the rent of money. Some rent money to producers, like in the stock market. Some just loan money at interest.
                  Usury was forbidden in islam because it is so destructive.
                  Dealing with Riba is one of the Major Sins

                  It was also forbidden in the Christian religion. Kitson, Douglas, et al have spoken against usury. https://www.youtube.com/watch?v=SI7WRoc56Mw
                  You can easily see from the situation in Greece that the interest burden rapidly gets out of control.
                  As more and more people live off the rental of money, there is an ever-smaller % of the population who must do the actual labor. Much of the labor is done by machines BUT, they don't pay taxes or buy finished goods.
                  Most of our "producers" are outside the consumption cycle. The more automation, the less need for human producers. As we get ever-more efficient at production, we have ever-fewer solvent consumers.

                  1/3 of the Western population lives off the rental of money. Eventually, everything responds to supply-and-demand. The banks are trying to rent their money out to a debt-saturated public. Failing this, the ONE bank prints gobs on money to drive down interest rates. The damage has already been done. The existing interest burden grows on it's own.
                  GOV is the only entity demanding credit. GOV never pays back so, it will be forced to default eventually. The credit bubble will eventually pop because there is no demand for the rental of money.

                  Keynes advocated euthanasia of the rentier. It just isn't that simple.
                  Keynes Said: Lets Euthanize The Rentiers, Instead, We Euthanized The Economy :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
                  John Maynard Keynes:

                  Keynes; The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.
                  How can we have full employment when the machines are doing all the work?
                  22 Billion Energy Slaves: Our Army of Invisible Helpers
                  The rental of money has gotten so far out of hand that it is killing the productive economy.
                  Speculators add about $ 27 to the price of a barrel of oil. Exxon reports that it makes 5.5 cents a gallon. 5.5 cents X 42 gallons a barrel is $ 2.31 profit a barrel.

                  Comment


                  • Fear and loathing in Berlin

                    The Greeks are doing their best to keep us from getting bored. Greek GOV signed on for an extension of the bailout. The people think that their leaders turned on them. It appears that they are just trying to buy some time to get their ducks lined up. This is reportedly what the new Greek Drachma looks like;
                    https://c1.staticflickr.com/9/8528/8...b4e4b9f5_z.jpg
                    http://www.zerohedge.com/news/2015-0...chmas-designed
                    "Separately and not surprisingly, the German parliament has approved the bailout extension by a large majority in the Bundestag."
                    FEAR !!!
                    Greek banks only hold a small amount of Greek debt. VERY strange,, they already have a new currency lined up.

                    Comment


                    • It's 1989 again

                      "Non-housing consumer debt (credit card, auto, student loan, other) was $800 billion in 1989.

                      The 300% increase in consumer debt, while incomes stagnated, has created a zombie nation of debt slaves. And this doesn’t even take into account the quadrupling of mortgage debt from $2.2 trillion in 1989 to $8.7 trillion today."
                      " A critical thinking individual might wonder how national home prices could rise by 25% since the beginning of 2012, while mortgage debt outstanding has fallen by $220 billion over this same time frame, and mortgage originations are hovering at 1997 levels."
                      " New home sales are 65% lower than they were in 2005, but median prices are 20% higher. This is utterly ridiculous."
                      BREAKING BAD (DEBT) ? EPISODE ONE « The Burning Platform
                      It appears that car loans are the new sub-prime boondoggle.
                      "Most alarming, the 2Q 2014 repossession rate was 70% higher than 2Q 2013."
                      "The last time the Fed reported this data in 2011, here was the data:

                      Average Loan to Value Ratio – 80%

                      Average Maturity – 62.3 months

                      Average Amount Financed – $26,673

                      That was then. This is now:

                      Average Loan to Value Ratio – 110.4%

                      Average Maturity – 65 months

                      Average Amount Financed – $27,430

                      It is mind bogglingly ludicrous for financial institutions to loan 110% of the value of a vehicle over a seven year term when the vehicle depreciates by 10% the moment you drive it off the lot and 50% in the first three years. It is even more preposterous for these financial institutions to loan 126% of the value of a vehicle for 71 months at 10% interest to someone without the means, income, or willingness to repay the loan."
                      The FED instituted ZIRP has caused investors to desperately search for yield. "The average APR on those loans was 18.59%. The original term length was 70 months. 75% of these loans had a loan-to-value ratio of over 105%. Eighty-one percent of the borrowers had a FICO score of below 600. And yet some of the securities that these loans are turned into are rated AAA."
                      Yep, rate them AAA and investors will buy them.
                      "These toxic subprime auto loan securities are being bought by pension funds, life insurance companies, and mutual funds in a frantic effort to reach their yield goals when 10 Year Treasuries yield 2%. When it all goes to hell, little old ladies, pensioners, and conservative investors will be screwed again. It’s so clear, even the Fed can see it coming."
                      BREAKING BAD (DEBT) ? EPISODE TWO « The Burning Platform

                      Comment


                      • Economics exponential Function

                        Do people really need a PHD for this crap?? I don't know exactly where the top is but it looks pretty obvious to me we should hit bottom of the crash of about DJIA of 5900 in around October of 2019. What do you think of my findings??








                        Attached Files
                        Last edited by Ruphus; 03-02-2015, 04:36 AM. Reason: Had date wrong as each tick is 3 years not one.

                        Comment


                        • Perhaps a badder bank to rescue the bad bank?

                          Ruphus, in a general sense, stock markets crash when investors lose confidence. The "Greenspan put" has given investors unlimited confidence. The PPT has pumped in many $ trillions to make it clear that nobody will lose in the stock market. The ESF and FED are doing the same. When you have a free-money printing press backing you, you don't worry.
                          Japan has a falling population, crashing fertility, crashing economy, terrible demographics and Fukushima. Still, the stock market rose.
                          http://upload.wikimedia.org/wikipedi...Nikkei_225.png
                          Their debt to GDP ratio is something like 250% and all their pension funds have been stolen. Still, the stock market avoids a crash.

                          The crash is most likely to start in the banking industry.
                          "The Creditanstalt (bank)itself was founded in 1855 by Salomon Mayer's son Anselm von Rothschild
                          Creditanstalt ( Austria) had to declare bankruptcy on 11 May 1931. This event resulted in a global financial crisis and ultimately the bank failures of the Great Depression"
                          Creditanstalt - Wikipedia, the free encyclopedia

                          "Moments ago, Austrian ORF reported that there have been "spectacular developments" in the case of the Hypo Alpe Adria bad bank, also known as the Heta Asset Resolution, where an outside audit of Heta's balance sheet exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the Austrian Financial Market Authority said."
                          "Of course, this being Austria, and the Creditanstalt, aka the bank which failed in 1931 under almost identical circumstances and set off the dominos that led to a global financial crisis which in turn bank fanned the flames of the Great Depression"
                          http://www.zerohedge.com/news/2015-0...nk-capital-hol

                          The PPT can buy up futures in the stock market and levitate it. The banks are so over-leveraged that they don't respond the same. The "product" that the bank sells is credit. It isn't selling so, the ONE bank tries to rescue them. Assets at least represent companies that have some kind of tangible product.

                          Comment


                          • "When you have a free-money printing press backing you, you don't worry."


                            But as you can see in the charts, growth appears to be exponential. So at some point the presses can't keep up, there is a lack of funds at that point, wouldn't you agree?


                            So I, as the Grasshopper I am, don't think it's a lack of confidence. Most crashes occur when the majority of traders think the bull market is there to stay. I'm not sure how all the computer auto buys/sells will effect the crash slope. It may make it near vertical which would mean a very short period that the crash would occur.

                            I find it most interesting that the "recovery" starting points occur where they do. It seems to be manipulated to drop to that point then recover. The recovery slopes are not flattened in the process, but actually increase in steepness from one to the next. This indicates inflation I suppose? If this is true the next period of "recovery" will result in inflation greater than the last, perhaps $200 oil for instance. The "recovery" of the DJIA would be quicker as well this next time around.

                            This should continue until the dollar is "reset" or abandoned. I am sure there are things that can be done to flatten out the recovery slope so it isn't so vertical next time. Raising taxes is one way that I can think of but it's hard to straighten an exponential curve. It appears that TPTB have positioned this recovery point very near the next presidential election, how nice!

                            I really appreciate your insight on this stuff. Really fascinating to read.



                            EDIT: I just looked at the chart and found that my dates in above posts are incorrect. The next recovery point is around 2019-2020 as each horizontal tick is 3 years. I would have known that if I had my PHD in economics.
                            Last edited by Ruphus; 03-02-2015, 04:35 AM.

                            Comment


                            • Producers vs non-producers

                              We have a 2 loop economy. The upper loop is swimming in currency. The lower loop is swimming in a corresponding pool of debt. The upper loop can't possibly bail out the lower loop. At the end of the cycle, the upper loop must depend on the wealth creation of the lower loop. The upper loop can fake it for a while but, not forever.
                              Here are a couple of excerpts (Chicago);
                              2013-12-30 The teachers' alone are $1 billion short of funds, while the city as a whole is looking at a whopping $27 billion shortfall.
                              2015-03-02 Moody's report has calculated the pension liability of the city around $32 billion, eight times of the operating revenue.
                              ML-Implode News - With Downgrade, Chicago is on the verge of fiscal free fall
                              15 months and $ 5 billion further in the hole.
                              More news on Chicago; Mish's Global Economic Trend Analysis: Chicago's Only Possible Salvation: Bankruptcy - a Name That Cannot be Spoken
                              Apparently, Pennsylvania is following Chicago;
                              Pennsylvania CPAs warn of looming pension crisis | BenefitsPro

                              A bond is a debt instrument. Pension money is paid out to non-producers. Borrowing money for consumption only works if the worker produces enough to carry himself + the non-producer. The American worker produces something like $ 76 an hour. Between personal welfare and corporate welfare, the load from the non-producers is getting too heavy.
                              Politicians buy votes with promises, GENEROUS promises. Pension costs grow faster than the economy that supports them.
                              https://www.youtube.com/watch?v=EmC26RuO26g

                              Crony capitalism and corporate welfare are huge drains on the productive economy. Sooner or later, we will return to the mean. The bubble has only grown this large because America had the reserve currency. Essentially, the bubble started in 1971 with the closing of the gold window. It is expected that the bursting of the bond bubble will be the LAST bubble. The Final Chapter in the Credit Bubble Story - Bonner & Partners

                              Everybody is trying to maintain their standard of living even after the jobs went away. Those closest to the printing press are having the most success. We are creating money but, not wealth. Those farthest from the printing press are losing everything and defaulting. Previously, GOV had reimbursed banks for all the defaults. It remains to be seen just how long the productive economy can remain divorced from the financial economy.
                              Last edited by Danny B; 03-05-2015, 02:13 AM. Reason: More info

                              Comment


                              • Eventual default

                                Bankers inject money into the economy. The money carries an interest burden. If an economy is healthy, it can carry the burden. In a general sense, this also requires a growing population to have a growing economy. Bankers and GOV are always trying to juice up an economy by printing extra money. The U.S. money supply grew at 3 times the rate that GDP grew. That means that the interest burden grew at about 3 times that productivity grew. The interest burden was effectively 3 times higher on the economy. The economy collapsed from the load.
                                The lower loop defaulted and the ONE bank handed out free money to keep the upper loop out of default and insolvency. The free money was high-power money that is interest free. The banks ALL hoped to survive by the spread they gained by renting their free money at 3-4-5%
                                There are too many banks for the size of the economy. There are too many people in the lower loop who are debt saturated. When the ONE bank created ZIRP, it transferred about $ 400 billion a year if interest payments away from the saver.
                                The lower loop lost a couple of $ trillion in income. The banks wrote off about $ 1.6 trillion in bad debt. The ONE bank reimbursed them.
                                The defaults continue as the lower loop gets even more poor. The Dodd-Frank bill will have the depositors pay now when a bank fails instead of the public purse. An Austrian bank just had a bail-in.
                                The central bankers have created about $ 200 trillion in new debt trying to rescue old debt that is in danger. They just keep printing new debt to rescue old debt. In the case of Greece, 50% of their debt is the "new" debt that was created to rescue their old debt from just a few years previous.

                                The banks should have been allowed to collapse so that they were commensurate with our diminished economy resulting from out collision with a VERY low-wage competitor. ALL the banks were saved. Lehman was sacrificed to boost GS. Bear Stearns was dumped because they previously refused to pony up money to participate in the rescue of LTCM. A few were forcibly merged to make big banks bigger.
                                BUT, the underlying economy is less able year after year to support the huge banking sector. There should have been a default in 2008 because the productive economy just couldn't support all of them. The productive economy is even worse now. The default will come eventually.
                                Only mass default will end the world's addiction to debt - Telegraph
                                Things have peaked and we are headed downhill.
                                The global financial system stands on the brink of second credit crisis - Telegraph
                                Last edited by Danny B; 03-04-2015, 04:53 AM. Reason: Need one more link

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