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Fed acts Sunday to prevent global bank run Monday ( Bear Stearns Taken over,...rates cut )
MarketWatch ^ | 9:40 p.m. EDT March 16, 2008 | Rex Nutting, MarketWatch

Posted on 03/16/2008 6:52:34 PM PDT by Ernest_at_the_Beach

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before.

he extraordinary weekend moves came as J.P. Morgan Chase sealed a deal to buy Bear Stearns Cos. for just $2 a share backed by funds borrowed from the Fed. The Fed board gave its approval to that unique funding arrangement, which guarantees JP Morgan against losses from buying Bear. See full story.

The Fed board also approved the creation of a special lending facility through the New York Fed that would be available to members of its primary dealers list, which includes both commercial banks and investment banks. Investment banks, such as Bear Stearns, have not been allowed to borrow directly from the Fed.

JP Morgan has access to the discount window through its Chase Bank subsidiary, but Bear Stearns does not have direct access.

Events have unfolded at warp speed over the last week. On Tuesday, the Fed announced a new lending program for primary dealers in the bond markets, but that program won't go into effect for two more weeks. On Friday, the Fed allowed Bear Stearns to borrow money via JP Morgan in a desperate bid to save the firm, which has been pummeled by losses on exotic securities backed by subprime mortgages.

The Federal Open Market Committee meets on Tuesday. Analysts expect the FOMC to cut the target for the federal funds rate by as much as a full percentage point to 2%. Another cut in the discount rate is also likely.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: 1929; bernanke; con; discountrate; economy; endofthedollar; fed; manipulation; profit; soros; stpatricksmassacre; subprime
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To: AmericanInTokyo
It happened in the 1970s, too. It's not like the Japanese can take physical plant and real estate out of the United States. There's no real problem.
101 posted on 03/16/2008 7:56:17 PM PDT by GAB-1955 (Kicking and Screaming into the Kingdom of Heaven!)
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To: GAB-1955

I’m all cash in my Fidelity account, but it’s held in a money market fund (FDRXX). Now I’m starting to worry that this may not be safe enough...things have moved so fast.


102 posted on 03/16/2008 7:59:40 PM PDT by rumrunner
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To: Travis McGee; All

“”The first rule of bank runs: get there first.”

.....that’s the truth....when my old bank failed it went like this:

1.on Monday some customers started lining up to withdraw their money and it made the evening news....my wife says “maybe we ought to get our money out”....I said “don’t be silly; this ain’t the Depression”....famous last words!

2.on Tuesday the line at the bank was around the block...that made the evening news too.

3.on Wednesday the bank send for an armored car full of cash from the federal reserve to try and stem the flow.

4.on Thursday fist fights broke out in the bank’s lobby.

5.on Friday the bank did not open.

MORAL:
1.listen to your wife.
2.no bank can weather a run.
UPSHOT
1.little guys like me got reimbursed in full by the Fed.
2.big guys got $100,000 and an IOU for the rest when the bank’s assests were sold....ended up at 11 cents on the dollar.


103 posted on 03/16/2008 8:01:34 PM PDT by STONEWALLS
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To: STONEWALLS

You certainly have the “MORALS” in the right order there!


104 posted on 03/16/2008 8:03:59 PM PDT by AmericanInTokyo (The GOP serves a huge cr*p sandwich every 4 years to Conservatives, & sez "shut up!, no choice!")
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To: HereInTheHeartland

Do not locate yourself below the swan diving brokers!


105 posted on 03/16/2008 8:07:09 PM PDT by Wally_Kalbacken (Seldom right but never in doubt)
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To: vox_freedom
BAILOUT. Do we really want the Federal Government to be the backstop for every (major and minor) financial downfall in our country? Just wondering here.

Next you will be called a corporate racist for asking a question. PC in the "21st Century Dark Ages".

106 posted on 03/16/2008 8:07:40 PM PDT by Digger (If RINO is your selection, then failure is your election)
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To: irish guard
JPM Chase now makes good on those obligations and all Bear shareholders lose everything.

Except the C-level execs who probably get golden parachutes.

Cheers!

107 posted on 03/16/2008 8:07:44 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Obadiah
That’s what I’m talkin’ about. Can you imagine those guys that bought Bear Stearns thinking it near the bottom when the Feds stepped in, only to find out that their 1,000 shares at $30 are now worthless 1 day later? Whoo boy. There will be blood!

I have read that most brokerages did not have any shares available for shorting on Thursday or Friday. That puts some real light on Thursday's and Friday's volume. There were some people who may have made some good money trading BSC on Friday, but it was pure sucker money if they were holding at the end of the day.

108 posted on 03/16/2008 8:08:01 PM PDT by Biblebelter (I will NEVER EVER vote for McCain or any other current Senator.)
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To: NaughtiusMaximus
I’m going to get out early tomorrow morning so I can claim the best corner for my apple stand.

Apples? I'm going with CONDOMS.

(Think about it...)

Cheers!

109 posted on 03/16/2008 8:08:43 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Hacklehead

***The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria!***

Is it too late to invest in Dutch Tulips?


110 posted on 03/16/2008 8:08:56 PM PDT by Ruy Dias de Bivar (Only infidel blood can quench Muslim thirst-- Abdul-Jalil Nazeer al-Karouri)
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To: Southerngl
You know you are right, but those new Cheezits Stiks are MAHVALOUS!!

LOL. Thanks for the heads up. I'm always looking for new and different ways to add pounds! ;)

111 posted on 03/16/2008 8:12:43 PM PDT by Lijahsbubbe
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To: NaughtiusMaximus
I’m going to get out early tomorrow morning so I can claim the best corner for my apple stand.

Apples? I'm going with CONDOMS.

(Think about it...)

Cheers!

112 posted on 03/16/2008 8:13:06 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Wally_Kalbacken
Do not locate yourself below the swan diving brokers!

No intention of that buddy. This is gonna be pretty horrible I think.

The Fed announcing a quarter basis point cut in interest rates on a SUNDAY NIGHT because they couldn't wait two stinkin days for their scheduled meeting?

Stearns losing billions in literally a FLASH?? Bank customers have to have a warm and fuzzy feeling right about now. How many bought BS shares last week and have literally thrown their money away? So the Fed HAS to guarantee that JP Morgan won't lose anything on the deal???

THEY'RE panicked and I think that others are gonna see that as readily as I do and THEY'RE gonna panic as well. Watch the stampede.

113 posted on 03/16/2008 8:14:25 PM PDT by HeartlandOfAmerica (Don't blame me - I voted for Fred and am STILL a FredHead!)
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To: Ernest_at_the_Beach
Me?

I'm headed to ALDI tomorrow to buy rice and beans.

I can buy 6 cans of peas for the price of a Bear Stearns share of stock. What a bargain! Last year I could have bought 500 cans for the same share of stock.

But, better late than never. Next month I will be able to only buy one can...

114 posted on 03/16/2008 8:15:25 PM PDT by Gritty (Regulation isn't a 'solution' of anything. It's merely what politicians always propose.-William)
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To: grey_whiskers; NaughtiusMaximus
Apples? I'm going with CONDOMS.

(Think about it...)

Hmm. I'm going to one-up you here and go with hard liquor.

115 posted on 03/16/2008 8:16:08 PM PDT by Lijahsbubbe
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To: NaughtiusMaximus
I’m going to get out early tomorrow morning so I can claim the best corner for my apple stand.

When Black Friday comes
I'll stand down by the door
And catch the grey men when they
Dive from the fourteenth floor ...

116 posted on 03/16/2008 8:17:01 PM PDT by anymouse
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To: AmericanInTokyo
Just my luck. I gave up alcohol *and* chocolate for Lent.

And Easter is *next* Sunday.

I is gonna dip my chocolate Easter bunny into my Guinness, that's what I'm gonna do.

No cheers, unfortunately.

117 posted on 03/16/2008 8:19:14 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: AmericanInTokyo
Mr Lee says the banking system in New Zealand and in Australia are in much better shape than the rest of the world.

That's because they are selling commodities *to* China, not just buying Wal*Mart Sh*t *from* China.

D* Y*u see st*rs?

Cheers!

118 posted on 03/16/2008 8:21:24 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Hacklehead

In other words... time to invest.


119 posted on 03/16/2008 8:22:52 PM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: AmericanInTokyo
Uhmmm why would anyone on FR want to look at a page of Japanese characters?

Just curious.

120 posted on 03/16/2008 8:22:55 PM PDT by JSteff ( This election is about the 4 or 5 Supreme Court Justices who will retire . Vote Accordingly!)
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To: DeaconBenjamin
Well, I guess can start thinking about calling it the "St. Patrick's Day Massacre of 2008"

Not a massacre, just St. Patrick driving out some of the snakes that were in Wall Street.



Post of the Day!

Happy St. Patrick's Day!
121 posted on 03/16/2008 8:24:52 PM PDT by Deo volente
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To: AmericanInTokyo
I don't think I have seen these levels in 12-15 years!

Lowest since 1995 they say.

122 posted on 03/16/2008 8:29:42 PM PDT by 1066AD
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To: Ernest_at_the_Beach

JP Morgan gets Bear Stearns for nothing, and is guaranteed against loss by the taxpayers. Why not just have the government take over Bear, and keep the eventual profits? This is the biggest government give-away in the history of the USA.


123 posted on 03/16/2008 8:31:07 PM PDT by devere
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To: Digger

We should all await Obama’s preacher and hear his views on all of this...//s


124 posted on 03/16/2008 8:32:21 PM PDT by vox_freedom (John 16:2 yea, the hour cometh, that whosoever killeth you, will think that he doth a service to God)
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To: rumrunner

http://www.smartmoney.com/commonsense/index.cfm?story=20080304-banks-frozen-assets You might be interested in this article.


125 posted on 03/16/2008 8:32:56 PM PDT by Biblebelter (I will NEVER EVER vote for McCain or any other current Senator.)
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To: Hacklehead

“The ecomony is headed for a disaster of biblical proportions, real wrath of God type stuff. Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes...
The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria!”

Unfortunately there’s a 50-50 chance you’ve got it right.


126 posted on 03/16/2008 8:32:58 PM PDT by devere
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bookmark


127 posted on 03/16/2008 8:33:18 PM PDT by tapatio
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To: AmericanInTokyo
“Regardless, al-Qaeda has GOT TO BE loving it. “

They got what Osama wanted (collapse of US economy) and did not even have to crash any more jets into buildings.

Now how to explain it to all those would be martyrs?

128 posted on 03/16/2008 8:34:07 PM PDT by JSteff ( This election is about the 4 or 5 Supreme Court Justices who will retire . Vote Accordingly!)
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To: AmericanInTokyo
Mr Lee says the banking system in New Zealand and in Australia are in much better shape than the rest of the world.

They all say that - "we're OK it's those other guys that have problems" !
UK's been saying that for months, for example.

129 posted on 03/16/2008 8:38:38 PM PDT by 1066AD
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To: AmericanInTokyo

Grab your coat and get your hat,
Leave your worries on the doorstep!
Life can be so sweet
On the sunny side of the Street ...

Can’t you hear the pitter-pat?
And that happy tune is your step
Life can be all reet
On the sunny side of the Street!

I used to walk in the shade,
With my blues on parade ...
Now I’m not afraid ...
This rover’s crossed over ...

If I never have a cent,
I’ll be rich as Rockefeller!
Gold dust at my feet ...
On the sunny, sunny side of the Street!


130 posted on 03/16/2008 8:39:59 PM PDT by Rte66
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To: JSteff

Actually, all this bad economy talk has me worried...but not just about the economy. What better way to really damage the US then to have terrorist attacks commence inside the US during this time? =(


131 posted on 03/16/2008 8:44:58 PM PDT by Aggie Mama
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To: Aggie Mama
"What better way to really damage the US then to have terrorist attacks commence inside the US during this time?" Not a chance, with our closed and secured borders. /s
132 posted on 03/16/2008 8:50:23 PM PDT by yorkie (The FEW. The PROUD. The MARINES. Semper Fi)
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To: Travis McGee; Halgr
Bear Stearns TOP INSTITUTIONAL HOLDERS
HOLDER
Shares       |  % Out   |     Value*         |   Reported

BARROW, HANLEY MEWHINNEY & STRAUSS, INC.
11,485,058   |   9.73   |   $1,013,556,368   |   31-Dec-07

MORGAN STANLEY
 6,335,729   |   5.37   |     $559,128,084   |   31-Dec-07

Legg Mason Capital Management, Inc.
 5,721,010   |   4.84   |     $504,879,132   |   31-Dec-07

PRIVATE CAPITAL MANAGEMENT, INC.
 5,541,259   |   4.69   |     $489,016,106   |   31-Dec-07

Barclays Global Investors UK Holdings Ltd
 4,245,451   |   3.60   |     $374,661,050   |   31-Dec-07

STATE STREET CORPORATION
 3,550,715   |   3.01   |     $313,350,598   |   31-Dec-07

VANGUARD GROUP, INC. (THE)
 3,149,691   |   2.67   |     $277,960,230   |   31-Dec-07

JANUS CAPITAL MANAGEMENT, LLC
 2,765,699   |   2.34   |     $244,072,936   |   31-Dec-07

FMR LLC
 2,359,011   |   2.00   |     $208,182,720   |   31-Dec-07

133 posted on 03/16/2008 8:52:28 PM PDT by nicmarlo (A vote for McRino is a false mandate for McShamnesty)
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To: Aggie Mama

Less anyone forget, it wasn’t FDR that saved the economy after the Great Depression, it was, sadly, WW II


134 posted on 03/16/2008 8:52:52 PM PDT by varina davis
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To: Squantos; Travis McGee
How many times have I said that when this happens, it will happen at a non-linear rate? It's like the drop ratio of a bullet past mid-range trajectory....or if you will...the formula of the arc of a parabola.

...this ought to be "interesting" at a MINIMUM. ...if "intersting" is even the correct term for what we're going to get to witness.
135 posted on 03/16/2008 8:54:25 PM PDT by hiredhand (Check my "about" page. I'm the Prophet of Doom!)
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To: NaughtiusMaximus
"I’m going to get out early tomorrow morning so I can claim the best corner for my apple stand."

LOL...........

can I be next to you.....I shine shoes!

136 posted on 03/16/2008 8:56:07 PM PDT by cherry
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To: Ernest_at_the_Beach

Thankfully, I invested all my money in tulip bulbs so I’m sleeping soundly tonite.


137 posted on 03/16/2008 8:56:56 PM PDT by Freedom4US
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To: Ernest_at_the_Beach

Bear S was involved with many hedge funds. One problem with letting an investment bank fail, is when assets are dumped at precisely the wrong time, one doesn’t get the best possible price (relatively speaking). Also, there is a fear that when the assets are priced at a new lower level, it forces more calls for collateral at other banks. It’s a rotten deal no matter what, but I believe it is better to “save” Bear by a merger than an out and out failure. I am not for corp welfare, but view the banks of various kinds to be special cases.


138 posted on 03/16/2008 8:58:44 PM PDT by PghBaldy (Hillary! Best advice to you HRC is get ppl to diss Michelle in a racial way.)
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To: Ernest_at_the_Beach

This is just false reporting, I am sure. After all, President George W. Bush acknowledged here Friday that the U.S. economy is experiencing a tough time, but it will regain its strength in the long run because the “economic foundation remains solid.”

So. We are solid. Move along, folks. Nothing to see here.


139 posted on 03/16/2008 9:00:02 PM PDT by yorkie (The FEW. The PROUD. The MARINES. Semper Fi)
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To: yorkie; Ernest_at_the_Beach

Oh yes!

And there’s nothing wrong here that can’t be solved by printing mo’ money.

[solid foundation....good grief....]


140 posted on 03/16/2008 9:03:16 PM PDT by lainie ("You had your time, you had the power, you've yet to have your finest hour" (Roger Taylor, 1984))
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To: irish guard
JPM Chase now makes good on those obligations

Maybe not. Part of the deal for the Bear Stearns credit line arranged on Friday was that JPM would not be liable if Bear defaulted. IOW, there's a really good chance that the Fed effectively bought a ton of questionable paper from Bear.
141 posted on 03/16/2008 9:04:03 PM PDT by javachip
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To: HeartlandOfAmerica

“THEY’RE panicked and I think that others are gonna see that as readily as I do and THEY’RE gonna panic as well. Watch the stampede.”

Bear Sterns lost 95% of its paper value over the weekend as folk b egan to realize mortage instriments could be worthless...

What would you do. I bought more gold yesterday and will max my ATM withdrawals of cash tomorrow befofe I hunker down and wait to see what happens. I figure more cash on hand will not hurt.


142 posted on 03/16/2008 9:06:46 PM PDT by Jim Verdolini
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To: Jim Verdolini
Yeah. Keep the gold... and some cash. Maximum flexibility.

Hope it's not as bad as I fear.

143 posted on 03/16/2008 9:11:49 PM PDT by HeartlandOfAmerica (Don't blame me - I voted for Fred and am STILL a FredHead!)
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To: hiredhand

Yep you have been dead on as to what and when thus far !

Lets hope it’s a non event at best...........waiting , listening and learning !


144 posted on 03/16/2008 9:13:30 PM PDT by Squantos (Be polite. Be professional. But, have a plan to kill everyone you meet.)
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To: Ernest_at_the_Beach

Asian markets are down tonight.


145 posted on 03/16/2008 9:17:14 PM PDT by GOPJ (Obama's Rev shows blacks too can be hateful small minded bigots. Toss white guilt-it's a new day.)
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To: Ernest_at_the_Beach

146 posted on 03/16/2008 9:19:39 PM PDT by hripka (There are a lot of smart people out there in FReeperLand)
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To: JSteff
それは中々いいご質問ですね。さァー良く分からないけど。。。
147 posted on 03/16/2008 9:27:05 PM PDT by AmericanInTokyo (The GOP serves a huge cr*p sandwich every 4 years to Conservatives, & sez "shut up!, no choice!")
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To: JSteff

The true answer is the URL link screwed up there.


148 posted on 03/16/2008 9:27:33 PM PDT by AmericanInTokyo (The GOP serves a huge cr*p sandwich every 4 years to Conservatives, & sez "shut up!, no choice!")
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To: Squantos

I would be HAPPY for tomorrow to be just another “bad Monday”, and not the catastrophe that it could be.


149 posted on 03/16/2008 9:31:50 PM PDT by hiredhand (Check my "about" page. I'm the Prophet of Doom!)
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To: Ernest_at_the_Beach; Travis McGee; M. Espinola; Calpernia; All
Hate to say 'I told you so. But I did. Repeatedly . . .

Blame Greenspan. Blame Bernanke. Don't blame Bush. It's not his fault. But he will get all the blame from the media. Stupid Dims will be yelling and pointing fingers all week.

Oh, well . . . Nothing to see here. Time to move on.

Or . . . Learn something useful . . . Or not. Whatever will be . . . will freaking be.

150 posted on 03/16/2008 9:32:10 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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