No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

Archive for the 'Politics' Category

September 9, 2009

As the wheels turn, UAW/Government Motors edition

by @ 12:24. Tags:
Filed under Business, Politics - National.

Revisions/extensions (6:45 pm 9/9/2009) – With a tip of the hat to Owen, we have some more-daunting US-specific numbers from the AP, as well as a Idiotic Quote of the Day nominee. Given that, and a review of the actual report, I’ve decided to ReWrite™ the entire post. The original post is archived and struck through below.

The Congressional Oversight Panel, in charge of keeping track of money expended by TARP, issued a report asserting that most of the $14.3 billion spent on UAW Motors and its predecessor, Chrysler LLC, the $49.9 billion spent on Government Motors and its predecessor, General Motors Corporation, and $16.9 billion spent on other elements of the automotive industry will never be repaid. I’m shocked, SHOCKED to find this out.

Let’s review what happened to the money that went out the Treasury door to the two big auto companies:

  • Chrysler LLC (now known as Old Carco LLC)/Chrysler Financial/UAW Motors:
    • Originally-loaned-and-used amounts ($14.31 billion total; does not include credit facilities not used):
      • $4 billion went to Chrysler on 1/2/2009
      • $1.5 billion went to Chrysler Financial on 1/16/2009
      • $280 million went to Chrysler for warranty obligations on 4/29/2009
      • $1.89 billion in used Debtor-In-Possession financing went to Chrysler in May
      • $6.64 billion went to UAW Motors in the form of senior secured debt when it emerged from bankruptcy
    • Repaid amounts ($1.78 billion total):
      • $1.5 billion (the entirety) of the Chrysler Financial loan repaid
      • $280 million (the entirety) of the Chrysler warranty loan repaid
    • Remaining obligations ($12.53 billion):
      • $7.14 billion owed by UAW Motors in the form of senior secured debt (includes $500 million of the original $4 billion loan assumed by the new company)
      • $5.39 billion owed by Old Carco LLC in the form of unsecured debt, not expected to be repaid as the assets of the old company are expected to be exhausted before secured debtors are paid in full
    • Assets owned by the US Treasury:
      • 9.85% of UAW Motors common stock (to be reduced to as low as 8% if Fiat meets up to alll three of its goals to raise its stake from 20% to 35%)
      • A claim of the greater of 40% of Chrysler Financial’s equity value or $1.135 $1.375 billion, to be applied toward repayment of the original $4 billion loan
  • General Motors Corporation (now known as Motors Liquidation Company)/Government Motors:
    • Originally-loaned-and-used amounts ($49.89 billion total; does not include a $880 million loan to GM made on 12/29/2008 in exchange for GMAC equity):
      • $13.4 billion went to General Motors on 12/31/2008
      • $2 billion went to General Motors on 4/22/2009
      • $4 billion went to General Motors on 5/20/2009
      • $360 million went to General Motors for warranty obligations on 5/27/2009
      • $30.1 billion in Debtor-In-Possession financing went to General Motors in June and July
    • Repaid amounts ($360 million total):
      • $360 million of the DIP financing repaid (the report scores it as a Government Motors debt repaid, though it was repaid before Government Motors assumed its portion of the DIP debt)
    • Obligations that went toward buying 61% of Government Motors common stock ($39.7 billion total) and $2.1 billion of Government Motors prefered stock (all toward the common stock unless otherwise noted):
      • $13.4 billion (the entirety) of the 12/31/2008 loan
      • $2 billion (the entirety) of the 4/22/2009 loan
      • $4 billion (the entirety) of the 5/20/2009 loan
      • $360 million (the entirety) of the 5/27/2009 warranty loan
      • $19.94 billion of the DIP financing for common stock
      • $2.1 billion of the DIP financing for prefered stock
    • Remaining obligations ($7.7 billion):
      • $6.71 billion of former DIP financing owed by Government Motors in senior secured debt
      • $990 million of former DIP financing owed by Motors Liquidation Company in a Wind-Down Facility, which is secured debt
    • Assets owned by the US Treasury:
      • 61% of Government Motors common stock
      • $2.1 billion of Government Motors prefered stock

The CNN story referenced in the original post notes that the $5.4 billion given to UAW Motors is as good as gone. I haven’t seen any plans on how the US and Canadian governments plan to divest themselves of their stakes in the company, but I doubt they’ll get more than $1.1 billion for the remains of Chrysler Financial or $4.3 billion for an 8% stake in UAW Motors.

Meanwhile, The Wall Street Journal reported in July that Government Motors plans on having an IPO sometime in 2010, with full divesture in 2018. Does anybody believe they’ll get $40 billion for 61% of GM or $2.7 billion for the non-voting prefered stock?

That does not address the possibility that UAW Motors and Government Motors will either dip back into the public trough or re-enter bankruptcy. In that case, even the secured debt might not be paid back in full.

That brings me to the Idiotic Quote of the Day. Let’s have the AP deliver it:

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

Hard bargain? For full repayment of the TARP moneys, the Congressional Oversight panel estimates Government Motors would need to reach a total market capitalization of $67.7 billion and UAW Motors would need to reach a total market capitalization of $57.5 billion. That compares very unfavorably to General Motors’ peak market capitalization of $57.2 billion in 2000 (not adjusted for inflation). Further, if memory serves, Chrysler was never worth more than about $25 billion.

Shoebox pointed to a CNN story that says that much of the $60 billion in tax dollars provided to both UAW Motors (nee Chrysler) and Government Motors (nee General Motors) will not be paid back. I’m shocked, SHOCKED to find this out.

Let’s review what happened to the money that went out the door:

– Something north of $13.4 billion from both the US and Canadian governments went to UAW Motors and its predecessor, Chrysler LLC, with $6 billion of that converted to senior secured debt held by the new UAW Motors, and an additional $2 billion spent to buy the assets of Chrysler LLC in exchange for 12.31% of UAW Motors (to be reduced to as low as 10% if Fiat meets certain goals). The remaining $5.4 billion, all unsecured debt, remained with Old Carco LLC, which will almost certainly run out of money and assets before it completes paying the $5 billion it owes its secured debtors.

– Somewhere around $50 billion went to Government Motors and its predecessor, General Motors Corporation, with $7.07 billion in Debtor-In-Possession financing converted to senior secured debt held by the new Government Motors and an additional $1.18 billion in DIP financing converted into a Wind Down Facility loan held by Motors Liquidation Company and given senior secured debt status. The remaining $42 billion was forgiven in exchange for the governments’ nearly-73% share in Government Motors.

The CNN story notes that the $5.4 billion given to UAW Motors is as good as gone. I haven’t seen any plans on how the US and Canadian governments plan to divest themselves of their stakes in the company, but I doubt they’ll get $2 billion for less than 10% of the company.

Meanwhile, The Wall Street Journal reported in July that Government Motors plans on having an IPO sometime in 2010, with full divesture in 2018. Does anybody believe they’ll get almost $42 billion for 73% of GM?

That does not address the possibility that UAW Motors and Government Motors will either dip back into the public trough or re-enter bankruptcy. In that case, even the secured debt might not be paid back in full.

Just Say No!

Tonight, President Obama will once again fill the living rooms of America.  Again he will be telling us that we have a crisis at hand and that “doing nothing is not an option.”  It’s being reported that he will make a clear and compelling argument that a government option is the “best way to introduce competition into they system.”  In essence, Obama’s argument this evening will ask us to trust the government to insert themself into a large, complex industry and that there will be no adverse affects to the overall system or end users.

This morning it is being reported that much, my guess nearly all, of the money lent to GM and Chrysler will be complete write offs for the American taxpayer.  Big surprise that!  Any high school accounting student could have told you that any money put into either of these companies had no expectation of being repaid.  Automotive is a large, complex industry that government has inserted itself into with unsuccessful results.  In fact, if you are one of the dealers who were closed even though you a major employer in a small community, had successful sales and high customer satisfaction, you’d say the results of government intervention were disastrous!

Yesterday, Senator Max Baucus released a framework for a health reform plan that has been worked on by a “Gang of Six” from the Senate.  Within the grand plan of Senator Baucus are still mandates for health care purchases, penalties on those who don’t and a government option, now called a coop. 

What is not in Senator Baucus’ plan is anything puts free market leverage on the health care system.  In fact, in one of the few attempts to put free market window dressing in his plan, where Baucus addresses removing the interstate sales restrictions on health insurance, there is no mandate for the removal.  Rather, Baucus’ plan allows states to from “compacts” amongst themselves that would allow insurance companies to sell across state lines of those within the compact.

The Baucus plan ends up being just the most recent attempt at “reform” who’s only real reform is using new words to describe an eventual government take over of the health care system.

Regardless of what is or isn’t included in the various attempts at health care to date, they all need to be scrapped.  Making anything of quality, be it a manufactured item, art or even food, usually requires following a specific process.  Even if you have the correct ingredients, it doesn’t work to just mix them or put them together in just any order you want.  While the current attempts may have some pieces that are worth discussing, none of them have been put together in the correct way.  Until we get a plan whose first ten precepts are based on increasing the leverage of the free market on health care, we should refuse to debate, opine or offer advice on them.  We should take the advice of Nancy Reagan and “Just say no!”

logo-no-just-say-no-480

September 8, 2009

I’ll Take Door #3 Please

by @ 8:56. Filed under Politics - National.

Major Garrett reports that Van Jones didn’t have to fill out the infamous questionnaire that was intended to remove all surprises from one’s past life. 

In this interview, Major Garrett suggests that Jones’ “miss” was due either to a breakdown in the vetting process or that the Czars are not sufficiently high ranking to merit a vetting.  In his hypothesis, Major misses the obvious door #3.

Jones and likely the other Czars, have become Czars and avoided vetting for one simple reason; they couldn’t pass the vetting.

Is there a question in any one’s mind that if under “relationships and affiliations”, Van Jones would have said “Communist”, he would have passed muster?  Well, he might have given what we know about Obama’s own preferences but he wouldn’t have passed the public review.  

The Czars are Czars for two simple reasons:  1: they align with Obama’s own personal views and 2: Making the views public via a public vetting process would ensure that they were never accepted for the position.

Stay on Target!

From the classic that is the original Star Wars movie (now Star Wars IV) during the attack on the death star:

As one of the rebellion pilots is heading to make the impossible shot that would destroy the death star Empire fighters are attacking from all directions.  The pilot loses his concentration as his head is spinning trying to keep track of the frenetic activity around him.  The leader of the attack then states his infamous line, “Stay on target!  Stay on target!”  In the end, he never gets his shot fired and is ultimately destroyed by one of the pursuing Empire fighters.

The month long Congressional recess has been an usually heady time for Conservatives.

First, after explaining to school administrators and the blogging world that we and our children “pledge allegiance to the flag” and not the president, the Obama acolytes resorted to using “in artfully worded” before redoing the “lesson plan” for Obama’s indoctrination speech to school children. 

Second, led by Worldnetdaily and Glenn Beck, Conservatives used the method that John McCain was too squeamish for and held Van Jones accountable for his extremist views, statements, actions and associates.  The result is that Van Jones has left the Obama administration “to seek other opportunities.”  Perhaps the most interesting aspect of both of these events is that neither of them had any of the D.C. Republican leadership leading them.  In fact, now now that I think about it, what was the last issue of substance that any of the D.C. Republican leadership?

Finally, Conservatives have successfully led an effort to expose the truth about the Democrat’s attempts to nationalize health care.  In town hall meetings, blogs, rallies and one on one discussions, Conservatives came armed with facts that left their opponents either lying or stumbling through things they made up.  Regardless of how many times President Obama or Democrat leadership claimed “it wasn’t in there,” the majority of Americans believe it is “in there” and they don’t like it.  The situation has degraded so far that President Obama will be addressing a joint session of Congress on Wednesday evening in an attempt put the plan on some new track that could lead to success.

While the first two items clearly sent a message to the Obama administration that he was not elected to a monarchy, the final outcome of the last issue is still to be decided.

Innumerable articles have been written in the past 10 days opining on whether Obama can save the health care reform bill.  Amongst other topics, the articles discuss the pros and cons of a 60 vote Senate approval versus a reconciliation process, dropping a public option or moving to a coop and which group of Democrats are more likely to support or jump ship from President Obama.  With so many different experts and theories it’s hard to guess what scenario may play out in the coming weeks.  In fact, depending upon your own personal preference, if there isn’t an article supporting your theory, just wait another day and there likely will be one written.

Over the next few weeks the fight over health care reform will take many new turns.  Some events will likely be complete surprises.  We can certainly expect that as President Obama reengages in the fight we’ll see him hang “shiny bright objects”that are meant to distract conservatives from their focus on health care.  Whatever transpires, one thing is certain, the fight is far from over.  We can’t allow the victories of small skirmishes to lull us into any sense of accomplishment.  We must keep pressure on every Congressional representative until health reform that has any increase, or might allow any possible future increase of government intervention is dead, dead, dead.

For the next six weeks or so we need to stay focused, stay aggressive and keep the White House on the defense.  Every morning for the next six weeks you should wake up to the admonishment of Gold Five:

September 7, 2009

Video of the day – Uncle Jimbo’s “Obama everywhere – More cowbell”

It’s been far too long since I featured one of Uncle Jimbo’s tour de forces. This time, he lays the smackdown on Obama’s UNSecurity Council meeting chairmanship. Roll tape.

[youtube]http://www.youtube.com/watch?v=HtUrK-hOMQw[/youtube]

DC, Beijing has a problem and it’s about to be your problem

by @ 10:52. Filed under Economy, Politics - National.

(H/T – Robert Stacy McCain)

If memory serves, both Shoebox and I have pointed out the reluctance of the Chinese to continue to soak up American debt. The Daily Telegraph has the latest in the coming ChiCom shift away from the US Dollar:

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.

“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

The Chinese are the single biggest foreign holder of US government debt, and they’re saying once again that they may well not continue to buy more. There simply are not enough buyers out there to soak up another $9+ trillion in US government debt over the next 9 years, which begs the question of whether the Fed will really flood the market with more dollars or whether the Treasury (really, Congress and the President) will do something that has never been done and default on US government debt.

In related reading, Charles K. Rowley, General Director of The Locke Institute and Duncan Black Professor of Economics at George Mason University, says that we could follow Argentina under socialist Juan Peron from the First World to the Third World. Why do I get the feeling that is precisely the ObamiNation’s goal?

Revisions/extensions (11:52 am 9/7/2009) – I know I’ve got too many blogs in the reader. As part of his look at George Friedman’s projections for the next 100 years on September 1, CDR Salamander wrote this little gem:

I agree with the last statement, but America can degrade itself though economic malpractice inline with what Argentina did to herself in the 1900s – but on a much larger scale. You cannot be the world’s greatest debtor and continue to run the world. It is unsustainable. Do not discount relative decline.

There is good relative decline; the USA % of global GDP decreases as other nations leave the 3rd to progress towards the 1st World. There is bad relative decline; the USA % of global GDP falls due to real falling national GDP and degrading internal economic factors and external competitiveness….

The only way the USA will lose its position over this century will be if we follow the Argentine model and economically destroy ourselves – something the present administration is doing very well from a debt-load POV.

Revisions/extensions (12:37 pm 9/12/2009) – Welcome to the party, fellow FMJRA devotees. Unlike RSM, this short-order cook doesn’t have a tip jar to hit, but between Shoebox and I, we do have some pretty good reading. And Smitty, I hear you on the 6-hour Mike Foxtrot shotgun sessions. If I had a tip jar, I might restart my version, but other than Rule 2, I don’t quite have the temperment to get enough hits for that to matter.

September 4, 2009

Is it 3.5 million jobs created/saved or 3.11 million jobs in all sectors lost?

by @ 12:59. Filed under Economy, Politics - National.

(H/T – The Senate Republicans)

Now that the Bureau of Labor Statistics has come out with the all-sector August jobs report, which shows a preliminary 216,000 job loss for August, it’s time to update the earlier private-sector-only post of 3.487 million private-sector jobs lost since the end of January. With the creation of 377,000 government jobs since the end of January, the economy has lost 3,110,000 jobs since then.

The Senate Republicans helpfully included a summary of what the Human Gaffe Machine Vice President Joe Biden (he of the three-letter J-O-B-S utterance) uttered to the Brookings Institution just yesterday:

“Analysts from Moody’s to IHS Global Insight to the Economic Policy Institute and others all estimate the Recovery Act has created or saved between 500,000 and 750,000 jobs. Matter of fact: Some notable economists suggest the number is as high as a million.”

That’s funny; even if one included only the government sector (which I believe the ObamiNation thinks is the only sector that matters), Porkulus fell short.

Friday Hot Read – Mitch Daniels’ “The Coming Reset in State Government”

Indiana Governor Mitch Daniels (R) penned a warning call on the state of the states’ finances:

For now, my state’s situation is far better than most, but it won’t stay that way if we fail to act in Indiana. At present, we are meeting our obligations, without raising taxes, and still have over $1 billion in reserve. But the dominant reality is that even assuming the official revenue projections are accurate (and they have been consistently too rosy for the past two years), the state of Indiana will have fewer dollars to work with in 2011 than it did in 2007. Most other states face similar or worse prospects.

And, unlike the aftermath of past recessions, odds are that revenues will take a long time to catch back up to their previous trend lines—if they ever do. Tax payments have fallen so far that it would require a rousing economic rally to restore them. This at a time when the Obama administration’s policies on taxes, spending and more seem designed to produce the opposite result. From 1930 to 2008, our national average annual real GDP growth rate was 3.49%. After crunching the numbers, my team has estimated that it would take GDP growth of at least twice the historical average to return state tax revenues to their previous long-term trend line by 2012.

That is in Indiana, which is weathering the storm relatively well. They still have over $1 billion in reserve, and they haven’t had to raise taxes yet. Further, they were able to get to that point from a state of near-bankruptcy 5 years ago by cutting per-capita spending by a 1.4% annual rate.

Gov. Daniels also has a warning for those who, like Wisconsin Gov. Jim Doyle (D) and the Democrat-run Legislature, treated Porkulus like a lifeline:

Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration’s “stimulus” package in effect shared the use of Uncle Sam’s printing press for two years. But after that money runs out, the states will be back where they were.

I do quibble with the notion that the federal government can deny reality by borrowing without limit. We are already at the point where there is little appetite for the existing near-100%-of-GDP federal debt. If the refinancing of said debt, to say nothing about the well-above-economic-growth $1 trillion-plus per year additions to said debt that extend as far as the eye can see, can’t be absorbed by the bond market, then we will be talking about hyper-inflation. Unlike most of the recent examples of countries that have experienced debt-caused hyperinflation (which were bailed out by the US), there is nobody left to bail us out.

September 3, 2009

Speaking of rationing – the Mandatory Schaivo edition

by @ 15:40. Filed under Health Care Reform, Politics - National.

(H/T – Ed Morrissey)

It is almost as if our friends across the Atlantic are warning us of what is in store if we follow them into socialized medicine. The Daily Telegraph ran a story of how (Not-So-)Great Britain’s health-care “scrutiny” body, the inappropriately-named National Institute for Health and Clinical Excellence, has adopted a particularily cruel end-of-life program called the Liverpool Care Pathway. I’ll let The Telegraph explain what this “last hours treatment”, now in place in nearly 1,000 British health-care facilities at the insistence of NICE, is:

Under the guidelines the decision to diagnose that a patient is close to death is made by the entire medical team treating them, including a senior doctor.

They look for signs that a patient is approaching their final hours, which can include if patients have lost consciousness or whether they are having difficulty swallowing medication….

When a decision has been made to place a patient on the pathway doctors are then recommended to consider removing medication or invasive procedures, such as intravenous drips, which are no longer of benefit.

If a patient is judged to still be able to eat or drink food and water will still be offered to them, as this is considered nursing care rather than medical intervention.

Unlike the Terri Schiavo situation, where there were conflicting interpretations of the level of care she wanted, what is missing is any decision by either the patient or a patient’s family. Considering the average person spends roughly a third of his or her life asleep, I guess one should not fall asleep in a British hospital with a sore throat.

Seriously, the story goes on to report on a letter signed by several leading British palliative-care experts calling the LCP a “national crisis”. Quoting The Telegraph’s reporting on the letter:

“Forecasting death is an inexact science,” they say. Patients are being diagnosed as being close to death “without regard to the fact that the diagnosis could be wrong.

“As a result a national wave of discontent is building up, as family and friends witness the denial of fluids and food to patients.”

Dr. Peter Hargreaves, a consultant in Palliative Medicine at St Luke’s cancer center in Guildford, told The Telegraph that he personally took patients off that pathway who went on to live for “significant” amounts of time because he did what many doctors don’t – keep monitoring the patient for signs of improvement. Those signs of improvement are harder to spot when a patient is under constant sedatement according to Professor Peter Millard, Emeritus Professor of Geriatrics, University of London.

Another problem with sedation while dehydrating is that a patient can enter a state of semi-consciousness and confusion. I wonder how many of the 16.5% of those who died in Britain in 2007 and 2008 during a state of continuous deep sedation, twice the rate in the Netherlands, which has a policy of physician-assisted suicide, suffered that state.

Of course, not all of those in Not-So-Great Britain are doomed to such a fate. Just ask Abdel Baset ali Megrahi, who got a get-out-of-Britain-free card after serving less than 12 days per person he and his Libyan associates murdered in the bombing of Pan Am Flight 103. Of course, he wasn’t a loyal subject of the British crown; he was a mass-murdering thug.

But of Course, There Will be Rationing

Every time attempt at a government run or mandated health plan has resulted in some form of rationing.  There is no exception to this rule.  The reason for this is quite simple.  Once people get something that appears to have no cost to it they will demand more and more of it.  As folks demand more and more it costs more and more to provide the service.  At some point, even the most arrogant printers of money will realize that there has to be some cap on the total costs.

Canada, England, Cuba and Massachusetts all have rationing occurring in their plans.  Rationing can take all kinds of forms; from the most blatant and obvious forms of outright denying the particular service to the less obvious like someone not answering a phone to accept an appointment. 

Since the rationing issue has been raised, those who support Obamacare have been besides themselves telling us that there will be no rationing in this plan.  As evidence, they often point to Medicare and Medicaid as shining utopian examples of everyone gettng all the health care they need without a hint of rationing.

An article from Tuesday’s USAtodayshows just how Medicaid is implementing rationing.  As a result of budget constraints the State of Louisiana has cut payments made to service providers of Medicaid by 10%.  The result?  68% of surveyed physicians will begin rationing of services to Medicaid patients.  Oh, they won’t refuse to perform a procedure that a patient needs, they’ll just quit accepting new patients, stop accepting referrals or for nearly 16%, quit seeing medicaid patients altogether. 

In a separate but related article, Bloomberg reportsthat the Obama administration’s plan to take $1.4 billion in payments from physicians who provide Medicare patients heart or cancer treatment and shift it to family practice physicians will likely result in fewer cardio and cancer physicians.

Folks, you can call it anything you want; cost shifting, benefit reduction or some other euphemism.  The fact remains that no matter what you call it, you will have to recognize it as rationing.

September 2, 2009

Which step in destroying private enterprise is this?

(H/T – Stephen Green)

The Hill reports that the AFL-CIO has extracted their price of making the Democratic Party a partially-owned subsidiary of them and is calling for a 0.1% tax on all stock transactions. That’s right; buy a stock, pay a tax. Sell a stock, even at a loss, pay a tax.

The stated reason, according to AFL-CIO policy director Thea Lee – “It would have two benefits, raise a lot of revenue and discourage speculative financial activity.” News flash #1 for Ms. Lee – it was “speculative financial activity” that got the various AFL-CIO pension funds to where they are. News flash #2 for Ms. Lee – that churn produced by “speculative financial activity” creates a lot of cash that is spent at the production end of the economic circle.

Stephen notes that we pay some of the highest taxes on winning stock plays on the planet. For those that held the sold stock less than a year, that profit is taxed at up to 35% (and soon to be 39.6% somewhere over 40%). Tax the losing plays as well, and almost nobody will want to invest in the stock market. Fewer people in the market equals lower stock prices, which equals lower pensions and less money available for expansion.

Trouble with a Capital “T” That Rhymes With “P” That Stands for Poll

by @ 5:39. Filed under Politics - National.

No wonder the Democrats are sounding desperate and attempting to channel Ted Kennedy. On the same day, President Obama hits a new high in disapproval according to Rasmussen’s polling and the Democrats are at the lowest level in years on the generic ballot.

Obviously, it’s way too early to make much out of this; there is no election to be held tomorrow.  However, it’s helpful to note that a year ago the situation was exactly reversed and we all know what happened last November.

If you think my post title is referring to trouble for the Democrats, it’s not.  Also noted in Rasmussen today was a poll as to what Republicans think of their Congressional representation.  55% of Republican voters believe their representative in Congress is NOT conservative enough.

I will keep sounding the alarm through next year’s elections. Don’t think that just because Democrats are in trouble that voters will just chose a “R” on the ballot. The American electorate has woken up and are looking to hold their representatives at the state and federal level accountable. If you are and “R” on the 2010 ballot you had better be in tune with your electorate. Don’t assume, know what your potential constituents believe and what they expect from you. If you can’t abide by those expectations, let someone run who can!

September 1, 2009

I Thought “Terrorist” was Verboten

Earlier this year the Obama administration eliminated several words and phrases from the English language.  “War on terror,” “enemy combatants” and finally the word “terrorism” itself was eliminated from the Obama lexicon.  According to Janet Napolitano this is the officially approved, new language:

“I did not use the word ‘terrorism,’ I referred to ‘man-caused’ disasters. That is perhaps only a nuance, but it demonstrates that we want to move away from the politics of fear toward a policy of being prepared for all risks that can occur.”

Well, I guess we can all understand how emotionally charged the word “terrorism” is.  We can understand that using it does nothing but inflame a situation that might otherwise be solved by clear thinking adults. 

From BarackObama.com as part of an organizing call to flood Congressional offices with calls supporting health care reform on 9/11:

All 50 States are coordinating in this – as we fight back against our own Right-Wing Domestic Terrorists who are subverting the American Democratic Process, whipped to a frenzy by their Fox Propaganda Network ceaselessly re-seizing power for their treacherous leaders.

So now, according to President Obama’s own website, those of us (the majority of Americans) who oppose the government’s further involvement with our heath care are terrorists. 

You’re not a terrorist if you rape, brutalize and kill innocent children, but if you disagree with the President….watch out!

Another Day, Another Meme

As I’ve been listening to various talk radio programs I’ve heard the following new meme proffered by Obamacare supporters, at least four times in the past 48 hours:

We have to pass a government option!  2/3rds of the bankruptcies in the US are caused by medical bills!

The basis for this argument is found in this recent study in the American Journal of Medicine.  A snippet of the conclusion of the study is as follows:

Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income.

At first look you’d have to say “Wow!”  Can nearly 2/3rds of bankruptcies be caused by the results of medical costs?  The answer, after you look at the study and some other information is “No.”

Brett J. Skinner did a great job of deconstructing the noted study.  His article, here, noted several items that left the study’s conclusions suspect.

First, Skinner makes the logical comparison with Canada.  With the bankruptcy law very similar in the two countries, and Canada having a government provided health care system, if the studies conclusions are correct, we should expect to see significantly lower bankruptcy rates in Canada.  We don’t.  In both 2006 and 2007 Canada had a higher bankruptcy rate per population than we had in the US.

Secondly, Skinner looked at other studies done on the topic.  One of those analysis was done by the Department of Justice:

finding that medical debts accounted for only 12 percent to 13 percent of the total debts among American bankruptcy filers who cited medical debt as one of their reasons for bankruptcy.

So now your question ought to be, “Is it possible to reconcile the study with the data Skinner found or is the study a fraud?”  Thanks for asking, I think I can reconcile the two.

Going back to the original study we find Table 1 shows that the mean negative net worth (the excess of debt over assets) is not materially different between those who claimed to file bankruptcy due to medical reasons (-$44,622) and those who filed for other reasons (-$37,650).  On page 4 we see that the average, total, not just the unpaid portion of out of pocket medical costs for those that filed bankruptcy for medically bankrupted families was $17,943.  If we assume that the entire amount of out of pocket costs were left unpaid and counted in the negative net worth (it wouldn’t be but let’s use it for a moment), that would still leave a negative net worth of approximately $27,000. 

A negative net worth of $27,000 would typically not be from a home mortgage as most of those would not be allowed to borrow more than the equity.  Also, remember that the study was done in 2007 before the current melt down and reduction in home values.  A negative net worth could be partially incurred from a vehicle as most new vehicles are upside down in equity for the first year or two of ownership.  However, with the average mean income reported as only $30,000, one wouldn’t expect a whole lot of really expensive new vehicles included in the negative net worth of this sample.  A negative net worth of $27,000 likely comes from one place, credit cards or uncollateralized loans.

While the study didn’t break it out this way, it appears to me that the average person who claims they filed for bankruptcy because of medical reasons also had significant credit card debt.  I suspect, but can’t prove it with what is in the study, that the individuals who filed for medical bankruptcy didn’t file only because of the medical costs.  Likely, the medical costs were the “straw that broke the camel’s back.”  And, while medical was the straw for these people  in this instance, the straw could have been any of a number of other things i.e. a major car repair, a major home repair or any number of other unexpected items. 

It appears to me that rather than any one specific issue, like most other bankruptcies, the folks that this study looks at had a series of issues with the last one in line, for them, medical expenses, being more than they could recover from.  In their case, medical costs were just one of the issues that led them to bankruptcy.  To say medical expenses were the reason that these folks filed for bankruptcy is about as accurate as saying that the Titanic sank because it was holding too much water.

August 30, 2009

Did he say 2 million jobs created/saved or 2 million jobs lost?

by @ 22:10. Filed under Economy, Politics - National.

King Banian, my favorite economics professor from St. Cloud State University, ran with the latest Office of Management and Budget projections for 2010 employment, which includes a 2010 fourth-quarter unemployment rate of 9.7%, and put together a quick-and-dirty spreadsheet (Excel 2007; those of you with Excel 2003 will either need a conversion tool from Microsoft to open or will want my Excel 2003 copy) to gauge what the projections actually mean. For those of you who can’t open Excel files, here’s a screencap of the spreadsheet:

Not only do the employment rolls drop by 1.96 million between the 4th quarter of 2008 and the 4th quarter of 2010, but the unemployment rolls increase by 4.59 million over the same 2 years. This is If you want percentage terms, employment rolls would drop 1.36%, while unemployment rolls would go up 42.96%.

That does assume that the Labor Force Participation Rate would bounce back to 66.0% from the current 65.8% and the 2009 first quarter 65.6%, which means those retiring, those without work for so long that they no longer count as “unemployed”, and others who are not part of the labor force would not increase as rapidly as the rest of the population. If the LFPR were not to bounce back as much, the employment roll drop would be even larger.

The Natives are VERY Restless!

by @ 8:17. Filed under Politics - National.

57% Would Like to Replace Entire Congress

From Rasmussen Reports

If they could vote to keep or replace the entire Congress, just 25% of voters nationwide would keep the current batch of legislators.

It appears that the American voter has tired of those in government who would be their masters.

If you’re concerned about the paragraph that says the number hasn’t changed since last year, read a little further and find:

Today, 70% of those not affiliated with either major party would vote to replace all of the elected politicians in the House and Senate. That’s up from 62% last year.

That’s not  a good sign for the party in power.

While I’m encouraged by this poll I take it with a bit of suspicion.  Typically, what you find when you pull back the covers a bit, is that while a majority want to replace the whole Congress, they usually expect it to be the Congress except for their particular elected one.  In other words, “Mine’s fine.  It’s all you guys that have this screwed up!”  While I have that sentiment about mine, I’d be willing to toss him into the pile of chaff if everyone would agree to do the same.

August 28, 2009

Al You Ignorant Slut

During one of his closed, invitation only, small group “town hall” meetings this week, Senator Al Franken made the following argument for why he insists a government option must be a part of any health care reform bill:

In case you missed it, Angry Al’s rationale is:

  1. Minnesota only allows non profits to be health insurance companies
  2. Minnesota has 90% of premiums paid go to health care
  3. All other states have only 70% to 80% of premiums go to health care
  4. Minnesota insurance is cheaper
  5. Therefore, non profit is cheaper.

While Al’s logic may follow from one point to the next, it exists in some fantasy land and not the real world.

Based on Al’s logic, if we looked at average insurance rates by state, we should expect to see Minnesota as one of, if not the cheapest state.  We would also expect to see most other states in the range of 10% to 20% higher than Minnesota.  We would expect to see state’s like Massachusetts where there is government run insurance, as the cheapest of them all.  Finally, we should expect to find that “profit” for insurance should amount to somewhere between 10% and 20% of premiums paid.  Let’s take a look, shall we?

America’s Health Insurance Plans (AHIP), a research and advocacy group, has this study that looks at average insurance rates.  Flip down to page 9 where they compare family insurance rates by state.

In the study, rather than being one of the cheapest of states, we find Minnesota 17th most expensive, just barely out of the top third.  We also note that at $5,508, Minnesota is only5% cheaper than the national average.  Hmmm, that’s weird, shouldn’t they have been at least 10% and maybe higher?

As you look across the remainder of the study, where Al’s claims would have us expecting nearly all other plans to be 10% to 20% more expensive, we find only 11 states are at least 10% more expensive than Minnesota.  In contrast, we see that 15 states are at least 10% cheaper than Minnesota.

Al’s implied assertion that government run things are best because they run cheapest, also bites the dust.  Note that the highest cost state in Massachusetts.  Not only are they the highest cost, they are highest by a margin that would make the most dishonest loan shark blush.  Now, to be fair, this analysis was taken in the first year of Massachusetts state run plan, perhaps the rates have dramatically lessened…NOT!

Finally, another analysis done by AHIP shows where your (and my) premium dollar goes:

health dollar

Contrary to Al’s implied assertion, average profits amount to only 3% of the entire insurance premium. In fact, on average, the entire SG&A cost is 13%. Clearly, even a non profit or government plan would have administrative overhead to operate the plan so the argument that non profits are cheaper by 10% to 20% because they don’t have to make a profit is completely specious.

Earlier this week Al stated that a government option must be a part of any health reform bill:

“I’m favorable to the public option, a strong public option which will provide competition for private insurance companies.

Al’s attempting to look Senatorial by inserting “facts” to support a decision he has already made.  The problem with Al’s facts is that they are completely wrong.  Given Al’s history with SNL, the next time Al asserts that government plans are cheaper because they don’t have to make a profit, the appropriate response would be “Al, you ignorant slut!”

If You’re Not a Leftist You’re “Brain Dead”

On a conference call yesterday, Rep. Pete Stark, D-Calif, a key House liberal referred to Blue Dog Democrats who are bucking the government takeover of health care in this fashion:

“They’re for the most part, I hate to say, brain dead, but they’re just looking to raise money from insurance companies and promote a right-wing agenda that is not really very useful in this whole process.”

Isn’t that ironic?  I usually regard the Blue Dogs as the only part of the Democrat consortium that had any chance of having part of a functioning brain!  I would have guessed, based on all the polling and what not, that these folks might in fact, be doing the jobs they were elected to do.  You know, represent their constituents!

I guess by extension, if the Blue Dogs are “Brain Dead,” the constituents who agree with them would also be “Brain Dead” or worse.  The further extension is that according to Representative Stark, all of us who would rather keep the government out of our health care are also “Brain Dead.”

We’re “Brain Dead” and “Un American.”  Maybe it’s time to officially form the Zombie Reagan Nation!

Can’t Have Your Cake and Eat It Too!

Do your remember all of those great arguments for support of the Waxman-Markey “let’s rush back to the 1500’s bill?”  We were going to save mother earth, we were going to increase jobs, we were going to be less dependent on foreign oil.

Not so much!

A new study done by Ensys Energy finds that rather than import less oil, if Waxman-Markey is passed, we will actually import MORE oil.  In fact, the study shows that by 2030 we would likely need to DOUBLE the amount of imported oil!

How can that be?  Simple.

If we start taxing production and processing of fossil fuels, less investment will be made into production and processing of fossil fuels.  If less investment is made, less outcome will result.  All of this is pretty much in line with the designs of the Waxman-Markey bill.  The problems comes in that there is no magical product available that can replace fossil fuels in the vast majority of it’s uses.  Thus, we dramatically reduce supply but have little reduction in demand.  Unless we actually do chose to go back to the 1500’s, we’ll need to replace the production that is no longer happening in the US.  According to the study, the shift in production looks like this:

U.S. refining throughput, a measure of productivity, could plummet by as much as 25% (4.4 million barrels per day) and investment in U.S. refining could fall by as much as $90 billion, a decline of 88 percent, by 2030, the EnSys study forecast.

Well, I guess that shoots one of the reasons for the Waxman-Markey bill.  Would you like a quick second?

According to the same study, because no magical new power source will be available, the effect of the Waxman-Markey bill will not reduce carbon emissions.  All Waxman-Markey will do is shift the carbon emissions from the US to other countries around the world.  In other words, only the NIMBY people will get anything out of Waxman-Markey.  Yeah, they’ll get something right up to the point that the US economy is hammered because we have a dramatically increasing negative trade balance because we have to import twice as much energy as we used to!  Oh, and we’ll lose a bunch of jobs too!

 

It’s Not About Me?

If you didn’t pick up on it during his candidacy, there are two things we now know about President Obama.  First, he is a committed leftist; no government involvement or control is too much in his view.  Second, his ego is second in size only to the deficit that his leftist policies are creating.

Within hours of his death, Democrat leadership began attempting to breath new life to the health care bill by attaching Ted Kennedy’s name to it.

“In his honor and as a tribute to his commitment to his ideals, let us stop the shouting and name calling and have a civilized debate on health care reform which I hope, when legislation has been signed into law, will bear his name for his commitment to insuring the health of every American,”

was the lament from Senator Robert Byrd.  And:

“Ted Kennedy’s dream of quality health care for all Americans will be made real this year because of his leadership and his inspiration,”

From Speaker Pelosi.

Even with the new, paid for supportive astroturf that the Democrats have been able to get into their townhalls, the public remains fully against the implementation of a government run health care program.  Rasmussen reports that while “support for the health plan has quit falling,” it is still opposed by a majority of voters.  Additionally, by greater than a 2:1 margin, “voters believe the proposed reforms would make the quality of care worse rather than better.”  It seems like a long uphill slog for passage of the bill, at least in its current form.

Ted Kennedy’s public funeral will be held Saturday morning.  We’ve learned that President Obama will deliver the eulogy.  I have one question.

With Cap and Trade likely dead for the year and his other major push health care, on the ropes, will President Obama be able to control his personal ego long enough to deliver an eulogy that actually has Ted Kennedy as the focus or will he succumb and use the event of the funeral to fan his own ego and push the health care reform bill?

Remember, never let a crisis or a highly personal and emotional event, go to waste!

August 27, 2009

Slight change in the Paul Ryan Monday listening sessions

If I had checked my e-mail this morning, I would have found this press release relating to the moves of all the Rep. Paul Ryan (R-WI, and my Congressman) Monday listening sessions earlier (and would have caught the error in the original press release for the Greendale one earlier as well – it is correct in the current schedule on Ryan’s House site):

Larger Venues Set For Paul Ryan’s Upcoming Listening Sessions

New locations for Racine, Big Bend, New Berlin and Greendale stops

All three of Congressman Paul Ryan’s Listening Sessions on Monday, August 31 have been moved to larger venues to accommodate First District residents seeking to participate in the health care debate. At the eleven listening sessions held in the previous three days, most venues have been at or above capacity, with record attendance at each stop.

The dates and times for all upcoming stops remain as previously scheduled. See below for an updated schedule – with new locations – of Congressman Paul Ryan’s Listening Sessions today and Monday:

Thursday, August 27

Rochester – 9:45-10:30 am
Municipal Hall, 203 West Main Street

Sturtevant – 11:15 am-12:15 pm
Village Hall, 2801 89th Street

Racine – 1:30-2:30 pm
Roma Lodge, 7130 Spring Street
NOTE: venue change to accommodate anticipated larger crowds (note; this was previously noted on my original post.)

Monday, August 31

Big Bend – 12:45-1:45 pm
Big Bend Elementary School, Gymnasium
W230S8695 Big Bend Drive
NOTE: venue change to accommodate anticipated larger crowds

New Berlin (Greenfield) – 2:00-3:00 pm
Whitnall High School, Auditorium
5000 S 116th Street
NOTE: The New Berlin stop has been moved to the Greenfield community to accommodate anticipated larger crowds

Greendale – 3:30-4:30 pm
Greendale High School, Auditorium
6801 Southway
NOTE: venue change to accommodate anticipated larger crowds

The rules are for thee, not for me – TurboTaxTimmy edition

by @ 11:13. Filed under Politics - National, Taxes.

(H/T – DRJ)

The TaxProfBlog found that, a few short months after Treasury Secretary “TurboTax” Timothy Geithner successfully dodged criticism and possible legal consequences over his failure to timely pay taxes by claiming TurboTax didn’t properly process his income tax returns for several years, the Tax Court rejected that defense in another case:

Petitioners have not met their burden of persuasion with respect to reasonable cause and good faith. Mr. Hopson admitted that he received both Forms 1099-R for the distributions and that he knew they constituted income. After using tax return preparation software for nearly 20 years, he simply filed the return that was generated by the software without reviewing it. The omission of the distributions resulted in the failure to report over 40 percent of petitioners’ total income for the year. Granted this was a one-time event, but petitioners nevertheless had a duty to review their return to ensure that all income items were included. Petitioners were not permitted to bury their heads in the sand and ignore their obligation to ensure that their tax return accurately reflected their income for 2006. In the end, reliance on tax return preparation software does not excuse petitioners’ failure to review their 2006 tax return.

Do note that the decision of the Star Chamb…er, Tax Court is final; according to the Internal Revenue Code, not even the Supreme Court can review it. Also note that it is not precedent-setting.

August 26, 2009

Rest in peace, Sen. Kennedy (1932-2009)

by @ 10:34. Filed under Politics - National.

Those of you in a cave may not know the news – Sen. Ted Kennedy (D-MA) passed away last night after battling a brain tumor. It is a sad day for his party, the Senate, and our country.

I’ll leave it to others to eulogize Sen. Kennedy. I recommend Baseball Crank’s take. For those of you who are thinking about taking cheap shots, listen to Michelle Malkin:

There is a time and place for political analysis and criticism. Not now.

Yes, there will be a nauseating excess of MSM hagiographies and lionizations — and crass calls to pass the health care takeover to memorialize his death.

That’s no excuse to demonstrate the same lack of restraint in the other direction. Not now.

I do, however, disagree with Michelle about not talking about the generalities of the implications. First, nothing of significance changes in the Senate for the moment, even though the Senate is now short a member. Because of his illness, he was rarely in the Senate to provide the 60th anti-filibuster vote. Of course, the need for that has been an illusion; there were almost always enough “Republicans” to break up any filibuster.

The reason why it is merely for the moment is the Massachusetts ganders of the Democratic Party are meeting the goose’s sauce. They failed to reverse a screw job they planned for then-governor Mitt Romney (R) by taking away the power of the governor to appoint a temporary replacement until the next general election. Now, there will be a special election held between 145 days and 160 days from now.

Shortly after that point, the Democrats will, assuming Masachusetts does what it has done since 1976 and send a Democrat to the Senate, have 60 permanent members of their caucus. I have a bad feeling about the second session of the 111th Congress.

Revisions/extensions (10:15 am 8/27/2009) – Somehow had the wrong birth year for Kennedy. Mea culpa.

The Killer Instinct

Large amounts of talent combined with training and technology have made it reasonably easy to field “good” teams in hockey, football, basketball or baseball. However, it is the rare team that moves beyond good and becomes dominating. The difference between the “good” teams and those that dominate their sport is one thing; killer instinct.

You may not be able to precisely define “killer instinct” but all sports fans know it when they see it.  Nobody left a Joe Montana and the Fortyniners game no matter what the score.  You knew that Joe was going to play until the last down of the game scoring at every opportunity he had.  Michael Jordan and the Chicago Bulls, some years of the Yankees and the Edmonton Oilers with Wayne Gretzy are all examples of athletes and teams that played with “killer instinct”

But, you say, this is a political blog.  What’s going on with the sports analysis?

As with sports, politicians are separated by the ability to have a “killer instinct.”  Look at Norm Coleman against Al Franken.  Ahead in the polls until he decided to side step ANWAR, vote for the stimulus and decide that he no longer wanted to run a “negative campaign” even though he had done that from day one until they day he changed with 6 weeks left.  Norm is the perfect example of a politician who not only didn’t have a killer instinct, he showed he had little political instinct of any kind.

The race between John McCain and Barack Obama also came down to killer instinct.  One had it and one didn’t.  You can probably figure out which was which.

Anyone paying attention can see that the health care plan is on the ropes and cap and trade may well be on life support.  The public, across all demographics except the extreme loons, are responding to polls with the equivalent of “I didn’t vote for Obama!”  We see early contests in Virginia and New Jersey showing polls that seem to support a significant and sudden swing towards Republicans.  Everything is pointing towards a significant resurgence for Republicans.  The question is, do they have the killer instinct?

Unlike the left who has never had any concern about “rubbing their nose in it” when winning, Republicans seem to have an inbred need to be liked by the other side.  The result is that when they get a chance to gain ground, Republicans often feel the need to “compromise” to allow the other side the ability to save face.

The Republicans (I use this term generically and certainly don’t mean all people who run under that banner) have gained ground, not through their own actions.  Rather, the Republicans are gaining in popularity mostly because in a two party system, they are the only other option.  While the Republicans benefit from being “the only other choice” today, I wouldn’t be betting my house on it sticking.  Based on the fact that a large portion of the general population are revolting against their political masters I think there is a fair chance that a “throw all the bums out” mentality takes hold if the Republicans look to cave on health care or once again become Democrat lite.

You don’t think the Republicans could be that dumb again right?  Wrong!

Rep. Thaddeus McCotter, a Michigan Republican Representative, has introduced a bill that would provide a $3,500 deduction for “qualified pet care expenses.”  The Representative is concerned of family hardships as a result of pet care costs during this time tough economic time.

How can any clear headed Republican think that providing a tax deduction for pet care makes sense when A: we have a hellacious deficit already,  B: human health care costs are subject to a 7% threshold of adjusted gross income and C: most of the Republicans and the general public are fighting to abolish further government intrusion into health care for people.  Does Thaddeus really think there is an urgency of any kind for the government (me and you) subsidizing health care for animals when we don’t want to do it for humans?

A stupid bill like this proves that Thaddeus McCotter does not have the killer instinct!  I hope to hell the rest of the Republicans have better political instincts.  If they don’t I’ll lead the parade for a third party.

August 24, 2009

We’ve Only Just Begun

After stalling for nearly a month, late Friday afternoon, the Obama administration leaked that their periodic budget/deficit update was going to show…..well, let’s just call it a deviation from expectations.  Rather than “cut the deficit in half as he promised, President Obama will reportedly tell us that he will increase the deficit by $2 trillion dollars to $9 trillion dollars over the next ten years.

While this new forecast is in line with what the CBO estimated back when Obama proposed his budget, it still seriously underestimates what the deficit will be if Obama gets his policies enacted. Obama’s two largest endeavors, cap and trade and health care reform were not considered in the CBO’s June estimate.

While it’s hard to tell what effect cap and trade will have on the deficit, we do have numbers from the CBO on the effect of health care reform. The CBO estimates that the $9 trillion deficit will increase at least another $1 trillion if the House bill is passed. I say “at least” because we now know that the Obama administration doesn’t have an accountant or an economist who either is honest or any good at their job. Doubt me? Just go back and look at the assumptions they made for the stimulus, the budget, cap and trade or health care reform and then look at what the CBO said. Who has appeared to be accurate?

I also say “at least” because there is historical evidence that the first year of all major government health programs have been significantly underestimated. Take a look at this graph from John Goodman’s Health Policy Blog:

health care graph

It turns out that regardless of the administration, government run health care plans always cost more than they are expected to. Why, you might ask? Well, if you’re selling something, are you more likely to tell the “buyers” what the best or worst case scenario might be?

Taking a simple average of the plans on the graph, it suggests that the government health programs cost 538% of what the original estimate was.  OK, let’s not be the Russian judge.  Let’s throw out the high and the low misses.  Doing that still has costs coming in at 414% of the original estimate. 

If history is any indicator, the $1 health care reform plan will cost significantly more.  How do you like the sound of $4 trillion for health care and a 10 year deficit of “at least $12 trillion?

Whether $2 trillion or $5 trillion more, I think this video pretty well sums up the public response:

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