THE ENTERPRISE--WHAT'S WRONG & WHAT CAN BE DONE?
MANY HAVE ASKED, SO I'LL TRY TO ANSWER--HOW DO I CHOOSE WHAT TO WRITE ABOUT IN HERE?
It is totally unscientific. I read a lot of things. Admittedly I read a bit too much of the WSJ and way too little of the NYTimes--but that is my leaning at work. I watch too much Fox, and too little CNN, although I watch more than I used to. It is still arguably the best "news-news" source on TV. I cannot stomach MSNBC, and I only occasionally listen to NPR. Glenn Beck used to get much more of my attention than he does now. I still read business news (although the only magazine I read any more is FORTUNE--the rest are either redundant or unreliable), and several investment newsletters, plus Yahoo news, a little USNWR, and my local newspaper, the Columbus Dispatch.
The one thing I always read is my favorite magazine of all: THE WEEK. I also get a lot of material from "correspondents," many of them readers of THE ENTERPRISE. I am usually reading at least 2-3 non-fiction books (I only finish a few of them) on always, a novel, on any given day or week. Then I copy, paste, print, cache, save clippings, make notes, and tear out articles. It all goes in the hopper and out comes a series of topics. I try to cover some business related stuff. I also try to deal with some (but not all) of the most prevalent topics of the week.
LEBRON
For example, I enjoyed watching LeBron James play for Cleveland, but I think Dan Gilbert showed a real lack of class when he bad mouthed LeBron for leaving like he did. It IS a business, and his livelihood, and try as they might, the Cavs couldn't win an NBA title--and the next 2-3 years would not have changed that. So LeBron joined two of his buddies in Miami. LeBron couldn't do it alone, or with the supporting cast Cleveland assembled. And none of the dynasties were build around one player. They all had 2-3 stars, and some good role players. It took Pippin and Rodman and Grant to complement Jordan. If you are a basketball fan, you know the others--Celtics, Lakers, etc. all had 2, 3 or 4 players who were key.
Anyway, back to the topic....what makes it into THE ENTERPRISE? I flip through the pile and write or paste sections until I get too much. Then I cut a few. And you see what's left.
So what is today's title? The most common topic in conversations and the media. What's wrong with the USA, the economy and what can be done about what is wrong? A reader asked me the other day if I didn't think much of Obama. I don't. He's not a good leader. He misleads people terribly. He's a rank rookie at doing a lot of the necessary parts of a President's job. He's just a hell of a campaigner and speaker. But he, his inept staff and his Democratic colleagues in Congress are doing great harm right now, and they must be slowed first and then stopped and the harm reversed.
Here are some of my answers.
------Overview: We can pull out of this but it will take a whole new leadership group with a different approach to do it. You don't save your way out of these crises. You certainly don't "control" your way out of them, no matter how many rules and regulations are added, they just make it worse, not better. And you sure as hell do not tax and spend your way out of them. There is one way out: Grow your way out. Take off the handcuffs. Quit the Robin Hood action of the government (take from the rich and give to the poor) because the rich are usually rich because they know how to make money, and the poor are usually poor because they waste any money they are given. Thus, a government that thinks "taxing the rich" and "redistributing wealth" is a good idea will dig us deeper in deeper in trouble until we REVOLT and throw them out.
WHY NO RECOVERY? A DOUBLE DIP RECESSION? OR JUST A LONG FLAT SPELL.
Pick one. Until or unless the Democrats lose control of Congress in 2010 and then Obama is routed in 2012, you can plan on a long slow nearly no growth recovery. There may not be a technical recession, because the politicians will print some more money and drop it from planes over their favorite spots. But growth at over 2% would be surprising for the rest of 2010--and maybe well into 2011. It may even be lower, with unemployment hovering near 9.5-10%.
Here's why:
F.U.D. FACTOR IS THE FIRST, BIG THING THAT'S WRONG WITH THE ECONOMY
Fear, Uncertainty and Doubt are three proven reasons (deterrents) that keep both businesses and consumers holding back on decisions, especially spending decisions. There is a circularity to this FUD dilemma.
1) FEAR: Companies are reluctant to hire aggressively, since they just finished cutting to survive during the past recession and FEAR having to go through that again. Further, companies are wary, concerned and anxious and FEAR what the coming governmental, regulatory and tax changes will bring. The current political forces in control are "enemies of business," based on their actions. (Their words deceive business that they are "friends'" they are not!)
2) UNCERTAINTY: Since hiring is anemic, jobs are scarce and working people everywhere, and the unemployed (technically around 10%) and the under-employed (another 7-8%) are UNCERTAIN about where or if their next paycheck will come from, and thus, they are afraid to spend on much beside the necessities, and then only the lowest cost version of those.
3) DOUBT: Since consumer spending fuels about 60-70% of the US economy, and consumers DOUBT that things are getting better anytime soon, the economic growth is very weak. Consumers DOUBT that the government will do anything to rein-in spending, which will drive higher taxes, thus consumers are unwilling to spend, when facing an uncertain or poor jobs environment.
Now go back to #1, which is caused by #2 & 3, and so forth.
THE BUDGET DEFICIT IS SO LARGE THAT FIXING IT IN THE NEAR TERM IS IMPOSSIBLE--LONGER TERM, VERY DIFFICULT!
First of all, many states also have their own budget problems. California is the most publicized (Pelosi's home state), but Illinois (Obama's home state) is also in deep trouble. The Federal government is handing out billions like they were ten dollar bills. These one time infusions are "Band-Aids" on gaping wounds, and what they do is allow Democratic incumbents to claim they solved the problem in hopes of reelection. Anyone running with a record of fiscal responsibility is crucified for the cuts everyone knows have to be made. Anyone with a business success record is branded a "robber baron" who stole from the poor. Our country has devolved to a frightening melange of lies, distortions and suspension of reality.
OBAMA IS ALREADY BEGINNING TO TALK ABOUT DEFICIT REDUCTION
But--like everything else, it is an early campaign ploy. He will talk about it in public and keep spending and taxing in private. How may lies can the man tell before it becomes obvious? Why do you think he is all for a "Comprehensive Immigration Refort" (code for Amnesty for millions!)?
MISGUIDED APPOINTEES, SLANTED AGENDAS, LACK OF TRANSPARENCY--"CHANGE YOU CAN BELIEVE IT"--SCARY!:
NASA: Quote : NASA Administrator Charles Bolden said in a recent interview that his "foremost" mission as the head of America's space exploration agency is to improve relations with the Muslim world; he said better interaction with the Muslim world would ultimately advance space travel.
JUSTICE DEPT.: The Black Panther intimidation of voters, shown on recent videos, was cited as something to be ignored, and no action is to be taken.
JUSTICE DEPT.: The US Dept. of Justice is now suing the State of Arizona because it passed a law that would allow it to enforce the existing laws.
JUSTICE DEPT.: The inner workings of the Justice Department are becoming more and more public and leaks from former staffers continue. Orders are being given to ignore and/or not enforce laws in some cases, and to over-zealously enforce them in others--all in support of the Obama "agenda."
HEALTH CARE: Obama is using a recess appointment (to avoid the publicity of a Senate confirmation hearing) to name a head to the health care department, a man who is publicly on record as favoring "redistribution" of wealth in health care and rationing as needed.
PUBLIC SECTOR PAY & BENEFITS VS. PRIVATE SECTON--A MASSIVE INEQUALITY
Those supporting higher public sector pay argue that more education, and specialized knowledge is needed in the public sector. However,our government's own Bureau of Labor Statistics has a branch (CPS: Current Population Survey) that tracks just how big this disparity is, and it is huge--48% higher average wage for a federal worker than a private sector. Job comparisons are admittedly tough to do, but considering workers with comparable education and experience, the gap is still 24%. Using every means possible to "justify it down," it still stalls out at 12%. So here is my proposal. It these jobs are so special and these people worth so much more money, let's put them out to big. Outsourcing and the prevailing "auction" mentality in industry will trim--I'd bet--a solid 20-25% off these costs. Why do you thing private prisons are so successful. Why do UPS and FedEx clobber the USPS at every step of the way?
BENCHMARK THE WORK, AND THE SKILLS AND EITHER THE WORK GETS OUTSOURCED OR THE WORKERS TAKE PARITY PAY AND BENEFITS
That will send the SEIU screaming "anti-union" bias and "discrimination" to the liberal media. IF, just if the states who are in deficit would benchmark public employee wages and benefits with the most comparable private sector jobs, the deficits would go away. Does any politician have the nerve to even try this? How badly does a state have to collapse before this kind of "radical solution" becomes palatable. Compete--or lose the job--it works all over the word. Why not here, and why not now?
HOW TO CONSUME THE DEFICIT--REAGANOMICS PLUS FISCAL SANITY ON SPENDING
Clear the way for businesses to compete, to operate without the huge burden of governmental regulations, taxes and anti-business discriminatory practices. Create a non-level playing field, just slightly in favor of the US companies, favoring exports and watch business grow. Cut taxes in ways that would relieve the load on businesses who must compete with subsidized countries, and watch what will happen. But meanwhile, rein in the ludicrous waste of money that the government practices each and every day. Get rid of the FEAR, UNCERTAINTY AND DOUBT so that businesses can operate like free enterprise, for profit ventures without fear that the profits will be deemed "windfall" and confiscated. At today's tax rates, a strong, growing economy will erase half the deficit--assuming someone stops the lunatics from spending like there is no tomorrow.
QUIT GIVING WAY OUR MONEY TO FOREIGN AID, THE WORLD BANK AND THE USELESS/UNITED NATIONS (UN)--WE NEED IT HERE
I sat next to a World Bank employee on a transatlantic flight a long time ago--in First Class (where I got bumped into an upgrade)--and where she normally travelled. She told me, bluntly, "My job is to go give away money, without any concern about whether or if it will ever get paid back." Stop trying to bribe rogue nations and non-allies to go along with the US and its policies. Bribes are a lousy way to build alliances. The US spends hundreds of billions this way. Recent news reports described "bales of money"--billions of dollars being flown OUT of Afghanistan. Google "hawalas." ($3B flown out a country with a GDP of $13.5B? Who's kidding whom?) Want to bet that a lot of that wasn't money the US sent into Afghanistan (and the rest from the drug trade). Stop it. Stop it all, and the resume by exception and limit it to no more than 25% of prior levels.
HAVE AN ADULT CONVERSATION ABOUT SOCIAL SECURITY, MEDICARE AND MEDICAID
There is no magic solution for these. We must find more revenue, charge more and cut the benefits one way or another. Any one alone is not enough to deal with the demographic tsunami that is the "baby boomers." Raise the ceiling on FICA Contributions, contingent on increasing the retirement age by 6 months every year for the next six years, until it reaches age 70. Use selective programs to dis-incent expensive testing, where in there are "co-pays" and/or deductibles, and limits on the fee structures charged to "reasonable and customary" levels. Stop the arms race where every clinic needs an MRI and CT Scanner and more--and then is pressured to use them and pay for them. Finally, rein in tort litigation on malpractice, with its insanely high punitive lawsuits driving higher and higher liability insurance premiums. WAIT, YOU SAY OBAMA-CARE WILL DO ALL THOSE THINGS? NONSENSE! PURE B. S.! It does just the opposite, hanging out a sign saying "freeloaders and gougers" jump on this train. The good old USA will pay for everything.
QUIZ: WHAT PERCENTAGE OF THE COST OF MEDICARE DOES THE NORMAL PREMIUM PAY?
Without any IRMA (Income Related Means Adjustment), Americans on Medicare Part A pay $110.40 per month. This is between 1/3 and 1/4 of the real, actual cost. The rest is subsidized by Uncle Sam (that's you--taxpayers!). Did you know that? I found out when a Medicare employee educated me last year, before adjusting my IRMA to the correct amount.
BUT LAST, A NEW POTENTIAL PRESIDENTIAL CANDIDATE--REALLY!?
What do you think? I'd have never asked this five years ago, but now, he makes a lot of sense and expresses himself very well? His leadership experience. however, is really thin--but then so was Barack Obamas!
http://online.wsj.com/video/opinion-journal-president-dobbs/CCDADEAE-2457-41BF-B462-614BB4BBFB62.html?mod=WSJ_Article_Videocarousel_1
HAPPY HOT SUMMER
JOHN
-----------------------------------------------------------
The government is supposed to work for the people, not vice versa. The fall of communism proved that; and socialism doesn't work either.
-----------------------------------------------------------
John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959 http://www.mariotti.net http://mariotti.blogs.com/my_weblog/
------------------------------------------------------------
MANY HAVE ASKED, SO I'LL TRY TO ANSWER--HOW DO I CHOOSE WHAT TO WRITE ABOUT IN HERE?
It is totally unscientific. I read a lot of things. Admittedly I read a bit too much of the WSJ and way too little of the NYTimes--but that is my leaning at work. I watch too much Fox, and too little CNN, although I watch more than I used to. It is still arguably the best "news-news" source on TV. I cannot stomach MSNBC, and I only occasionally listen to NPR. Glenn Beck used to get much more of my attention than he does now. I still read business news (although the only magazine I read any more is FORTUNE--the rest are either redundant or unreliable), and several investment newsletters, plus Yahoo news, a little USNWR, and my local newspaper, the Columbus Dispatch.
The one thing I always read is my favorite magazine of all: THE WEEK. I also get a lot of material from "correspondents," many of them readers of THE ENTERPRISE. I am usually reading at least 2-3 non-fiction books (I only finish a few of them) on always, a novel, on any given day or week. Then I copy, paste, print, cache, save clippings, make notes, and tear out articles. It all goes in the hopper and out comes a series of topics. I try to cover some business related stuff. I also try to deal with some (but not all) of the most prevalent topics of the week.
LEBRON
For example, I enjoyed watching LeBron James play for Cleveland, but I think Dan Gilbert showed a real lack of class when he bad mouthed LeBron for leaving like he did. It IS a business, and his livelihood, and try as they might, the Cavs couldn't win an NBA title--and the next 2-3 years would not have changed that. So LeBron joined two of his buddies in Miami. LeBron couldn't do it alone, or with the supporting cast Cleveland assembled. And none of the dynasties were build around one player. They all had 2-3 stars, and some good role players. It took Pippin and Rodman and Grant to complement Jordan. If you are a basketball fan, you know the others--Celtics, Lakers, etc. all had 2, 3 or 4 players who were key.
Anyway, back to the topic....what makes it into THE ENTERPRISE? I flip through the pile and write or paste sections until I get too much. Then I cut a few. And you see what's left.
So what is today's title? The most common topic in conversations and the media. What's wrong with the USA, the economy and what can be done about what is wrong? A reader asked me the other day if I didn't think much of Obama. I don't. He's not a good leader. He misleads people terribly. He's a rank rookie at doing a lot of the necessary parts of a President's job. He's just a hell of a campaigner and speaker. But he, his inept staff and his Democratic colleagues in Congress are doing great harm right now, and they must be slowed first and then stopped and the harm reversed.
Here are some of my answers.
------Overview: We can pull out of this but it will take a whole new leadership group with a different approach to do it. You don't save your way out of these crises. You certainly don't "control" your way out of them, no matter how many rules and regulations are added, they just make it worse, not better. And you sure as hell do not tax and spend your way out of them. There is one way out: Grow your way out. Take off the handcuffs. Quit the Robin Hood action of the government (take from the rich and give to the poor) because the rich are usually rich because they know how to make money, and the poor are usually poor because they waste any money they are given. Thus, a government that thinks "taxing the rich" and "redistributing wealth" is a good idea will dig us deeper in deeper in trouble until we REVOLT and throw them out.
WHY NO RECOVERY? A DOUBLE DIP RECESSION? OR JUST A LONG FLAT SPELL.
Pick one. Until or unless the Democrats lose control of Congress in 2010 and then Obama is routed in 2012, you can plan on a long slow nearly no growth recovery. There may not be a technical recession, because the politicians will print some more money and drop it from planes over their favorite spots. But growth at over 2% would be surprising for the rest of 2010--and maybe well into 2011. It may even be lower, with unemployment hovering near 9.5-10%.
Here's why:
F.U.D. FACTOR IS THE FIRST, BIG THING THAT'S WRONG WITH THE ECONOMY
Fear, Uncertainty and Doubt are three proven reasons (deterrents) that keep both businesses and consumers holding back on decisions, especially spending decisions. There is a circularity to this FUD dilemma.
1) FEAR: Companies are reluctant to hire aggressively, since they just finished cutting to survive during the past recession and FEAR having to go through that again. Further, companies are wary, concerned and anxious and FEAR what the coming governmental, regulatory and tax changes will bring. The current political forces in control are "enemies of business," based on their actions. (Their words deceive business that they are "friends'" they are not!)
2) UNCERTAINTY: Since hiring is anemic, jobs are scarce and working people everywhere, and the unemployed (technically around 10%) and the under-employed (another 7-8%) are UNCERTAIN about where or if their next paycheck will come from, and thus, they are afraid to spend on much beside the necessities, and then only the lowest cost version of those.
3) DOUBT: Since consumer spending fuels about 60-70% of the US economy, and consumers DOUBT that things are getting better anytime soon, the economic growth is very weak. Consumers DOUBT that the government will do anything to rein-in spending, which will drive higher taxes, thus consumers are unwilling to spend, when facing an uncertain or poor jobs environment.
Now go back to #1, which is caused by #2 & 3, and so forth.
THE BUDGET DEFICIT IS SO LARGE THAT FIXING IT IN THE NEAR TERM IS IMPOSSIBLE--LONGER TERM, VERY DIFFICULT!
First of all, many states also have their own budget problems. California is the most publicized (Pelosi's home state), but Illinois (Obama's home state) is also in deep trouble. The Federal government is handing out billions like they were ten dollar bills. These one time infusions are "Band-Aids" on gaping wounds, and what they do is allow Democratic incumbents to claim they solved the problem in hopes of reelection. Anyone running with a record of fiscal responsibility is crucified for the cuts everyone knows have to be made. Anyone with a business success record is branded a "robber baron" who stole from the poor. Our country has devolved to a frightening melange of lies, distortions and suspension of reality.
OBAMA IS ALREADY BEGINNING TO TALK ABOUT DEFICIT REDUCTION
But--like everything else, it is an early campaign ploy. He will talk about it in public and keep spending and taxing in private. How may lies can the man tell before it becomes obvious? Why do you think he is all for a "Comprehensive Immigration Refort" (code for Amnesty for millions!)?
MISGUIDED APPOINTEES, SLANTED AGENDAS, LACK OF TRANSPARENCY--"CHANGE YOU CAN BELIEVE IT"--SCARY!:
NASA: Quote : NASA Administrator Charles Bolden said in a recent interview that his "foremost" mission as the head of America's space exploration agency is to improve relations with the Muslim world; he said better interaction with the Muslim world would ultimately advance space travel.
JUSTICE DEPT.: The Black Panther intimidation of voters, shown on recent videos, was cited as something to be ignored, and no action is to be taken.
JUSTICE DEPT.: The US Dept. of Justice is now suing the State of Arizona because it passed a law that would allow it to enforce the existing laws.
JUSTICE DEPT.: The inner workings of the Justice Department are becoming more and more public and leaks from former staffers continue. Orders are being given to ignore and/or not enforce laws in some cases, and to over-zealously enforce them in others--all in support of the Obama "agenda."
HEALTH CARE: Obama is using a recess appointment (to avoid the publicity of a Senate confirmation hearing) to name a head to the health care department, a man who is publicly on record as favoring "redistribution" of wealth in health care and rationing as needed.
PUBLIC SECTOR PAY & BENEFITS VS. PRIVATE SECTON--A MASSIVE INEQUALITY
Those supporting higher public sector pay argue that more education, and specialized knowledge is needed in the public sector. However,our government's own Bureau of Labor Statistics has a branch (CPS: Current Population Survey) that tracks just how big this disparity is, and it is huge--48% higher average wage for a federal worker than a private sector. Job comparisons are admittedly tough to do, but considering workers with comparable education and experience, the gap is still 24%. Using every means possible to "justify it down," it still stalls out at 12%. So here is my proposal. It these jobs are so special and these people worth so much more money, let's put them out to big. Outsourcing and the prevailing "auction" mentality in industry will trim--I'd bet--a solid 20-25% off these costs. Why do you thing private prisons are so successful. Why do UPS and FedEx clobber the USPS at every step of the way?
BENCHMARK THE WORK, AND THE SKILLS AND EITHER THE WORK GETS OUTSOURCED OR THE WORKERS TAKE PARITY PAY AND BENEFITS
That will send the SEIU screaming "anti-union" bias and "discrimination" to the liberal media. IF, just if the states who are in deficit would benchmark public employee wages and benefits with the most comparable private sector jobs, the deficits would go away. Does any politician have the nerve to even try this? How badly does a state have to collapse before this kind of "radical solution" becomes palatable. Compete--or lose the job--it works all over the word. Why not here, and why not now?
HOW TO CONSUME THE DEFICIT--REAGANOMICS PLUS FISCAL SANITY ON SPENDING
Clear the way for businesses to compete, to operate without the huge burden of governmental regulations, taxes and anti-business discriminatory practices. Create a non-level playing field, just slightly in favor of the US companies, favoring exports and watch business grow. Cut taxes in ways that would relieve the load on businesses who must compete with subsidized countries, and watch what will happen. But meanwhile, rein in the ludicrous waste of money that the government practices each and every day. Get rid of the FEAR, UNCERTAINTY AND DOUBT so that businesses can operate like free enterprise, for profit ventures without fear that the profits will be deemed "windfall" and confiscated. At today's tax rates, a strong, growing economy will erase half the deficit--assuming someone stops the lunatics from spending like there is no tomorrow.
QUIT GIVING WAY OUR MONEY TO FOREIGN AID, THE WORLD BANK AND THE USELESS/UNITED NATIONS (UN)--WE NEED IT HERE
I sat next to a World Bank employee on a transatlantic flight a long time ago--in First Class (where I got bumped into an upgrade)--and where she normally travelled. She told me, bluntly, "My job is to go give away money, without any concern about whether or if it will ever get paid back." Stop trying to bribe rogue nations and non-allies to go along with the US and its policies. Bribes are a lousy way to build alliances. The US spends hundreds of billions this way. Recent news reports described "bales of money"--billions of dollars being flown OUT of Afghanistan. Google "hawalas." ($3B flown out a country with a GDP of $13.5B? Who's kidding whom?) Want to bet that a lot of that wasn't money the US sent into Afghanistan (and the rest from the drug trade). Stop it. Stop it all, and the resume by exception and limit it to no more than 25% of prior levels.
HAVE AN ADULT CONVERSATION ABOUT SOCIAL SECURITY, MEDICARE AND MEDICAID
There is no magic solution for these. We must find more revenue, charge more and cut the benefits one way or another. Any one alone is not enough to deal with the demographic tsunami that is the "baby boomers." Raise the ceiling on FICA Contributions, contingent on increasing the retirement age by 6 months every year for the next six years, until it reaches age 70. Use selective programs to dis-incent expensive testing, where in there are "co-pays" and/or deductibles, and limits on the fee structures charged to "reasonable and customary" levels. Stop the arms race where every clinic needs an MRI and CT Scanner and more--and then is pressured to use them and pay for them. Finally, rein in tort litigation on malpractice, with its insanely high punitive lawsuits driving higher and higher liability insurance premiums. WAIT, YOU SAY OBAMA-CARE WILL DO ALL THOSE THINGS? NONSENSE! PURE B. S.! It does just the opposite, hanging out a sign saying "freeloaders and gougers" jump on this train. The good old USA will pay for everything.
QUIZ: WHAT PERCENTAGE OF THE COST OF MEDICARE DOES THE NORMAL PREMIUM PAY?
Without any IRMA (Income Related Means Adjustment), Americans on Medicare Part A pay $110.40 per month. This is between 1/3 and 1/4 of the real, actual cost. The rest is subsidized by Uncle Sam (that's you--taxpayers!). Did you know that? I found out when a Medicare employee educated me last year, before adjusting my IRMA to the correct amount.
BUT LAST, A NEW POTENTIAL PRESIDENTIAL CANDIDATE--REALLY!?
What do you think? I'd have never asked this five years ago, but now, he makes a lot of sense and expresses himself very well? His leadership experience. however, is really thin--but then so was Barack Obamas!
http://online.wsj.com/video/opinion-journal-president-dobbs/CCDADEAE-2457-41BF-B462-614BB4BBFB62.html?mod=WSJ_Article_Videocarousel_1
HAPPY HOT SUMMER
JOHN
-----------------------------------------------------------
The government is supposed to work for the people, not vice versa. The fall of communism proved that; and socialism doesn't work either.
-----------------------------------------------------------
John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959 http://www.mariotti.net http://mariotti.blogs.com/my_weblog/
------------------------------------------------------------
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