It’s More Than Just Money: When Capitalism Hits the Fan (The True Story of this Economic Meltdown)

This is an incredible lecture that everyone needs to peep that breaks down the current state of affairs with our economy. This cat Professor Richard Wolff is a beast when it comes to this as he lets us know that what is going down goes beyond money.. The quality on these clips aren’t all that great.. You can get better qualities at his website..

Below is a more detailed description of what’s on these clips…They come in 9 parts

With breathtaking clarity, renowned University of Massachusetts Economics Professor Richard Wolff breaks down the root causes of today’s economic crisis, showing how it was decades in the making and in fact reflects seismic failures within the structures of American-style capitalism itself. Wolff traces the source of the economic crisis to the 1970s, when wages began to stagnate and American workers were forced into a dysfunctional spiral of borrowing and debt that ultimately exploded in the mortgage meltdown. By placing the crisis within this larger historical and systemic frame, Wolff argues convincingly that the proposed government “bailouts,” stimulus packages, and calls for increased market regulation will not be enough to address the real causes of the crisis – in the end suggesting that far more fundamental change will be necessary to avoid future catastrophes. Richly illustrated with motion graphics and charts, this is a superb introduction designed to help ordinary citizens understand, and react to, the unraveling economic crisis.

Capitalism Hits the Fan pt 1-Three Things the Economic Crisis is Not

Capitalism Hits the Fan pt 2-How We Got Here: American Exceptionalism

Capitalism Hits the Fan pt 3-History Interrupted: The Trauma of Flat Wages

Capitalism Hits the Fan pt 4-Coping with Trauma: The People’s Response

Capitalism Hits the Fan pt 5-The Meaning of the Trauma for Business

Capitalism Hits the Fan pt 6-Bust and No Boom In Sight

Capitalism Hits the Fan pt 7-What Won’t Work: Re-Regulation

Capitalism Hits the Fan pt 8-So What Might Work?

Capitalism Hits the Fan pt 9-Beyond Free Markets and Regulati

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Did President Obama’s Speech Go Far Enough? Not if You are working class or poor

Last night’s State of the Union address by President Obama came a bit too little too late… Yes, it was perceived as a good speech in many circles but only because he finally focused on the one thing nagging at the heels of at least 1 out of every 10 Americans… We’re talking about JOBS. It had been along time coming and when you compare that with what has thus far been a disastrous Health Bill which caved into the wanton greed and desires of clowns like Senators Joe Lieberman and Bill Nelson, his speech  was a breath of fresh air.  Unfortunately, what was missing, was a discussion of how to help out those who have already been severely damaged by the fleecing of this economy. What was missing was a discussion of how to help those who saw their 401Ks tanked, saw their credit lines cut, saw their credit rating ruined often through no fault of their own. We didn’t hear discussion on how to help those who worked 10, 15 and even 20 years at a job only to find themselves out of work because of downsizing-the result of greedy banks making record profits, giving out  billion dollars to top level employees and not helping small businesses get a line of credit to purchase goods and supplies or make payroll. We DID NOT hear conversation on how to help out those people who are part of the working poor and the poor.

I heard President Obama say things like ‘Tax credits‘, and small business loans.. and don’t get me wrong, that’s great if you’re in a position to take advantage of them. But if you spent your last savings on rent and other basic necessities after being laid off and unable to find work or a decent paying job over the past few months, none of these tax breaks do you any good.  I was looking for the President to say something like..

1-Renters get a voucher.. landlords get a tax break or some other economic incentive to give tenets a couple of months to save money..

2-Folks who lost their jobs will get paid for job training so they could re-enter a changing job market that requires new technological skill sets. I heard all this talk about Green jobs.. Great, but what exactly is a green job?Installing solar panels? My elderly mom is gonna start installing panels?? Really?  If you been working in the office for the past 10 years shuffling papers, you need to get a new skill set.. and that new skill set needs to come not after you get hired, but while you’re looking… Give people some incentive. Help boost their confidence. make them feel useful. Without that, guess, what? You’re gonna have a bunch of out of work, ‘unskilled’ workers who are still in the economic dog-house… All of that compounded by watching uber rich bankers get billion dollar bonuses.

3-There’s been a disproportionate  amount of hidden taxes and hidden costs applied to the poor.  We saw no break or relief from that. What do I mean? Well, take a city like Oakland where there is high unemployment in many neighborhoods.  Last fall the city council seeing the city was strapped for cash, decided to have the police and parking enforcement step up and crack down on any and all vehicle violations. They were encourage to pull up all sorts of antiquated and obscure laws and go after folks to raise money. So all all sorts of folks, especially those in poor neighborhoods found themselves being hit and hit hard. If you were parked in your driveway wrong or on the street at some odd angle or not ‘too far’ from the curb, you saw a hefty ticket being slapped on you. Police officers were zealously handing out tickets for everything ranging from expired tags to not having enough screws on your license plate.  Parking officers were combing the streets early in the morning with books and little known rules in hand looking for violators. This of course led to people not coming to shopping centers in oakland where this sort of madness was taking place. Everyone got hurt. If that wasn’t enough the city added to this by raising parking meter rates to a whopping two dollars an hour and expanded the enforcement to 8pm at night. This was a hidden tax that saddled the working poor and poor. We wont even talk about the high bridge tools to go into San Francisco. 4 dollars a pop plus 3 dollar gas is alot when you don’t have.

The final straw was when the city went out and got a machine that reads license plates and checked to see if you had more than 5 tickets, which isn’t hard to have happen in the Bay Area. I got three after the increased enforcement. 5 tickets meant you got your car  towed or booted immediately.  Lots of poor folks who were choosing between paying for basic necessities and superfluous parking tickets wound up  taking what little money they tucked away in December and paying parking fees. Not a good look at all. Very few people could afford to be without a car.

4-We didn’t see the lowering of costs for food or gas prices. In poor neighborhoods prices went up not down, with managers talking about poor people were stealing food so they had to pay for extra security. All of us got hit.

Banking and credit card fees which actually increased especially with outlets that got bailouts. For many who aren’t living on the brink, such things weren’t thought about. It didn’t hit the radar. I had one friend say what’s a few extra dollars to pay during a troubled economy? A whole hell of a lot when you have no money.  Last night I needed 20 bucks here in DC and all the withdrawal fees were 3 bucks and none of the stores in the poor neighborhood I’m staying took credit cards.. Thats that hidden tax that poor folks get hit with everyday

5-There was no discussion about the crazy costs of payday loans. Lots of folks in the hood know about this. They need a loan to pay for rent or the electric bill or cable and internet bill (all of which have gone up over the past year) and they wind up paying loan shark type fees in order to get that loan.. Thats another hidden cost.I ran into NAACP ben jealous last night and he said it was an issue that needs to be discussed, cause a lot of poor folks are getting clobbered with this..

6-many of the working poor are saddled with taking care of two or three kids and aging parents. President Obama did not talk about that last year.  We didn’t hear any discussion about how the new ‘millienium baby boomers who are facing this new challenge will get relief.. Many in this generation have parents who divorced, didn’t have a home to get equity and very little retirement and savings. They’re too old to work, and not really able to make it. Their kids are looking out after their parents as well as kids. I can tell you first hand, that’s daunting. For example, my sister has spent thousands flying back and forth to Miami, looking in my pops who is not able to work other than odd jobs here and there and has failing health. The cost of putting him in an old age home which he absolutely under no circumstances would ever agree to go to was minimum 3500 bucks a month. Completely unaffordable for two siblings and thats just one parent at the same time he needed to be looked after especially when he got sick.  Someone had to do it-That someone was his kids who had to save up money fly to another state and take on an unexpected, new challenge that has no blue print to follow.

I can go on and on about these hidden costs that impact poor and working class people all day. People reading this know what I’m talking about. They also know how political posturing and political pimping has resulted in a nasty stigma being attached to those who can barely make it..  For years we allowed high prices news pundits come on TV and essentially blame folks who are not making ends meet. Sadly many of us have adapted that line of thinking and have gone on to blame themselves for not doing so well, until they hit a brick wall and realized that it’s almost impossible to make it under lots of circumstances.

Yes, President Obama gave a good speech if you were middle class- but coming into 2010 there aren’t a whole lot of folks who are in that category anymore. Sure, many may think they are, but in reality unless you have 3-4 months rent in the bank you can fall back on, a healthy 401K that wasn’t decimated during the bank bailout era and you have health insurance, you are NOT middle class. You’re part of the working poor and at any given moment you can slip away and become part of the permanent ‘poor’ underclass.

Lastly I’ll say this… what I’m afraid is by not addressing poor & working poor..a big part of the economy is served-Prison Industrial complex but thats for another article

That’s Something to ponder

Davey D


State of the Union: Why Is Obama Still Clinging Bipartisanship?

Obama restated 2008 campaign promises that were not kept during his first year as president. It’s unclear how he can make good on them in 2010 working with Republicans.

January 27, 2010 |By John Nichols

But don’t accuse the president of veering from the course he charted at a point when his term was new, his popularity ratings were high and Americans took seriously all that talk of “hope” and “change.”

Despite the battering he has taken during his first year in the White House, despite suffering a serious drop in his personal approval ratings, despite the frustration and disenchantment that gave the Senate seat from the deep blue state of Massachusetts to the opposition Republicans, Obama used his initial State of the Union address to renew the call for the health care reform initiative that was the primary focus of his difficult first year in office.

“Don’t walk away from reform — not now, not when we are so close,” the president pleaded with the Congress.

“By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Co-pays will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether,” he declared, in the signature line of his speech. “I will not walk away from these Americans. And neither should the people in this chamber.”

The president admitted that he bumbled the push for health reform, even drawing warm laughter when he said: “I did not choose to tackle this issue to get some legislative victory under my belt. And by now it should be fairly obvious that I didn’t take on health care because it was good politics. But remember this– I never suggested that change would be easy, or that I can do it alone.”

He also acknowledged that his first year in office was a tough one: “I campaigned on the promise of change — change we can believe in, the slogan went. And right now, I know there are many Americans who aren’t sure if they still believe we can change — or at least, that I can deliver it.”

Yet, Obama still did not seem to “get” the politics of the moment.

Speaking at a point when the year-long effort to enact fundamental health-care reforms has stumbled badly — in the face of united Republican opposition, wrangling between House and Senate Democrats and unfocused messaging from the president — Obama made a renewed effort to find the common ground that has eluded almost everyone in Washington.

Remarkably, the president clung to the hope for bipartisanship that was dashed at every turn in 2009 — either with outright rejection by the “party of ‘no'” or, worse yet, via compromises that handed ultimate authority over policy-making to Republican senators who diverted stimulus funding from job creation to tax cuts for the rich and Democrat-In-Name-Only Ben Nelson and Republican-In-Everything-But-Name Joe Lieberman, who forced the Senate to scrap the public option that was needed to challenge the grip of health insurance companies.

“We face big and difficult challenges. And what the American people hope what they deserve — is for all of us, Democrats and Republicans, to work through our differences; to overcome the numbing weight of our politics,” said the president, whose repeated references to bipartisanship made clear that he is not ready to adopt the fighting stance that might rally the Democratic base for a serious fight to use the party’s majorities in the House and Senate to initiate meaningful reforms.

This was not a rally-the-base speech.

It was a speech that, at many turns, sounded as if it was written a year ago — before Obama saw his domestic agenda blocked at so many turns.

It was this tone-deaf quality that made Obama’s speech a less-than-inspired statement.

Even when Obama outlined what sounded like an activist agenda, he generally restated 2008 campaign promises that were not kept during his first year as president.

In particular:

* To suggest a commitment to job creation, he dusted off one of his presidential campaign’s less-impressive position papers on using tax cuts to get small businesses hiring. In particular, the president called for eliminating capital-gains taxes on investments in small businesses and for giving small employers a tax credit for new hires.

* He repeated old promises to create clean-energy jobs and to end aid to businesses that are off-shoring jobs and facilities.

* Even as said “we all hated the bank bailout” (“it’s about as popular as a root canal”), Obama defended the giveaway to big banks as a necessary, even courageous, move. And he only offered up a little of the populism that should have defined the speech, with a proposal to recover bailout bucks by placing a fee on the biggest banks. “I know Wall Street isn’t keen on this idea,” he declared, “but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.”

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30 Million Small Businesses: The Army President Obama Has Yet To Deploy


Update: We interviewed Cedric Muhammad on Hard Knock Radio about the economy and how its looking under what many see as a New World Order of sorts. He expounds up on his article and gives some keen breakdowns..Here’s a link to the archived show

30 Million Small Businesses: The Army President Obama Has Yet To Deploy

by Cedrick Muhammad

President Barrack Obama’s decision to deploy more troops to Afghanistan should be a reminder and not a distraction that the country is involved in a two-front war. Not only one where the battlefields are Iraq and Afghanistan, but also a domestic economic war where saving an ailing banking system, is one front, while the struggle of small businesses to grow and expand is the other.

So far, that second war is only being waged on one battlefield.

It may be a generalization but not an oversimplification to say that when push came to shove, during and after the Financial Panic of 2008, the United States government – both Congress and two Presidential administrations – decided the interests of Wall Street and only a small portion of America’s 10,000 commercial banks, along with a handful of auto companies, were more important than the needs of approximately 30,000,000 small businesses [There were 6.1 million employer and 23.1 million nonemployer firms (a nonemployer firm is defined as one that has no paid employees, has annual business receipts of $1,000 or more and is subject to federal income taxes.) in the U.S. in 2008 according to Statistics of U.S. Businesses (SUSB) data from the U.S. Census Bureau].

The commercial banking sector is important – especially those smaller and community-oriented institutions that have been an after-thought in the plans of both Presidents Obama and George W. Bush. And if money is the lifeblood of a nation, then the financial system is somewhat like a circulatory system moving capital and credit wherever it is needed throughout the economic body.

This crisis was a financial one for sure, and its roots can be found in four areas.

First, a fractional reserve banking system which allows banks to lend out (or extend credit) several times the actual amount of money they actually have on deposit.

Second, a fiat currency (money with no sound backing) created gradually in three stages – initially when the Federal Reserve was born in 1913 giving a private central bank control over the issuance of America’s currency, a responsibility the U.S. constitution reserved for Congress. And then, when the gold standard was ended in two stages – in 1933 under Franklin Delano Roosevelt and 1971under president Richard Nixon.

Third, the out of control growth of a derivatives market initially built upon the legitimate need of farmers and businesses to insure themselves from disasters and unpredictable circumstances (like storms and poor crops) which grew to dwarf the real economy (the physical and digital goods and services that we need to survive and want to enjoy) in size. It should be noted that the first major derivatives market was in foreign currency and it grew out of the instability of a world where the dollar was no longer on the gold standard and investors, entrepreneurs, farmers and corporations had to guess and gamble each day over what the world’s currencies were worth.

Fourth, the birth of the modern securitization market in 1970s, started by the Government National Mortgage Association (GNMA) or ‘Ginnie Mae’ which allowed private institutions to gather mortgages extended to different customers and owned by different banks into large bundles to be resold to other institutions – like pension funds and investment banks. With the help of institutions like Salomon Brothers this practice grew to the size of trillions of dollars and saw bundles as large as 5,000 mortgages and up, sold all over the world. By 2009 loans of all kinds – mortgages, bank, student, credit card and business – were being made not because individuals and entities qualified for them but because banks could make more money off of securitizing and re-selling them to Wall Street investors and institutions and governments all over the world. When these loans could not be repaid the whole house of cards tumbled.

For the most part, first under President Bush, and afterward President Obama very little has been done to effectively address these four fundamental aspects of the financial crisis. When you combine this reality with a national debt of $12 trillion (around $60 trillion when you add in the money owed for Social Security and Medicare payments) it is not hard to see the hand-writing on the wall – the American economy is headed for a painful day of reckoning.

But there was an equally important problem to be solved, aside from the financial one. In fact, it was already in effect and looming on the horizon before the Panic of 2007-2008. It was the challenge of how the American economy was going to transition through the era of globalization that was eroding its foundation due to two practices – offshoring and outsourcing. Offshoring is the decision of a company to relocate an entire business process from one country to another and outsourcing is the subcontracting of a service or business process to a third party.

Former Federal Reserve Governor and Princeton University Professor Alan Blinder, before the recession, estimated that 30 million to 40 million American jobs have the potential to be offshored. These include such professions as tax accounting, film and video editors, computer programming, bookkeepers, architects, lawyers specializing in contract law, mathematicians, graphic designers, financial analysts, actuaries, microbiologists, and even economists.

And who was on the front lines of this battle best positioned to win it and create the jobs that will replace those being lost, but also suffering the greatest casualties?

Without question, it is the country’s 30 million small business owners.

According to the Small Business Administration (SBA)’s 2009 “Small Business Economy: A Report To The President,” ‘…since the mid-1990s, small businesses have generally created 60 to 80 percent of the net new employment, but in 2008 there was a net loss of 3.1 million jobs. While it is not yet possible to know how many were lost in smaller businesses, it is likely they were a significant share of the losses. In the first three quarters, the United States lost 1,695,00 jobs, of which 60 percent were in small businesses.’

And what has been the official policy response to this recognition?

Virtually none of the over $700 billion Troubled Asset Relief Program (TARP) under President Bush went to small businesses (including most of the nation’s 8,000 smaller community banks) and while President Obama signed the $787 billion American Recovery and Reinvestment Act, funding to the U.S. Small Business Administration (SBA) was increased by only $730 million. An SBA plan designed to generate $10 billion in loans to small businesses has been crawling for months.

When one considers other steps taken by the administration of President Obama including putting $2 trillion on the line in order to jump-start the previously mentioned securitization market (through the Federal Reserve-engineered Troubled Asset Relief Facility or TALF), it can be argued that while the U.S. government has put an estimated $4 trillion on the line to help revive the commercial banking sector and securitization markets, its best efforts to help small business may have not even reached $10 billion.

To make matters worse, the economic pain is not being distributed evenly across racial lines.

While the overall unemployment rate in the country was 10.2% in October it was 15.7% for Black Americans, with Black males 20 and over at an unemployment rate of 17.1% and Black teenagers of both sexes unemployed at the rate of 41.3%. This is all the more troubling when one considers that prior to the recession, it had already been determined that Black male unemployment in cities like New York and Milwaukee was over 50%.

With all of this doom and gloom what should President Obama do?

First, he should be applauded for hosting this week’s Jobs Summit.

But summits, meetings and conferences are only as good as their agenda, the quality of the dialogue and debate, and the follow-through on the best ideas, policies and decisions that emerge.

To that end here is a nine-point platform for consideration at the Jobs Summit that could jumpstart the American economy from the ground up:

1) Cut the Payroll Tax. In his November 18, 2009 Wall Street Journal op-ed, Michael J. Boskin makes the case, “…to evaluate the stimulus properly we should consider not just what we got for the $787 billion cost but the effects of alternative policies that might have been enacted. My Stanford colleague Pete Klenow and Rochester economist Mark Bils estimated that cutting the payroll tax by six percentage points (of the 12.4% Social Security component) would, under standard assumptions, increase employment by three million to four million workers—an amount equal to all the job losses since the stimulus was passed. The payroll tax cut would have reduced firms’ costs by roughly the same amount as from the entire decline in employment. It would have cost less than half as much as the stimulus bill, gotten far more income into paychecks quickly and, most importantly, greatly reduced incentives for firms to lay off workers. In fact, it would have created incentives to hire. Even using the administration’s claims of one million jobs ‘created or saved,’ the stimulus program passed in early February is millions of jobs short of what a cheaper payroll tax suspension would have delivered.”

2) Enact Job creation tax credits (as proposed by the Economic Policy Institute:

3) General capital gains tax rate reduction to 10%, indexed for inflation and made permanent.

4) Reduce the holding period to qualify for capital gains tax elimination in distressed rural and urban areas from 5 years to 6 months. This will encourage investors to make investments in struggling inner cities because they know they don’t have to wait 5 years to see a return. Entrepreneurs don’t want patient capital (what makes 5 years a magic number for the government anyway – especially since most small businesses have failed by then?) as much as they want smart capital.

5) Expand of the number of Empowerment Zones and Renewal Communities that receive incentives for economic development in distressed communities. If, since the financial crisis, the rest of the country has been receiving incentives that were previously reserved for these areas, something must be done to maintain their comparative advantage.

6) Increase incentives and worker tax credits for any business which hires a previously incarcerated person. This gets at the core of the unemployment problem (aggravated by state laws that make it illegal for ex-offenders to be employed in certain jobs) in the poorest areas, and in communities where the social fabric is the frailest.

7) Complete capital gains tax elimination for investment clubs which invest in businesses with less than 5 paid employees, and an increase of the limit from 99 persons to 250 on the size of an investment club before it falls under SEC regulations. This may inspire the merger of several successful existing clubs – increasing their scale and reach – and fill the void in areas of the economy where venture capital and private equity are unavailable or unwilling to invest (the government’s SSBIC program to bring venture capital into the Black economy has been a failure, as Senator John Kerry has so duly highlighted, and which I discuss in my book, The Entrepreneurial Secret). If something is not done to move these areas away from debt-dependency and toward equity capital, a mass of small businesses are set to go under as the government fails to re-start lending and unfreeze credit, even in programs it sponsors through the SBA.

8) Reduce combined state (of course with the assistance of Governors and State legislatures here) and federal corporate tax rates. Perhaps the problem with the corporate tax is that only an elite group of corporations has the resources to avoid paying it. The motivation here is not only to produce shareholder earnings, capital investment, higher wages, and lower prices for goods and services but also to increase the attractiveness of the limited liability company to sole proprietorships. Utilizing the corporate legal form of business will allow them to raise capital more efficiently (only 10% of Black businesses utilize the C or S corporate form of business), share and spread risk, and develop a managerial hierarchy (about 90% of these businesses do not have more than a single paid employee).

9) Reduce regulations that hamper entrepreneurship and create a burden on cash strapped and employee-thin small businesses. As John Berlau and William Yeatman wrote recently in a Washington Times op-ed, ‘Solutions: How To Reduce Unemployment’: “Congress also should pare back job-killing mandates like those embedded in the Sarbanes-Oxley Act of 2002, which was rushed through Congress in the wake of the Enron and WorldCom scandals. This law has showered business with massive accounting procedures that may have created jobs for auditors — the law is often called the Accountants Full Employment Act — but discouraged business expansion by making it so costly for a firm to raise money by going public.” Sure enough, according to the Small Business and Entrepreneurship Council, the Small Business Administration (SBA)’s Office of Advocacy has noted, “Very small firms with fewer than 20 employees annually spend 45 percent more per employee than larger firms to comply with federal regulations. These very small firms spend four and a half times as much per employee to comply with environmental regulations and 67 percent more per employee on tax compliance than their larger counterparts.”

The above proposal is an eclectic mix of policies favored by some on the Left, Right and Center, members of both political parties and Independents. It is a framework that would invite creative compromise and deal-making – always a function of the political processs. What is required to help this economy can only be advanced with this kind of electoral coalition and a wide cross section of support from others, which the skillful and gifted President Obama can uniquely convene, organize and build.

Paul Ryan

If President Obama could enlist the support of a leading pro economic growth Republican like Congressman Paul Ryan (who I know understands the economic challenge from past discussion with him: and a liberal, business conscious Democrat like Senator Charles Schumer (surprisingly the strongest political voice on the crisis of Black male unemployment: , and have the initiative spearheaded by the rare embodiment of compassion for the poor and understanding of the rich – the brilliant and nimble Jared Bernstein (Vice-President Biden’s Chief Economist and co-author of the penetrating ‘The Benefits Of Full Employment’: – the country would find if not these, then other realistic and radical solutions that the time demands.

With these policies – the nation’s army of small businesses will have more of the weaponry, ammunition, and moral support they need to do what they do best – innovate, and create jobs.

It should be noted that there are one and not two wars underway that will determine the future of America. What is more obvious are the war underway in Afghanistan and Iraq. What is less obvious is that the battle to save the American economy has a second front.

An army – 30,000,000 million strong – awaits its orders from the Commander In Chief.

Cedric Muhammad is a business consultant, political strategist, and monetary economist. He is author of the book, The Entrepreneurial Secret: To Starting a Business Without A Bank Loan, Collateral Or Revenue ( His talk show, ‘The Cedric Muhammad and Black Coffee Program’ can be viewed every Wednesday from 12 to 5 PM EST (USA) at: He can be contacted via e-mail at: cedric(at)

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