# World Bank Report Paints Bleak Picture for Australia



## sinner (9 November 2008)

Nov. 9 (Bloomberg) -- Australia's economy may be hit harder than expected as the global economic slowdown spreads to emerging markets that are among the nation's key trading partners, Treasurer Wayne Swan said, citing a World Bank report.

The report, shown to finance ministers and central bank heads meeting in Brazil, shows the crisis that began in advanced economies is spreading to the developing world. That threatens Australia's extensive trade with countries in Asia and elsewhere, Swan said in comments to journalists e-mailed to Bloomberg News by his office in Canberra.

``We had already factored in a slowing of Australian growth and world growth,'' Swan said. ``It appears from this World Bank report that the slowing in growth will be more dramatic than many had thought previously.''

A bit light on numbers....

http://www.bloomberg.com/apps/news?pid=20601081&sid=aV2eYRDa.kvE&refer=australia

Last week, the government slashed its forecast budget surplus by 75 percent, saying the slowest economic growth in eight years will erode tax revenue. On Nov. 6, the International Monetary Fund approved a $15.7 billion loan to Hungary to shore up an economy it said was among the first emerging markets to be ravaged by the financial crisis.

``Finance has been drying up for the emerging world,'' said Shane Oliver, senior economist at AMP Capital Investors in Sydney. ``Most of Australia's exports go to Asia, and if those economies are slowing down more than expected it'll cut into demand for our exports.''

`Dangerous Zone'

Swan spoke to journalists after the first day of a meeting in Sao Paulo of ministers and bank governors of the so-called Group of 20 industrialized and developing nations, a prelude to the G-20 leaders' meeting on Nov. 15 in Washington.

The summit is exploring the impact of the global financial crisis on the world's developing economies. Separately, European Union leaders completed proposals during the week for tighter worldwide financial regulation, which they plan to take to the Washington summit.

``It is very clear that in the past month or so emerging economies have entered a dangerous new zone,'' Swan said. ``That is the description of the World Bank in their report.''

Swan told journalists a consensus was emerging among G-20 ministers of the need for coordinated action to stimulate national economies, a further loosening of monetary policy and ``fundamental'' reform of the international financial architecture.

`Modest Growth'

Australia's central bank has cut the benchmark interest rate by 2 percentage points since September, the most aggressive round of reductions since the economy was in recession in 1991. House prices dropped in the third quarter by the most since 1978 and retail sales in September had their biggest fall in three years.

The International Monetary Fund forecasts 1.8 percent growth for Australia's economy in fiscal 2009, Swan said last week.

``While the global financial crisis is causing a global recession, Australia is expected to continue to record modest growth and compares favorably with most other advanced economies,'' he said in an e-mailed statement.


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## Wysiwyg (10 July 2010)

sinner said:


> The International Monetary Fund forecasts 1.8 percent growth for Australia's economy in fiscal 2009, Swan said last week.
> *
> "While the global financial crisis is causing a global recession, Australia is expected to continue to record modest growth and compares favorably with most other advanced economies,''* he said in an e-mailed statement.



This Forbes article suggests Australia is in great shape with its mineral quantities, location to Asia and sheep among other things. I hope any of the pessimists on this forum have a good debate against further improvement in Australia's prosperity. 



> Reflecting an ongoing shift away from Europe and North America to Asian markets, the bulk of Australia's A$197 billion in 2009 exports went to China (22%), Japan (19%), Republic of Korea (8%) and India (7%).
> 
> Positive Influences on Equity Prices
> 
> ...




http://www.forbes.com/2010/03/23/au...ance-morgan-stanley.html?feed=rss_mostemailed


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## Putty7 (10 July 2010)

I would be hard pressed to believe anything that Wayne Swann said after recent events that have been played out.


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## robots (11 July 2010)

hello,

Dont have to listen to Swan, just look around the street man for whats going on, paradise

What a sour life the doom and gloomers must live
Thankyou
Professor robots


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## Bill M (11 July 2010)

robots said:


> hello,
> 
> Dont have to listen to Swan, just look around the street man for whats going on, paradise
> 
> ...




Spot on there mate. I went to my local Bunnings Mega Store yesterday, the car park was over flowing and the store was doing a roaring trade. People were out and about spending in droves and this is in a real working class area. Some people really got to stop reading these end of the world stories and just get back to basics and enjoy life, cheers.


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## UBIQUITOUS (11 July 2010)

Bill M said:


> Spot on there mate. I went to my local Bunnings Mega Store yesterday, the car park was over flowing and the store was doing a roaring trade. People were out and about spending in droves and this is in a real working class area. Some people really got to stop reading these end of the world stories and just get back to basics and enjoy life, cheers.




If you don't look, then it's not happening?


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## MR. (11 July 2010)

Bill M said:


> I went to my local Bunnings Mega Store yesterday, the car park was over flowing and the store was doing a roaring trade. People were out and about spending in droves and this is in a real working class area. Some people really got to stop reading these end of the world stories and just get back to basics and enjoy life, cheers.




Saturday to visit the local Bunnings Mega Store! Good to see it's busy on it's most popular day. I went in Thursday, I thought, this place is dead. No doubt location location, the old Gold Coast builder must be doing it tough.


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## moXJO (11 July 2010)

MR. said:


> Saturday to visit the local Bunnings Mega Store! Good to see it's busy on it's most popular day. I went in Thursday, I thought, this place is dead. No doubt location location, the old Gold Coast builder must be doing it tough.




I'm seeing packed stores in a blue collar town as well. I think people are spending a bit wiser though. Still the malls are packed.


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## UBIQUITOUS (11 July 2010)

Bill M said:


> Spot on there mate. I went to my local Bunnings Mega Store yesterday, the car park was over flowing and the store was doing a roaring trade. People were out and about spending in droves and this is in a real working class area. Some people really got to stop reading these end of the world stories and just get back to basics and enjoy life, cheers.




Correct me if I'm wrong but isn't Bunnings a DIY store? Couldn't an increase in trade at Bunnings be a signal that more and more people are economically forced to do their own handywork rather than pay somebody else?

Bunnings is hardly a barometer for prosperous times. If anything it is the opposite.


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## Wysiwyg (11 July 2010)

UBIQUITOUS said:


> Correct me if I'm wrong but isn't Bunnings a DIY store? Couldn't an increase in trade at Bunnings be a signal that more and more people are economically forced to do their own handywork rather than pay somebody else?
> 
> Bunnings is hardly a barometer for prosperous times. If anything it is the opposite.



Yes, good vision.


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## Bill M (11 July 2010)

moXJO said:


> I'm seeing packed stores in a blue collar town as well. I think people are spending a bit wiser though. Still the malls are packed.



That's what I noticed too, very hard finding a car park these days. 



UBIQUITOUS said:


> Bunnings is hardly a barometer for prosperous times. If anything it is the opposite.



It's the spending people are doing is what I tried to point out. If anything I really thought about buying some Wesfarmers shares again as no other Hardware store comes with coo-ee of this mob, they have everything!


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## Garpal Gumnut (11 July 2010)

Townsville is still very busy. The V8's were packed out. Another large Bunnings is opening soon. 

House prices are staying firm although there seem to be more on the market. The shopping centres are busy. 

The only store to fail recently in town was Clive Peters, but thats another story, and HVN have taken them over. 

There are lots of pregnant ladies about, so all in all Townsville is quite a productive place.

gg


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## Wysiwyg (11 July 2010)

Bill M said:


> It's the spending people are doing is what I tried to point out. If anything I really thought about buying some Wesfarmers shares again as no other Hardware store comes with coo-ee of this mob, they have everything!



The numbers could go either way from now. At a long term significant turning point this year I think.


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## Tatts (12 July 2010)

moXJO said:


> I'm seeing packed stores in a blue collar town as well. I think people are spending a bit wiser though. Still the malls are packed.




But are the people in the malls carrying bags full of goods/products or just window shopping?



Bill M said:


> If anything I really thought about buying some Wesfarmers shares again as no other Hardware store comes with coo-ee of this mob, they have everything!




Woolies has their hardware stores opening soon don't they? That could be another option to consider.


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## satanoperca (12 July 2010)

The last time I saw so many shops for sale or up for lease in Bourke Rd, Camberwell, Collingwood, Fitzroy, Richmond Victoria was during the early 90's.

Talking with friends in the retail game, they are having to discount heavily to get sales at the moment. Yes they might be getting some sales, but their profit margins have been greatly reduced.

Only time will tell.

Cheers


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## Calliope (12 July 2010)

moXJO said:


> I'm seeing packed stores in a blue collar town as well. I think people are spending a bit wiser though. Still the malls are packed.




The malls have been packed up here for the last fortnight, for the simple reasons that is was school holidays and the weather has been too lousy to go to the beaches.


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## trainspotter (12 July 2010)

MR. said:


> Saturday to visit the local Bunnings Mega Store! Good to see it's busy on it's most popular day. I went in Thursday, I thought, this place is dead. No doubt location location, the old Gold Coast builder must be doing it tough.




I am gussing most people would be at work on a Thursday and not shopping at Bunnings. More likely they are saving their money to spend on the weekend.


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## trainspotter (12 July 2010)

UBIQUITOUS said:


> Correct me if I'm wrong but isn't Bunnings a DIY store? Couldn't an increase in trade at Bunnings be a signal that more and more people are economically forced to do their own handywork rather than pay somebody else?
> 
> Bunnings is hardly a barometer for prosperous times. If anything it is the opposite.




Have you tried to get a tradesman lately? AND when you do get them to actually quote the job your platinum black does not have enough limit on it to cover the charge! No wonder the DIY's are doing it for themselves.

I would have thought Bunnings was the perfect economic indicator which means that people are spending money to fix up their homes and or their investment properties? What else do you go to Bunnings for?


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## UBIQUITOUS (12 July 2010)

trainspotter said:


> Have you tried to get a tradesman lately? AND when you do get them to actually quote the job your platinum black does not have enough limit on it to cover the charge! No wonder the DIY's are doing it for themselves.




I guess that means that you are understanding as to the reasons why interest rates will need to rise further? 



trainspotter said:


> I would have thought Bunnings was the perfect economic indicator which means that people are spending money to fix up their homes and or their investment properties? What else do you go to Bunnings for?




You go to Bunnings because:

1) You can't afford a tradesperson (as you have mentioned)
2) You are deciding to stay put in your house as you cannot afford to move

DIY means DIC (Do-It-Cheaper), 

I expect Bunnings to be one of the few companies that continues to do well while the RE market and general economy suffers.


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## trainspotter (12 July 2010)

UBIQUITOUS said:


> I guess that means that you are understanding as to the reasons why interest rates will need to rise further?
> 
> You go to Bunnings because:
> 
> ...




Ummmm ... I would have thought that when the economy slows that the tradespeople will bring their prices back to a more "normal" level due to lack of work rather than pricing themselves out of the market? I understand that rates need to go up for other fiscal reasons and not to kerb the spending habits of the proletariat. Has something to do with the Govt stimulus spending I think.

1) Granted
2) Why would you constantly want to move?? HUH ?? I like where I live and go to Bunnings to buy some fertiliser for the lawn. The occasional tin of paint to change a room colour. A leaky tap every now and then as well. Some people do not have the urge to move every 5 years or upgrade or whatever.


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## UBIQUITOUS (12 July 2010)

trainspotter said:


> Ummmm ...* I would have thought that when the economy slows that the tradespeople will bring their prices back to a more "normal" level due to lack of work rather than pricing themselves out of the market? *I understand that rates need to go up for other fiscal reasons and not to kerb the spending habits of the proletariat. Has something to do with the Govt stimulus spending I think.




In an ideal world, that is the way it would work. However, I have seen no wage decreases, even during last year's downturn. Why is that? Can you point me to any wage cuts during that time? 



> 2) Why would you constantly want to move?? HUH ?? I like where I live and go to Bunnings to buy some fertiliser for the lawn. The occasional tin of paint to change a room colour. A leaky tap every now and then as well. Some people do not have the urge to move every 5 years or upgrade or whatever.




A lot of people do like to upgrade homes, but prefer to stay put if they cannot afford that move. Instead they 'do up' their own homes. Bunnings no doubt benefit from this.


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## trainspotter (12 July 2010)

UBIQUITOUS said:


> In an ideal world, that is the way it would work. However, I have seen no wage decreases, even during last year's downturn. Why is that? Can you point me to any wage cuts during that time?
> 
> A lot of people do like to upgrade homes, but prefer to stay put if they cannot afford that move. Instead they 'do up' their own homes. Bunnings no doubt benefit from this.




Nope ... sorry Ubi ... can't say I have seen any wage decreases in this time but I can tell you that I am noticing that subcontractors are being more reasonable in their pricing structure and it has become slightly more competitive as the work dries up. I think that in "certain" areas that tradespeople still have work to finish for the larger builders or contractors and really do not need the extra work (right now that is). Maybe more of a plateau in the prices they are charging instead of a steady increase.

I concur Ubi that there are those people that prefer to upgrade and keep up with the Jones's and move to more "hoity toity" areas. There are also the majority that prefer to stay put due to the location of their purchase. Close to schools, hospitals, work etc. and I agree Bunnings will benefit from these people who become the "weekend warriors" of the garden/home DIY variety.


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## robots (12 July 2010)

UBIQUITOUS said:


> I guess that means that you are understanding as to the reasons why interest rates will need to rise further?
> 
> 
> 
> ...






satanoperca said:


> The last time I saw so many shops for sale or up for lease in Bourke Rd, Camberwell, Collingwood, Fitzroy, Richmond Victoria was during the early 90's.
> 
> Talking with friends in the retail game, they are having to discount heavily to get sales at the moment. Yes they might be getting some sales, but their profit margins have been greatly reduced.
> 
> ...




hello,

oh yeah, high interest rate environment coming too

for sure, banks already cut fixed rates

thankyou
associate professor robots


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## moXJO (12 July 2010)

Calliope said:


> The malls have been packed up here for the last fortnight, for the simple reasons that is was school holidays and the weather has been too lousy to go to the beaches.




I'm talking last few months


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## tech/a (12 July 2010)

*World Bank Report Paints Bleak Picture*

This heading is more appropriate.
Checkout the names on this list!

Now check out the names at the bottom.

We have it----they want it!
They produce it the rest of the world want it.
The grass really IS GREENER on the other side!
Click to EXPAND
And of course incase you wondered where the US of A faired.


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## trainspotter (12 July 2010)

But but but sinner posted a graph showing AUSSIES were at 100% of GDP?


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## tech/a (12 July 2010)

Where?
And from which scource?
I have seen this from 3 sources just do a google.
GDP V DEBT.


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## wayneL (12 July 2010)

tech/a said:


> *World Bank Report Paints Bleak Picture*
> 
> This heading is more appropriate.
> Checkout the names on this list!
> ...




Check external debt. A slightly different picture.

Aus is 92% of GDP

http://en.wikipedia.org/wiki/List_of_countries_by_external_debt


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## UBIQUITOUS (12 July 2010)

tech/a said:


> *World Bank Report Paints Bleak Picture*
> 
> This heading is more appropriate.
> Checkout the names on this list!
> ...




Thanks, I checked it out. Do you think that one day, Australia's public debt % can be as low as Iran and Nigeria's? Perhaps we can aspire to be like those countries.

Australia not faring nearly as well on this even more important list ($920billion):

http://en.wikipedia.org/wiki/List_of_countries_by_external_debt


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## tech/a (12 July 2010)

wayneL said:


> Check external debt. A slightly different picture.
> 
> Aus is 92% of GDP
> 
> http://en.wikipedia.org/wiki/List_of_countries_by_external_debt




I was referring to


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## wayneL (13 July 2010)

tech/a said:


> I was referring to




Gu'mint debt as a comparison does not give a complete picture because of differing state involvement in the economy. Total external debt i.e. combined public and private debt owed in foreign currency gives a better, though still not complete picture.


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## tech/a (13 July 2010)

wayneL said:


> Gu'mint debt as a comparison does not give a complete picture because of differing state involvement in the economy. Total external debt i.e. combined public and private debt owed in foreign currency gives a better, though still not complete picture.




Personally I have a problem with debt thats being covered by IOU's (bonds).
Debt which has no such luxury tends to be contained and if its not and doesn't affect the money printers interests to a great extent then they go broke. Debt is written off.

Its the only way I see the majority of Governments recovering from crippling debt.
AUST fortunately isn't one of them.


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## lianeisme (13 July 2010)

trainspotter said:


> Nope ... sorry Ubi ... can't say I have seen any wage decreases in this time but I can tell you that I am noticing that subcontractors are being more reasonable in their pricing structure and it has become slightly more competitive as the work dries up. I think that in "certain" areas that tradespeople still have work to finish for the larger builders or contractors and really do not need the extra work (right now that is). Maybe more of a plateau in the prices they are charging instead of a steady increase.
> 
> I concur Ubi that there are those people that prefer to upgrade and keep up with the Jones's and move to more "hoity toity" areas. There are also the majority that prefer to stay put due to the location of their purchase. Close to schools, hospitals, work etc. and I agree Bunnings will benefit from these people who become the "weekend warriors" of the garden/home DIY variety.




As a Mortgage Broker with my own company during the GFC all broker commissions was dropped back by 30 / 35% all trail commission was also dropped back 30 / 35%.  So yes our income was cut quite dramatically. You will probably find that wages as per say were not dropped. How ever people working on commission have suffered quite considerably.


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## trainspotter (13 July 2010)

lianeisme said:


> As a Mortgage Broker with my own company during the GFC all broker commissions was dropped back by 30 / 35% all trail commission was also dropped back 30 / 35%.  So yes our income was cut quite dramatically. You will probably find that wages as per say were not dropped. How ever people working on commission have suffered quite considerably.




Thanks lianeisme for the info ...... I forgot about the commissioned Mortgage Broker industry and the trail setup. I am guessing there would be quite a few more that have had to feel the pinch in regards from those who make a living in the finance and securities industry. 

I find it quizzical that the GFC has slaughtered the finance industry and decimated lending institutions globally but our banks are still making RECORD profits?

http://www.smh.com.au/business/anz-upbeat-after-cash-profit-jump-20100226-p6hm.html ANZ - underlying profit after tax of $1.6 billion for the four months to end-January. February 26, 2010

*CBA recorded a $2.94 billion cash profit for the first half, placing it as one of the most profitable banks in the world.* (From: The Australian March 01, 2010 12:00AM )

Yeahhhhhhhhh ....... we really needed the Govt to guarantee the safety of our banks !


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## explod (13 July 2010)

tech/a said:


> Personally I have a problem with debt thats being covered by IOU's (bonds).
> Debt which has no such luxury tends to be contained and if its not and doesn't affect the money printers interests to a great extent then they go broke. Debt is written off.
> 
> Its the only way I see the majority of Governments recovering from crippling debt.
> AUST fortunately isn't one of them.




Some is written of by currency debasement, dilution as you say and and a lack of productivity (tangible value) as the backing, if you like a lack of assets.  Yes the aussie is okay but what will cripple all of us for awhile will be the untangling of the US markets in my view.

But we have said for a number of years on ASF that the bond market is a time bomb yet so many still say they are putting thier money into bonds for safety.  The bonds of enterprises that go broke are worthless and as we learnt by the 1929 crash that includes soveriegn states as well.


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## explod (14 July 2010)

On a bright note, Chuck Butler today talks of the strength in the Chinese and Indian economies.   For Aussie busineses the outlook longer term is rosy folks.

http://www.dailypfennig.com/

Who controls the jargon from the World Bank I wonder?


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## doctorj (14 July 2010)

So the conclusion is that Australia will sail through unaffected?  OK good luck.  So China have low Debt to GDP or whatever it is that's mentioned below.  They will keep buying Australia's raw materials, to turn it into what and sell to who?


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## explod (14 July 2010)

doctorj said:


> So the conclusion is that Australia will sail through unaffected?  OK good luck.  So China have low Debt to GDP or whatever it is that's mentioned below.  They will keep buying Australia's raw materials, to turn it into what and sell to who?




To the emerging billions across Chindia who are looking for thier fair share of the good things (like we had) under expansionism.

The hunderds of millions from the developed areas will have but little effect.  Just imagine every family in China and India with a motor car, computer, TV and brand new 4 bedroom home, low interest and nothing to pay for 12 months etc. 

Dont' you worry about the little Aussie, we in fact are even having a big hand in educating their acedemia.


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## UBIQUITOUS (14 July 2010)

explod said:


> To the emerging billions across Chindia who are looking for thier fair share of the good things (like we had) under expansionism.
> 
> The hunderds of millions from the developed areas will have but little effect.  Just imagine every family in China and India with a motor car, computer, TV and brand new 4 bedroom home, low interest and nothing to pay for 12 months etc.
> 
> Dont' you worry about the little Aussie, we in fact are even having a big hand in educating their acedemia.




I like it! The American dream for the whole world to enjoy!


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## wayneL (14 July 2010)

tech/a said:


> Personally I have a problem with debt thats being covered by IOU's (bonds).
> Debt which has no such luxury tends to be contained and if its not and doesn't affect the money printers interests to a great extent then they go broke. Debt is written off.
> 
> Its the only way I see the majority of Governments recovering from crippling debt.
> AUST fortunately isn't one of them.




Either way the debt has to be paid for from production.


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