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Was The Housing Boom By Design

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

Given banks effectively print their own wealth and HPI with associated debt cycle always end up with banks owning a greater % of physical wealth e.g. peoples assets, you have to wonder.

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

By design initially, then the herd took over.

I always used to think that the banks/government tempted sheeple into the debt trap by design, as soon as they had blead the last ones dry they hiked the interest rate and made a sh#tload of surplus cash in the process, hence clearing any deficit.

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

Housing in this country is deliberately under legislated in order to allow bubbles. I always believe in incompetence before conspiracy, but the weight of evidence suggests that sometimes conspiracy theories are true. That it keeps bubbling again and again, that the industry is under regulated (probably the only industry in the UK where thats the case) and that the various vested interests all state the same line, tells me some thing is going on.

But hey, there is enough lying stupid decision makers in the UK to make a strong case for incompetence. Who knows?

Edited by murpaul

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A clear collusion between Government and the Financial industry!

By clearing out the Pension Pots, Government herded the sheeple into the housing markets and opened the banks stairways to financial heaven.

Bubbling house prices, jumping in value by leaps and bounds, lured the greedy punters as they locked themselves into bricks and mortar (whilst deluding themselves that whatever happens, even if prices fall - all will be rosy in the end!).

To emphasize what a good thing houses were, our own Prime Minister and his wife were used as 'prime' examples to follow with their Million pound house and Letting flats in Bristol!

Of course, nothing was taken into account of (by the sheeple) that within a decade we will have influences:

the rising costs of our Global energy supply

Global energy/mineral shortages

the rise of Asia and the great wage leveling that will take place forcing down wages, rents and HOUSES!

Massive taxes forced upon British taxpayers to compensate for declining Gas/Oil revenues and the massive burden of supporting an imbalance of pensioners <> taxed workers

future turbulence of the world as it is forced through an energy, food crisis

Unknown wars due to the above!

SELL, SELL, SELL - If you want anything left for your pension!

Houses will sell for about 15-25% of todays prices and its inevitable!

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

I have begun to wonder whether the whole global housing bubble is part of a plot by Al Qaeda to bankrupt the West. Maybe it's far-fetched, but hear the idea out. Bin Laden is from a Saudi family with intimate connections into the Saudi royal family. Now, the Bin Ladens have completely disowned him, but nonetheless, some of the contacts that come with such a background must know exactly what the state of the Saudi oil fields are. Think it through: what will be the result of a ferociously dramatic terror attack against the US? Many things, amongst which the fear that the shock will lead to recession, so fair prediction to assume interest rates will be held very low and that this will lead to asset bubbles. What's going to happen to the Western financial system if it gets hit by Peak Oil right when its banks are maxed out to the masses with easy credit and mortgages?

Disaster.

Otherwise, why have 9/11? What's the point in an act of wanton violence that has not been to the advantage of Al Qaeda, or anyone? Bin Laden is not a fool. He was clever enough to build up a sizeable business empire in the Sudan and Ethiopia, as well as organise a global terror network that we can only combat in a limited way. I suspect there was a deeper reason for 9/11 - to provoke a massive asset bubble just as Peak Oil strangles the industrialised world.

I may be way off the mark here. Then again, maybe not.

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In answer to Fred's original question, of course it was by design. You don't get the lowest interest rates for 50 years by 'accident'.

I have begun to wonder whether the whole global housing bubble is part of a plot by Al Qaeda to bankrupt the West.

No offence, but quotes like these diminish the credibility of this website and make easy pickings for bulls trying to discredit and belittle us. Interest rates in the US were dropped in response to the dot com crash, not 9/11. Peak oil is at least 20 years away, and that is a conservative estimate. You should study the history of "wolf-crying" about oil (and coal) running out before jumping to such conclusions.

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In answer to Fred's original question, of course it was by design. You don't get the lowest interest rates for 50 years by 'accident'.

But this has been happening for decades, booming and busting since the 1970s. The same thing hasnt happened in the eurozone, and they have had lower rates than us. Its a long term scam.

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But this has been happening for decades, booming and busting since the 1970s

Of course, interest rates are only part of the picture. The UK's chronically-restrictive land use policy and taxation (or lack of) on principal private residences have all played a part in this current boom.

Read these papers by Policy Exchange to learn more:

http://www.policyexchange.org.uk/uploads/m...ore_-_final.pdf

http://www.policyexchange.org.uk/uploads/m...age_summary.pdf

http://www.policyexchange.org.uk/uploads/m...0_June_2005.pdf

Warning: the 1st and 3rd links are over 1MB in size, do not download if you are on dial-up internet access.

Gordon Brown's tax raid on pensions, the reform of assured shorthold tenancies in 1988 and 1996, demographics, all of these have been contributory factors.

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

RSF.....Why don't you just find a women (divorce, whatever) whose

allready got a house and your problem is solved. (as long as she bought pre 2000). serious question!

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'The World is run by very intelligent people who are having us on, or

by imbeciles who mean what they say.'

Mark Twain

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Given banks effectively print their own wealth and HPI with associated debt cycle always end up with banks owning a greater % of physical wealth e.g. peoples assets, you have to wonder.

I see it's your first post! Welcome to HPC!

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

not quite,if the media hadn't force-fed the sheeple property get-rich-quick programmes for the last 5 years then the bubble would not be anywhere near as bad.

the sheeple are victims,blame the perpatrators.

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any thoughts on if this boom was deliberate or a result of people just following the herd and snowballing it ?

I don't think that these things are mutually exclusive. A hypothetical cabal of conspirators who already know the propensity of the herd to magnify a bubble, can bring about conditions which allow the bubble to form.

But, honestly, I don't think it was a conspiracy. More like a case of failed opportunity followed by political expediency. Let me explain:

Labour inherited a legistlative/economic context in which the housing bubble was likely. Their instinct was to try to correct this and they had a golden opportunity in 1997. However, the only move they chose was granting independence to the Bank of England. The story at the time was that while the Tories had used interest rates as a political tool, Labour never would.

However, interest rates can go up and down even with an independent Bank of England so granting it independence does not in itself prevent boom and bust. Labour failed to take any of the measures which would have really helped prevent the extremes of boom and bust. These were:

- regulate the banks, i.e. mortgage lending, remember this had been massively deregulated in the 80s

- improve tenants' rights.

- invest in social housing.

- reform planning law.

The first of these, regulating the banks, is by far the most important. I think Labour failed to do this because the City had largely backed them in 1997 (which was unprecedented) and they didn't want to upset their new friends.

Finally, when the boom did take off, especially post 2001, it was just too inconvenient to try to stop it. Much easier to believe your own hype about steady growth etc.

I write as a life long Labour supporter, very disillusioned.

frugalista

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I think that the present over valuation of UK and Irish property has much more to do with the availability of bargain basement credit, to all and sundry, than with any fundamental demographic demand. Being a keen student of history I think it’s worth looking how we got here.

Alan Greenspan chairman of the American Federal Reserve is often cited as the man who championed the loosening of the purse strings even prior to the Dot Com bust in 2000. Some commentators suggest this relaxation was a consequence of the break up of the Soviet Empire in 1990 which allowed investment to flow into what was once called the Second World, free from any geopolitical cold war security concerns; creating a ‘Global Economy’

By the mid 1990’s the US was the sole superpower and was emerging from a recession which started at the beginning of the decade. It was reasonable for Greenspan (knowing that the US administration were undertaking successful trade and security talks with China and the old Soviet block) to formulate Federal Reserve Policy in response by lowering the cost of borrowing to encourage the economic recovery, and while government spending and trade deficits had grown in this period, acquiescent Arab Oil States (after the success of Gulf War 1) and the emerging benefits of low and falling production costs in Asia cemented the view that the old foe inflation was off the radar screen for the foreseeable future.

So in the mid nineties things looked rosy for The United States they had won the Gulf and Cold Wars they were the dominant world power and their economy was out of recession with a new industry ‘The Internet’ blazing a ‘frothy’ trail towards the dawn of a new millennium, sure deflation in Japan had some worried and even Greenspan in 1996 alluded to “irrational exuberance” in the highly valued Dot Com market. But on the 1 January 2000 when even the dreaded Y2K bug proved to be mere doom mongering, things looked set fair.

But things started to unravel, the Dot Com bubble predictably burst in the spring sending stock markets across the globe into reverse, the Fed responded by cutting rates to bolster the markets and consumer spending, meanwhile (back at the ranch) G W Bush was busily cutting taxes on the rich as part of his plan to boost investment in the US (during this period Bush also increased Government budgets by a magnitude that even Democrats would balk at) a growing trend of outsourcing to Asia was eating away at Americas industrial base as the big corporations became comfortable with investing in China etc. All this time the governments spending deficit and the nations trade deficit climbed.

Then literally out of the blue on the morning of Tuesday the eleventh of September 2001 came, an attack on the US by mainly Saudi Islamic extremists which killed 3,000 people. These attacks sent the stock markets (which were showing nascent signs of recovery) into reverse, the Fed responded to the attacks by introducing what they styled “emergency rate cuts”. In response to the 9/11 attacks the US and her allies invaded first Afghanistan and then Iraq.

Against this chaotic and confusing background the scene was set for the largest run up in American property prices in history. Lead by sceptical public perception of equities following the Dot Com bust and fuelled by cheap money and ‘casual’ lending standards house prices soared.

Savings rates have plummeted in the US and in other bubble economies, deficits have soared, governments and bankers are desperate to stave off (or more likely, to be seen to stave off) deflation, and a Japanese style deflationary recession. I think they know they’ll fail.

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I think that the present over valuation of UK and Irish property has much more to do with the availability of bargain basement credit, to all and sundry, than with any fundamental demographic demand. Being a keen student of history I think it’s worth looking how we got here.

Alan Greenspan chairman of the American Federal Reserve is often cited as the man who championed the loosening of the purse strings even prior to the Dot Com bust in 2000. Some commentators suggest this relaxation was a consequence of the break up of the Soviet Empire in 1990 which allowed investment to flow into what was once called the Second World, free from any geopolitical cold war security concerns; creating a ‘Global Economy’

By the mid 1990’s the US was the sole superpower and was emerging from a recession which started at the beginning of the decade. It was reasonable for Greenspan (knowing that the US administration were undertaking successful trade and security talks with China and the old Soviet block) to formulate Federal Reserve Policy in response by lowering the cost of borrowing to encourage the economic recovery, and while government spending and trade deficits had grown in this period, acquiescent Arab Oil States (after the success of Gulf War 1) and the emerging benefits of low and falling production costs in Asia cemented the view that the old foe inflation was off the radar screen for the foreseeable future.

So in the mid nineties things looked rosy for The United States they had won the Gulf and Cold Wars they were the dominant world power and their economy was out of recession with a new industry ‘The Internet’ blazing a ‘frothy’ trail towards the dawn of a new millennium, sure deflation in Japan had some worried and even Greenspan in 1996 alluded to “irrational exuberance” in the highly valued Dot Com market. But on the 1 January 2000 when even the dreaded Y2K bug proved to be mere doom mongering, things looked set fair.

But things started to unravel, the Dot Com bubble predictably burst in the spring sending stock markets across the globe into reverse, the Fed responded by cutting rates to bolster the markets and consumer spending, meanwhile (back at the ranch) G W Bush was busily cutting taxes on the rich as part of his plan to boost investment in the US (during this period Bush also increased Government budgets by a magnitude that even Democrats would balk at) a growing trend of outsourcing to Asia was eating away at Americas industrial base as the big corporations became comfortable with investing in China etc. All this time the governments spending deficit and the nations trade deficit climbed.

Then literally out of the blue on the morning of Tuesday the eleventh of September 2001 came, an attack on the US by mainly Saudi Islamic extremists which killed 3,000 people. These attacks sent the stock markets (which were showing nascent signs of recovery) into reverse, the Fed responded to the attacks by introducing what they styled “emergency rate cuts”. In response to the 9/11 attacks the US and her allies invaded first Afghanistan and then Iraq.

Against this chaotic and confusing background the scene was set for the largest run up in American property prices in history. Lead by sceptical public perception of equities following the Dot Com bust and fuelled by cheap money and ‘casual’ lending standards house prices soared.

Savings rates have plummeted in the US and in other bubble economies, deficits have soared, governments and bankers are desperate to stave off (or more likely, to be seen to stave off) deflation, and a Japanese style deflationary recession. I think they know they’ll fail.

this is a really good post!

but if history teaches us one thing,especially true in politics.You don't have friends,only potential successors.So while the old soviet republic and china may look friendly now,it doesn't for one minute mean they have changed their ambitions.....merely the tactics they are using to achieve their goal.It ain't always about brute force.

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In answer to Fred's original question, of course it was by design. You don't get the lowest interest rates for 50 years by 'accident'.

No offence, but quotes like these diminish the credibility of this website and make easy pickings for bulls trying to discredit and belittle us. Interest rates in the US were dropped in response to the dot com crash, not 9/11. Peak oil is at least 20 years away, and that is a conservative estimate. You should study the history of "wolf-crying" about oil (and coal) running out before jumping to such conclusions.

You are certainly wrong about Peak Oil, IPOD. The only people claiming PO is at least 20 years away are those who haven't worked through the implications of such a suggestion. clv101 had an excellent post elsewhere in which he showed there was really no realistic way of setting PO much beyond 2010. And you should understand that the guy who correctly predicted the peaking of US oil in 1970 (Marion Hubbert) predicted that global PO would happen in 2000. So why hasn't it happened? Because the oil crisis of 1979 postponed it by a few years. Another analysis by Deffeyes predicts PO this year. Chris Skrebovski, the Editor of Petroleum Review, has analysed oil demand and oil supply and concludes that the projects that will come into production between now and 2010 are not sufficient to offset depletion of existing fields (that is the definition of Peak Oil). Another analyst called Simmons carried out a literature review of the Institute of Petroleum Engineers library and realised that assumptions about Saudi oil fields were dangerously optimistic. He predicts the lasrgest oil field in the world, the Ghawar, with peak and decline sharply in the next few years. This field is so critical to global supply that when it peaks that will be Peak Oil.

A couple of weeks ago the Kuwaitis made the astonishing admission that the second largest oilfield in th world, the Burgan, has peaked and is now in decline. This has amazed the oil world, but attracted little notice beyond those who appreciated its significance.

Peak Oil is not 20 years away. It is imminent.

As regards the sneering... well, I agree it's an off the wall idea. But I'm pretty sure I am onto something there. There was much more to 9/11 than a random act of mass murder. Such an immense operation could only have happened with great collective understanding of purpose behind it. Still, if you have a better explanation, I'll be glad to hear it.

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I found this interesting quote on a Peak Oil site:

"AS WE CAN SEE THE NON-OPEC GLOBAL SAILINGS EXHIBIT A WELL PRONOUNCED PLATEAU BEGINNING AROUND 2001. OPEC SAILINGS CONTINUE TO RAISE UNTIL NOW. HOWEVER GLOBAL SAILINGS EXHIBIT THE BEGINNING OF A WELL PRONOUNCED PLATEAU AROUND DECEMBER 2004 WITH A SLIGHT DOWNTREND IN 2005. ANOTHER IMPORTANT POINT IS THAT THE DATA NOISE IN 2005 SAILINGS DIMINISHES SIGNIFICANTLY. THIS SHOWS A HIGHLY STRETCHED UPSTREAM AND MID-STREAM SYSTEM. ANOTHER POINT OF INTEREST IS THAT GLOBAL DEMAND SHOWS A GENERAL UPTREND WITH SEASONALITY BUMPS. THIS HOWEVER IS NOT OBSERVED OR AT LEAST NOT VISIBLY REFLECTED IN THE SAILINGS DATA IN 2005. THE MOST OBVIOUS CONCLUSION IS THAT THE GLOBAL UPSTREAM AND MID-STREAM SYSTEMS ARE STRETCHED TO POINT WHERE NO MORE SLACK EXISTS. ALSO THE NON-OPEC SAILINGS HAVE ENTERED A BROAD PLATEAU WITH NO VISIBLE SIGNS OF PICKING UP. WITH OPEC CURRENTLY THE ONLY MARGINAL PRODUCER WITH SOME SPARE CAPACITY AND WORLD TANKER FLEET PUSHED TO THE LIMITS THE UPSTREAM AND MID-STREAM SUPPLY SYSTEM HAS CLEARLY TOPPED OUT IN 4Q-04. THIS MAY LEND CREDENCE TO THE THEORY OF WORLD PEAK IN CRUDE OIL PRODUCTION ALTHOUGH A MUCH MORE RIGOROUS APPROACH IS NEEDED COMBINED WITH A GLOBAL ECONOMETRIC MODEL TO REACH A CONCLUSION. A COMBINATION OF WOCAP AND FAIR-PARKE MODEL APPROACH COULD YIELD DEFENDABLE RESULTS."

Interesting......

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You are certainly wrong about Peak Oil, IPOD. The only people claiming PO is at least 20 years away are those who haven't worked through the implications of such a suggestion.

Like Total, one of the biggest oil companies in the world you mean?

http://www.total.com/static/en/medias/topi...wsletter_17.pdf

page 5.

Or perhaps the IEA are clueless about such things?

http://www.guardian.co.uk/life/feature/sto...1464050,00.html

The US Geological Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three trillion barrels and that peak production will not come for about 30 years. The International Energy Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and Iran, four countries with much of the world's known reserves, report little if any depletion of reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates," said BP this week.

Indeed, almost every year for 150 years, the oil industry has produced more than it did the year before, and predictions of oil running out or peaking have always been proved wrong.

the guy who correctly predicted the peaking of US oil in 1970 (Marion Hubbert)

He correctly (some say by sheer luck) predicted the peak of oil production from the lower 48 states. Offshore and deepwater extraction continues to increase.

http://www.energyseer.com/NewPessimism.pdf

Chris Skrebovski, the Editor of Petroleum Review, has analysed oil demand and oil supply and concludes that the projects that will come into production between now and 2010 are not sufficient to offset depletion of existing fields (that is the definition of Peak Oil).

No, the definition of Peak oil is passing the ALL_TIME peak in net oil production. How can he possibly pretend that this will come in 2007/8 when he has no idea (and does not even attempt to speculate) what projects will come online AFTER 2010?

http://researched.blogspot.com/2004_10_01_...ed_archive.html

Also, the sources you quote are all from the Peak oil "High Church" (ie Deffeyes, Hubbert, Laherrerre, Skrebowski, Simmons, etc). It would do your credibility a world of good to research the other side of the story (Lynch, Maugeri, Baqi, Saleri, etc) before making up your mind.

Another analyst called Simmons

Matt Simmons is not an analyst, nor is he a petroleum engineer. He is an investment banker in the energy business.

A couple of weeks ago the Kuwaitis made the astonishing admission that the second largest oilfield in th world, the Burgan, has peaked and is now in decline.

Yeah, sure, it peaked.....at 2 mbpd. For the next 30-40 years it will produce 1.7 mbpd instead. Big deal.

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

In November, 2005, Farouk Al Zanki, Chairman of state-owned Kuwait Oil, reported that the Burgan oil field production levels are running down. Burgan will now produce 1.7 mbpd rather than 2 mbpd for the rest of its 30-40 years. He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate.

As for your 9/11 theory, bear in mind Occam's Razor; the most obvious explanation is sometimes the correct one. Islamic fundamentalists, who have long despised the decadent West and America in particular as an embodiment of all that the West stands for, sought to bring down that which underpins the stability and prosperity of the West, ie international trade. What better target then, than the World Trade Center?

As the IRA said in a message to Maggie Thatcher after the Brighton bombing, "We only have to be lucky once; you will have to be lucky every single time". They finally got lucky.

THE MOST OBVIOUS CONCLUSION IS THAT THE GLOBAL UPSTREAM AND MID-STREAM SYSTEMS ARE STRETCHED TO POINT WHERE NO MORE SLACK EXISTS. ALSO THE NON-OPEC SAILINGS HAVE ENTERED A BROAD PLATEAU WITH NO VISIBLE SIGNS OF PICKING UP.

If this is the case why is crude oil 20% down off it's highs?

Edited by IPOD

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IPOD, re Peak Oil, you make the error of taking sides and caricaturing the side with which you disagree. This is not a very smart approach. I have no reason to suppose that the “High Church” of Peak Oil is inherently more reliable than the US Geological Survey.

I have looked at the case each has proposed (and that of CERA too) and I find the technical case for imminent Peak Oil to be compelling, given current knowledge. Whereas, projections by the USGS and CERA rely on assumptions about future Middle East oil production which a) are based on politically inflated oil reserve data, and b ) are not plausible given the condition of ME oil fields c ) assume an increase in global researves of a third, a trillion barrels, yet discoveries have been declining since the early 1960s. Even the Saudis admit they will not be able to exceed 15mb/d production, yet the USGS proposes they reach 18-20mb/d production by 2020 to meet its projections. In fact, the Saudis recently tacitly admitted that 12mb/d will be a struggle to reach by 2010. They have actually stated that the Ghawar field is 48% depleted – a peculiarly ominous admission. Existing fields are depleting and there is little newly discovered capacity to bring on line to replace it. I am not impressed by the presentation of oil companies to their shareholders and this kind of thing is not very relevant anyway – the reserves of the oil companies amount to only a tiny fraction of (claimed) global reserves. Likewise it must be said that CERA has a history of making optimistic predictions that don’t come true, viz nat gas in the US.

But I am not going to be your researcher. Believe what you like. If you think the "High Church" is wrong, it would be interesting to see your own projections for Saudi production, and its reasoning.

The current fall in oil price is not a surprise. As demand squeezes out the last spare capacity, prices become extremely volatile as well as following an upward long term trend. So a fall is not unexpected. There will be big rises and falls to come.

The suggestion that the house price boom is at least partly an Al Qaeda plot is a whacky idea – if you want to view it as “barmy” then go ahead. Each to his own.

Edited by malco

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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