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Is America Facing An Economic Disaster?

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Stephen Sackur talks to America's Auditor -in-Chief, David Walker. Is America facing an economic disaster?

http://news.bbc.co.uk/2/hi/programmes/hardtalk/4857646.stm

Mabye. This is a link to a video interview suggesting US faces a fiscal imbalance with an aging population, which will hit when the baby boomers retire. The imblance will, it is argued, become a problem by 2020 or so - Mr. Walker is vague about dates. The subtext is that policy changes are needed now to head this off. Interesting, though it does not address such key issues as the health of the financial system, the housing market, the oil price, or of the economy in general. But the fiscal issues are an important factor, of course.

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Stephen Sackur talks to America's Auditor -in-Chief, David Walker. Is America facing an economic disaster?

http://news.bbc.co.uk/2/hi/programmes/hardtalk/4857646.stm

It's so depressing. Thirty years ago Americans were walking on the moon, and now, they look set to be reposessed.

I am afraid of what is unravelling in this world. I would give anything to stop it.

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It's so depressing. Thirty years ago Americans were walking on the moon, and now, they look set to be reposessed.

I am afraid of what is unravelling in this world. I would give anything to stop it.

Yes. Annoyingly... as much as it is fashionable to slag off the yanks for all their injustices, can you seriously imagine anyone else being in charge?

If so, why would the world be better place for it?

How about Russia?

hmm.

No. Maybe not. Ok then... the Uk.

No maybe not.

Japan? No.

How about France?

The European Union?

China?

India?

North Korea, anyone?

Actually my money would probably be on the Germans. I think they've chilled out a lot in the last fifty years.

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I've lived in America now for the past five years and think you should all think again before you write off USA inc. The fact is, this is the largest single trading block in the world with some of the most flexible labor laws and powerful corporations. Their universities are crammed with the worlds' best minds, and hundreds of thousands of Brits and other resident aliens support their competitive advantages in technology. Take a look at the Times Worldwide University Rankings and see where brains prefer to live.

If the US is to fail someone else must stand in and there are no credible alternatives. Ok, the Euros rise is an impressive testimony to Monet's vision which now holds the worlds' attention, even in the face of the UKs' petty minded nationalism. However, the Euros success is not displacing the dollars privileged role as a preferred reserving currency, instead it's sharing the role as China and India expand. I spoke with an investment advisor this week who challenged me to check the amount of cash held by businesses in the US, it truly huge, and the economy is doing very well despite Katrina, the War and Britney Spears. The advisor is predicting a good year for equities and bad year for housing - I am inclined to agree even with their contrarian view of a stronger dollar by the end of the year as the UK slides towards recession.

As I drive to work along I10 I see construction work on a huge scale, all being manned by Mexicans. Houston will expand by several hundred thousand over the next 25 years to accommodate the New American Century. Oddly, I can't say I have seen ONE black face on the roadwork despite New Orleans being 400 miles away and having a some 200,000 perpetually unemployed people - many of course now supported by the Government here in Houston. The reason I point this out is to highlight the paradox of America. The truth is this is both one of the wealthiest and poorest nations on earth. The standard of living is fantastic if you are a professional and dreadful if you are poor. And therein lies the solution to America's impending fiscal tsunami - Bush and the republicans have already tried to bankrupt Social Security and MEDICARE and failed but its just a matter of time. When I first realized what he was doing I was horrified and all my British caring and social sentiments hit me. That was 2-3 yrs ago and now is different because I understand what is happening and fear for life in the UK. If you are under 45 and don't own a house in the UK then you will already understand what I mean. Your future has been sold to pay for the current generation of pensioners and public workers who use house prices as one means of milking you. There are others like demanding pensions and state benefits that you will never enjoy. The ideals set by Labor are fine if you work in the public sector or are old but mull for a while what it will really mean to you. Better still get on a plane and come to the US where you will see what happens to those who don’t have means to support themselves.

The way UK plc is heading will split society in Britain into those who were lucky and those who are not, with the 'have nots' being milked like cash cows. Mark my word, the real effects of this will mean you won't have the same health care, or dental plans, or pensions enjoyed by this generation of pensioners. That means real pain and hardship for many of you. And that is why Bush is right, or at least the republican hawks are right, they know what is about to happen and know the solution is for the US to be a low wage society that can compete with what many condescendingly call Chinida. A policy of open borders, lax labor laws, expansion of the population, and reduction in social provisions will allow the American middle classes to weather the demographic storm. All it needs is a little more scare factor and the American middle class will queue to vote for a two track Nation.

Somebody asked whether younger people should riot as they did during the poll tax years – you are facing a far worse situation, but this time the frog is being boiled so slowly it will be too late before you know.

PS I'm English and young enough to be slightly ashamed of the fact people sing 'rule Britannia' and 'god save the queen'

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What would happen if world interest rates go up?

And people get busted?

And we have a recession?

Clean sheet?

Is this a deliberately engeineered situation - cheap borrowing?

Could it just be a ****** up?

I like the way so many people on here think that politicians actually "run" things.

Consider the situation the Tories found themselves in during the early 1990s.

DO YOU THINK THEY WANTED THAT?

Emphasis on the "WANTED" part?

See what I mean?

Our Chancellor arrogantly proclaims "no more boom and bust" at his 10th budget.

Do you not think that this secret - if it exists - would have been discovered BEFORE now?

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Arguing that America in a good financial position is plain stupid

For every man woman and child in the USA you have $108k of both public and private debt and now Iran is going to be selling oil in euros, the world won’t be financing the American debt cycle to the same degree as they had been doing.

GW-Bush bombed his own people on the 9-11, threatens it’s friends in the west and undercuts Americans wages by allowing mass immigration of cheap foreign workers so he and his friends can fill their pockets.

Here in the UK you need to protect yourself, start saving for your own pension as the government will give little to none of your tax back to you when you retire. Stopped being mugged by paying high taxes that give a poor return in terms of services, use the same tax avoidance programs your leaders use. Take care of number one if you want to survive the collapse of the USD$

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Arguing that America in a good financial position is plain stupid

For every man woman and child in the USA you have $108k of both public and private debt and now Iran is going to be selling oil in euros, the world won’t be financing the American debt cycle to the same degree as they had been doing.

GW-Bush bombed his own people on the 9-11, threatens it’s friends in the west and undercuts Americans wages by allowing mass immigration of cheap foreign workers so he and his friends can fill their pockets.

Here in the UK you need to protect yourself, start saving for your own pension as the government will give little to none of your tax back to you when you retire. Stopped being mugged by paying high taxes that give a poor return in terms of services, use the same tax avoidance programs your leaders use. Take care of number one if you want to survive the collapse of the USD$

Here Here!!!!!!!

.......

If the US is to fail someone else must stand in and there are no credible alternatives. ........

Why?

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Apologies if its been posted, but just spotted this on a spanish forum link Consa posted.

http://money.cnn.com/2006/03/24/pf/persona...tcies/index.htm

"Personal bankruptcies soar to all-time high

Bankruptcies jumped 30% to nearly 2.1 million last year as debtors rushed to file petitions before new restrictions took effect.

NEW YORK (CNNMoney.com) - The number of Americans filing for bankruptcy jumped 30 percent last year to the highest on record as debtors rushed to file petitions before new restrictions took effect, according to the Administrative Office of the U.S. Courts.

Personal bankruptcies filed in the federal courts totaled 2,078,415 in 2005, up from 1,597,462 petitions filed in 2004, the office said in a statement on its Web site Friday."

Edited by Saving For a Space Ship

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I've lived in America now for the past five years and think you should all think again before you write off USA inc. The fact is, this is the largest single trading block in the world with some of the most flexible labor laws and powerful corporations. Their universities are crammed with the worlds' best minds, and hundreds of thousands of Brits and other resident aliens support their competitive advantages in technology. Take a look at the Times Worldwide University Rankings and see where brains prefer to live.

If the US is to fail someone else must stand in and there are no credible alternatives. Ok, the Euros rise is an impressive testimony to Monet's vision which now holds the worlds' attention, even in the face of the UKs' petty minded nationalism. However, the Euros success is not displacing the dollars privileged role as a preferred reserving currency, instead it's sharing the role as China and India expand. I spoke with an investment advisor this week who challenged me to check the amount of cash held by businesses in the US, it truly huge, and the economy is doing very well despite Katrina, the War and Britney Spears. The advisor is predicting a good year for equities and bad year for housing - I am inclined to agree even with their contrarian view of a stronger dollar by the end of the year as the UK slides towards recession.

As I drive to work along I10 I see construction work on a huge scale, all being manned by Mexicans. Houston will expand by several hundred thousand over the next 25 years to accommodate the New American Century. Oddly, I can't say I have seen ONE black face on the roadwork despite New Orleans being 400 miles away and having a some 200,000 perpetually unemployed people - many of course now supported by the Government here in Houston. The reason I point this out is to highlight the paradox of America. The truth is this is both one of the wealthiest and poorest nations on earth. The standard of living is fantastic if you are a professional and dreadful if you are poor. And therein lies the solution to America's impending fiscal tsunami - Bush and the republicans have already tried to bankrupt Social Security and MEDICARE and failed but its just a matter of time. When I first realized what he was doing I was horrified and all my British caring and social sentiments hit me. That was 2-3 yrs ago and now is different because I understand what is happening and fear for life in the UK. If you are under 45 and don't own a house in the UK then you will already understand what I mean. Your future has been sold to pay for the current generation of pensioners and public workers who use house prices as one means of milking you. There are others like demanding pensions and state benefits that you will never enjoy. The ideals set by Labor are fine if you work in the public sector or are old but mull for a while what it will really mean to you. Better still get on a plane and come to the US where you will see what happens to those who don’t have means to support themselves.

The way UK plc is heading will split society in Britain into those who were lucky and those who are not, with the 'have nots' being milked like cash cows. Mark my word, the real effects of this will mean you won't have the same health care, or dental plans, or pensions enjoyed by this generation of pensioners. That means real pain and hardship for many of you. And that is why Bush is right, or at least the republican hawks are right, they know what is about to happen and know the solution is for the US to be a low wage society that can compete with what many condescendingly call Chinida. A policy of open borders, lax labor laws, expansion of the population, and reduction in social provisions will allow the American middle classes to weather the demographic storm. All it needs is a little more scare factor and the American middle class will queue to vote for a two track Nation.

Somebody asked whether younger people should riot as they did during the poll tax years – you are facing a far worse situation, but this time the frog is being boiled so slowly it will be too late before you know.

PS I'm English and young enough to be slightly ashamed of the fact people sing 'rule Britannia' and 'god save the queen'

I remember living in the US, and much of what you say is certainly true. In many parts of cities your take your life in your hands crossing ghetto areas and the black underclass and drug culture dominates the businesses and streets. Many white people live in security guarded apartment towers in the financial district away from the problems. However, if there was no mass immigration of millions mexicans, and tight immigration, many of the undesireables in cities like new orleans would be sought after by employers for construction or other work, raising ther aspirations and standards of living and turning them into honest citizens - the whole sub culture would change.

With collosal amounts of profits on the books of US companies, it would hardly be a bad goal to see labour get its fair share through tight immigration so wages rise and poverty is reduced. A polarised society is not something the founding fathers had in mind when they drew up the consititution.

The under 45s are now more or less a surf class when you realise the taxes they pay and savings they make for benefits will simply goto pay the gilded pension of those above.

Thats why a population register and Id card infrastructure will mean they will be trapped under the burden of increasing liabilties.

P.S. In the US the government is only 28% of the size of the economy. Thats mainly because healthcare is a private industry, which in itself is 13.6% of the economy, far larger than the NHS at 7% of the economy.

Dispite all the massive spending on US healthcare, many US citizens have no insurance and no healthcare, dispite these being essentials, which in turn, futher shows just how very expensive US healthcare really is.

Americans are paying too much for healthcare, because dispite competition, hospitals have all the economic charateristics of a monopoly such as a water or electric utility, but unlike those regulated entities, with unregulated pricing power.

I can think of no other industry in which you can walk in for a simple consultation/treatment for a simple prescription and see a specialist for 2 minutes after waiting 4 hours, and be landed with a bill for $650 to be claimed back from insurance.

(What comes close is the minor accident damage/whiplash from a car mishap, which can be £1000 also paid from insurance).

Edited by brainclamp

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........... However, if there was no mass immigration of millions mexicans, and tight immigration, many of the undesireables in cities like new orleans would be sought after by employers for construction or other work, raising ther aspirations and standards of living and turning them into honest citizens - the whole sub culture would change.

I would love this to be true but wouldn't bet a penny on the outcome you suggest. I lived in New Orleans long enough to know that the city is full of people who have no aspiration other than to demand welfate rights not earned. The US is mired in guilt about the way blacks were treated and to some extent still are - racism is repugnant and you would need a heart of stone not to see the former injustice. But the fact is human rights have been clouded with welfare rights and most Americans are too afraid to reveal their true feelings about the poor in places like New Orleans - and by poor I mean backs and whites. The truth is simple, there are jobs for many of the unemployed but they dont want them, it's a dog hard day building roads in 110F and the attitude of the unemployed of New Orleans is simple - why work when the State will support you? The western world has created a subclass of lazy unproductive people who live on the fringes. There are many like them in the UK as well of course but here race has made the problem even more complex.

As for mexicans, on the average, I think it's fair to say they work harder, commit less crime, have better social structures and have better family values than the poor of America. The oddest part of American life is you hear people on the radio revile them on a daily basis. It makes me give up hope when I hear one radio host after the other criticising Mexicans as I sit in my car driving to and from work watching them build the I10 with their bare hands. As house price crash hopers know justice is often very clouded.

Edited by bpw

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I live in the US. The healthcare situation is a joke. Every single person I know who has interacted with it has ended up in a Kafkaesque bureacratic nightmare where they have to pay out hundreds or thousands of dollars out of pocket and then write letters to the provider / insurer or some other office to try and argue why they should have been covered, not always successfully. And these are people with *good* health insurance, so you can imagine what it is like for those with bad or no insurance.

It is obvious to me why healthcare has worked out this way. A given industry benefits from competition when people want a range of different products and have time to choose between them. In the case of healthcare there really is only one product and no ill person in their right mind is going to waste time shopping around for it. So competition just adds loads of extra costs such as

  • new drugs having swish TV adverts
  • hospitals hiring marketing consultants
  • insurers hiring armies of lawyers to chase liable parties through the courts
  • etc. etc.

Another nasty aspect to it is you never quite trust the health professionals who treat you. Are they acting in your best interests healthwise or simply trying to maximise their profits? The NHS might not be perfect but it is actually very good value for money compared to the mess you get in America.

The US has the most productive businesses in the world and you can see why. Every possible way of minimizing costs and maximising revenues is utilized. This has good and bad effects. On the good side many common goods and services work out quite cheaply, service is generally good, things get done when and how they were promised. On the bad side people work far too many hours, do not take enough time off and end up burning themselves out. Workers' rights are awful, and consumers have to be constantly vigilant for ripoffs, and every time you walk into a shop you get a hard sell.

Taxes in the US are not particularly low compared to other industrialized nations. The reason for this is obviously the massive proportion of tax dollars spent on military spending which is probably higher than any other developed country other than Israel.

The prognosis for the US is unclear in my view. On the one hand they have taken industrialization in a very different direction from other developed countries and seem to be storing up massive social problems in the future. On the other hand there is a very positive problem-solving attitude amongst people so maybe they will pull through.

frugalista

edit: to get round IPB changing s.w.a.n.k.y. to s*****y

Edited by frugalista

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The way UK plc is heading will split society in Britain into those who were lucky and those who are not, with the 'have nots' being milked like cash cows. Mark my word, the real effects of this will mean you won't have the same health care, or dental plans, or pensions enjoyed by this generation of pensioners.

Last time I went to the States 12 months ago. 50% of the population lived in nice 5 bed Mcmansions, the haves (on credit anyway for the time being) and the other 50% lived in trailer parks with not a pot to p*55 in, the have nots (soon to be joined be the current "think they haves"). This was the first time I had spent time outside the Metropolitan areas so it was a real eye opener to the real America.

So what you are effectively saying is the US is just a blueprint for the UK.

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I've lived in America now for the past five years and think you should all think again before you write off USA inc. The fact is, this is the largest single trading block in the world

Yes trading block but not producing block

fact is american buys stuff from china to rebrand and sell to the west but when it comes to payment american does not have the money so china lends them yet more so that the whole cycle can start again.

the totol debt for the average household in the USA is over $500,000 and what is now a trickle to get out of the fiat $$$$ with no M3 data will become a flood.

With Dictator Bush running the country you have one chance and thats no chance

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I've lived in America now for the past five years and think you should all think again before you write off USA inc. The fact is, this is the largest single trading block in the world with some of the most flexible labor laws and powerful corporations. Their universities are crammed with the worlds' best minds, and hundreds of thousands of Brits and other resident aliens support their competitive advantages in technology. Take a look at the Times Worldwide University Rankings and see where brains prefer to live.

If the US is to fail someone else must stand in and there are no credible alternatives. Ok, the Euros rise is an impressive testimony to Monet's vision which now holds the worlds' attention, even in the face of the UKs' petty minded nationalism. However, the Euros success is not displacing the dollars privileged role as a preferred reserving currency, instead it's sharing the role as China and India expand. I spoke with an investment advisor this week who challenged me to check the amount of cash held by businesses in the US, it truly huge, and the economy is doing very well despite Katrina, the War and Britney Spears. The advisor is predicting a good year for equities and bad year for housing - I am inclined to agree even with their contrarian view of a stronger dollar by the end of the year as the UK slides towards recession.

As I drive to work along I10 I see construction work on a huge scale, all being manned by Mexicans. Houston will expand by several hundred thousand over the next 25 years to accommodate the New American Century. Oddly, I can't say I have seen ONE black face on the roadwork despite New Orleans being 400 miles away and having a some 200,000 perpetually unemployed people - many of course now supported by the Government here in Houston. The reason I point this out is to highlight the paradox of America. The truth is this is both one of the wealthiest and poorest nations on earth. The standard of living is fantastic if you are a professional and dreadful if you are poor. And therein lies the solution to America's impending fiscal tsunami - Bush and the republicans have already tried to bankrupt Social Security and MEDICARE and failed but its just a matter of time. When I first realized what he was doing I was horrified and all my British caring and social sentiments hit me. That was 2-3 yrs ago and now is different because I understand what is happening and fear for life in the UK. If you are under 45 and don't own a house in the UK then you will already understand what I mean. Your future has been sold to pay for the current generation of pensioners and public workers who use house prices as one means of milking you. There are others like demanding pensions and state benefits that you will never enjoy. The ideals set by Labor are fine if you work in the public sector or are old but mull for a while what it will really mean to you. Better still get on a plane and come to the US where you will see what happens to those who don’t have means to support themselves.

The way UK plc is heading will split society in Britain into those who were lucky and those who are not, with the 'have nots' being milked like cash cows. Mark my word, the real effects of this will mean you won't have the same health care, or dental plans, or pensions enjoyed by this generation of pensioners. That means real pain and hardship for many of you. And that is why Bush is right, or at least the republican hawks are right, they know what is about to happen and know the solution is for the US to be a low wage society that can compete with what many condescendingly call Chinida. A policy of open borders, lax labor laws, expansion of the population, and reduction in social provisions will allow the American middle classes to weather the demographic storm. All it needs is a little more scare factor and the American middle class will queue to vote for a two track Nation.

Somebody asked whether younger people should riot as they did during the poll tax years – you are facing a far worse situation, but this time the frog is being boiled so slowly it will be too late before you know.

PS I'm English and young enough to be slightly ashamed of the fact people sing 'rule Britannia' and 'god save the queen'

excellent post.

thats exactly whats happening.

The US is well on the way to being INDIA mark 2 and the UK looks like it may be on the way to emulating China.

If you visit the 3rd world like India you will notice there is no such thing as Social Security or National Insurance or Welfare or Free Health care. Everything is privatised and if you are poor then tough shit.

You will have to beg to eat and god help you of you get really sick.

I have heard the screams of people dying without any medical attention.

We all thought that the grand plan was for India to become like us. We were wrong.

The grand plan is for us to become like India.

There appears to be the 3rd way of socialist China.

But China has no welfare or social security either.

China is simply India with a better economy and more authoritarian government.

Being poor in China or India is not a pleasant experience.

The UK already seems intent on followinng the Chinese model : Massively authoritarian govt allied with free-wheeling capitalism.

If I had to choose I suppose I would choose the Indian model.

You may be dirt poor and have to beg for food but at least the govt leaves you alone to mind your own business.

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David Walker in the FT: Learn from the fall of Rome, US warned

"The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned..."

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Actually my money would probably be on the Germans. I think they've chilled out a lot in the last fifty years.

Maybe, they've chilled a lot in the last 15 years. When I lived and worked there in the late 1980s, in both east and west Germany the West Germans were unbearable, whinging about how they were robbed over the 2nd World War and jackbooting around us "Gastarbeiters" reminding us that during WWII we'd have been taken out and shot for questionning the master race. 10 years of recession and also the immediate post war generaton dying off has mellowed them, they were almost pleasant when I went there on a recent business trip. On and they even open shops on Saturday afternoon now.

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The advisor is predicting a good year for equities and bad year for housing - I am inclined to agree even with their contrarian view of a stronger dollar by the end of the year as the UK slides towards recession.

Time to get a new advisor. It's August and the S&P500 has gone nowhere. If it's going to be a good year for equities it'll have to go gangbusters for the rest of the year. Years ending in a 6 or a 7 are historically bad for equities - he knows that I presume?

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As I drive to work along I10 I see construction work on a huge scale, all being manned by Mexicans. Houston will expand by several hundred thousand over the next 25 years to accommodate the New American Century. Oddly, I can't say I have seen ONE black face on the roadwork despite New Orleans being 400 miles away and having a some 200,000 perpetually unemployed people - many of course now supported by the Government here in Houston.

not so sure i agree with that... i dont see too much building along the i-10 corridor these days, certainly not as much as there was five years ago. there are some developments along the baytown section and some in the west as well but generally i see a slowdown on all fronts. there is a hell of a lot of unsold property especially in crosby and around IAH - my company was looking for a residential house to turn into an office last month and prices were certainly very very soft

since katrina all the miads in my hotel are now black, no more mexican, and most of the new stevedores in the various port terminals also seem to be black katrina refugees. i think a lot of the katrina blacks who didnt make it to houston scattered north, moving from one hurricane-prone city to another was not really a solution for many of them and a lot moved away from the gulf coast altogether. in nola though mexicans have certainly filled the void since katrina and i see nola being a mexican city in future and no longer a 'chocolate city'

not being argumenatative, just my view of the big H as some one who knows and (sometimes) loves the place

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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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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