Several industry consultants said they thought IBM's primary motive for the change was to reduce its costs by freeing itself from contributions for employees who leave the company during the year, a move that would help the company remain competitive. This, they said, would likely be the goal of most other plan sponsors that might follow in IBM's footsteps.
IBM declined to discuss the move with BNA. ...
Specifically, employees expressed concern on a union website that IBM's action foreshadowed additional layoffs and would reduce retirement savings even for those who stayed with the company.
In addition, a union organizer said, employees were troubled by the fact that IBM's move might increase their investment risk, because putting the full amount of the employer's contributions into the market at one time could leave the investment more vulnerable to a steep market decline, because they would now need to invest a more significant amount all at the same time.
The essence of greed? Simple. Greed amounts to taking more than you need when you already have enough — and others don’t. Who among us, by this yardstick, rate as our greediest? Those greediest would be those who have the wherewithal to take whatever they want — and deny others the basics they need.
We abound in these greedy. Most of them wear power suits and dart in and out of the executive suites that sit high atop America’s most elegant corporate towers. Year in and year out, these greedy grab ungodly rewards for their own labor — and deny their employees anything close to decent compensation for theirs.
The Institute for Policy Studies weekly on excess and inequality, Too Much, has been compiling lists of America’s most greedy grabbers since the Great Recession first hit in 2008. This fifth annual Too Much list of our greediest showcases those ten deep pockets who’ve done the most in 2012 to subvert the decency we all like to call, at this time of year, the “holiday spirit.” ...
Samuel Palmisano: Busting Nest Eggs: IBM, the world’s first computer giant, now has just 92,000 employees stateside, down from 160,000 back in 2002, the year Sam Palmisano took up the IBM CEO reins.
Palmisano stepped down as chief exec last year and retired as the chairman of IBM’s board at the start of this month, but not before green-lighting a change in the IBM 401(k) plan that sets a damaging precedent for millions of Americans outside the IBM ranks.
Up until now, IBM has been matching employee contributions to 401(k)s on a semi-monthly basis. Starting in 2013, IBM will make only one match a year, on December 31. Workers who leave IBM’s employ next December 15 will get no IBM match to their 401(k) for the entire year, even if they were laid off or had to leave because of a disability.
No major U.S. corporation currently short-changes workers through this sort of maneuver. A good many other large corporations “will be looking very closely” at the IBM move, says Brooks Herman of Brightscope, a financial info firm. If they follow IBM’s lead, notes Reuters, working families throughout America will find it “very difficult to build significant nest eggs through the 401(k) system.”
Sam Palmisano doesn’t have to worry about his nest egg. He’s walking out the door with a package of retirement, bonus, and assorted other benefits one analysis values at $224.7 million.
Palmisano isn’t actually walking out the door. He’ll be consulting for IBM. His rate: $20,000 for any day he puts in four hours. In 2013, observes the Wall Street Journal, Palmisano “could pocket $400,000” for a mere “20 half-days of work.”
Following a path started by Jed S. Rakoff, a Federal District Court judge in Manhattan, Judge Richard J. Leon of the Federal District Court in Washington, D.C., has held up the settlement for nearly two years because of his demands for greater disclosure to ensure the public’s interest is protected.
The case involves violations of the Foreign Corrupt Practices Act by International Business Machines from 1999 to 2008 for payments made to foreign government officials. The amounts involved were not significant, about $207,000 paid in Korea and a slush fund of undisclosed size to pay for overseas trips by Chinese officials.
The settlement called for the company to pay $10 million. That included a civil penalty of $2 million, an amount that is small compared with some other recent overseas bribery cases. For example, Eli Lilly agreed last week to pay more than $29 million to settle with the S.E.C., with $8.7 million designated as a civil penalty.
Unlike the recent reporting by The New York Times about widespread bribery paid by Wal-Mart to officials in Mexico, the I.B.M. case created hardly a ripple when the S.E.C. announced it. It looked like a routine matter in which the company promised not to violate the law again and paid its fine in much the same way that you would pay a parking ticket.
That is, until Judge Leon took a hard look at the terms of the settlement. In a hearing last Thursday, Bloomberg reported, the judge raised questions about the deal, saying, “I’m not just going to roll over like the S.E.C. has.”
The proposed settlement involved the “books and records” provisions of the overseas bribery law that requires companies to properly report their transactions and maintain adequate internal controls. To ensure it does not violate the law again, Judge Leon has demanded that I.B.M. provide annual reports on its compliance with the Foreign Corrupt Practices Act and any possible accounting violations in the company.
The S.E.C. and I.B.M. defended the settlement and said that the additional reporting requirements would be too difficult for the company to comply. Judge Leon expressed some skepticism, asking “why, for one of the largest companies in the world, this is too burdensome.” ...
This case was not the first time I.B.M. had run afoul of the Foreign Corrupt Practices Act. In December 2000, the company settled a S.E.C. case by agreeing to not commit future violations of the same “books and records” provisions and paid a $300,000 penalty.
So, Judge Leon may have good grounds for seeking information about I.B.M.’s continuing compliance with the law because it is a prior offender of the overseas bribery law.
That means hypothetically he could pocket $400,000 a year for 20 half-days of work—twice what his predecessor, Louis V. Gerstner Jr., makes per day under a similar consulting arrangement. Mr. Palmisano's contract is open-ended and doesn't specify the number of days he will work. Mr. Gerstner's 10-year consulting contract expires in March. ...
The controversial perquisite bothers some activist investors, especially because these deals are sometimes made when a company is nudging an executive out the door.
"Consulting agreements often are a hidden substitute for severance pay," says Brandon Rees, head of the AFL-CIO's Office of Investment. "Their questionable value will influence how shareholders vote on executive pay in the 2013 proxy season."
Federal prosecutors charged Trent Martin, who worked at a Connecticut brokerage firm, for purchasing shares of SPSS before IBM agreed to the $1.2 billion deal. He was also charged with passing the information to others, including his roommate.
I looked at this video with Ellen Schultz and others including a government employee describing how IBM and others used pension funds. The government employee tells a story about a female IBM executive who said "IBM has no obligation to its employees" with a pension.
Worth a look, CSPAN has removed a similar video.
If you, like thousands of IBMers, lost their Defined Benefit Pensions, or much less than expected, you might find this enlightening. Just because IBM has a 401K does not mean that a scheme to take the benefits of a 401K away is not possible.
By they way, 44 million experienced pension loss and are in the Pension Benefit Guarantee Corp, over 100,000 defined benefit pension plans disappeared with only 26,000 remaining. But the schemes to "harvest" pensions continue, Hostess and the US Post Office are being set up to be raided.
Here is the presentation, worth watching: http://www.youtube.com/watch?feature=endscreen&v=azSUHpAb_E4&NR=1
Just for reference, if Palmisano is getting $184 million, the five VP's are probably getting $150 million each upon retirement. As Ms Schultz explains, the money came from employees pension funds by cutting benefits.
Here is a more detailed explanation on how IBM used the DB pension for profit: http://www.c-spanvideo.org/program/301767-1
Cons: Benefits slowly going down the drain, constant US resource actions leading to extremely overworked people left (now you have to be billable at least 125-145% of the time just to be considered "average"); extremely unfair rewards system (advertise that they "reward performance" but reality is, rewards are extremely limited so most who "perform" are definitely NOT rewarded due to the inadequate forced curve. Innovation is possible at IBM, but definitely an uphill battle. Most business units are purely interested in staffing their opps and nothing more--you will have to fight LONG and HARD to get anything new seriously considered--but, it IS possible at least.
Advice to Senior Management: Your maniacal focus on your shareholders is ruining this company--slowly, but surely. There's no advice I can really give, because you aren't interested in anything else, despite what you tell clients IBM is all about. It's a shame to watch this historically great American company sinking with respect to delivering real value to customers.
Advice to Senior Management:
On one hand, employers warn of a dire labor shortage. On the other, recent high-tech graduates can't find jobs. Many face crushing student loans that they may never pay off. Mid-career high-tech workers are steadily being let go. Discouraged mid-career workers take lower-paid service jobs after months of searching for a job as good as the one they lost.
Employers get plenty of applications, but they can't find "qualified workers." Peter Cappelli at the Wharton School studied this situation. He finds that employers are hiring more selectively, looking for the ideal match. It's not enough to be able to do the job. Employers want someone already doing that exact job.
I am reminded of one employer, desperate for an engineer with several years of experience with 2.2 GHz antennas. All the employer could find were applicants with experience at 1.9 GHz. ...
In 2006 and 2008, employment at Microsoft went up by at least 8,000 workers. More to the point, in 2009, Microsoft laid off more than 5,000 workers. Plus or minus 6,000 seems typical at Microsoft.
A Microsoft human resources manager told me that its percentage acceptance rate for job offers is in the low 90's. That means Microsoft could fill more openings by making more offers. ...
Economists argue that a chronic labor shortage is technically not possible. The problem is not a shortage of workers; rather, employers are offering too little.
That's something else we can check. Are salaries going up? Not really. Engineering salaries, college enrollment and employment have been very stable— inching up slowly—for many years. ...
It's worth noting that Microsoft is currently campaigning to flood the high-tech labor market by dramatically opening our immigration system to foreign high-tech workers. Microsoft's talking points align with its policy demands for more foreign workers. However, labor market statistics and graduation rates say we have plenty of workers, a conclusion backed up by the life experience of thousands of unemployed and underemployed domestic high-tech workers.
We can duel over statistics, but a deeper issue is working here. More and more, employers see themselves as global companies who want "flexible" labor practices. That means less commitment to long-term careers, more global outsourcing and more frequent layoffs. Microsoft and other high-tech employers use legions of contractors and contingent labor. Europeans call this "precarious employment."
The IT industry is notorious for discarding older workers and replacing them with younger workers who are compensated lower on the pay scale. In 1996, Intel's chief operating officer, Craig Barrett, told his stockholders, "The half-life of an engineer...is only a few years."
In the July 6, 2012, Wall Street Journal, 3G Studios CEO James Kosta said, "Engineers were outliving their usefulness from one project to another. When projects end, it's better to re-evaluate your entire staff and almost just hire anew."
The Great Recession, which decimated retirement assets, played a big role in building this lesser-known cliff. They siphoned pension assets for profit-boosting purposes. When the pension deficits started to balloon, many corporations responded by slashing benefit programs. ...
And the same CEOs who have contributed to rampant retirement insecurity are now calling for cuts to these benefits.
Nearly 100 CEOs are trying to convince Americans that Social Security and Medicare lie at the root of our fiscal woes. Their "Fix the Debt" campaign features plain-spoken Americans in ads and sounds moderate, because they call for both spending cuts and revenue increases.
But the real objectives of the campaign include massive new corporate tax cuts and cuts on Social Security and Medicare. ...
The Fix the Debt campaign's CEO supporters need not worry about Social Security because they're members of the "I've Got Mine Club." Fifty-four of the CEOs leading Fix the Debt benefit from lavish executive retirement programs. Their collective pension assets total $649 million, which comes to more than $12 million per CEO. That's enough to garner a $65,000 retirement check each month starting at age 65, according to a new report by the Institute for Policy Studies, which I co-authored. In contrast, the average retiree receives just $1,237 from Social Security each month.
Yet, the firms headed by Fix the Debt CEOs owe their U.S. pension funds more than $100 billion, according to the IPS study. U.S. law requires businesses to keep their pension debts manageable.
Beware of CEOs who are lecturing us about tightening our belts. Workers would better off if CEOs worried about fixing their companies' pension debts.
For others, thoughts about when to retire make them nervous, and the decision isn't easy. Determining the right time to retire can become mind-numbingly complex when you consider all of the personal and financial factors that come into play.
For those individuals and couples who are on the fence and not sure about the right time to retire, you're not alone. Fellow boomers face the same daunting decision, as 10,000 turn 65 every day and will do so at that rate for the next 18 years.
Instead of waiting for a mystical sign in the sky or a new software program to help you figure it out, consider these seven signs that tell you that now's definitely not the right time to retire.
We, the petitioners want IBM to keep the automatic contribution at semi-monthly and NOT an annual contribution.
IBM, by moving the automatic contribution from semi-monthly to an annual contribution effectively denies employees who are terminated in resource actions up to the cut off of December 15 of the given year, the matching contribution from IBM. Furthermore, the movement of the automatic contribution to the end of the year denies interest generated for the employees 401(K) account. Sign this petition to tell IBM to REVERSE this decision, immediately!
And if you are an active IBM employee, please Join Alliance@IBM CWA Local 1701.
Web site: http://www.allianceibm.org; Twitter ID: @Allianceibm; Facebook: Allianceibm CWA
Curiously, this lady admonishes someone in one of her later posts for being disrespectful to her, while at the same time she is making statements such as those above, which clearly indicate she has no respect for her fellow IBM employees. BTW, if you don't have a LinkedIn account, I strongly encourage you to sign up for one and post your resume. After you join the Alliance, of course! Basic LinkedIn accounts are free and they give you an important resource to enhance/build your professional network. -Alliance member-
I guess the advice is to work at IBM right out of college, learn everything you can in four years or so, and then move on to a place where you can start a career and be respected. Depending where you are at, you might be OK until 2015. But, all bets are off for 2020. Every US IBMer should have an exit strategy for post-2015 regardless of your position (management or technical). Those who are near retirement are the luckiest.
Others, like me, still have another 20+ years to work. We all need to look out for ourselves and family. A union may help temporarily, but given the management, my guess is that they would expedite off shoring and close US plants quickly. I'm sure they have a play card for that scenario. It is sad, but this is what America has become. -Anon-
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
The aggregate net worth of the world’s top moguls stood at $1.9 trillion at the market close on Dec. 31, according to the index. Retail and telecommunications fortunes surged about 20 percent on average during the year. Of the 100 people who appeared on the final ranking of 2012, only 16 registered a net loss for the 12-month period.
“Last year was a great one for the world’s billionaires,” said John Catsimatidis, the billionaire owner of Red Apple Group Inc., in an e-mail written poolside on his BlackBerry in the Bahamas. “In 2013, they will continue looking for investments around the world -- and not necessarily in U.S. -- that will give them an advantage.”
The bottom line is that hedge fund and private equity moguls will continue to be taxed relatively lightly after the new fiscal cliff legislation. Carried interest will continue to be taxed as long-term capital gains for hedge fund and private equity managers. The top rate for capital gains has increased to 20% from 15%, but most of the carried-interest benefit has been retained. That means that the rich performance fees hedge fund and private equity managers charge their investors—usually 20% of their investment profits—will continue to get favorable tax treatment.
The survival of the carried-interest tax break created by high-paid lawyers for some of the richest Americans is ironic given that President Barack Obama’s announced goal in the fiscal cliff negotiations was to tax the richest Americans more. Now, there will be some rich lawyers and dentists who are paying higher taxes while the far richer hedge fund and private equity moguls the lawyers and dentists work for will experience less of a tax hit. Nobody will cry for the hip surgeon who is being taxed more, but there are no hip surgeons on the Forbes 400 list of richest Americans. There are, however, 31 hedge fund managers on the Forbes 400, representing 8% of the nation’s wealthiest individuals. There are another dozen or so private equity guys on the list, too.
On one hand, the new law makes permanent most of a large tax cut from 2010 for the estates of the wealthiest Americans. Republican negotiators initially forced that estate tax cut into the 2010 year-end tax deal as their cost for extending tax credit improvements for low-income working families that President Obama and Congress had first enacted in 2009. On the other hand, the new law extends these refundable tax credit improvements only for five years. By breaking the linkage in their treatment of these two sets of tax provisions, policymakers have done two unfortunate things: they have squandered nearly $120 billion in revenues despite the nation's fiscal problems, and they have put a major obstacle in front of efforts to sustain these important tax-credit improvements for struggling working families after 2017. ...
To fully appreciate why the disparate treatment between this estate tax cut for wealthy heirs and the tax credit improvements for low-income working Americans is so appalling, you need to know the "back story." In December 2010, with President Bush's tax cuts set to expire, President Obama reluctantly agreed to extend all of the Bush tax cuts for two years, including the high-income tax cuts. Obama also proposed to extend the 2009 improvements to the tax credits for low-income working families -- specifically, in the Child Tax Credit, the Earned Income Tax Credit, and the American Opportunity Tax Credit, which helps to defray part of college costs for middle- and low-income families. These provisions, too, were scheduled to expire at the end of 2010.
At the time, the extension of these tax-credit improvements seemed a no-brainer. Virtually all reputable analysts agreed that these measures had a much greater "bang-for-the-buck" effectiveness in stimulating a weak economy than the high-end tax cuts did. Nevertheless, Republican negotiators first refused to extend these tax-credit improvements in the 2010 tax package despite its extension of the Bush tax cuts for the nation's richest people. Republican negotiators then offered a deal: they would agree to extend the tax-credit improvements, if -- and only if -- the package included a new estate tax break. Led by Arizona Senator Jon Kyl, Republican negotiators insisted on raising the estate-tax exemption from the 2009 level of $3.5 million (double that for a couple) to $5 million (double for a couple), indexing the $5 million for inflation, and lowering the estate tax rate from 45 percent to 35 percent. The president reluctantly took the deal.
Now, two years later, this week's new tax law contains a bitter pill. Policymakers made most of the estate tax break permanent, while they set the refundable credit improvements to die after five years. ...
Something is amiss when the Senate's Minority Leader insists that a million-dollar average tax break for the heirs and heiresses of the richest three of every 1,000 people who die must become the permanent law of the land, while tax measures that lift millions of children in working-poor families above or closer to the poverty line must die. It's the tax-credit measures that should be permanent -- not the extravagant estate-tax break.
The funny thing about unsustainable trends is how durable they can be. The Soviet Union’s economic model was unsustainable, but it lasted for decades past its sale date. And then when it finally collapsed, it was not with a bang, as everyone expected, but a whimper.
The same will be true with the Federal budget. It is widely believed among conservatives that the end is near. Unless immediate action is taken to slash benefits for entitlement programs such as Social Security and Medicare, they say, bankruptcy and a Greece-like economic collapse is just around the corner.
One problem with this idea, which will likely lead Republicans to hold an increase in the debt limit hostage to evisceration of the social safety net, is that those saying so have been making the same claim for decades. Since at least the 1930s, Republicans have warned ad nauseam that every Democratically-sponsored expansion of government social welfare programs was another step toward bankruptcy. Oddly, Republican-sponsored tax cuts or entitlement programs such as Medicare Part D never contribute to looming bankruptcy.
The word “bankruptcy” is always thrown around loosely. It’s actually a legal term for what is better described as “insolvency.” When it relates to private businesses or individuals it simply means that they are no longer capable of servicing their debts and must seek court permission to liquidate both their assets and debts.
When we speak of insolvency or bankruptcy as it relates to sovereign national governments, neither term really suffices insofar as the United States is concerned. What got Greece into trouble– as well as every other country that has meaningfully flirted with bankruptcy – is that they borrowed money in a foreign currency. They ran into trouble when their currency fell in value to such an extent that they could no longer use it to buy the foreign currency needed to service their foreign debts.
This is a very, very different problem than that for a country like the U.S., whose debt is 100 percent denominated in its own currency. At least in theory, we can always print money, figuratively speaking, to service our debts. There is no possibility of a Greece-like problem unless the day comes when the Treasury is forced to sell foreign currency denominated bonds. ...
While it is tempting to say that inflation results from budget deficits, few economists believe this. Inflation is primarily, if not exclusively, a monetary phenomenon. That is to say, it all depends on what the Federal Reserve does. If it creates too much money we will have inflation even if the budget is balanced. It can also maintain price stability regardless of how large the budget deficit is.
For the last four years, conservatives have regularly and monotonously said that inflation and high interest rates are immediately imminent, the inevitable result of unprecedented budget deficits and/or an extraordinarily loose monetary policy. And just as regularly, financial markets have driven interest rates down to levels never before seen in American history. Inflation remains flat, with no evidence of rising.
The fact that their predictions have consistently failed to materialize has had no effect whatsoever on deficit hawks, who continue to bemoan the fact that every budget deal that doesn’t slash entitlements is another missed opportunity to get us on the right track. It’s just a matter of time, they say, before Stein’s law kicks in and we pay the price for budgetary profligacy.
These people have been saying the same thing about Japan for at least 20 years, when its debt to GDP ratio first reached the level we are at today. Japan’s gross public debt is now well over 200 percent of GDP, with no sign of inflation or rising interest rates or lack of demand for government bonds.
All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction.
Yet all we're hearing from Washington -- and all we're likely to hear as Republicans and Democrats negotiate over raising the debt ceiling -- is how to cut the deficit.
Apple’s domestic tax bill has drawn the interest of corporate tax experts and policy makers because although the majority of Apple’s executives, product designers, marketers, employees, research and development operations and retail stores are in the United States, in the past Apple’s accountants have found legal ways to allocate about 70 percent of the company’s profits overseas, where tax rates are often much lower, according to corporate filings. ...
“This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes,” Senator Levin said at that hearing. “The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.”Apple has long been a pioneer in developing innovative tax strategies that lessen its domestic taxes. At the September hearing, Senator Levin said the investigation indicated that Apple had deferred taxes on over $35.4 billion in offshore income between 2009 and 2011.
Tech companies are able to easily shift “intellectual property, and the profit that goes along with it, to tax havens,” said a former Treasury Department economist, Martin A. Sullivan. “Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.” ...
Almost every major corporation tries to minimize its taxes. However, technology companies are particularly well positioned to take advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.
Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft emerge from royalties on intellectual property, like the patents on software. At other times, products are digital, such as downloaded songs or movies. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers.
Although technology is now one of the nation’s largest and most highly valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’, according to a New York Times analysis. (Cash taxes may include payments for multiple years.)
Representatives for Wegelin & Company, a Swiss bank founded in 1741, appeared in Federal District Court in Manhattan and acknowledged that for nearly a decade the firm helped dozens of wealthy American customers dodge taxes by hiding more than $1.2 billion in secret accounts. ...
“From about 2002 through 2010, Wegelin agreed with certain U.S. taxpayers to evade the tax obligations of these U.S. taxpayer clients, who filed false tax returns with the I.R.S.” Otto Bruderer, another Wegelin partner, said in court. “Wegelin was aware the conduct was wrong.” ...
As part of the push to eliminate tax cheats, a federal grand jury in Manhattan indicted Wegelin last February. The firm’s elaborate scheme involved its Swiss bankers’ opening secret accounts for American clients using code names and setting up sham entities to avoid detection in far-flung locales, including Panama and Liechtenstein.
“There is no excuse for wealthy Americans flouting their responsibilities as citizens of this great country to pay their taxes, and there is no excuse for foreign financial institutions helping them to do so,” said Preet Bharara, the United States attorney in Manhattan. “Today’s guilty plea is a watershed moment in our efforts to hold to account both the individuals and the banks — wherever they may be in the world — who are engaging in unlawful conduct that deprives the U.S. Treasury of billions of dollars of tax revenue.”
Last week, The New York Times reported that regulators were close to settling with 14 banks whose foreclosure practices had ridden roughshod over borrowers and the rule of law. Although the deal has not been made official and its terms are as yet unknown, the initial report said borrowers who had lost their homes because of improprieties would receive a total of $3.75 billion in cash. An additional $6.25 billion would be put toward principal reduction for homeowners in distress. ...
Some back-of-the-envelope arithmetic on this deal is your first clue that it is another gift to the banks. It’s not clear which borrowers will receive what money, but divvying up $3.75 billion among millions of people doesn’t amount to much per person. If, say, half of the 4.4 million borrowers were subject to foreclosure abuses, they would each receive less than $2,000, on average. If 10 percent of the 4.4 million were harmed, each would get roughly $8,500.
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