Germany killed the eurozone?

10:30 AM Eurozone, Germany, killed No Comments

By Jim Jubak

A new budget makes it clear that only the weaker euro zone economies offer Germany lectures on frugality. This will deadlock.



German Chancellor Angela Merkel speaks with President of the European Parliament Martin Schultz at a EU Summit in Brussels on Thursday.

Today, left March 14, Germany the euro zone.

Oh yeah, nothing official. And I hold my breath not wait for confirmation of objective, such as the reintroduction of the German mark. But the new German budget marks the beginning of the effective end of the eurozone and the euro.

What exactly happened is the so important? How can a single national budget will make such a difference?

Because any upturn in Europe on Germany is on the way.

The German budget 2014 announced by the German Finance Minister Wolfgang Schaeuble on Wednesday, containing an extra EUR 5 billion (US$ 6.4 billion) in spending cuts eve of a European Summit. Total net new borrowing for 2014 to 6.4 billion euros (U.S.$ 8.3 billion), will be a 40-year low.

And it is balancing the German budget on a path in the year 2015. This is a year ahead of the German Constitution.

If fiscal prudence is your goal, this budget deserves the praise heaped by Ministers for the economy of Philipp Rosler, who said: "with all modesty, this is a result of historic proportions. The lesson from the crisis is that sound finances are essential. Thanks to this approach, Germany is a pioneer in Europe. Our success with a policy of growth-oriented consolidation is the envy of the world."

The problem-apart from the complacency of this Kommentaren--this is fiscal prudence which isn't the most pressing goal in Europe's largest economies.

Jim Jubak

Everyone knows the Greek economy is a city and the home of the latest unemployment figures was pressed. Unemployment hitting 26% in the fourth quarter from 24.8% in the third quarter. Workers between 15 and 24 years old is the unemployment rate at 57.8%. The percentage of the unemployed hit 65.3% searched for more than a year for a job.

But the real problem is not Greece. The real problem is that the rest of Europe-except Germany-, such as Greece, facing rising unemployment with no medium-term relief in sight. Employment in the euro area as a whole decreased by 0.3% in the fourth quarter from the third quarter. Only Germany showed growth in jobs between the zone's major economies. The decline in employment is particularly threatening in the fourth quarter because the Christmas-shopping season generated usually jobs.

And the Outlook for an improvement? Grim. Ernst & young, for example projects that unemployment continue until 2014 will rise this year, and the recovery will be anemic. Until end of 2017 Ernst & young estimates, the unemployment rate in Europe of 11% is stuck.

At the EU Summit now underway to promote the growth of the European economies to propose measures. But it is not clear where growth maybe could come.

Germany's neighbors have with the land, to stimulate its own economy pleaded because additional demand could produce more spending by German consumers for goods from Spain, Italy and France. The new German budget seems to have taken off the table.

The European Central Bank seems also unwilling to intervene. The International Monetary Fund has to stimulate the ECB on growth in Europe, by man named its benchmark interest rate, but the Bank continued to insist insist that combined with austerity budgets of European governments lead the current monetary policy, to a higher growth in the second half of 2013 sufficient will. The Bank is obliged at the moment, waiting for structural economic reforms to work. This growth to take alternative from the table.

Other members of the euro zone, most particularly France, called for easing of euro-zone 3% budget deficit-GDP ratio rules to Governments higher cyclical deficits in difficult economic times, to allow. The French argue clearly in the Eigeninteresse--it looks as if France were a deficit to GDP ratio of 3.7% or more in this year instead of hitting the 3% target is executed. Germany, however, this has also continued to insist that the countries the budget rules-follow and was particularly insistent on the need for the major economies like France, tax examples of smaller euro-zone economies. To remove this last alternative.

And somehow that heads of State and Government, gathered at the Summit to produce a growth plan for the eurozone. The later post instructions for these sessions are always in advance drawn up, changed through discussion. The design for this event, according to the financial times, called "short-term targeted measures to promote growth and employment."

Before the session, this language took fire from Germany, Finland and the Netherlands. The announcement of the German budget 2014--an announcement that a week pressure at the Summit to hold the line on discipline so that the budget ahead of the Summit would released - seems moved. Germany and austerity measures advocates such as European Commission Minister Olli Rehn have heaped scorn on French calls for the relaxation of the budget rules.

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Merkel tried to calm uproar over eurozone plans

12:30 PM Eurozone, Merkel, plans, tried, uproar No Comments

By Noah Barkin and Paul Carrel, Reuters
BERLIN/FRANKFURT – Angela Merkel trying a growing storm over eurozone crisis on Sunday after the Bundesbank governing compared buying bond plans to a dangerous drug and a conservative ally of German leader to calm strategy said that Greece should leave the currency block in the next year.

The comments show of Central Bank Chairman Jens Weidmann and a senior figure in the Bavarian Christian Social Union (CSU), Alexander Dobrindt, mounting unease in Germany with the policy used to fight the three-year debt crisis.

Domestic criticism has reduced Merkel's room for manoeuvre at a time when much more help and policy makers crawl Greece to prevent that infection enveloping large countries such as Spain and Italy.

Two days after the Greek Prime Minister Antonis Samaras Berlin visits and an impassioned plea for politicians not to talk about the possibility of a Greek euro exit made it Merkel a warning to allies, who have said the euro zone would better off without its weakest link.

"We are at a crucial stage in the fight against the euro debt crisis," Merkel told public broadcaster ARD in an interview. "My plea is that all their words very carefully weigh."

Dobrindt, whose Partei prepared in the autumn of next year, for a State election in Bavaria and the Federal vote said top-selling German daily Bild that he expected that in the year 2013 left Greece of the euro area. His comments drew a quick rebuke from Foreign Minister Guido Westerwelle, who said that "Mobbing" must stop euro members.

In addition to Greece, makers of President European Central Bank Mario Draghi have plans to bonds Spain and Italy buy have been economical.

The ECB assumes a greater role in the crisis, while Governments, legal and political hurdles to negotiate to coordinate to a longer-term response. Italian head of the Bank should his plans after a Sept. 6 meeting of its 23-member Board detail.

Merkel gave their tacit support of Draghi on a trip to Canada earlier this month and again in the ARD interview, that they believed the policy of the ECB within the framework of its mandate were to ensure to stable prices in the block.

Addicted
But Weidmann, a former economic advisor to Merkel, said in a front page interview with influential German news magazine Der Spiegel, which buys the bond could be against rules against the ECB to provide for Governments almost financing.

"Such a policy for me in the vicinity of State financing of the press" said Weidmann mirror. "In democracies it is parliaments and not the central banks, which should decide on such a comprehensive pooling of risks."

Funding Governments have long a taboo for Germany. Weidmann of's predecessor as Bundesbank Chief Axel Weber, quit last year in protest against the ECB existing, but now dormant bond purchase scheme - the securities markets programme (SMP).

"We should not underestimate the risk that the Central Bank may finance like a drug become addicted,", said Weidmann.

The Bundesbank retains considerable influence within Germany and in the financial markets due to its inflation-fighting credentials, but, as only one of 17 components at the ECB, it is unlikely that it could fail the plan Draghi.

The TV interview asked whether she supported Weidmann, praised Merkel him speak for his doubts out and said that she looked to influence strong Bundesbank within the ECB as positive. But she cared not to show any support for his criticism of Draghi policy.

Money avoid Central Bank sources told of Reuters on Friday, which is setting yield band considering the ECB aims for the new bond purchase program allows you to keep it shielded its strategy and try to speculators.

Weidmann has such yield band targets "sensitive term" but evidence suggests that he have on the Governing Council such reservations isolated was rejected.

"I hardly believe that I am the only one on this one get abdominal pain", he said.

Dobrindt was direct, said Draghi risks as the "currency counterfeiters of Europe" passed into the history books.

Sticking to commitments
With the "troika" of EU, ECB and International Monetary Fund Greece return is prepared to assess the plight of the weakest link in the eurozone Austria's Chancellor said that Athens pay more time to its debt, should be granted, provided that it is to reform.

"I see a good chance we Greeks stick to their agreements with the EU get the but at the same time more time for repayment will come with a result with Greece, definitely," said newspaper Austria Werner Faymann.

"The most important thing is that the Greeks stick on the reforms and savings targets agreed with us." If this is guaranteed, in favour of a delay in repayment, I am ", he said, adding that the delay could be two or three years."

But Germany's economy and Finance Ministers both reaffirmed their opposition to any relaxation of the time frame for Greece, emphasizes that, what would it mean, more time more money there. Samaras has said that he needs more time but not more money.

Samaras caused no promises from Merkel or of the French President Francois hollande, the Greek leaders in Paris met on Saturday. No final decisions on Greece is expected, before the troika delivers his report in October.

Merkel said that she had come from their talks with Samaras convinced that he seriously about the Greek reform drive, but clearly shown that the pressure on Athens was extremely high. "Every day counts," she said.

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Stocks slip on reports of eurozone downgrades

2:03 PM downgrades, Eurozone, reports, stocks No Comments

NEW YORK — U.S. stocks dropped on Friday, snapping a four-day winning streak after news reports that Standard & Poor's would downgrade credit ratings on several eurozone countries.

The ratings agency was reportedly set to downgrade eurozone countries, including France and Austria, but leave the ratings of Germany and the Netherlands unchanged. French Finance Minister Francois Baroin said the country has been notified of a one-notch cut.

"This is going to destabilize lot of those funding packages because they are all based on the AAA rating, and now you are going to have AA+ for France and Austria, and maybe down two notches for Italy," said Alan Valdes, director of floor operations for DME Securities in New York.

Friday's slide came as investors' focus shifted back to the euro zone's debt crisis.

In recent days, the S&P 500 had reached five-month highs on the back of solid U.S. economic data. The tight relationship between U.S. stocks and the euro has broken down in recent weeks, a sign investors have placed less emphasis on the euro zone's woes.

The Friday selloff shows Europe's debt problems can still make U.S. investors skittish. However, it is notable that the major U.S. stock indexes finished well off the day's lows.

Banks led the decline, as the impending downgrades and lackluster earnings from JPMorgan Chase & Co drove those shares lower. The S&P financial index fell 0.8 percent, making it the worst performer of the 10 major S&P sectors.

The Dow Jones industrial average dropped 48.96 points, or 0.39 percent, to 12,422.06 at the close. The Standard & Poor's 500 Index lost 6.41 points, or 0.49 percent, to 1,289.09. The Nasdaq Composite Index fell 14.03 points, or 0.51 percent, to 2,710.67.

For the week, the Dow rose 0.5 percent, while the S&P 500 advanced 0.9 percent, and the Nasdaq gained 1.4 percent.

Investors will look to earnings next week for insight on how the euro zone's debt woes may affect profits.

"If you get a weak recession or deep recession in Europe, it is going to hurt our companies and bring our market right back down," Valdes said.

JPMorgan Chase slid 2.5 percent to $35.92 after the bank said fourth-quarter profit fell as the European debt crisis weighed on trading and corporate deal-making. Chief Executive Jamie Dimon expressed renewed concerns about the eurozone debt crisis.

The KBW index of bank stocks slipped 0.4 percent, following a streak of gains. The index was still up more than 10 percent for the year.

Bank of America shares fell 2.7 percent to $6.61. Goldman Sachs lost 2.2 percent to $98.96.

Volume was light with about 6.39 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 6.68 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,941 to 1,036, while on the Nasdaq, decliners beat advancers 1,666 to 804.

Copyright 2012 Thomson Reuters.

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Progress? Eurozone deal is a ' great leap sideways '

12:37 AM Eurozone, great, Progress, sideways No Comments

Europe divided on Friday in a historic divide on a closer fiscal Union, the euro, with an overwhelming majority of the countries under the leadership of Germany and France approval to go ahead with a separate contract, so that the EU isolated to maintain the third largest economy of Great Britain.

By John W. Schoen, senior producer

To prevent Europe's high-profile consultation Friday spending hard to break, stack larger pile of debt can euro zone countries. It will do little to ease growing financial pressure on the European banking system from the binge of bonds, has pushed to the edge of the standard Greece, Italy and Spain.

The European financial crisis has undermined already business confidence of consumers and deposit of euro zone into a slight recession. How the American economy has strengthened in recent months, has the risk, that Europe relieved could recession the United States again in a downturn 'double dip' send. But a meltdown could constitute a serious threat to the prospects for global growth one or more of the big banks in Europe.

Under the deal in Brussels agreed on the 17 countries with a common currency introduced national spending cap would bound to introduce legislation, their deficits. Countries that exceed this limit would be taken with automatic sanctions, unless it lifted it, a majority of the members. The intergovernmental Pact, the voters approved by referendums is required, is to be ratified by mid March.

The business can investors confidence, that Europe's free spending ways of are. It offers very little head from the risk that one or more Governments default on their debt.

"This is a great leap sideways," said Daniel Gros, Director of the Centre for European policy studies think tank in Brussels. "We have a framework that could restore a certain tax order at the euro area over 10 years now." The German view is that all of this that is required is Spanish and Italian markets, debt to buy to convince. I have my doubts that it will be enough. "I think the tension further."

Earlier this week, expressed credit rating agency standard & poor's also doubt whether European Heads of State and Government could come with a convincing answer to the current crisis, warning that it may be 15 euro zone countries downgrade, including Germany and France, along with a number of large European banks. S & P said Friday it was the plan review and Woiuld a decision applies to all reviews changes int he next few days.

There were high hopes that plan the eighth sponge this year, the latest, more immediate action would to be attached to banks in Europe heavily invested backstop in shaky Government bonds. But the Summit offered little to reassure investors in this respect.

"Germany should feel pretty good about the fact that it the promise of long-term budgetary discipline," said David joy, chief market strategist for Ameriprise financial. "But, that still brings us back to: who is the lender of last resort, until we, get there in the next 18 months, 24 months." Will the (European Central Bank) strengthen? We find out during the first quarter (European governments) come to the markets with a substantial amount of debt to roles. "

Italy and Spain have the biggest debt pile in need of refinancing early next year; Italy has to sell fresh debts on loans over EUR 150 billion between February and April. Refinancing has become more expensive as investors have called for higher interest rates reduce the risk of default. , Add Italy's deficit, in turn forcing higher borrowing costs, to make more, to borrow the deficit.

Europe's central banks still shy on the idea of a more comprehensive response, the large purchases of non-performing Government bonds similar to moves reserve such as the market soothing of the Federal developed as the U.S. banking system in early 2008 until would include.  Friday news agency governing is sources Reuters that it purchases to EUR 20 billion limited his per bond.

Early in the week, Europe's central bankers announced a series of measures to try to calm the financial markets and the head from a looming credit crunch. The ECB cut its key interest rate by a quarter's point record low 1 percent. It simplifies the rules on can the quality of assets to secure loans to banks, lowered the reserves banks must hold and increased the term of the Central Bank loans to 3 years by one.

The trains may have helped the deterioration of the European banking system, now to stabilize. But they are not far enough to fix the problem, David Malpass, President of the economic research and consulting company encima global LLC and former officials, the Treasury Department to.

The UK is cut an isolated figure in Europe today after the Prime Minister David Cameron in the European Union to deal with the euro-zone crisis effectively a treaty veto. ITV political correspondent Chris ship reports.

"That are of a bandaid as a correction of the underlying fundamentals," he said. "The problem is that banks can't afford, can further depreciation of government bonds, but there is no plan by Germany to stop the infection of Greece in Spain and Italy."

European regulators, said in the meantime, this week, banks of the eurozone must lift 115 billion euros in fresh capital, the more strain on their ability to lend to businesses and consumers.

Friday of the Summit also left unresolved the fate of a combination of backup funds, if you help in could or other standard Governments. Germany has violated this bailout funds that mechanism (ESM), expand European financial stability facility (EFSF) and the European stability. German Chancellor Angela Merkel blocked a proposal to the ESM allow a banking license to borrow money from the European Central Bank.

Brussels Summit also agreed to help the International Monetary Fund, less than EUR 200 billion, Italy and Spain to lend works through the funding crunch, with those who confronted you early next year. But, that is also as a short-term solution. These funds are not nearly enough, to a full-blown standard reverse running stop; Alone in Italy, almost EUR 2 billion in total debt has outstanding.

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EU warns of possible recession in eurozone

7:42 AM Eurozone, possible, recession, warns No Comments

BRUSSELS — The European Union has warned that the 17-country eurozone could slip back into recession next year as the debt crisis shows alarming signs of spinning out of control.

The EU's economic watchdog, the European Commission, said its central forecast is that the eurozone will grow by only a paltry 0.5 percent in 2012. That's way down on the 1.8 percent prediction it made as recently as September.

The sharp cut in the forecast comes as the eurozone's debt crisis has spread alarmingly to Italy, the single currency bloc's third-largest economy. The interest rate on Italy's ten-year bonds has reached the same levels that forced Greece, Portugal and Ireland to request multibillion euro bailouts. Speculation that Premier Silvio Berlusconi will officially resign within days and be replaced by leading economist and former Commissioner Mario Monti has helped calm the market mood somewhat Thursday.

Greece, meanwhile, remains in political chaos as party leaders have failed for several days to appoint an interim governments, putting the country in serious danger of defaulting on its massive debts before the end of the year.

"Growth has stalled in Europe, and there is a risk of a new recession," The EU's Monetary Affairs Olli Rehn said in a statement. "While jobs are increasing in some member states, no real improvement is forecast in the unemployment situation in the EU as a whole."

EU unemployment will be stuck at 9.5 percent for the foreseeable future, the Commission warned.

The report also contained some worrying figures for some individual member states.

Italy is unlikely to fulfill its promise of balancing its budget by 2013 if recently promised austerity and reform measures aren't implemented. According to the forecast, which does not take into account the most recent promises, Italy will still run a deficit of 1.2 percent, with debt close to 119 percent of economic output.

Berlusconi has come under so much pressure that he promised to resign as soon as the new budget has been passed. The Commission this weeks started a verification mission in Rome to check on Italy's efforts, with the International Monetary Fund to follow soon.

Rehn warned that if several states don't soon implement additional measures to get their spending budgets control, he will start using new powers to sanction overspenders set to come into force in the coming weeks.

"What we need now is unwavering implementation," Rehn said. "On my part, I will start using the new rules of economic governance from day one."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Euro-zone bond purchase proposal implemented

11:29 PM Eurozone, implemented, proposal, purchase No Comments

FRANKFURT – the European Central Bank said on Sunday it would "actively implement", his controversial bond purchase programme to combat the eurozone debt crisis, signaling it Spanish and Italian Government buys bonds, to stop financial market contagion.

After a rare Sunday night Conference the ECB welcomes new measures for the deficit and economic reform announcements of Italy and Spain as also a German promise, that the euro zone Rescue Fund is responsible for bond purchase, as soon as it is probably in October.

"It is to the above evaluations, that the ECB securities markets programme actively implement", an ECB statement said.

The statement marks a turning point in the ECB fire-fighting efforts after modest bond buying last week stop infection to the currency block larger economies.

It has not explicitly said that efforts would now buy-Spanish and Italian paper, but the fact that last week limited purchases to Irish and Portuguese paper were Italian and Spanish 10-year paper on a 14-year high sales.

Last Friday, downgrading of the AAA rating of the United States from standard & poor's added urgency of efforts to the euro-zone turbulence control by increasing the risk of the global financial crisis, global policy makers into a frenzy weekend telephone consultations to drive.

"The euro system will react intervention very clearly in the markets and in a significant and coherent manner", a eurozone said monetary source, speaking just before the statement was released.

Germany and France said in a joint statement that the EFSF would soon be bailout funds able to buy government bonds of debt Kellerkind Italy, Spain, Greece, Portugal and Ireland.

ECB President Jean-Claude Trichet called the Sunday session of the Governing Council policy setting to decide on the Italian paper buy, after Prime Minister Silvio Berlusconi announced new measures Friday to deficit reduction speed up and to speed up economic reforms.

An ECB source said that the Council would discuss any liquidity emergency measures to prevent the financial markets freeze.

Finance Ministers and central bankers from the Group of seven major powers industrialized due to hold a teleconference were late on Sunday, calm on the two euro-zone and U.S. debt crises to discuss market turmoil to action.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said that she required, the authorisation to get financial stability facility Rescue Fund to end of September were by their parliaments for new powers for the European.

That allows EFSF to buy government bonds in the secondary market, if it thinks the ECB, the ECB is justified and if the eurozone agree, potentially taking Member States of the need for a policy, a powerful minority of its members strongly to oppose.

"France and Germany confident that the ECB analysis for secondary market interventions appropriate form the basis, since they help to determine the case when the financial stability of the euro area as a whole is at risk," said the Guide.

The Treaty reaffirms its statement last month granted the second bailout Greece emergency euro-zone Summit, but the focus is on the EFSF buy ability, government bonds, if the block should have ratified their new powers parliaments the ECB to do, to encourage the same in the meantime.

The ECB was votes against any resumption of purchases, argues members of 23 member last Thursday to the bond-buying program with four German, Dutch and Luxembourg, which was Bank area of monetary policy divided.

The ECB statement trying to justify this buy say it was "developed to a better transfer of our monetary policy restore decisions taking into account the dysfunctional market segments and thus to ensure price stability in the euro area."

The ECB purchased 76 billion euros in bonds of the Greek, Irish and Portuguese in the last year but purchases tailed off in January and there was none at all for more than four months.

Critics say the intervention brought only temporary relief in the bond markets and any of these countries do not store by the EU/IMF bailouts to look. Stabilization of the Italian and Spanish bond prices far more massive purchases would require, they say.

RBS analysts said in a first reaction, that while intervention might be the ECB half current Italian and Spanish bond of benchmark FPS spread German Bunds of almost 400 basis points to below 200, that use short-lived can be.

"Without guarantees that a first decline in income in the long term opportunity, exit prices look much better on the market, the ECB will will be," said a RBS note.

"We see opportunity spreads under 200 basis points to Confederation for Spain and Italy than yours." In fact, these markets are still important challenges.

"In the course of time, we believe that ongoing pressure to sell ECB/EFSF finally close will force half of traded debt instruments of the Italian and Spanish, or around EUR 850 billion," she said.

Such large European possession of southern countries debt could increase to a political backlash against bailouts in Northern Europe.

The ECB was first back from the purchase of Italian and Spanish bonds last week, the more front insertion cost-cutting measures.

Under pressure from the EU colleagues and the Central Bank of Berlusconi Announces balanced budget rule enshrined in the Constitution late Friday plans to forward load balancing of the budget for one year 2013, and push through welfare and labor market reforms after talks with the trade unions and employers.

Merkel and Sarkozy welcomes the new Italian plan.

"Above all the Italian authorities target a balanced budget to achieve is one year earlier than previously planned fundamental", she said.

Information about Italy's strict drive are but thin, so that many analysts - and maybe some in the ECB - skeptical.

After a week, the global stock markets wiped saw $2.5 trillion, are political leaders under pressure reassure investors, that Western Governments have the will and the ability to reduce the large and growing public debt load.

Who had pressure on the ECB to act to calm the markets, until the euro-zone-440-billion euro saving funds at secondary bond markets to intervene and give precautionary credit lines authorised lands in trouble is thrown.

It has also encouraged, rejected widespread calls by economists and market analysts for the euro area, the size of the European financial stability facility at least to double - a step that the EU has paymaster Germany and the France close box allies so unnecessary.

Copyright 2011 Thomson Reuters.

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Euro-zone are important Greek aid rate

9:15 AM Eurozone, Greek, important No Comments

BRUSSLES - euro-zone Finance Ministers say that Greece achieve a vital loan rate from July 15, will continue work on a second rescue mission for the struggling country.

The Ministers signed off their portion of the euro12 of billions (17.39 billion$) loan tranche in a conference call Saturday night. The International Monetary Fund to approve its share of the loan next week.

The Ministers also reaffirmed that she would continue to assist Greece of the euro110 billion loan package granted last year, but a final decision on the new aid plan left, found out the involvement of banks and other private creditors.

She said "the exact modalities and extent of participation of the private sector, and additional funding from official sources be fixed in the coming weeks."

Copyright 2011 associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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