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IN THE NEWS:
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OFFSHORING GOES ON THE OFFENSIVE – Forbes Magazine Online, The McKinsey Quarterly, May 12, 2004
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While it is true that only a few Asian countries offer enough English-speaking call-center representatives to deal with U.S. customers, many other skills are more abundant in Asia than in the United States. China, for example, produces 350,000 graduate engineers every year, compared with 90,000 for U.S. engineering schools. And most leading Indian information technology-outsourcing firms operate at level five--the highest degree of expertise--of the IT service capability maturity model, whereas most internal IT departments in the U.S. operate at levels two or three.  Many skills of Asian companies are distinctive. Product engineers in China and Taiwan, for instance, are more focused on designing for production than are their U.S. counterparts, who tend to emphasize features and product performance. China and Taiwan are also developing world-class design expertise in specific technologies. Some of the world's best designers of wireless chips and developers of wireless software are now based there, partly because China has emerged as the largest market for cellular telephones.
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http://www.forbes.com/business/2004/05/12/cx_0512mckinseyoffshoring.html
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EDITORS NOTE:  Americans are told not to worry about manufacturing jobs moving overseas because the high skilled (or those jobs requiring higher education such as engineering) will remain inside the US.  However, if the above news article is true, this means white-collar workers may find themselves on the very same breadline.  Federal Reserve Chairman Greenspan testified not too long ago that Americans can help themselves counter the job exportation trend (which all assume are ONLY the low wage, low skill factory jobs) by seeking higher education and new skills.  Perhaps he forgot to mention learning Mandarin Chinese as another skill set as well.  What is the point?  The US may be in for a very, very rough ride and lifestyle shock in terms of ALL sorts of jobs moving abroad for lower wages (higher long-term US unemployment), while pressure for lower wages in the US as well reduces incomes for Americans (the other alternative is for your employer to move YOUR job to another qualified candidate in China who will work for much less).  Either way, an interesting long-term trend and not a pleasant thought in terms of what this means for the economic future of Americans.
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FILMAKERS WANT US TO PROTECT THEIR JOBS – ABC News – Reuters News - June 30, 2004
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U.S. cinematographers and other film industry workers have asked the Bush administration to take action against Canadian, Australian and other government filmmaking subsidies that they say have lured away tens of thousands of jobs.  We have been harmed by runaway production of films, videos and television shows that are being made in foreign countries because of unfair trade practices, the Film and Television Action Committee said in comments filed this week with the Commerce Department's Unfair Trade Practices Task Force.
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http://abcnews.go.com/wire/Business/reuters20040630_258.html
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EDITORIAL:  What Does a Spider Monkey in Brazil have to do with the local Economy in Holland or Michigan?
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So, here we are in the year 2004, or at least that is the year of the calendar used currently by the Christian and most of the modern secular world.  For those that follow the Jewish calendar it is the year 4000 or 5000 something or other.  More or less same deal for the Chinese, plus it is the year of the monkey or crocodile or whatever.  Anyway, point is, we have been around for a very long time now on this planet of ours.  Which also leads to the old adage that history does repeat itself, but we as human beings never seem to notice.  And I am referring to economics, by the way, and not just political history. 
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There was a very interesting program produced by the BBC some time ago called Connections.  The premise of the program was to ask a seeming ridiculous question like: What does a spider monkey in Brazil have to do with the local economy in Holland or Michigan?  And then take 60 minutes to explain it or make the connection, very convincingly and with a great deal of detail and insight as well.  So, with that in mind, is there really anything new or different today than say, economic and social problems facing the Roman Empire some 2000 years ago, or even the US and Europe just 150 years ago?  And what lessons can we learn from other civilizations or other economic systems to understand what is happening today, and more importantly to perhaps predict the future (or possible outcomes for ourselves and our family)?
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For example, is the idea of free world trade or globalization really something new?  Has it been tried before and what were the problems, issues and result?  Is the push for it really what we are told, or can there be some other agendas at work?  Has any government attempted to inflate the money supply (deflate the value of currency or money) before and what was the reaction, result, etc.??  Has it ever been the case before whereby script or paper money was used as an economic medium of exchange (no gold standard or asset backing) and what were the problems and result?  Are we repeating history today or are we not?  Why is it that the economies of the so-called industrialized world seem to be in a quagmire? I know, I know, the current economic nightly news reports say everything is just great, but why is job growth stalling in the so-called wealthy industrialized nations?  Why has real wages, after adjusted for inflation and cost of living actually gone down?  Who is to blame?  Personally I tend to think it is beyond one particular politician or political party, but instead a deep-seated long-term economic trend put on course a long time ago, and past economic history can teach us a great deal about the possible outcomes as well.
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In any event, my point is not to alarm or discuss negatives for the sake of bashing any one country or particular political organization and that is why I have not done so here on purpose.  In addition, I apologize for asking questions without supplying answers and in general speaking in very vague terms.  But, it is my goal to illicit thinking and your own inquisitiveness rather than you having to suffer hearing my own thoughts alone.  However, to be sure I do think it important for everyone to really understand the problems that exist, and not just to accept conventional wisdom or political campaign speeches as the only source of information.  In addition it is also important to try and position oneself in a defensive way if you arrive at some of the same conclusions as we have regarding some of the possible long-term trends and outcome (notice the term possible was used because what is certain is that nothing is certain, but since many things are cause and effect, one can predict what the outcomes might be regarding certain trends and economic policy).
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My grandfather always said, hope for the best BUT plan for the worst.  I will add to that by saying read as much as you can, and keep an open mind to other comments even though they may be contrary to your own.  For example, what have been some time proven methods of both wealth and physical preservation through out time?  Asset diversification has been one, including keeping some wealth abroad in other countries and other currencies (not to mention consideration of assets such as real estate and gold in other places as well).  In addition, having a dual citizenship or second passport never hurt either, for a number of reasons.  So, what does a spider monkey in Brazil have to do with the local economy in Holland or Michigan, and why should you care?  Maybe after some extensive investigative reading, much more than you realize.
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Some Recently Published Books of Interest to Consider Reading:
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THE DOLLAR CRISIS:  By Richard Duncan, Published 2003 by John Wiley and Sons.  Our Comments:  An interesting commentary on the US Dollar, and current Real Estate bubble in the US.  While I do not agree with the authors end of book suggestions which focuses on global minimum wages as being the answer to all problems, I do think some very tedious statistics and research in the first half make it a worth while read (a highly suggested US economic history lesson starting with the 1920’s).
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THE PRICE OF LOYALTY:  By Ron Suskind, Published 2004 by Simon and Schuster.  Our Comments:  A refreshingly humble (non self aggrandizing) memoir of former US Treasury Secretary Paul O’Neill and his 2-year tenure in the Bush Whitehouse.  In short, what really goes on in the world of politics and at the US Treasury - In addition some interesting personal insights about Federal Reserve Chairman Alan Greenspan as well.
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IN AN UNCERTAIN WORLD:  By Robert E. Rubin and Jacob Weisberg, Published 2003 by Random House.  Our Comments:  More of a my life memoir rather than a complete focus on the Clinton Whitehouse, but none the less interesting to see what when on during that administration in terms of the US Treasury.  One important item to note was Bob Rubin’s assessment of the previous financial problems in Thailand (devaluation of the local currency, etc.).  In short, Rubin says it seemed obvious looking back that Thailand was ready to implode, what with a huge negative trade imbalance (importing far more than what they export) and a tremendous amount of foreign money propping up (and even over heating) the economy there.  Hmmm, let’s see Bob, so you are saying that a country that imports far more than what they export, plus in relying on borrowed foreign money (in the bond market and banking system) creates a recipe for disaster including a real estate bubble.  I wonder what other country can fit that description today?
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THE PARTY’S OVER: Oil, War and the Fate of Industrial Societies   By Richard Heinberg, Published 2003 New Society Publishers.  Our Comments:  It’s about the gas folks and the fact that the CEO of Exxon-Mobil has stated that less than half the oil will be available to meet demand in 2010, plus it will cost about one trillion US dollars to get what remains.  You think gasoline is expensive now, you have not seen nothing yet.  In the opening commentary of the book, C.J. Campbell says that oil and politics are never far apart.  You think??
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THE GLOBALIZATION OF POVERY AND THE NEW WORLD ORDER: By Michel Chossudovsky, Published 2003 by Global Outlook.  Our Comments:  The IMF, the World Bank, and all the interesting things that have gone on for the past 30 years or so.  Should be required reading for any head of state for a developing country, but even you are just an average Joe like myself, some very interesting insights to be aware of.
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DUAL NATIONALITY AND A SECOND PASSPORT FOR AMERICANS:  Is it Legal??
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We get quite a few letters from people who are very confused about the idea of holding a second nationality or dual citizenship.  Stated another way, they often ask: Can I lose my US Citizenship When Obtaining a Second Passport?
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Not to go off on a tangent, but it should be clarified that a legal passport is normally only granted to citizens of a particular country.  I highlight this idea because many people hear about ways to get their hands on a second passport, although not always exactly in a legal or correct fashion.  In other words, a Passport is simply a legal and valid travel ID document granted by the government to CITIZENS of its country as in part proof of citizenship for foreign travel purposes.  So, if you are offered a passport by someone or some agency and becoming a legal citizen first is not part of the deal – watch out.  You might be getting a passport albeit one that has not been legally or officially issued (and one that may or may not registered in the computer system either).  In addition, if you are not a citizen or do not have any documents proving that you are (such as naturalization papers) then you will have a difficult time (if not impossible) trying to get such a passport renewed.  However, this is not to discourage anyone from going the correct and legal route, as in many cases it can be very simple and straight forward (of course all depending upon the country where you might seek to become a citizen and the requirements accordingly).  Some countries for example might have a timeline of only one year to become a citizen (after obtaining legal residency) or in other countries it could be up to seven years.  There are a very few (only one or two I can think of at the moment) countries that might offer an instant or economic citizenship, but such programs are normally quite expensive. So, choose the country that meets the best of your needs, timeline and even budget.
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Getting back to the legality of having a second citizenship and passport, keep in mind that while some countries do prohibit dual citizenship or may force you to relinquish one upon getting the other (Germany and Ecuador are two countries where this is the case), this is not the case with the vast majority of other nations on the planet, including the US (see the information below taken directly from the US State Department website).  In the case of Americans, the only thing the US State Department does require is that US citizens use their US Passport when entering and leaving US territories.  Apart from that, a second citizenship or passport does not in and of itself jeopardize your existing citizenship status.
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From the US State Department Online Information:
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http://travel.state.gov/loss.html
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The Department has a uniform administrative standard of evidence based on the premise that U.S. citizens intend to retain United States citizenship when they obtain naturalization in a foreign state, subscribe to routine declarations of allegiance to a foreign state, or accept non-policy level employment with a foreign government.  When, as the result of an individual's inquiry or an individual's application for registration or a passport it comes to the attention of a U.S. consular officer that a U.S. citizen has performed an act made potentially expatriating by Sections 349(a)(1), 349(a)(2), 349(a)(3) or 349(a)(4), the consular officer will simply ask the applicant if there was intent to relinquish U.S. citizenship when performing the act. If the answer is no, the consular officer will certify that it was NOT the person's intent to relinquish U.S. citizenship and, consequently, find that the person has retained U.S. citizenship.
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WHAT THE US STATE DEPARTMENT SAYS ABOUT DUAL NATIONALITY:
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Dual nationality can occur as the result of a variety of circumstances. The automatic acquisition or retention of a foreign nationality, acquired, for example, by birth in a foreign country or through an alien parent, does not affect U.S. citizenship. It is prudent, however, to check with authorities of the other country to see if dual nationality is permissible under local law. Dual nationality can also occur when a person is naturalized in a foreign state without intending to relinquish U.S. nationality and is thereafter found not to have lost U.S. citizenship the individual consequently may possess dual nationality. While recognizing the existence of dual nationality and permitting Americans to have other nationalities, the U.S. Government does not endorse dual nationality as a matter of policy because of the problems, which it may cause. Claims of other countries upon dual-national U.S. citizens often place them in situations where their obligation to one country, are in conflict with the laws of the other. In addition, their dual nationality may hamper efforts to provide U.S. diplomatic and consular protection to them when they are abroad.
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EDITORS NOTE:  In plain English – You Do NOT loose US Citizenship simply by acquiring another nationality and passport.  The US State Department admits, more or less, they do not like it, as dual citizenship can create all kinds of havoc when it comes to legal or other matters such as taxation, inheritance, divorce, law suits, etc. (often enough in your favor if you understand the law and plan accordingly), but it is not prohibited.  In addition, it is clearly stated that Dual Citizenship for Americans is legal and accepted.
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READERS WRITE IN:
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Hello John, I always look forward to receiving your newsletter.  It is an interesting point that you brought up about gold.  How does DR customs treat the importation of gold and silver?  I understand there is no tax on the flow in and out of electronic USD and Euros, but how about real money, the metal itself?  Are there retail gold and silver dealers in the DR if one wanted to cash in some silver for some Pesos? I haven't found any via the Net yet.  I've heard but not confirmed that there are about 10 wholesale gold and silver dealers in the free trade zone in Colon, Panama, plus a vaulting service. But when we were in Panama City (loved it) about a year ago, I asked a couple of taxi drivers for gold and silver coin shops but they didn't know of any.   Is the current situation in the DR and Panama not good for cashing in gold and silver?
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I understand Mexicans value silver and have some Mexican Libertads myself. It appears Hugo Salinas Price is doing a good job promoting the Libertad in Mexico. But I'm not getting a sense that the rest of Latin America really values gold and silver. My Argentine Spanish translator, who lives in Argentina, says the Argentines look at buying gold and silver as gambling, despite what recently happened to their currency. What's your sense about Latin Americans in general regarding gold and silver?
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EDITORS REPLY:  On the very first question regarding the Dominican Republic, I do not have a technical answer for you, but my advice and instinct would be to say (in terms of application of customs regulations) is to keep the amount down to less than reportable value as it applies to cash.  In addition, do not of course bring in a trunk load of gold either – not a good idea in any country.  One smart idea might be an account with the Perth Mint, whereby you can obtain warehouse certificates representing your physical ownership on safe deposit elsewhere.  Warehouse certificates are not financial instruments, are not cash, and therefore not subject to the so-called reporting of the later.  Interestingly enough, there are dealers that will accept these signed certificates in exchange for either physical gold on demand or the cash equivalent at the day’s spot price.  Dealers exist in a number of countries including the US, Canada, Switzerland, Australia, Hong Kong and Panama.
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You can own gold in the Dominican Republic, or to say it certainly is not a problem legally to own precious metals privately.  The real problem, though, as you point out, are the lack of dealers for physical gold coins or bullion.  While there are few precious metals dealers listed in the phone book (in the Capital of Santo Domingo), I suspect you would have an easier time trying to cash in your gold coins in Panama, Switzerland or some other major European city for example.  But, all in all, not a bad idea to keep some gold safe and secure in some nearby location to take with you if and when you need it.  In regards to some of your later comments, on the whole I would have to agree that ownership of gold coins is not very common in Latin America or perhaps not as common as in North America or Europe.  This is not to say that people do not do so, but not to the same extent that would allow you to find a large network of gold and silver coin dealers as you certainly will in major cities of North America and Europe.   Is this because Latin Americans view ownership of gold as being risky or speculative?  Perhaps.  Gold of course has always been called the wealthy man’s asset because it often costs money to hold it (storage fees, etc.) and it does not offer any interest income.  However, my guess is that many wealthy Latin Americans do own gold, but outside their home country, such as in Switzerland, Channel Islands, etc.  The reason for this is, while most currently live with a stable and democratically elected government, the truth is that many have such a kind of government only for the last 40 years or so (some even less).  So, when one has grown up under political turbulence and often a dictatorship in the past, the tendency is to not only hedge your wealth with other assets or other currencies, BUT also in other countries as well for safety sake. So, in short, I have the tendency to believe that at least some Latin Americans do see the benefit of keeping a portion of assets in gold, but there is not enough of a local market to support a large network of dealers.
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Another Reader Writes:
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What will the disastrous flooding and deaths do for the Dominican Republic economy? How will the new President address Healthcare and Hospitals? Will they both get better?
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EDITORS REPLY:  On the issue of flooding in the region you probably saw in local news reports in your home country, while a terrible thing, this was an issue or incident isolated to a very specific small area of the country.  In fact, surely for the people living in this area, which tended to be a fairly poor and living in an undeveloped region of the country, the economic impact was quite acute.  However, does this have any effect on the entire country or the economy?  The answer is no, just as a flood in a small town of the coast of North Carolina does not in and of itself mean the entire state has a problem economically speaking.  Also, in the case of the Dominican Republic, we are talking about a few thousand people affected in a country with over 8 Million.  Again, not to make light of the matter, we are talking about a very specific and small portion of the population as well. In addition, the government and many private charities have been very active in helping these people, including many Dominicans living abroad also.
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On the issue of Public Healthcare, allow me to first comment that just as the state of public hospitals in the US is abysmal, the same can be said for public hospitals in the DR, and most other places I think also.  However, private healthcare is excellent and very affordable in the Dominican Republic.  For example, I can tell you from personal experience in March of this year when I had surgery, I found the quality and costs to be both quite good.  I had a very good surgeon and stayed at a private hospital, in a private room complete with A/C, cable TV, private and very modern bathroom, sitting room with my own refrigerator, and nurses that came in just about every hour on the hour (they woke me up in the middle of the night for medication, but what can you do).  So, in short, the entire bill for a four-day hospital stay in a very comfortable private room, surgeon’s bill and anesthesiologist’s bill plus all medication, etc, came out to the equivalent of US$1,000.  So, the point is that public healthcare, both in terms of cost and quality is no way an indication of the medical care in the country as a whole.  However, I state this simply to make a point, even though I realize it does not answer your question.
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What will the new administration do about public healthcare?  It is a good question and I do not have an easy or direct answer for you.  Part of the problem is that I think the general public was sold a bill of goods in regards to this new Social Security and Public Health Insurance touted by the previous government (which is voluntary, by the way, as one must apply and sign up for it if you want it).  Of the roughly 4 Million eligible workers in the country, only about 2.7 Million people have in fact signed up for Social Security and Public Health Insurance (which means they alone are paying in the additional funds via monthly payroll deductions for this thing and in theory are the persons entitled to such benefits).  But one must realize and consider that there were, and still are those very same government funded public hospitals before this program.  So, what is the difference today?  Well, the government has even more money now coming into its coffers from these monthly payroll deductions, aside from the government funding that existed before for such institutions (public hospitals).  So, in theory, one would expect things to be that much better, with that much more money going towards such programs, no?  However, that has not been the case recently.  Serious shortages are reported in terms of medication and supplies in the public hospitals at the moment.  This begs the question: Where is all this money (new social security and healthcare contributions taken out of people’s paychecks voluntarily on their part since January of 2003) going?  My answer is, as always, is that government should not be in the business of running programs or institutions better left to the private sector.  Runaway all-inclusive socialism does not work, or in the least, does not provide value for the amount of money passing through the system.  Time and time again, politicians have proven themselves ineffective in this arena, breeding bloated government bureaucracies and inefficient allocation of resources.  Is this a problem applicable to the Dominican Republic alone?  Of course not, and the US, which is one of the wealthiest nations on earth, is living proof of this as well, with public hospitals of its own which can be called nothing short of a disgrace (if one wishes to be polite about it).
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So, what is the answer?  Well, government should step in and provide assistance and services in areas where the private sector will not (this certainly should be one function of good government and is necessary).  After all, there were public hospitals before, as a last resort for the poor, and while not a perfect solution, certainly better than nothing.  In addition, one can argue that government should be more diligent about quality of care and allocation of funds to the best possible extent also.  When Dr. Fernandez was President before (1996-2000), he paid surprise visits to the public hospitals all hours of the day and night, and subsequently fired a number of doctors and nurses he found sleeping on the job, literally.  So, I can say, he seems to be a man concerned about making sure that government run institutions comply fully with the quality and quantity of services they are meant to provide to the public. 
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However, to create a carbon copy of the US style social security and public healthcare system is not the answer in my opinion.  In fact, of all the public welfare systems in place, especially in the area of healthcare, only France seems to have gotten it right.  In any event, perhaps a voucher system, tax credit or subsidy for private health insurance would make more sense and be a less costly solution overall.  Certainly a much better idea to turn the funds over to a private and already successful insurance company, and allow government to keep a sharp watch over such a process, rather than try and turn a group of government employees into insurance executives (by operating what is in essence a government insurance company).  Private health insurance in the DR is quite comprehensive and quite reasonable in terms of premiums (US$100 per month for some of the very best plans which might include some of the University Hospitals in Miami as well) for the benefits provided (for services in private hospitals or clinics), so tapping or using a system that already is known to work well might be one solution.  And in truth, there may be a variety of other options and solutions to consider also.  To be sure, public healthcare is just one of a great many areas that the new administration needs to focus on in terms of what can best be deemed, quality assurance in delivery of government services (perhaps this is an oxymoron, but one can try).
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