Should there be a separation of school and profit? Many opponents of education reform seem to think so.
Case in point, a blog post at the Washington Post yesterday decried “outside forces that want to make big profits on the backs of our nation’s most vulnerable children.” Setting aside that the vast majority of private schools are nonprofit, the author apparently misses the fact that parents choose to send their kids to these schools. (Does it make sense to complain that other businesses are profiting “on the backs” of their paying customers?) In order to persuade parents to switch to private schools, they must offer parents something that the free-to-attend government schools do not. Even when a school choice program covers the full cost of private school tuition, the parents would merely be financially indifferent. To motivate parents to choose something other than the default government school option, private schools still must offer something better.
Moreover, it is absurd to think that profit—in the sense of financial gain—is limited only to the for-profit sector. Do teachers, principals, and other school staff from janitors to bus drivers “profit” from their salaries or wages? What of the profits made by the corporations that publish the textbooks that students read? Or construct school buildings? Or manufacture desks, whiteboards, pens, pencils, and playgrounds? Whether government- or privately-run, nearly every adult involved in the formal education process is earning a “profit” short of the parents who volunteer to chaperone the high school dance.
Those who denounce “profits” in education simply don’t understand the role of profits in a market. Perhaps they are confused because in the government-run education system with which they are familiar, there is little connection between financial gain and meeting the needs of students. In a competitive market, by contrast, profits (and, just as importantly, losses) provide valuable information. As explained in Herbert Walberg and Joseph Bast’s excellent book, Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools (which is celebrating its 10th anniversary):
In a capitalist economy, profits are the reward earned by firms that maximize the quality of services and goods, minimize overhead and bureaucracy, motivate their workers to achieve high and consistent levels of productivity, and avoid unnecessary expenditures. Successful firms sell better, cheaper, or better and cheaper products and services than do other firms. Customers notice, and business gradually shifts from inefficient to efficient firms. […]
Low-performing government schools don’t gradually lose customers and face the threat of closure, the way an inefficiently run business does. As a result, there is little urgency for reform. Their assets do not move from the control of those who have misused them into the hands of others who could do a better job. (Pages 98-9)
In our existing education system, only the financially well-off can afford to live in the expensive districts with high-performing government schools or to pay for private schooling. Without school choice programs, low-income families are locked out of these markets. Instead, their only option is the local, assigned, government school. If I blogged for WaPo, I might say that these underperforming schools are built on “the backs of our nation’s most vulnerable children.”
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Of course I have yet to hear anyone on Wall Street thank the taxpayers of America for anything. Did Jamie Dimon or Lloyd Blankfien ever look into the camera during a congressional hearing and say-
“American people, thanks for saving our bacon in 2008. Thanks for saving us from ourselves. Thanks for the giant bonues in the years since 2008 which could not have happened if it wasn’t for all you rednecks out there in flyover country, I mean good citizens. And thanks also for the ongoing subsidy you fine Americans pay us every year, the subsidy which constitutes nearly all of the profits of the big banks. Thank you, so much.”
No, none of those guys ever said anything like that. Why? Because they aren’t thankful. They just think they’re smart.
Remember, according to Bloomberg.com, nearly all of the profits of the big banks, the second largest amount ever, is as a result of a taxpayer subsidy created when these banks became officially “too big to fail.”
The post 2012 the 2nd best year ever for bank profits. Thanks taxpayers! appeared first on AgainstCronyCapitalism.org.
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Drought worries drive Lindsay profits up five-fold
Shares in Lindsay Corporation echoed those in agribusiness peer Monsanto by hitting a four-year high after the irrigator maker unveiled a rush in sales to US farmers concerned over further drought.
The Nebraska-based company revealed a five-fold jump to $14.7m in earnings in the September-to-November quarter, equivalent to $1.15 a share.
The result was well ahead of the $0.75-a-share result that Wall Street had expected.
And while Lindsay chief executive Rick Parod remained cautious on the company’s outlook – saying that the result "represents pulling forward in order volume, at least in part, from the second half" of the group’s financial year – the results were well received by investors.
Lindsay shares hit $88.54 at one point, the highest since September 2008, before closing at $86.03 in New York, a gain of 7.5% on the day.
‘Very concerned about drought’
The earnings rise reflected a jump of 59% to $96.5m in sales of irrigator to US growers, whose crop yields were dented by the worst drought since 1956.
"At drought conditions across the US pushed commodity prices higher through the summer and fall months, the realisation of the importance of efficient mechanical irrigation rose creating robust market conditions," Mr Parod said.
The largest sales increases came "in the drought-impacted Corn Belt".
"What we’re seeing is farmers are very concerned about the drought and the potential future impact of more drought or dry weather."
However, growers were "obviously pulling forward, to some degree, some of those applications that we think eventually would take place any way, whether it was later this year or next year or the year after", he told investors.
Middle East slowdown
The surge in domestic irrigator sales outpaced a 6% increase to $37.7m in sales of irrigation abroad, "due to lower project revenues in the Middle East", where the group booked takings from a large project a year ago.
"Excluding the Middle East market, the international irrigation revenues showed a high single-digit increase over the previous year’s quarter," Mr Parod said.
Sales in Lindsay’s infrastructure business, which makes road barriers, sales tumbled 29% to $13.2m.
Group revenues nonetheless rose 24% to $147.4m, thanks to the strong domestic irrigator market.
Statistics: Posted by yoda — Wed Jan 09, 2013 2:37 pm
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By Neal McCluskey
By now you’ve probably seen the economically ignorant, Ed Asner-narrated polemic from the California Federation of Teachers that “explains” how the rich hurt everyone because they are just so darn greedy. At one point in the original version the already loathsome Richy Rich actually goes so far as to relieve himself on the middle- and lower-class people above whom he rises on his pile of cash. Don’t look for that “trickle down” visual now, though. It seems the CFT has edited it out after getting, shall we say, less than positive reviews for it. The rest of the tedious allegory, however, isn’t much more subtle.
It’s the reality-denying hypocrisy of it all, though, that is so grating. You see, teachers and unions want to profit just as much as reviled “Wall Street fat cats.”
“What?!” I can hear the teachers reading this scream. “I don’t do this for the money! How dare you, sir!”
Mr. and Mrs. Teacher, please bear with me for a moment. I mean you no harm.
First, undertsand what profit is. Basically, it is making more from providing something than it costs to produce it. So if you are a teacher and use your earnings to buy food, housing, cable television, garden gnomes, airplane tickets, plastic surgery – anything — you are making a profit. And on an hourly basis likely a good profit, outpacing accountants and auditors, insurance underwriters, registered nurses, and other professionals. And that is without considering quite generous benefit packages public school employees often get.
Those concrete things, though, are not the compensation limits. There’s also substantial job security that comes with tenure, and in conjunction with teaching not being especially hard to break into, relatively little personal risk. Contrast that to entrepreneurs — you know, people who sometimes become fat cats — who often risk much of what they have to try new things that often end in failure. Such risk is a huge cost teachers simply don’t deal with.
In addition, while working with children is often very challenging, it can also be very rewarding. Who doesn’t get a kick out of the antics, questions, and comments of little kids? (I mean, they say the darndest things, right?) Or enjoy seeing their smiling faces. And when they get older, it can be very gratifying to guide them or inspire them as they contemplate what they want to do with their lives. In contrast, running a business involves often stultifying detail work such as running payroll, securing office space, keeping “the books,” dealing with detailed government regulations, etc.
Finally, and perhaps most importantly, there is nothing wrong with making a profit! Indeed, being profitable is generally the key to knowing that what you are doing is in demand — that you are providing something that makes other people better off — and, because you are earning more than the cost of production, you are doing something sustainable. So teachers, don’t disdain profits — embrace them!
Perhaps, though, be concerned about how you are getting them.
While there is far too much crony capitalism at work — businesses enriching themselves through government and politics — in general, companies can only make profits by earning the voluntary business of customers. In other words, they have to provide something people want, at a cost they are willing to pay. Payers have to feel they are better off.
Not so for public school teachers. Rather than getting paid by voluntary customers, they are ultimately paid with money extracted through government. Whether taxpayers like it or not, they are forced to pay for public schools. Which is, of course, why teachers’ unions are so deeply involved in politics. They want to take people’s money no matter what.
The real irony is that many teachers could probably get paid more — in Korea some get MUCH more – were free enterprise rather than socialism allowed to reign. But we have a government monopoly, which is ripe for union control. One system, without any real competition, is best suited to have one employee rep. Allow people to freely choose among autonomous schools, however, and schools would have big incentives to pay the best teachers well because providing a great service — not throwing around political weight — would be the key to success.
Teachers, ultimately, are human beings, and on the whole almost certainly enjoy profit as much as anyone else. That’s not a problem. The problem is how they — and much worse, their unions — make it.
View full post on Cato @ Liberty
Black Monday for stocks as lower profits and higher taxes menace US equity outlook?
Posted on 20 October 2012
The biggest fall in US stocks since June on Friday could well be a decisive reversal point for US equities, with the broadest measure up 18 per cent this year. It is not just that the rise in the stock market has happened against the background of a worsening global economy. It’s the outlook now for lower profits and higher capital gains taxes.
While the US ‘fiscal cliff’ coming on January 1st is feared mainly for the instant recession it would bring to the US economy, investors are also being warned of the implications of a surge in capital gains taxes from 15 to 40 per cent. Cash-out before the end of the year and you will certainly avoid that penal rate of tax. So why not sell now?
At the same time the Q3 profit reports from majors like Microsoft, Google, General Electric and MacDonalds have all been a disappointment over the past week. Next week the results season goes into top gear and we can expect more of the same.
The profits cycle for US corporations has peaked. They are struggling now with falling revenues and more job cuts are inevitable across the board. But headcount reductions will not be as effective at boosting the bottom line as before. Smaller businesses will make smaller profits.
The downcycle is self-fuelling. As one business contracts that is less business for another. Staff fired by one company mean less customers for another. Redundant workers cannot pay their mortgages and that is another bad debt for a bank.
Major US corporations cannot avoid the recession and slowdown in the rest of the global economy that is so obvious everywhere you look this year, except in the Oil States. If you sell software or hamburgers outside the US then there is a hit on revenues and a second hit from the stronger dollar as you bring those revenues home.
Given that the US economic recovery is very shallow it is not able to provide the business to compensate for the global downturn. The US economy has just not reached take-off speed in time and faces a ‘fiscal cliff’ of its own with automatic spending cuts and tax rises from the year-end.
These fiscal adjustments are actually required if the US is to get its ballooning debts under control and avoid a disastrous loss of confidence in the US dollar later. The new Congress may not repeal all these adjustments immediately as expected by over-optimistic Wall Street investors. Recessions are a normal part of the business and electoral cycle.
Will Wall Street finally wake up this weekend and push the panic button for Monday? Really the warning flashed with Friday’s sell-off and the smart money is already out of the exit.
Statistics: Posted by yoda — Sat Oct 20, 2012 12:57 am
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OBAMACARE IMPACT IN THE REAL WORLD8
14th September 2012 by Administrator in Economy |Politics |Social Issues
Small business owners will do whatever it takes to survive. Obamacare will absolutely result in millions of lost jobs and millions of jobs never created. Welcome to the real world.
Franchisors warn Obamacare will halve profits
The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare.
Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. “They had their head in the sand,” he told Secrets.
That is until he pulled out his powerpoint showing how funding Obamacare will cut his–and likely their–profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren’t eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.
Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides 30 with health insurance. Barr said he pays 81 percent of their Blue Cross Blue Shield policy, or $4,073 of $5,028 for individuals, more for families, for a total bill of $129,000 a year. Employees pay $995.
Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, “I’m not paying $444,000.”
Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he’ll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine. “Every business has a way to eliminate jobs,” he said, “but that’s not good for them or me.”
But that’s not all. His experience tells him that most low-wage workers he would have to cover under Obamacare won’t take it because their $995 share is too high, meaning those the program was set up for won’t see any benefit. And those who do will because they have major health issues, likely resulting in higher premiums to him.
Statistics: Posted by yoda — Fri Sep 14, 2012 12:31 pm
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Drought may hit farm profits harder than thought
The financial losses to US farmers from this year’s devastating drought may be deeper than some corporates have prepared for, thanks to a failure among growers in worst-hit areas to take out crop insurance.
Some 30-35% of corn in Illinois and Indiana, where crops have been particularly hard hit by drought, is not covered by insurance, analysis of official data by broker Allendale showed.
The two states account for 19.2m acres of corn sowings this year, or 20% of the US total, according to the US Department of Agriculture.
While some other farmers are covered by revenue protection policies, "the takeaway from this information is that the agricultural community will likely have some dark spots in the months ahead", Paul Georgy, the Allendale president, said.
"There will be bankruptcies" among farmers, he said, with the potential even for insured growers to suffer significant hardship if the corn rally crumbles over coming weeks, with the monthly average value in October used as a basis for payouts.
The comments follow assertions by some commentators that, thanks to insurance, US growers stand to lose little from the drought.
Maurice Taylor, the chairman and chief executive of tyres group Titan International, forecast last month that the drought may even bring a net benefit to farmers as soaring crop prices more than offset the impact of lower yields.
"I have been visiting farms in North Dakota, Minnesota, Illinois, Michigan and Ohio and I believe the net income to farmers will be equal or greater than the record last year," Mr Taylor, a former US presidential hopeful, said.
"Yes, there will be farmers who will lose their total crop, but they most likely have crop insurance."
Last week, Deere & Co, the world’s biggest farm equipment group – while cutting by $8.0bn its forecast for US farm profits this year – said that, at $102.3bn, they would prove the second biggest on record.
‘Dent in farmland price growth’
However, Mr Georgy said that he was already hearing talk of farmers cancelling orders for farm equipment, and of cautioning that they will be unable to pay farm rents, or at least delaying payments.
"A lot of rents may be due on November 1. Even for farmers who have insurance, they will not have received their payouts by then," he told Agrimoney.com.
Last week, research from Nebraska’s Creighton University showed farm equipment sales in the major US agricultural states falling to their lowest since October 2008, during the world recession, with the farmland market at its weakest since July 2009.
"The drought is putting a dent in farmland price growth and the purchase of agriculture equipment, including trucks," said Creighton economist Ernie Goss said.
Furthermore, some 41% of bankers surveyed said that the drought had encouraged greater borrowing by farmers, up from 29% last month.
‘Not a stupid risk’
Mr Georgy declined to condemn farmers for failing to take out insurance, which typically costs roughly $40 an acre.
"It was not a stupid risk. A farmer on 3,000 acres would have to pay $120,000 – not an insignificant sum of money.
"Indiana and Illinois do not normally get these types of problems. They have not seen anything like this in 20 years."
Statistics: Posted by yoda — Wed Aug 22, 2012 3:19 pm
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Fiscal woes in Washington have not prevented the federal government from buying 29,000 new vehicles over the past six years. That brings the federal government’s fleet of cars to 449,000, nearly one for every seven federal employees, according to the Detroit News, based on a recent report from the Government Accountability Office. The federal Department of Veterans Affairs added 5,400 vehicles, an increase of 49 percent. The increase comes as the overall number of veterans has declined but VA officials say they have stepped up programs for veterans with disabilities.
The ever-expanding Department of Homeland Security added 18,200 vehicles, for an increase of 48 percent. The Department of Agriculture grew its vehicle total by 5 percent. Alternative fuel vehicles, using ethanol or batteries, are up 14-33 percent according to the report.
According to the GAO, eight federal agencies account for 79 percent of federal vehicles. The General Services Administration, which oversees the federal fleet, is buying 116 plug-in electric vehicles including 10 Nissan Leafs and 101 Chevrolet Volts. The Volt is manufactured by General Motors, which along with Chrysler got $17.4 billion from the federal government’s bailout fund plus $6 billion for GMAC, the General Motors Acceptance Corporation.
GM’s profits fell 41 percent in the second quarter, with an operating loss of $361 million in Europe. In North America, GM’s profits fell from $2.25 billion to $1.97 billion. In July, GM deliveries decreased by 6.4 percent. The U.S. Treasury owns 26 percent of General Motors but by one account GM’s stock price would have to increase to $50 before U.S. taxpayers break even.
The GAO makes no recommendations in its report on the federal vehicle fleet but notes that, while overall numbers are up, some federal departments managed to reduce their vehicle fleets. The Treasury Department trimmed its fleet by 13 percent, the Navy by 17 percent and the Interior Department by 9 percent. Last year, the U.S. Air Force cut 739 vehicles from its fleet.
For the GSA, meanwhile, bulking up on Chevy Volts has not been an isolated expense. Since 2008 the federal agency, with a budget of about $20 billion, has handed out more than $1 million in bonuses not to top performers but dozens of employees under investigation for misconduct.
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Karen Klein is, as I’m sure you’ve all heard, the Greece, New York bus monitor who, after video of her being cruelly bullied made it onto the internet, reaped a windfall of emotional support from people all over the world.
She’s getting windfall profits, too. Someone on the crowdsourced funding site Indiegogo launched a campaign to send Klein on the “vacation of a lifetime.” With 29 days to go, Klein’s well on her way to much more—a lifetime of vacations. The campaign, as I write this, has collected $542,009, and more is pouring in at a rapid clip.
There’s nothing wrong with that. In fact, it warms my voluntaryist heart to see people, without government coercion, giving to support a complete stranger. This is the sort of giving I think we’d see more of if the state weren’t crowding it out.
But then came this. A well-meaning supporter of Klein’s, feeling like she should get every penny donated to her and believing—erroneously, it turns out—that the government would tax away a large chunk of her windfall, set up a petition to have President Obama “use his executive power to grant Karen Klein a waiver of all income taxes and any other federal taxes that would apply to the funds being donated to her through this fund.”
Of course, Obama doesn’t possess such an executive power and the small gifts aggregating to Klein’s enormous reward aren’t taxed anyway. But the very fact that this petition existed, that it garnered 7,624 signatures before ending, and most strikingly the motivations supporters articulated for signing it all add up to an awesome display of cognitive dissonance.
Jairo Navarrete says she signed because Klein “deserves every penny.” Ashley O’Brien says, “I do not believe that Karen should have to pay taxes on this money, it is being donated to her for very good reason and she deserves ever [sic] single cent of it.” And so on. “Deserves” shows up constantly throughout the comments.
Which is awfully weird. Here are thousands of people basically making the argument that if earnings are deserved, they shouldn’t be taxed—which implies that if earnings are (legitimately) taxed, they aren’t deserved.
I assume nearly every petitioner earns a paycheck somehow, out of which the government takes some cut in taxes. Does this mean all these people feel their own earnings are undeserved? How are we to distinguish between deserved and undeserved profits?
Shannon Kaopuiki, another signer, hints at an possible answer. “People are wanting to help Karen so she should be able to get every last cent,” Kaopuiki writes. “She deserves all the money that people want to give her.”
So deserved earnings are those that people wanted to give you. That I can get behind. In fact, it’s roughly the foundational theory of the free market economy. Sellers offer up their goods and services and buyers, wanting those goods or services more than they want the amount of money equal to their price, and voluntarily hand over cash for them. A mutually beneficial exchange occurs.
Except a great many folks out there don’t think the profits arising from voluntary transactions are deserved—at least not if “deserved” means in part that the government shouldn’t collect taxes on them. “He deserves all the money that people want to give him,” wasn’t the typical response to Eduardo Saverin, after all.
And this is strange because, when we get down to it, it seems that perhaps capitalists deserve their earnings more than Klein does. What happened to her was awful and it’s wonderful that people want to help her out. But she didn’t give those people anything in return for the $542,009 (and growing!) she’s gonna get. Business men and women, on the other hand, don’t just have their earnings voluntarily given to them. They also gave something voluntarily back in return. Further, because the buyers were willing to give their money to the sellers, the buyers must have valued what the sellers gave them even more than they valued the given-over money.
Maybe I’m reading cognitive dissonance into a situation entirely lacking it, though. Maybe the sentiment being expressed in the Karen Klein petition is, rather, that all deserved earnings shouldn’t be taxed and that almost all of us deserve our earnings. If that’s true—if that’s what so many people think—then the future’s looking a lot more libertarian than I thought.
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Majority of oilsands ownership and profits are foreign, says analysis
BY MIKE DE SOUZA, POSTMEDIA NEWS MAY 10, 2012
More than two-thirds of all oilsands production in Canada is owned by foreign entities, sending a majority of the industry’s profits out of the country, says a new analysis released Thursday by a British Columbia-based conservation group.
OTTAWA — More than two-thirds of all oilsands production in Canada is owned by foreign entities, sending a majority of the industry’s profits out of the country, says a new analysis released Thursday by a British Columbia-based conservation group.
The research by Forest Ethics Advocacy was based on an analysis of shareholder information in January 2012 from Bloomberg Professional of more than a dozen companies, including nine with headquarters in Canada, and six with their head offices in other countries. It found 71 per cent of the ownership of oilsands production was foreign, while the foreign-based companies controlled 24.2 per cent of the sector’s production.
"Some notably Canadian oil companies, such as Suncor, Canadian Oil Sands and Husky, are predominantly owned by non-Canadians," said the report. "The data also shows us that more than half of Canada’s oil and gas revenue goes to foreign entities."
The analysis, which also used production data in January from Oilsands Review, a publication that focuses on unconventional oil issues, found $11.7 billion of investments in oilsands production between 2007 and 2011 were coming from China, making up about 16 per cent of the total investments of $73.6 billion in that time period.
Alberta’s oilsands sector has become a target of many well-organized environmental campaigns because it requires huge amounts of land, water and energy to extract heavy oil from the natural bitumen deposits in the ground that are considered to make up one of the largest oil reserves in the world.
But Prime Minister Stephen Harper’s government responded by launching an international lobbying and marketing campaign, in partnership with industry and the Alberta government, to promote the oilsands industry abroad and counter foreign environmental policies that target the sector’s footprint on the atmosphere.
Internal federal documents have concluded oilsands production is the fastest growing source of greenhouse gas emissions in Canada.
Scientists and governments from around the world say all sources of the heat-trapping emissions must be dramatically reduced to avoid potentially irreversible changes to the planet’s ecosystems, atmosphere and the global economy from climate change.
Meantime, the Canadian Energy Research Institute, a government-funded think-tank, has estimated that the oilsands sector is responsible for more than 100,000 direct and indirect jobs in Canada, and will contribute more than $1.7-trillion to the country’s economy over the next 25 years. But the institute’s research has been challenged by some economists, including former Insurance Corporation of British Columbia president Robyn Allan, who have argued this analysis doesn’t adequately consider the impact of fluctuations of the Canadian dollar or oil prices, among other factors.
Forest Ethics Advocacy said that its own analysis on ownership demonstrates that recent efforts by Harper’s government to weaken Canada’s environmental protection laws and speed up approval of industrial projects are not in the national interest.
"Since the beginning of the year, our federal government has either cut or gutted every piece of environmental legislation designed to protect our land, air, and water while aggressively pushing for the expansion of the tar sands and the building of new pipelines, such as the controversial Enbridge Northern Gateway pipeline and supertanker project," concluded the report. "Harper has claimed to do this in the name of Canada’s national interest while attacking anyone who disagrees."
Statistics: Posted by yoda — Thu May 10, 2012 1:37 pm
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