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Thread: Financial Crisis - Page 6







Post#126 at 09-17-2001 05:12 PM by Anne '72 [at joined Jul 2001 #posts 114]
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I just saw that the Dow dropped about 680 points today (9/17), but that most analysts decline to panic, and think that things will stabilize soon. What do people here think?







Post#127 at 09-17-2001 06:56 PM by [at joined #posts ]
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I think it is too soon to tell what this means. A 680 point drop sure does sound bad, and maybe it is, but this doesn't necessarily mean we're headed for another depression (though we can't rule it out either).

I heard financial analysts on the news telling people not to panic, and not to start pulling their stocks yet. Of course, people are people, and if they are scared, they are likely to act on their fears, espcially when it comes to safeguarding their money. I don't know much about the stock market, but I do know this: stock market fluctuations are based less on reality than on psychology and perception. If NO ONE panicked, and thus no one pulled their stocks, nothing at all would change and everything would be fine. It's the fact that so many people get scared and pull out their stocks all at once that causes drops like this one. In a sense, it is a self-fulfilling prophecy.
I heard on NPR that major changes can be expected in the stock market, but these aren't necessarily bad. Certain industries will do badly, such as major airlines, but others, such as construction and insurance, will do much better.

I have a question: should the WTC be rebuilt? Should we try to duplicate the Towers or build something in its place? My feeling is that trying to duplicate the scrapers would be a bad and dangerous idea at this juncture. I was thinking perhaps a memorial park, with a monument containing all the names of the people who were killed, with a special tribute to the firemen and rescue workers who gave their lives.







Post#128 at 09-17-2001 08:05 PM by Neisha '67 [at joined Jul 2001 #posts 2,227]
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Actually it sounds like the drop was not the result of panic. People on the trading floor said that it was not any more frantic than ususal, just higher volume as a result of so many days off. Also, some stocks, notably teleconference and security companies, were up. The ones hit the hardest were airlines and insurance companies, not surprisingly.







Post#129 at 09-17-2001 10:10 PM by [at joined #posts ]
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Subject: Today's Market Action

Actually, I don't think today's drop was due to what happened to the WTC. The Market was headed down last week anyway. I think what we saw today was just pent up selling pressure from last week working itself out. Which is not to say a panic and crash cannot happen. That has been in the cards for the last twenty years. The only question is WHEN not IF.

There is now no doubt we are in our decannual recession. The only real question is whether it will segue over into a depression. For the last twenty years we have seen the effects of "irrational exuberance". Now we may be able to observe the effects of "irrational gloom". This entire market bubble was built on the confidence that investors would be able to sell their stocks to "greater fools" at ever higher prices. Perhaps that confidence is now waning. It will be several years before we know for sure.

As for rebuilding the WTC, this is a bad idea. With modern telecommunications there is no need for the WTC or for New York City for that matter. All it is is a big target. We should be DECENTRALIZING not CENTRALIZING.

<font size=-1>[ This Message was edited by: Robert on 2001-09-18 11:58 ]</font>







Post#130 at 09-17-2001 11:41 PM by [at joined #posts ]
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Robert says, "Actually, I don't think today's drop was due to what happened to the WTC."

Robert, Robert, Robert!

I have read your many posts... with some guarded trepidation given some of your notions of how things work... but this goes beyond the pale, pal.

You, sir, are completely off the map.





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"Also, Bush surely isn't GC. The thought is to puke for." Mr. Brian Rush

<font size=-1>[ This Message was edited by: Marc Lamb on 2001-09-17 21:43 ]</font>







Post#131 at 09-18-2001 12:49 AM by Neisha '67 [at joined Jul 2001 #posts 2,227]
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Does anyone know if there's anything to this rumor that Osama bin Laden sold short some reinsurance securities on the German stock exchange?







Post#132 at 09-18-2001 02:50 AM by alan [at joined Sep 2001 #posts 268]
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Its a featured story on today's [9/17] Drudge report [drudgereport.com]. I think it was done on the London stock exchange.







Post#133 at 09-19-2001 11:40 AM by [at joined #posts ]
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Subject: Hard Deflation Soon?

The latest debt figures for the second quarter were posted over at the Federal Reserve website yesterday. They weren't good. Total Aggregate Debt is now 28.4 Trillion Dollars. Unfortunately this represents a Rate of Increase in Total Aggregate Debt of only 6.6%. For the last forty years the Rate of Increase in Total Aggregate Debt has been 9.4% on average. Anything much less than 9.4% and the US economy falls into recession.

Of course this 6.6 is the true rate of inflation. It tells you exactly how much funny money has been created by the banking system. Somewhere in one of their books Howe and Strauss use the phrase "our debt fueled economy". They are precisely right, without these huge increases in debt our economy IS in trouble. It's like a drug addict, he requires a larger hit each time to get the same effect.

So we are only 6.6% away from HARD DEFLATION. We haven't seen any hard debt deflation since the depression. With all due respect to the victims, if we fall into hard deflation next year our present problems will be forgotten as being relatively minor.

<font size=-1>[ This Message was edited by: Robert on 2001-09-24 12:00 ]</font>







Post#134 at 09-20-2001 09:34 PM by [at joined #posts ]
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09-20-2001, 09:34 PM #134
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Subject: World Financial Meltdown

Steve Puetz's newsletter came today. He agrees with me. The WTC didn't trigger the selloff in the markets, it simply intensified and ratified a downtrend that started long ago.

What we have going here is a controlled crash. But sooner or later the shorts who are running Wall Street these days will have to cover and there will be a rally. How big of a rally and whether the rally will be sold remains to be seen.

We are at the end of a Third Turning. The last time we had a Stock Market Crash and recession at the end of a Third Turning it devolved into a Depression. Back then the amount of debt public and private was relatively SMALL. And look what the thing developed into: the greatest depression of all time. But that was then and this is now. What kind of depression do you think we'll have after 60 years of the greatest credit and debt explosion the world has ever seen? Depression won't do it we'll have to coin a new word.

Since the rate of Aggregate Inflation is now only three and a third percent this is hardly enough to keep the CPI/GDP Bubble pumped up. The Stock Market Bubble is in hard deflation, I rather imagine the Real Estate Bubble will be next.

<font size=-1>[ This Message was edited by: Robert on 2001-09-20 19:36 ]</font>







Post#135 at 09-21-2001 03:50 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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http://www.msnbc.com/news/631549.asp?0dm=B28JB

There has been another economic blow in August. Housing construction fell by 6.9% during that month.
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
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Post#136 at 09-21-2001 03:51 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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Is the economy in freefall?
http://dailynews.yahoo.com/htx/nm/20...cks_dc_70.html

<font color="blue">
Friday September 21 1:00 PM ET

Dow Headed for Worst Week Since Depression
By Denise Duclaux

NEW YORK (Reuters) - Stocks slumped at midday on Friday, leading blue chips to their biggest weekly drop since the Depression, as fears over a long war on terrorism after last week's deadly attacks overshadowed an upbeat earnings outlook from bellwether General Electric Co. (NYSE:GE - news).

``We are outside the historic envelope,'' said Paul Cherney, a market analyst at S&P Marketscope. ``No one knows when we will bottom.''

Investors dumped shares for the fifth straight day after hijacked passenger planes slammed into the World Trade Center in New York's financial district and the Pentagon near Washington and claimed thousands of lives ten days ago.

Wall Street has tossed major stock indexes down 15 percent to three-year lows as the devastation sparked national mourning, massive layoffs, recession fears and plans for military retaliation. U.S. treasures and gold climbed as investors fled to safe havens.

General Electric offered a short-lived respite from the relentless selling after the conglomerate said it was on track to deliver double-digit earnings growth this year. The corporate icon rescued the market from a drop of as much as 5 percent after President Bush prepared the nation for war on Thursday night.

``You can't get a historical parallel. We are boxing with a ghost,'' said Richard Cripps, chief market strategist at Legg Mason Wood Walker. ``The market is oversold, but there is always an intangible factor to stock prices and an irrationality that they can reflect. You have to let it run its course.''

The Dow Jones Industrial Average (^DJI - news) fell 164.75 points, or 1.97 percent, to 8,211.46, after dropping more than 3 percent around the opening. GE, a Dow component, climbed $1.08 to $31.45 and briefly pushed the blue-chip gauge into positive ground.

The technology-loaded Nasdaq composite index (^IXIC - news) slid 51.36 points, or 3.49 percent, to 1,419.57, after tumbling more than 5 percent. Chip leader Intel Corp. (Nasdaq:INTC - news), down $1.02 to $19.67, and software giant Microsoft Corp. (Nasdaq:MSFT - news), off $2.02 at $48.74, pressured both the Dow and the Nasdaq.

The broad Standard & Poor's 500 index (^SPX - news) fell 19.42 points, or 1.97 percent, to 965.12.

Friday's session was marking a sour end to a devastating week for stocks. The Dow has fallen almost 15 percent, putting it on track to post its second-biggest weekly loss ever, after a 15.5 percent weekly slide in 1933, according research firm MarketHistory.com.

The Nasdaq has tumbled 16 percent and the S&P 500 has fallen roughly 12 percent this week.

``People look at this and say 'Oh my Gosh, if the market is not going to go anywhere and earnings aren't going to come back then the dinner I've been waiting for is going to be postponed even further out, where do I want to park my money?'' said Richard Babson, president of Babson-United Investment Advisors, which manages $1.8 billion.

Losers trounced winners by a 5-to-1 ratio on the New York Stock Exchange and 4-to-1 on Nasdaq. More than 1 billion shares changed hands on each of the exchanges, twice the average midday volume. The NYSE is on track to have its busiest week in history.

Companies ranging from airlines and publishers to financial services firms and software makers have announced steep layoffs after the Sept. 11 attacks. The assaults paralyzed the travel industry, aggravated fears of a recession and threatened to damp consumer confidence.

``Every day there are more layoffs and more contraction,'' said Larry Wachtel, a market analyst at Prudential Securities. ''The economy really grinded to a halt and profit projections are changing. You are pushing off economic recovery and you are pushing off profit recovery. And then there is fear.''

EMC Corp. (NYSE:EMC - news) fell $1.21 to $11.41. The computer storage company said it would cut 10 percent of its work force, or more than 2,000 jobs, and probably report a third quarter loss, blaming a widening recession and slowing technology spending.

German-American carmaker DaimlerChrysler AG (NYSECX - news) (DCXGn.DE) shed 88 cents to $27.36. Auto makers are being hit by fears that their earnings may be wiped out by weak consumer sentiment.

Morgan Stanley (NYSE:MWD - news) added 60 cents to $38.22. The Wall Street firm posted its worst quarter since the financial turmoil of 1998, as investment banking fees dropped and trading revenues slid. Morgan Stanley was the largest tenant in the destroyed World Trade Center but lost miraculously few employees.

Palm Inc. (Nasdaq:PALM - news) fell 43 cents to $1.72. The company pulled the plug on its plan to launch this year a highly anticipated wireless handheld computer, derailing any momentum gained after it delivered first-quarter results that met lowered expectations.

ONI Systems Corp. (Nasdaq:ONIS - news) plunged $3.84 to $4.53. The optical communications gear provider said its results for the remainder of the year would fall well short of earlier expectations and it will post charges due to the deteriorating global telecommunications market.
</font>
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er







Post#137 at 09-21-2001 04:00 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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As usual, Lyndon Larouche has something to say about the economy in the wake of the attacks: http://www.larouchepub.com/other/200...emergency.html
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
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Post#138 at 09-21-2001 06:25 PM by Barbara [at 1931 Silent from Pleasantville joined Aug 2001 #posts 2,352]
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MadRobert, good article, I'd just read it the other night, but I just now re-read it and was struck by how it succinctly restates what's been posed on this board. I wonder how many here should know they share the same viewpoints as the infamous and always-made-to-look-like-a-crackpot LaRouche? I myself began a while back to ask instead who are the crackpots who try so hard to give him that taint.

Week in Review: Irrational Exhuberance Hangover

Well, a 1400 point drop, the biggest one-week drop in the history of the Market. Even my cadre of XOM is ailing. Coffee prices are fixing to go way up. Precious metals are soaring. Triple-witching Friday, indeed.

I spent this week's days glued to CNBC. I watched as frightened men in suits boast gloriously about the Market's Return and spur on the Floormen to work "as usual" when it was clear all they wanted to do was mourn their dead cohorts. I watched as consumer citizens were urged and advised to get out there and return to Normalcy - spend, spend, spend; while all they wanted to do was to mourn the dead and worry about their country and if they were next in the job cuts. And, I watched the Talking Heads desperately avoid the R word and D word, as we all watched the market begin that much-predicted Downward Value Adjustment. Today was the first day anyone would start candidly talking Reality: about Bottoms and Panic and Climactic Lows, Rallies, Retests, and maybe after all that, then Rebuilding.

I predict the market has farther to go. Bottom is not here yet. Company Buybacks can continue to positively manipulate the market only through next Friday as of now. As I personally suspect this has been a material cause for those rallies at each day's end, October 1 will be quite interesting.







Post#139 at 09-21-2001 07:20 PM by [at joined #posts ]
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My Silent mother (b. 1930) called me today in tears. She is terribly worried because she has lost two major clients (one of whom was headquartered in the WTC) due to 911. She has never read any of S&H's books, and knows nothing of 4-cycle theory, but said that she believes we are heading for a Depression, and that she hasn't seen such patriotism and teamwork since WW2. Not normally a pessimistic person, she thinks the worst for the economy, and for America. I told her I was going to send her a copy of T4T and it would explain a lot, and also offer her hope for the future.

But my local bookstore, which couldn't get rid of its remaining copies of T4T, and kept them in their warehouse, has suddenly sold out of copies! I called the publisher, and was told that there has been a dramatic increase in requests for this book. Can't say I'm surprised.







Post#140 at 09-21-2001 10:10 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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Dramatic increase? So that explains having several new people everyday!
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er







Post#141 at 09-21-2001 10:29 PM by [at joined #posts ]
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09-21-2001, 10:29 PM #141
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Subject: That was the week that was.

And what a week it was! From its peak last year the Net Capitalization of all stocks has fallen from 20.3 Trillion Dollars to something like 13 Trillion Dollars. About 7 Trillion Dollars has gone up in smoke.

Remember that one way or another most of this money was funny money borrowed from the Federal Reserve and it's minion banks. The DEBT that created that 7 Trillion STILL EXISTS and must either be PAID BACK or DEFAULTED ON (most likely defaulted on). When and if the debt is defaulted on ALL DEBT will become suspect (including Government Debt) and this will trigger a deflationary spiral in the Bond Market similar to the present deflationary spiral in the Stock Market. To make the Market go back to its old highs some kind person would have to borrow 7 Trillion Dollars and throw it into the Market. Pretty unlikely.

Watch out for a short covering rally soon but do not be decieved. We are very much in a Bear Market.







Post#142 at 09-22-2001 06:58 AM by [at joined #posts ]
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Start using the "D" word, not the "R" word - I see unemployment being somewhere in the 13 to 15 per cent range this time three years from now. And the war won't be going well either - there is no way we can win this thing without resorting to the nuclear option, and "Bush 43" won't do it. So that means Al Gore - with or without the beard - wins the rematch in November 2004, and the Supreme Court will not figure in the outcome this time around. (Personally I'd like to see Jesse Ventura run - he would "Body-Slam" both Gore and Bush, but I doubt that it will actually happen).

Once Gore takes over (and Hillary as Vice President?) - and with lopsided Democrat majorities in both houses of Congress to work with - what you will see is wealth redistribution on a massive scale - good old-fashioned Keynesian "pump-priming" (and there will be a good chance that we'll still be at war, too). This will lead to inflation like this country has never seen before in the second half of this decade - something we're due for (at least to some extent) no matter what, according to Dr. Ravi Batra's three-decade money-supply growth cycle, which I still believe will pan out despite his prophecy of a "Great Depression" in the '90s not hitting home. National health insurance also comes with the deal; what Gore would do about the war is anybody's guess.

So my advice (for what it's worth) is the soon as the polls show it's obvious that Gore is gonna win, start buying precious metals like a fiend - gold will be at least $10,000 an ounce by 2009 if not sooner!

<font size=-1>[ This Message was edited by: Anthony '58 on 2001-09-22 07:35 ]</font>







Post#143 at 09-24-2001 08:29 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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I think that the large rally today was a total fluke. It might rally for a couple more days, but I think the trend is clearly downwards.

http://www.newsmax.com/archives/arti...3/203835.shtml
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er







Post#144 at 09-24-2001 09:25 PM by [at joined #posts ]
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09-24-2001, 09:25 PM #144
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Subject: Today's Rally

Today was a short covering rally. The shorts were forced back in to cover their positions. They had to buy back the stock they sold last week. The market was forced down so much last week the rally may extend several days. But nothing has changed, bear markets are notorious for downward movements punctuated by short covering rallies to sucker the longs back in for another kill.







Post#145 at 09-25-2001 12:23 AM by Brian Rush [at California joined Jul 2001 #posts 12,392]
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Anthony:


First comment is, don't write Bush off just yet. I have a feeling he may have some surprises in store. He's undergoing a big change as a result of this mess. I could be completely wrong, but there's this nagging suspicion that his response to the economy, once it's obvious how serious the problem is, could be altogether un-Republican. The economy will still be having problems by '04, but this is a 4T. If it's improving much at all, and if the war is also going well, Bush will get the benefit of the doubt.


Second, don't assume the war won't be going well four years from now. The government doesn't seem to be conducting it stupidly or flying off the handle.


Third, the solution to the economic problem will have to be as international as the war is shaping up to be. Wealth redistribution will need to take the form of higher wages abroad, even more than wealth redistribution in America itself. That means rethinking the global free trade policy that's been standard fare in the last three administrations, and moving to change IMF and WTO policies. Unexplored territory. That's another reason not to write Bush off. He has to get past Republican knee-jerk responses, but if he does, he's unlikely to fall prey to Democratic ones. Very likely he'll come up with something untried, and that at least gives him a chance that what he'll try will be the right thing.


Fourth, don't assume a Gore nomination. There's also John Kerry. So even if Bush screws the pooch, we won't necessarily see a Gore administration in '05.

<font size=-1>[ This Message was edited by: Brian Rush on 2001-09-24 22:27 ]</font>







Post#146 at 09-25-2001 11:13 PM by [at joined #posts ]
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So, what about all this talk of $100 billion "stimulus packages" coming from Alan Greenspan of all people? How quickly balancing the budget at all costs has gone out of style! Maybe the Republicans have hit on the idea that they can be the Gray Champions if they imitate Winston Churchill. This decade is going to be just like the '70s, as least as far as inflation is concerned (indeed, that's what Ravi Batra's cycles point to). I'm leaning toward taking back my advice about starting to buy gold in 2004 and suggesting we all do it now instead!







Post#147 at 09-27-2001 01:37 PM by [at joined #posts ]
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Subject: Quote from Steve Puetz.

"Most analysts are blaming current global market turmoil on the uncertainty following the recent terrorist attacks on the US. This is incorrect. It completely deflects attention from the true cause. The global collapse in equity prices is simply part of the ongoing bursting of the most massive bubble market of all time.

The developing depression is the direct result of a monetary system that has inadvisably replaced the stability of gold with a risky system of fiat credit. The sad history of fiat credit is that it always creates a boom when it is easy, only to be followed by economic collapse once the boom runs its course. The magnitude of the collapse is always equal to the magnitude of the preceding boom. In the current case, the coming collapse will be unequalled in its severity. In fact, it's highly likely that the current global financial system will not survive."

<font size=-1>[ This Message was edited by: Robert on 2001-09-27 11:39 ]</font>







Post#148 at 10-03-2001 09:13 PM by [at joined #posts ]
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Subject: Only 250 Basis Points 'Til Christmas

Well, our old buddy Al cut rates again yesterday. If a LOT of funny money is good maybe some more will be even better. He still has 250 basis points to go and it looks like he'll have to use every one of them.

Even after the big drop the Dow is still TWO times more overpriced now than it was in '29. The Dow would have to drop below 2000 before it would be neutral by historical standards. Have patience we'll get there yet.

This terrorist thing has absolutly nothing to do with what is happening in the economy. They could catch every terrorist in the world and tack their hides to the barn door tomorrow morning and it would make absolutely NO difference to the economy. It looks more and more like what we have here is a busted bubble and a broken credit creation machine. The key is unemployment. The real pain will come when the recession deepens and unemployment goes over 10%.

<font size=-1>[ This Message was edited by: Robert on 2001-10-04 10:52 ]</font>







Post#149 at 10-04-2001 08:45 PM by [at joined #posts ]
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Robert says, "The real pain will come when the recession deepens and unemployment goes over 10%."

Ah yes, what price freedom?

"A Republic, if you'll have it ma'am."
Ben Franklin, post-"constitution framers" convention in Philadelphia, 1789







Post#150 at 10-04-2001 09:09 PM by Brian Rush [at California joined Jul 2001 #posts 12,392]
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Marc:


Ah yes, what price freedom?

Whose freedom to do what? Price paid by the person preserving the freedom or by others?


Oft-neglected, but important questions.
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