Friday, March 6, 2015

The Obama Administration Declares Full Agreement with the Ferguson Grand Jury Decision Not To Indict!

      President Obama’s Justice Department  has just issued "Department of Justice Report Regarding the Criminal Investigation into the Shooting Death of Michael Brown by Ferguson, Missouri Police Officer Darren Wilson" (March 4, 2015). It’s surprising. It unequivocally exonerates Officer Wilson and says that he was acting in self defense. It doesn’t just say, “there isn’t sufficient proof” or “we cannot say beyond a reasonable doubt”.  It goes into specifics and says that the conventional story, pushed by the mainstream media, was completely false. The Justice Department  has not only failed to indict Wilson, they have decided it’s not even worth bringing the matter before a federal grand jury.

  Will there be mass protests? Will Washington, D.C. be burned down? Will there be calls for President Obama to resign? Do black lives matter?

    I thought the Ferguson grand jury documents definitely proved Officer Wilson innocent, that the Ferguson grand jury acted correctly in not indicting, and that it was even questionable whether the prosecutor should have brought the matter before a grand jury (but probably justified in light of public concern, for transparency).  But that doesn’t seem to be the perception of many people, even educated people, though I don’t know if any of those people actually looked at the evidence. This could be the subject of a fascinating case study, perhaps even a comparative one comparing it to France’s Dreyfus case (though that took years to finish), on how elite opinion is formed by initial news reports and is hard to change even as more credible evidence appears.

 Some quotes from the Justice Department report:

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March 6, 2015 | Permalink | Comments (0)

Monday, March 2, 2015

Expressive powers of Law (2015) by by Richard McAdams


I would like to highlight a great book, recently published, by Richard H. McAdams from Chicago Law School on the Expressive powers of Law. (Harvard University press 2015)

              The book brings together lots of research, which has been carried out throughout the years by McAdams and his co-authors on this important topic. McAdams, one of the most important scholars in this tradition, was among the first legal scholars to recognize that law can affect behavior not only through sanctions and morality.

I personally feel especially connected to the expressive function of the law since I have written my mostly experimental dissertation on this topic. What’s unique about the subject is that it captures something which many people feel lies somewhere between deterrence and moral/fairness based approaches to compliance but it is actually based on both. This approach is also unique in a sense that it represents research conducted by people from different disciplines, each suggesting a different account for what expressive law really captures.  For example, one of my PhD advisors, Bob Cooter, has developed a competing thesis to this topic. This concept has attracted scholars in the field of law and philosophy to write about it and people who focus on law and institutions have worked on it as well.

The specific thesis provided by McAdams focuses on the notion of information provided by the law as a way to help people coordinate their action. Clearly, the focus on information signaling and focal points brings to the table, something which is distinctively different than deterrence or internalization. Interestingly, while McAdams himself is mostly a Law and Economics scholar, he does review many of the relevant literatures from various other disciplines and analyses them.

However, at the same time it is clear that law serves as a much better focal point when it is seen as something that might be obeyed due to either extrinsic or intrinsic rationales. This is why it is important to recognize that this third "in between" type of effect of the law captures parts of the more traditional approach to the effect of law on behavior.

McAdams' book is also very interesting in a world where states now communicate with citizens through nudging them by various situational cues, which are sometimes beyond their awareness. Revisiting some of the more traditional effects of the law, when people are aware of the effects of it and can deliberate on its meaning, is therefore a highly needed task.



March 2, 2015 | Permalink | Comments (0)

Thursday, February 26, 2015

The FBI's Ten Most Wanted

Steve Sailer has a post,  Texas's Top 10 Most Wanted Fugitives Include 8 White Males .        (though all 8 are hispanic, as well as the one woman on the list). That made me curious about the FBI list. Here it is: 


     The federal prison population is 34% hispanic, so that ratio matches the Ten Most Wanted pretty well. It's 7% female, which is also pretty close, but 38% black. I wonder whether the most serious criminals are really 40% WASP (we Norwegian-German-Americans feel a bit left out), or whether the choice is political. It might be interesting to look at the ethnic make-up over time. The FBI has a list of everybody who's ever been Most Wanted at



February 26, 2015 | Permalink | Comments (0)

Monday, February 23, 2015

Comments on Goolsbee and Krueger, “A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler,”

Austan D. Goolsbee and Alan B. Krueger have just  posted a working paper, “A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler,” that is going to be a Journal of Economic Perspectives article (I saw it via Marginal Revolution).  They were involved in the process in the Obama Administration. They think the rescue was a success, but I think there are some things about the process that they don’t notice, much less deal with. I’ll let them know about them, and maybe they’ll address them in the final version.

    The biggest problem to sort out is the difference between the accounting/legal and the economic assets.   When a company goes bankrupt, the first-order economic effect is zero, despite the drastic accounting/legal effect. The assets are the same as they were--- they’re just owned by different people. It’s not necessarily any different than when existing shareholders sell 60% of the stock to new shareholders. In bankruptcy, the existing shareholders are in effect forced to give up 100% of the stock to the people who lent them money they can’t repay. Often those people will decide the company isn’t worth keeping together, so they sell it off in pieces, at the extreme auctioning off the land, trucks, and furniture. But it’s not like a nuclear bomb hit the company’s property.

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February 23, 2015 | Permalink | Comments (0)

Shouldn't They Have Titled It "All About the Benjamins"?

"U.S. Consumers’ Holdings and Use of $100 Bills" Free Download 
Federal Reserve Bank of Boston Research Paper Series Research Data Reports No. 14-3

CLAIRE GREENEFederal Reserve Banks - Federal Reserve Bank of Boston
SCOTT D. SCHUHFederal Reserve Bank of Boston - Research Department

Conventional wisdom asserts that $100 bills are often associated with crime and foreign cash holdings, leading some commentators to call for their elimination; in light of this view, it is useful to examine the legal, domestic use of cash. This report uses new data from the 2012 Diary of Consumer Payment Choice (DCPC) to evaluate consumer use of $100 bills as a means of payment. On a typical day in the United States, 5.2 percent of consumers have a $100 bill in their pocket, purse, or wallet. But only 22 percent of U.S. consumers have at least $100 in their wallet, pocket, or purse. Of these cash-intensive consumers, the main association with holding a $100 bill is the amount of cash carried. A consumer who carries $400 to $699 has a 64 percent probability of carrying at least one $100 bill.

February 23, 2015 | Permalink | Comments (0)

Michal Gal and Daniel Rubinfield at Harvard Law on February 24, 2015

Michal Gal (Haifa) and Daniel Rubinfeld (Berkeley, NYU), The Hidden Costs of Free Goods: Implications for Antitrust Enforcement

February 23, 2015 | Permalink | Comments (0)

Sunday, February 22, 2015

Sure, crowdfunding under Title III doesn't work, but can we fix it?

Critics seems to agree that equity crowdfunding—the new exemption to the Securities Act that lets ordinary people invest in startup companies—is going to be a major flop.  Papers call it a “siren call,” a “promise unfulfilled,” “a market for lemons” and even “fraudfunding.”  The problems are many, but proposed solutions are few.  Instead of finding new holes to poke in the existing regulation (Title III of the JOBS Act of 2012), can we find a regulatory patch that makes crowdfunding work?

Yes we can find a valuable role for crowdfunding, but that means asking some new questions.  What is crowdfunding supposed to do, anyway?  First off, let’s be clear on what it won’t do: crowdfunding won’t fund small businesses.  Despite what Barack Obama said when signing the JOBS Act into law (“start-ups and small business will now have access to a big, new pool of potential investors”), small business remain terrible equity investments. They just don’t product rewards sufficient to offset their risks.  But crowdfunding can “democratize access to capital,” as the MIT Sloan innovation@work blog put it.  Can crowdfunding create the possibility of viable startups with new business models (not just iPhone apps) created by new entrepreneurs (not just white male founders) in new geographies (not just Silicon Valley)?

Crowdfunding as it's currently regulated won't democratize investment, but it could be restructured to fulfill this promise, and here’s how.  One: raise the crowdfunding limit from $1 million to $5 million. As Number Two said to Dr. Evil in the 1997 movie Austin Powers, “One million dollars isn’t exactly a lot of money these days.”  Startups—especially in relatively cost-intensive fields like hardware design and life sciences—need millions of dollars to get started.  For example, the Pebble smartwatch (the most successful crowdfunded campaign to date) needed $10 million to bring their product—which is now sold in BestBuy, WalMart, Amazon and Target—to market.

Two: require angels to invest before crowdfunding.  Crowds of folks investing $25 each don’t have proper incentives to protect themselves.  It’s rational for such small investors to be apathetic.  Crowdfunding is fraught with fraud risk because no one may be overseeing the investment.  Angels, who invest at least $10,000 (and often more) each—and do this for a living—are in a much better position to diligence, oversee and influence a brand new startup company.

My new paper talks about these and related topics in some depth, but the point is simple: the best way to protect crowdfunding investors is to let them invest enough money (collectively) in startups to protect themselves.  While the SEC is still pondering the exemption’s rulemaking, it’s high time to raise the limit so crowdfunding can actually democratize investment.  Voting with dollars only works when the money can be well spent.

For more in depth information and analysis, check on my new article on SSRN, Bridgefunding is Crowdfunding for Startups across the Private Equity Gap, at

By Seth C. Oranburg, Visiting Assistant Professor, Florida State University College of Law

February 22, 2015 in Current Affairs, Web/Tech | Permalink | Comments (0)

Tess Wilkinson-Ryan at Columbia Law School on February 23, 2015

Tess Wilkinson-Ryan, Assistant Professor of Law and Psychology, University of Pennsylvania Law School

"The Common Sense of Contract Formation"

"We find that indeed information that a contract has been legally formed has behavioral effects, enhancing parties’ commitments to a deal even when there are no associated formal sanctions. However, we also document a series of situations in which misunderstandings have limited practical repercussions, because even parties who believe that legal obligation is about formalities take seriously the moral obligations associated with informal expectations, promises and exchanges. "

February 22, 2015 | Permalink | Comments (0)

Friday, February 20, 2015

Age Discrimination in Academia and Silicon Valley

Tyler Cowen at Marginal Revolution has a post on age discrimination in academia. "I believe it is very bad, although I do not have data.  I believe that if a 46-year-old, with an excellent vita and newly minted Ph.D in hand, applied for academic economics jobs at the top fifty research universities, the individual would receive very few “bites.” - 

 I'm skeptical. There are plenty of lateral hires of 46-year-olds, with tenure. So why would a department be reluctant to hire a 46-year-old without tenure, who can be fired in 6 years without much problem? And who would have fewer years of life to be deadwood if he burned out? 

   To be sure, it would be odd for anyone to get a Ph.D at age 46, and difficult, given that we of mature years aren't as good at staying up all night doing problem sets or slaving away on the computer to get our professor's numbers ready for his talk the the next day.  And one has to wonder why the person wants to give up 5 or 6 of the most productive years of his life to acquire expertise in a new field in the company of 22-year-olds and start on a career track that is highly risky even for the most talented. But if someone did, and could show a good reason for doing so  (like having made his pile on Wall Street and deciding that he loved economic theory), would he really not get job offers?  I only know of one case. That was a woman whose husband was a big-name professor and whose kids had grown up. She got a PhD in accounting (a  rigorous PhD, with plenty of economics and finance), and got a good job immediately, in the same university as her husband.

    The comments were quite interesting. Most of them were about age discrimination in high-tech. There was strong disagreement as to whether (a) Silicon Valley discriminates in favor of women and minorities or against them, and (b) whether there is massive discrimination against men over 45, or no discrimination against them. A friend here in Boston said that he knows lots of middle-aged dads without jobs because they got too old for their well-paid high-tech jobs.  Why the industry doesn’t want them is a good question. I am told that in prestigious law firms the situation is not as dissimilar as you might think, because many older partners are pressured to retire early by the few who run the firms. 

February 20, 2015 | Permalink | Comments (0)

Thursday, February 19, 2015

Top Downloads in L&E Public Law, 2/20/15

RECENT TOP PAPERS for all papers first announced in the last 60 days  
21 Dec 2014 through 19 Feb 2015

RankDownloadsPaper Title
1 260 Friedrich Hayek's Contribution to Antitrust Law and Its Modern Application 
Thibault Schrepel 
University of Versailles 
Date posted to database: 12 Jan 2015 
Last Revised: 29 Jan 2015
2 135 The Effect of Regulatory Harmonization on Cross-Border Labor Migration: Evidence from the Accounting Profession 
Matthew J. BloomfieldUlf BrüggemannHans Bonde Christensen and Christian Leuz 
University of Chicago - Booth School of Business, Humboldt University of Berlin - School of Business and Economics, University of Chicago - Booth School of Business and University of Chicago - Booth School of Business 
Date posted to database: 19 Jan 2015 
Last Revised: 24 Jan 2015
3 89 Explaining Race Gaps in Policing: Normative and Empirical Challenges 
Sonja B. Starr 
University of Michigan Law School 
Date posted to database: 15 Jan 2015 
Last Revised: 21 Jan 2015
4 81 The Law and Economics of Proportionality in Discovery 
Jonah B. Gelbach and Bruce H. Kobayashi 
University of Pennsylvania Law School and George Mason University - School of Law 
Date posted to database: 20 Jan 2015 
Last Revised: 28 Jan 2015
5 70 Behavioral Public Choice: The Behavioral Paradox of Government Policy 
W. Kip Viscusi and Ted Gayer 
Vanderbilt University - Law School and Brookings Institution 
Date posted to database: 4 Feb 2015 
Last Revised: 4 Feb 2015
6 69 The Politics and Economics of Metropolitan Sprawl 
William A. Fischel 
Dartmouth College - Department of Economics 
Date posted to database: 23 Jan 2015 
Last Revised: 24 Jan 2015
7 68 Wynne v. Comptroller: It's Not About Double Taxation 
Michael S. Knoll and Ruth Mason 
University of Pennsylvania Law School and University of Virginia School of Law 
Date posted to database: 16 Jan 2015 
Last Revised: 6 Feb 2015
8 61 The Broader Implications of Merger Remedies in High Technology Markets 
D. Daniel Sokol 
University of Florida - Levin College of Law 
Date posted to database: 18 Dec 2014 
Last Revised: 18 Dec 2014
9 59 On the Inefficiencies of Efficiency as the Single-Minded Goal of Antitrust 
Albert Foer 
American Antitrust Institute (AAI) 
Date posted to database: 11 Jan 2015 
Last Revised: 11 Jan 2015
10 57 Does Access Encourage Science? Evidence from the WWII Book Replication Program 
Barbara Biasi and Petra Moser 
Stanford University - Department of Economics and Stanford University - Department of Economics 
Date posted to database: 26 Dec 2014 
Last Revised: 28 Jan 2015

February 19, 2015 | Permalink | Comments (0)

Top Download in L&E Private Law, 2/20/15

RECENT TOP PAPERS for all papers first announced in the last 60 days  
21 Dec 2014 through 19 Feb 2015

RankDownloadsPaper Title
1 293 Like Uber, But for Local Governmental Policy: The Future of Local Regulation of the 'Sharing Economy' 
Daniel E. Rauch and David Schleicher 
Yale University - Law School and George Mason University School of Law 
Date posted to database: 16 Jan 2015 
Last Revised: 16 Jan 2015
2 268 Auditor Lobbying on Accounting Standards 
Abigail M. AllenKarthik Ramanna and Sugata Roychowdhury 
Harvard Business School, Harvard University - Harvard Business School and Boston College 
Date posted to database: 7 Jan 2015 
Last Revised: 7 Jan 2015
3 202 The Valuation of Unprotected Works: A Case Study of Public Domain Photographs on Wikipedia 
Paul J. HealdKris Erickson and Martin Kretschmer 
University of Illinois College of Law, University of Glasgow and University of Glasgow 
Date posted to database: 6 Feb 2015 
Last Revised: 6 Feb 2015
4 187 Bank Resolution in Europe: The Unfinished Agenda of Structural Reform 
Jeffrey N. Gordon and Wolf-Georg Ringe 
Columbia Law School and Copenhagen Business School - Department of Law 
Date posted to database: 13 Jan 2015 
Last Revised: 5 Feb 2015
5 148 Freedom of Contract (and Economic Analysis) 
Péter Cserne 
University of Hull 
Date posted to database: 16 Dec 2014 
Last Revised: 17 Dec 2014
6 116 Cashing Out: The Rise of M&A in Bankruptcy 
Stuart C. GilsonEdith S. Hotchkiss and Matthew G Osborn 
Harvard Business School - Finance Unit, Boston College - Carroll School of Management and Boston College - Department of Finance 
Date posted to database: 10 Jan 2015 
Last Revised: 10 Jan 2015
7 106 A Theory for Regulation of Essential Products 
Shlomit Azgad-Tromer 
Tel Aviv University - Buchmann Faculty of Law 
Date posted to database: 12 Jan 2015 
Last Revised: 16 Jan 2015
8 103 The Distributive Deficit in Law and Economics 
Lee Anne Fennell and Richard H. McAdams 
University of Chicago Law School and University of Chicago Law School 
Date posted to database: 3 Jan 2015 
Last Revised: 9 Jan 2015
9 89 The Core of Copyright: Authors, Not Publishers 
Wendy J. Gordon 
Boston University School of Law 
Date posted to database: 17 Jan 2015 
Last Revised: 17 Jan 2015
10 83 The Opening of American Law: Neoclassical Legal Thought, 1870-1970: Epilogue 
Herbert J. Hovenkamp 
University of Iowa - College of Law 
Date posted to database: 4 Feb 2015 
Last Revised: 4 Feb 2015

February 19, 2015 | Permalink | Comments (0)

Monday, February 9, 2015

George Washington University and Absolut Vodka

The man who made the George Washington University what it is today sits in the corner office of a building with his name on the entrance — the Trachtenberg School of Public Policy and Public Administration, where he now teaches — a few blocks away from University Yard.

The university was an inexpensive commuter school when Stephen Joel Trachtenberg became president in 1988. By the time he was finished, two decades later, it had been transformed into a nationally recognized research university, with expanded facilities and five new schools specializing in public health, public policy, political management, media and public affairs and professional studies.

U.S. News & World Report now ranks the university at No. 54 nationwide, just outside the “first tier.”...

Mr. Trachtenberg convinced people that George Washington was worth a lot more money by charging a lot more money. Unlike most college presidents, he was surprisingly candid about his strategy. College is like vodka, he liked to explain. Vodka is by definition a flavorless beverage. It all tastes the same. But people will spend $30 for a bottle of Absolut because of the brand. A Timex watch costs $20, a Rolex $10,000. They both tell the same time.

(From the New York Times via Steve Sailer)

    I wonder if this story is correct. Did people get fooled by the high price? It's believable. I've heard that people commonly think the University of Chicago is like a community college, judging from the name. And people do buy that expensive diluted grain alcohol, thinking it's sophisticated even tho people like me smile at them. 

February 9, 2015 | Permalink | Comments (1)

Do Clinical Offerings Improve Law School Graduates' Job Outcomes?

That’s the question raised by Jason Yackee in a working paper he recently posted to SSRN.  The paper is a nice starting point for this conversation.  But there are method problems that prevent us from drawing any strong conclusions at this point. 

Basically, the paper does a good job of collecting data on law school clinical offerings and employment outcomes.  Jason then runs a basic OLS regression using employment outcomes as his dependant variable.  Slots in clinical courses (scaled by enrollment) is the main variable of interest, and there are controls for school ranking and local employment conditions.  The impact of clinical opportunities is consistently negative, but its significance varies depending on how school ranking is measured.  Jason interprets his results as suggesting, counter-intuitively, that clinical offerings may hurt employment prospects.

The problem with this interpretation is that the causation story could well be  backwards.  Schools whose graduates are struggling may believe that clinical training will help---or, at least, they believe that applicants will think it helps.  That would give us the negative correlation Jason observes.  Dealing with this kind of endogeneity problem in data this coarse will be tough.  As a first pass, though, it would be nice to see a dynamic model in which we can see the evolution of job outcomes and rankings over time.  If lagged clinical offerings predict job outcomes, but not vice-versa, that would support Jason’s story a bit more. 

Some other details below the jump.

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February 9, 2015 | Permalink | Comments (2)

Lisa Bernstein at Columbia Law School, February 9, 2015

On February 9, 2015, Lisa Bernstein, Wilson-Dickinson Professor of Law, University of Chicago Law School presents "Private Ordering, Social Capital, and Network Governance in Procurement Contracts: A Preliminary Exploration" at the Columbia Law & Economics workshop.


February 9, 2015 | Permalink | Comments (0)

Tuesday, February 3, 2015

Alan Schwartz at Harvard, February 3

Alan Schwartz (Yale) presents Regulating for Rationality from 5 to 7 on Tuesday, Feb. 3 at The John M. Olin Center for Law, Economics, and Business Law & Economics Seminar (Harvard Law School).

February 3, 2015 | Permalink | Comments (0)

Monday, February 2, 2015

Helland at Northwestern L&E Feb. 2

Northwestern Law & Economics Colloquium

February 2
Eric Helland, William F. Podlich Professor of Economics and George R. Roberts Fellow, Claremont McKenna College
Estimating Effects of English Rule on Litigation Outcomes

February 2, 2015 | Permalink | Comments (0)

Marian W. Moszoro at Boalt, February 2

Political Contestability and Contract Rigidity: An Analysis of Procurement Contracts

Marian W. MoszoroBerkeley Haas School of Business and Kozminski University, Poland.

Boalt Hall, room 134

12:15 PM - 1:55 PM

February 2, 2015 | Permalink | Comments (0)

Wednesday, January 28, 2015

Since we seem to be stuck with 529 plans, let's fix 'em

The Obama administration announced yesterday that it was dropping its proposal to tax distributions out of "529 plans," and in some ways that is too bad.  (A 529 plan, for readers without college-bound descendants, is a tax-free savings vehicle whose proceeds can be used only to pay for higher-ed expenses).  The program isn't particularly money well spent.  Although many lower-middle-income families save for college in a 529 plan, they aren't able to put much money in, and their tax rate is too low to make the tax savings all that valuable.  Higher-income families get the vast majority of the tax savings, and of course these are the families whose children were already going to be able to go to college.  We don't have good data on how much of the tax savings are captured by colleges and universities, but it's probably at least some.  

A less obvious problem is that the plans are run by states, and states discriminate against each other.  

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January 28, 2015 | Permalink | Comments (0)

Monday, January 26, 2015

Catastrophe Insurance for Global Warming

      At the AEA meetings in Boston this January Robert Barro  talked about global warming. He has a draft paper out, "Environmental Protection, Rare Disasters, and Discount Rates," where he argues that the biggest concern in global warming ought to be insuring against low-probability disasters, rather than remedying the more likely levels of warming which cause relatively little damage.  William Nordhaus estimated the damage from unmitigated global warming of 3 degrees Centigrade at 2.5% of world GDP. ($file/EE-0564-14.pdf).  That's a lot of GDP, but an ordinary recession has the same effect--- say, a 1% decline in GDP and 1.5% lost potential growth. Most recessions are followed by a bounceback to the trend line for potential GDP, but that doesn't always happen.    Laurence Ball  found  that by 2013 U.S. potential GDP was still 4.7 percent below the  trend before the Great Recession of 2009. ( Thus, we in the US have already experienced double the likely loss from global warming (assuming global warming resumes again after its 14 year halt).

  What Barro points out (as Martin Weitzmann has been doing for some time) is that it's the improbably but disastrous downside that we should be looking at. This is even more true if you think the most likely scenario has changed to be a permanent stop to global warming rather than just a 14-year hiatus. Whatever the most likely scenario, we still should worry about the possibility that current science is wrong, and global warming will be much worse than anyone expects.

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January 26, 2015 | Permalink | Comments (0)

Graham et al.: Do CEOs Understand the Corporate Tax?

"Tax Rates and Corporate Decision Making" Free Download

JOHN R. GRAHAMDuke University, National Bureau of Economic Research (NBER)
MICHELLE HANLONMassachusetts Institute of Technology (MIT) - Sloan School of Management
TERRY J. SHEVLINUniversity of California-Irvine
NEMIT SHROFFMassachusetts Institute of Technology (MIT) - Sloan School of Management

"We estimate that behavioral biases that influence firms to use the average tax rate for decision-making lead to deadweight losses that average $10 million for poor capital structure decisions and $25 million for suboptimal acquisition..."

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January 26, 2015 | Permalink | Comments (0)