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vineri, 18 noiembrie 2011

Video: On the Road with the President

Your Daily Snapshot for
Friday, Nov.18, 2011

Video: On the Road with the President

This week, President Obama is in the Pacific. He traveled to Hawaii for the Asia Pacific Economic Cooperation conference, visited Australia for meetings with Prime Minister Julia Gillard and an address to Parliament, and he's currently in Indonesia for the East Asia Summit.

We'll be back next week with a special edition of West Wing Week, but for now, check out a few clips from the road:

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Introducing the new Verbatim search tool from Google

Posted: 17 Nov 2011 04:45 AM PST

Google announced a new tool this week – Verbatim, which is essentially a fast way to find results which exactly match your search queries.

This tool replaces the use of the + key in searches when you want to force it to include certain words in the results it brings up. According to Google, this is because:

users typed the "+" operator in less than half a percent of all searches, and two thirds of the time, it was used incorrectly.

In addition to this, one surmises that the move is not entirely unrelated to the domination of the + character by Google+ and +1.

What the tool does highlight is that it's very easy to forget just how much work the Google algorithm puts in without you even realising it. As Google points out on the official Inside Search blog, when you search for something on Google without Verbatim, the algorithm approaches your query in an amazingly intelligent way to make sense of what you've typed. For example, it:

Corrects spelling (and sometimes even grammar)
Personalises your results using data on what other sites you've visited recently
Looks for synonyms of terms you've written and similar terms/phrases
Looks for words with the same root (e.g. optimise, optimising)
Drops some words, e.g. "circa"

The Verbatim tool drops all these features and just gives you the raw results containing all the words you've typed.

So does it look very different?

For most searches, the results are essentially the same with or without Verbatim. That's because the algorithm is already good enough to understand what you meant most of the time, so you don't actually need to specify greater precision. Furthermore, Verbatim will still ask you if you meant to search for the correct spelling, such as:

The situations in which Verbatim will be a useful tool are likely to be occasions where:

A slight difference in terminology makes a big difference to the meaning
You've visited a lot of websites recently which might skew the results for a different but vaguely related query in personalised search

Obviously, this tool is unlikely to have any impact on the SEO industry. It's buried in the "more search tools" section to the left of the search results and, given that fewer than 0.5% of searches ever actually used the + button to make them more exact, the tool isn't likely to be utilised by a significant number of searchers.

However, Verbatim is interesting as a response to searcher behaviour (it was apparently requested by many a user) and as a reminder that it's a good idea to target variations of keywords in order to be picked up in as wide a range of searches as possible. For example, a book seller might target the whole range of "buy" and "sell" words: books for sale, buy books, second hand books bought and sold, buy a book, book seller and so on. You never know when someone might be looking for an exact phrase – and if you're in e-commerce, these super-precise searchers are likely to be nearer the end of the buying cycle, and therefore more likely to convert.

Seth's Blog : No.

No.

No, we don't take clients like that.

No, that's not part of what we offer.

No, that market is too hard for us to service properly.

No, I won't bend on this principle.

No, I'm sorry, I won't be able to have lunch with you.

No, that's not good enough. Will you please do it again?

No, I'm not willing to lose my focus, and no, I'm not willing to compromise.

• Email to a friend •

joi, 17 noiembrie 2011

Mish's Global Economic Trend Analysis

By Any Objective Measure, the Euro is a Failure
LME Warehouses in US Overloaded with Copper, Zinc, Aluminum, Steel because of Economic Downturn
IMF Downgrades Portugal GDP Outlook to -3.0%; Barclays Capital Cites Downside Risks
Whack-a-Mole Euphoria Wears Off
Official Denial Signals Spanish Bailout Imminent; Dreadful Result in Spanish Bond Auction, 6.975% Yield on 10-Year Debt; Merkel says "ECB Cannot Solve Euro Crisis"
To Save the Euro we Must Destroy Germany
Spanish 10-Year Bond Yield Hits Euro-Era Record 6.61%, 2-Year Yield Hits 5.53%; Italian 2-Year Yield Hits 6.54%, 10-Year Yield at 7.04%

By Any Objective Measure, the Euro is a Failure

Posted: 17 Nov 2011 07:29 PM PST

Nigel Farage once again blasts Eurocrats in front of European Parliament, emphatically stating "By Any Objective Measure, The Euro is a Failure"

Link if YouTube video does not play: http://www.youtube.com/watch?feature=player_embedded&v=bdob6QRLRJU#t=35s

Farage also called various unelected EMU officials a "pack of hyenas".

It is an entertaining video as well as the truth.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

LME Warehouses in US Overloaded with Copper, Zinc, Aluminum, Steel because of Economic Downturn

Posted: 17 Nov 2011 11:41 AM PST

Here is an interesting story from a reader about huge stockpiles of metals building up, right here in the US, because of limited demand from manufacturers.

Dear Mish,

The link below is to a recent article in the New Orleans newspaper, the Times Picayune. I have read a lot about metal stockpiling in China, but nothing about how it is happening here, too. I did not know that New Orleans is the second largest London Metal Exchange site in the country behind Detroit, and now has more copper, zinc and steel in storage than any other place in the United States. This nicely fits into your deflation thesis.

Keep up the good work,
Harry

LME Warehouses in US Overloaded with Metals

Please consider Local warehouse space is bursting with stored metals

Long-vacant New Orleans warehouses are bursting with metals such as copper, lead, aluminum and zinc as manufacturing slows down with the economy. The stockpiles that are accumulating are good news for owners of local warehouses, but the trend has touched off a rare scramble for specialized warehouses in certain parts of the metro area.

New Orleans is now the second-largest London Metal Exchange site in the country behind Detroit, according to the exchange, and has more copper, zinc and steel in storage than any other place in the United States.

With the global economic slump continuing for longer than anyone imagined, metals are now piling up in the 53 New Orleans-area warehouses certified with the London Metal Exchange because they're not needed around the world for manufacturing.

Kevin Kelly, owner of Port Cargo Service, a metals warehousing business, said it may take years to run down supplies. He says the city is running out of suitable warehouse space.

"We're probably close to 98 percent occupancy, which is the best ever," Kelly said. "I'm considering buying property and building warehouses if I can find good land to build it on."

The metal has sopped up lots of space in New Orleans area warehouses. Warehouses that sat empty for years between Jackson Avenue and downtown are full of it. And because the London Metal Exchange only allows metal to be stored on the east bank of Orleans, Jefferson and St. Bernard parishes in areas close to the Mississippi River and rail lines, warehouse owners like Kelly are booting tenants from Elmwood to make room for the lucrative metals business, sending many movie production companies that occupied those east bank warehouses over the Huey P. Long to the West Bank.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

IMF Downgrades Portugal GDP Outlook to -3.0%; Barclays Capital Cites Downside Risks

Posted: 17 Nov 2011 10:45 AM PST

The IMF is nearly always late and nearly always overly optimistic in its assessment of global growth. Today the IMF downgraded its forecast of Portugal, something that should have been obvious six months ago.

Via Email (no link available) Barclays Capital offers these comments ...

Portugal: 2nd IMF programme review revises down 2012 growth forecasts

The IMF released yesterday a press statement on its second mission review of Portugal (see link at end). Overall, the conclusion is that the "programme is on track" for this year but headwinds will require additional fiscal measures to meet 2012 targets. The 2012 "headwinds" are reflected in IMF's downward revision to its growth forecast from -1.8% to -3% (in line with the EC).

In our view, there are downside risks to this scenario. Meeting the 2012 fiscal target may prove challenging as tax revenue may disappoint on account of weaker growth than expected (BarCap 2012 GDP growth -3.6%.)

The growth outlook

The IMF expects real GDP to contract -3.0% next year, down from -1.8% projected in the WEO and at the programme inception in May 2011 (BarCap: -3.6%). According to the technical mission, weak domestic and external demand will impair the economy. Specifically:

Private consumption will suffer as fiscal austerity and elevated inflation (reflecting significant indirect tax and tariff increases) take their toll on consumers. Moreover, the ongoing deleveraging by the financial sector is likely to weigh on household consumption and investments, which will further impair real GDP growth prospects.

External demand: A slowdown in global growth could weaken the contribution to real GDP growth. As the IMF noted, in a context of low competitiveness, "key measures, particularly nominal cuts in public wages and pensions and increases in indirect taxes, are also appropriate in view of the need to switch from a consumption-based to a more export-led growth model".

Fiscal outlook

On the fiscal front, the IMF assessed that implementation of the 2011 budget has proven difficult. In particular, it pointed out that while preliminary data indicate that the end-September ceiling on the cash deficit was met, spending overruns relative to program objectives for the whole year could add up to 1.5% of GDP on an accrual basis. According to the technical mission, these unexpected budget pressures reflect in large part slippages in expenditure controls and insufficient corrective measures.

The link Barclays referred to is Statement by the EC, ECB, and IMF on the Second Review Mission to Portugal

All of Europe is degrading rapidly. Portugal will not come close to IMF growth estimates. Alternatively, Portugal will not come close to meeting IMF budget goals, most likely both.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Whack-a-Mole Euphoria Wears Off

Posted: 17 Nov 2011 10:05 AM PST

On November 11, I commented on Whack-a-Mole Euphoria and 6-Sigma Events

Hooray! The Borg Technocrats have saved us already, even though they have yet to lift a metallic finger.

The Borg took a huge whack not at a mole actually, but an Italian Elephant. This event instantaneously brought upon mass-euphoria.

The market has more-or-less been in a continual state of euphoria recently having been saved (by something), for the 83'rd time in the last 63 days.

Today's euphoria is about falling yields on Italian government debt. The yield on 10-Year Italian bonds is down 44 basis points to 6.45%. The yield on 2-year government bonds is down a whopping 70 basis points to 5.70%.

....

S&P 500 Futures 10-Minute Chart

I expect that gap to fill sooner rather than later as whack-a-mole euphoria wears off.

Gap Fills

It took five trading days, but today the gap filled and the S&P sits at 1212.

Noty to worry, more euphoric moments are sure to be on the way.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Official Denial Signals Spanish Bailout Imminent; Dreadful Result in Spanish Bond Auction, 6.975% Yield on 10-Year Debt; Merkel says "ECB Cannot Solve Euro Crisis"

Posted: 17 Nov 2011 09:06 AM PST

The ECB stepped into the fray once again today but the the results of the Spanish debt auction today speak for themselves. The rate on 10-year bonds is close to touching the 7% mark.

The BBC reports on the "Dreadful Result"

The Spanish government sold 3.56bn euros (£3.04bn; $4.79bn) worth of bonds out of a maximum target of 4bn euros.

The auction attracted bids worth 1.5 times the securities offered. The so-called bid-to-cover ratio was down from 1.8 in October.

"The result was dreadful. They didn't manage to raise the full amount and the bid-to-cover is really poor," said Achilleas Georgolopoulos, rates strategist at Lloyds in London.

"The fiscal profiles of Spain and Italy are different but their yields seem to be aligning now."

Volatility on Spanish Bonds Soars

Bloomberg reports "Volatility on Spanish sovereign debt was the highest among developed-country markets today, according to measures of 10- year bonds, two-10-year spreads and credit-default swaps. The cumulative change was 5.1 times the 90-day average, the Bloomberg gauge showed"

Official Denial Signals Spanish Bailout Imminent

An official denial from a ranking Spanish government official suggests a bailout of Spain is now imminent.

Spain is "absolutely not at risk of a bailout," Salgado said on Cadena Ser radio, after rates for the government to borrow money rose to dangerous levels.

"The sustainability of our debt is beyond all doubt."

For a discussion of the "official denial" concept, please see Eurozone Breakup Logistics (Never Believe Anything Until It's Officially Denied)

Systemic Nonsense

In "Debt Crisis Live" The Telegraph reports Spain's finance minister Elena Salgado says there is a "systemic attack" on European sovereign debt going on, and that the ECB must keep on supporting government bonds by buying them until some other instrument is put in place.

Clearly Salgado is talking systemic nonsense. Yields in Spain are approaching 7% for a simple reason: Spain cannot possibly pay back what is owed.

The Telegraph also reports on huge protests in Italy and Greece:"We will throw all of them out," promised a banner held aloft by students, while another carried by anarchists read: "In the face of tyranny, one must choose between chains and arms."

Here is a picture of a protest turned violent in Italy.

Merkel Rules Out Everything

Here is a nice quote at the 10:45 mark from Debt Crisis Live.

10.45 Mrs Merkel has been speaking in Berlin this morning, and she seems to be ruling out everything. She said neither joint euro-area bonds nor using the European Central Bank will solve the debt crisis.

Apparently a "snappy debt cut" is also out of the question. She said:

Quote I'm convinced that none of these approaches, if applied right now, would bring about a solution of this crisis.

Which is all very well - but what the markets want to know is, what IS the solution?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

To Save the Euro we Must Destroy Germany

Posted: 17 Nov 2011 12:59 AM PST

Yesterday German Chancellor Angela Merkel came flat out and said, "To save the Euro we must Destroy Germany".

Well not exactly, but she may as well have because that is the implication. This is what she did say: Germany Is Ready to Cede Some Sovereignty to Save the Euro

Chancellor Angela Merkel said that Germany is ready to cede some sovereignty to strengthen the euro area and restore confidence in the common currency.

European Union treaty changes to strengthen EU institutions and patrol tighter budget rules are needed "to make the euro zone more crisis-proof," Merkel told reporters in Berlin today at a joint briefing with Irish Prime Minister Enda Kenny.

"Germany sees the need in this context to show the markets and the world public that the euro will remain together, that the euro must be defended, but also that we are prepared to give up a little bit of national sovereignty," Merkel said. Germany wants a strong EU and a euro "of 17 member states that is just as strong and inspires confidence on international markets."

Not Merkel's Decision

For starters Merkel is saying what she wants. It is debatable if that is what Germany wants at all. I rather doubt it.

Moreover, even if it is what Germany wants, it is not Merkel's decision. Such decisions, as the German supreme court has ruled are up to voters of Germany, not politicians with an axe to grind about what they want.

If German voters want to cede power and form a European nanny state, then so be it. But it will be the end of Germany and the end of Europe as well should they do so.

Desperate Attempt to Save Something Not Worth Saving

As the crisis lingers the cries for more intervention get louder and louder, even though the massive intervention to date has only made matters worse.

Ambrose Evans-Pritchard highlights the cries for intervention in Latin showdown with Germany over ECB

The EU's €440bn EFSF bail-out fund was supposed to take over on the rescue task, relieving the central bank. It has been a disastrous flop, unable to raise money itself at a viable cost after toying with leverage plans that greatly concentrate risk for creditor states. The net effect has been to accelerate contagion to the core.

Germany's constitutional court has ruled that "open-ended" and "automatic" liablities violate the country's Basic Law. So only the Germans can save monetary union, yet the Germans cannot legally do so. Europe's crisis has reached an impasse, the result of the original design flaws of EMU.

Even so, a growing chorus of economists within Germany itself is calling for a strategic change. Wurzburg professor Peter Bofinger wants the ECB to cap Italian and Spanish yields.

"We are in an emergency situation; this isn't plastic surgery. If worse comes to worst, the ECB has to act before the financial system falls. And if it acts, it should act properly and set an upper limit for sovereign yields. It's naive to believe that Italy can solve its problems on its own. Structural reforms can't be implemented overnight."

Dennis Snower, head of the Kiel Institute, said the ECB must act to stem the crisis, even if this means straying into fiscal policy. Thomas Mayer from Deutsche Bank said Italy's new government will fail unless the ECB buys time by holding down yields, perhaps as low as 5pc.

Euro Experiment is Over

Pritchard concludes with a couple of paragraphs that I whole-heartedly endorse...

David Heathcoat-Amory, Britain's former Europe minister, said Berlin will do whatever it takes to try to save EMU.

"The Germans will pay up, accept eurobonds, and mobilise enormous firepower. But this won't save monetary union in the end because it is not a debt crisis. It is a currency crisis. The weaker states are uncompetitive and you cannot force them to deflate their way back to competitiveness by cutting wages 30pc. The EU elites won't admit it, but the euro experiment is over," he said.

Merkel is willing to destroy Germany (and Europe) to save something that is doomed anyway.

Top Orwellian Comments Of All Times

An American major after the destruction of the Vietnamese Village Ben Tre: "It became necessary to destroy the village in order to save it."
Vice President Joe Biden: "We Have to Go Spend Money to Keep From Going Bankrupt."
President George W. Bush: "I've abandoned free-market principles to save the free-market system."(For a discussion please see The Most Redeeming Feature of Capitalism is Failure)
Nancy Pelosi said "We have to pass the health care bill to see what's in it." (YouTube Video)
Larry Summers says "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending." (Reuters)

We can safely add "To Save the Euro we Must Cede Sovereignty" to that list.

Unlimited Supply of Hare-Brained Ideas

There have been more hare-brained ideas in the last 6 months on how to save the Euro and the global economy than in the prior three years combined.

Ceding sovereignty to save the unsavable is one of them. A leveraged EFSF is another hare-brained idea. It has already blown sky high.

Here are some more examples.

Alan Beattie proposes the ECB lend money to the IMF so that the IMF can take on Eurozone credit risk, in order to get around ECB statues regarding bailing out insolvent nations. Allegedly that needs to happen or it will be another Great Depression. (Financial Times)
In one of the looniest ideas in history, economist Brad DeLong proposes "The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip. The Federal Reserve Needs to do so now." (DeLong Typepad)
In an absurd idea since abandoned, EU officials actually proposed that rating agencies be barred from rating countries with "excessive volatility"

Quack Ideas

In regards to Beattie's proposal EuroIntelligence writes

In the never-ending search for quack solutions to the eurozone crisis, European leaders come up with ever desperate attempts. After the silly idea of leveraging the EFSF, the G20 summit discussed – and failed to agree on – the notion of leveraging the EFSF through the IMF's special drawing rights (SDRs).

Alan Beattie writes in the FT it is illusory to think that one could bolster the EFSF to €1 trillion through SDRs as such a decision would require approval by the US Congress, with a success chance of between low and zero, he writes. He concludes that the only thing that currently prevents a crisis resolution is ideology. The ECB could lend money to the IMF, which in turn could set up a fund to buy Italian debt.

Interventionists Man the Barricades

In response to DeLong's proposal, my friend Pater Tenebrarum comments in Interventionists Are Manning The Barricades

Another quite funny missive reaches us via the always amusing Keynesian statist Brad DeLong, who argues that given the euro area crisis escalation, the US Federal Reserve should immediately proceed to crank up its printing press. In terms of sheer lunacy his proposal is hard to beat.

DeLong approvingly quotes an article by Paul Krugman, who bemoans the possibility of the eurocratic moloch falling apart:

"I believe that the ECB rate hike earlier this year will go down in history as a classic example of policy idiocy. We would probably still be in this mess even if the ECB hadn't raised rates, but the sheer stupidity of obsessing over inflation when the euro was obviously at risk boggles the mind."

First of all, who's to say that the euro is worth saving? If saving the euro depends on the central bank rewarding the fiscal profligacy of member nations by monetizing their debt, then obviously we'd be better off without the euro. These nations could then attempt to inflate themselves to prosperity on their own.

Regarding the ECB rate hike earlier this year, it is really hard to argue that it makes any difference whatsoever if the administered interest rate sits at a minuscule 1.25% or a minuscule 1.5%. How can that have any bearing on the insolvency of peripheral governments? Moreover, whether the rate is at 1.25% (where it now is again after the recent rate cut) or 1.5% – in both cases it is well below the official inflation rate of 3%, in other words it represents a negative real interest rate. The ECB is definitely not pursuing a tight monetary policy either way.

The euro system has proven a badly constructed self-destructive system, just as its opponents have claimed from day one. In fact, they have pointed this out well before the euro was introduced. Alas, it does not logically follow from this that it is worth attempting to 'save' it by means of inflation, which is what all the above quoted people evidently want.

Currency Expiration Looniness

For sake of completeness, I need to point out once again Gregory Mankiw's inane proposal to save the economy by expiring 10% of Money supply every year (see Time For Mankiw To Resign)

GDP Targeting Looniness

I also need to point out the preposterous idea by Christina Romer who proposes the Fed institute GDP targeting in which she says Dear Ben: It's Time for Your Volcker Moment.

For starters the Fed cannot spend money, it can only lend it. Thus the Fed has at best an indirect affect on GDP.

Interest rates are at 0% and money is stacking up at the Fed as excess reserves. In such conditions, the Fed has no affect on GDP. However, the price of crude is back over $100. Food prices are up as well. The Fed has destroyed those on fixed income.

The Fed already has a dual mandate. A dual mandate is stupid enough in and of itself. The reason is the Fed can control at most one variable at a time. For example, the Fed can defend an interest rate target but it then loses complete control over money supply. It can target money supply but lose control over interest rates.

The Fed cannot do a damn thing about jobs other than indirectly. Now Romer appears to seek a triple mandate that is quite frankly economically impossible.

How Economic Incompetents Rise to Fame and Power

Inquiring minds may be asking "How the hell did such a blazingly incompetent economist ever get picked to Chair Obama's Council of Economic Advisers and why is she on Obama's Economic Recovery Advisory Board?"

Those are excellent questions. The snide answer would be to place the blame on Obama. However, President Bush also had incompetent economic advisors.

The answer is more fundamental. Romer was picked precisely because she was incompetent, not in spite of her incompetence. She says the things government wants to hear.

We need to print more money
We need to spend more money
We do not need to worry about debt
The "Free Lunch" exists
Government is the savior

In short, Romer preaches exactly what presidents want to hear.

Addendum:
I added to my list above one of the biggest Orwellian statements in history: Nancy Pelosi said "We have to pass the health care bill to see what's in it." (YouTube Video)

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Spanish 10-Year Bond Yield Hits Euro-Era Record 6.61%, 2-Year Yield Hits 5.53%; Italian 2-Year Yield Hits 6.54%, 10-Year Yield at 7.04%

Posted: 17 Nov 2011 12:31 AM PST

Yields on Italian and Spanish bonds are up once again, ahead of critical auctions for both countries.

Italy 2-Year Government Bonds

http://www.bloomberg.com/apps/quote?ticker=GBTPGR2:IND

Spain 2-Year Government Bonds

http://www.bloomberg.com/apps/quote?ticker=GSPG2YR:IND

Spain 10-Year Government Bonds

Yield on the 10-Year Italian bond held above 7% up 3 basis points to 7.04%.

Expect the ECB to step in once again if things get much worse.

Note: I was able to get this format back on Bloomberg charts by deleting cookies and clearing cache. One other person experienced the problem I complained about in regards to an interactive map format and I tried his solution. It worked.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

vineri, 18 noiembrie 2011

Video: On the Road with the President

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joi, 17 noiembrie 2011

Mish's Global Economic Trend Analysis

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vineri, 18 noiembrie 2011

Video: On the Road with the President

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Seth's Blog : No.

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More Recent Articles

joi, 17 noiembrie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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Arhivă blog

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