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Neo-Liberal Economics and the decline that followed

Strider Benston : Neoliberal Economics and the decline that followed (mp3, 91.9 Mb)

The following is the text of a compelling and informative presentation given before the membership and guests of the Longmont Area Democrats January 4, 2012 meeting.

What is NeoLiberal Economics?
How did it take over the World?
What Must/Can we do about it? Now!

Strider Benston, civil rights activist

What I intend to do here tonight is to initiate a dialogue.  For the many-headed Hydra we face, wherever we turn if we actually WORK for a living, does have an historical core, which, if we do not understand, we shall continue merely tilting at windmills.

If you came for CONCLUSIONS you should go back to FOX news.  For everything they say is a conclusion, designed precisely to Prevent thinking.   And it serves that purpose very well.

They ask us: Why do we Occupy Wall Street?

The implied answer is that we are a motley crew of ungrateful, lazy sluts and hippies who want to take the rightful earnings of our BETTERS, those bankers and investors, and their political and media hacks who EARN their $ Billions, because they are SMART.

I could see about 20 different approaches to this topic, the Monster is too big to floor with one pin, but I hope this initial stab will draw some blood. Our civilization and our planet is at stake.

You can probably see why I have never been allowed to work in this country other than heavy labor.

Overheard conversation among top businessmen in the mid-1950s:

$ is the Oil of the economy, the grease in the gears that lets them turn and not grind or freeze up. It is also an inevitable by-product of a successful economy. In a thriving economy such as we now enjoy at mid-century, how do we both MAKE more $, and TAKE more $$$? For now, under Ike, with 91% tax off the top, too much of the oil is being plowed back into the economy. Why, $5,000,000 is quite a good salary nowadays: at 91%, my next $5,000,000 is only worth about $490,000 to ME. What’s the point? I might as well let it stay there and grow the company, else the Government will take it and grow their bureaucracy and regulations!!; and those fat cat Postal workers, even Black ones, making up to $3000, even $4000 a year if they stay in there for a couple decades – and look how UPPITY they’re getting!! Some of ’em here in the North even VOTE – even put in City Councilmen. Why they even put Adam Clayton Powell in OUR Congress! “an inch – a mile” – You know. What’ll They do next ?!?

We already SOLVED the cyclical crisis syndrome with Military Keynesianism. To drain off any overheating of the economy and HOOK in the workers to line up, wave the FLAG, and march off to WAR as told. But IKE wants to put a cap on “Defense” spending! We’re crippled even THERE!

And, GOD! The Natives are getting restless – look at India. They just took over their own country And CHINA!! Them Coolies just went and took the biggest damn country on earth, and they beat us back in Korea, and we can’t get it back – for now.  What is this world coming to??

We’d better get us a plan – build a TEAM. Take it BACK! That Commie cripple Franklin Roosevelt’s been dead for YEARS now and he’s still running the show!

Now even the biggest lie ever told has a kernel of truth in it, which can, if exploited properly, become the entire justification for the lie itself (at least to the gullible and the ignorant). True Believers can be hooked in so deep into the web till they can NEVER find their way out – even if they HAD moral compass enough to want to.

That radical Commie, William Jennings Bryan said, “We shan’t crucify Mankind upon a cross of GOLD!” Maybe he had a point, But! Tell you what – No One has EVER escaped from a Golden prison. So – how do we sweeten the pot? Look at Chicago, Gary, Youngstown, Akron, Toledo, Pittsburgh, Detroit. Look at all that damn STUFF we make! Look at all those houses they’re building – and roads!

What if we just stick a big Spigot right into the Heart Valve, and suck out as much lucre as we want? We could do ANYTHING with the take – but first we gotta BLOCK off that feedback pipeline that’s pumping it back into the machine.

TAXES ! That’s it! Everybody hates Taxes!


And so – the WAR to TAKE BACK AMERICA began in the mid 1950’s

And it was launched on EVERY front – especially on your TV, in your schools, churches, civic clubs, sports fields, music scene, battlefields, and the Red-Hot Mustang.

So what’s the grease?? $$$$$ IS the GREASE. LET’S take the Money!!

Our legal system extols the sanctity of CONTRACTS. If you actually work for a living and make your boss rich by doing so, and he (usually he) wants to throw your family into the street, he merely punches a keystroke and sends your factory to Mexico, or Vietnam, or China, or perhaps merely changes the name of his company to steal your pension, or just fires you. If the Bankster runs into trouble because they suckered you into a lavish home based on the income you thought you were earning, and you cannot pay the interest, and their shareholders, they merely order their government to give them a $ Trillion or so of your taxes, and they give themselves $tens$ of $Billions in BONUSES, because they were SMART enough to set it up this way.  Then WE who have actually WORKED all our lives, are castigated as lazy, scruffy BUMS who want to live on the DOLE. SS anyone?

See how it works?

Public servants, like teachers, fire fighters, water cleaners, forest rangers – you know the type. Those bums who make lots of YOUR money by sitting on their fat can twiddling their thumbs. THEY threaten the solvency of this GREAT nation by living in luxury. So we can surely get rid of tens of millions of them. That will save us from the monster of out of control Government debt.

And the Unemployed. They just drink beer, smoke dope, watch TV,and make stupid babies. They are UN American, UN Christian, UN white, UN worthy, and really should be in Jail.

Why do we OCCUPY???

OK Here is my disclaimer. I really intended to articulate a tight presentation/thesis tonight, like those polished folks on the TV or in the colleges. I really did. But I couldn’t afford 5 or 6 more books I wanted to read. I stress out, and can’t quite find the INTERNET. I keep trying to learn how to get my website to work. I get intruded by homeless folks and fear losing my trailer home, because of THE RULES, and sometimes my bicycle breaks down. So what you get is what you get. We all got circumstances.

Well, I discovered a book on the shelf of Longmont Library, and it says:

“A week or so later Arkansas spoke at a mass meeting.   A 14-year old girl–whom he named–had died under the July sun, “choppin’ cotton” for a wage of $2.50 a day. Teenagers and mothers came and went to the plantations around Demopolis, from dawn to about sunset, in trucks the contractors brought. The girl’s death seemed to me to be just a part of the way of things, but Arkansas was enraged. “There’s a SYSTEM at work against us,” he preached. “It’s not enough to stop this abuse or that. We have to get rid of the System that puts people to work for $2.50 a day.” His little speech had drawn Amens from Henry and the crowd, but it fretted me a bit: I wondered if Arkansas was a Communist, like little Red.”

A couple weeks later: “I surveyed the crowd inside Morning Star Church, 200 strong and still growing …. Some had come from Linden, and some from the countryside. By 3: a whole army of lawmen were already mustered. We heard the clink and saw the glint of tear gas containers as they were passed around. Apparently the cops didn’t intend to let us get very far from the church. Demopolis was fixing to blow. On TV.

An hour later I conferred with Linda: no Henry, no march. But Arkansas had showed up, and he and some of the Demopolis Youth Kids wouldn’t give in. While a knot of us argued, everybody else was singing Freedom Songs, but now in a different way. The kids were singing even the mournful songs in voices of challenge. They went to the open windows and shouted out lines like, “Ain’t gonna let no tear gas turn me round!” They were daring the cops, whose mere presence was a dare to us ….

At the door almost everyone fell in line behind Arkansas, still singing. I reached the steps–about the time that the billy clubs began to flail. The attack didn’t come in waves. Instead it was like propellers on an airplane. A continuous flurry. A half dozen lawmen had encircled Arkansas, and it seemed that they were intent on killing him.”

Oh, my name was, “Arkansas” – just a snippet, 47 years ago, of one of millions of incidents in ten thousand communities in the Struggle for human rights and dignity – here – in America.

Now, there are, maybe 20 different approaches I could bring. But they ARE commensurate. I hope others will take up the cudgel to deepen our understanding, for if you do not comprehend your circumstance, you will become the slave of those who do.

The Capitalist Revolution

Much of the language of resentment exploited by thugs like Grover Norquist, was launched during the English Civil War of the 1640s, Europe’s first Capitalist revolution. Oppressive taxation, regulative stifling of entrepreneurship, bureaucratic cronyism, arbitrary government, paternalism – all became terms of opprobrium used by London merchants against the King and his retainers. Unproductive lands were confiscated or enclosed, fostering a more technologically advanced and productive system of agriculture. Mercantileism was crippled, allowing the introduction of the factory system which employed the displaced peasants. Modern society was born in conflict between Royalists and the capitalist Bourgeoisie.

Further decades of conflict led to the Glorious Revolution of 1688 which reconciled the contradictions and the persons of Nobility and Capitalist. England thus never experienced the French Revolution of 1789, nor the class rebellions of 1848, which led to European Social Democracy, now being viciously undermined by the American mortgage debt crisis, the austerity fiat, and the WTO. But, such forms which were worked out for two centuries under English law did not necessarily apply to the new, and thus lawless United States.

The Capitalist world economy, fueled by slavery, colonialism, the scientific revolution, the bourgeois and democratic revolutions, and Constitutionalism was thus co-extensive with, and largely parent to, the Industrial Revolution. Even with tragic Dickensian immiseration and oppression of the new working class, 14-hour days, child labor, pollutive poisoning and destruction of land and forests, with democratic rebellion and social legislation we in the West have experienced two centuries of a rising standard of living.

Here in America you got Food to eat, won’t have to run through the jungle and scuff up your feet. You’ll be as happy as a monkey up a monkey tree; Y’all oughta BE an American.

Sail Away! Sail Away! Across th’ Mighty Ocean into Charleston Bay.

Our present Behemoth, the CORPORATION as such, invented itself in this process. The lawless United States took the lead, freed from the shackles of tradition, Church, existing property relations, demographic, geographic, cultural, legal, and natural restraints, American corporations, especially the railroads out in the wild West, and South, used bribery, legal impunity, systemic violence, private armies, the courts and especially the United States Supreme Court to establish their supremacy, including the insane doctrine of Corporate personhood which required another 125 years to be codified.

Formal democratic institutions, and their substructure of human rights have been employed by the population through fierce, bloody, protracted, wise, and courageous struggles over two centuries in an effort to keep up with our Oppressors, earn a decent standard of living for our children, and lately to try to save our living planet Earth.

The Rise of Neo-Liberal economic power

With the rise of Neo-Liberal economic power, the export of industrial capital, explicitly anti-democratic International Institutions, scapegoating of immigrant and minority populations, perverted religious ideology and power structures, massive imprisonment, indentured servitude of the entire student class, we have experienced 30 years of roll-back of our democratic standing, our earning power, and our human and democratic rights. The traditional once per decade Capitalist Crises were solved in America by military Keynesianism, which employed millions of workers and scientists in the production of WASTE {military hardware}, and which corrupted the democratic working class into nationalism, racist warfare, and a convenient ideology of mindless and divisive patriotism.

The very successes of the working class and oppressed minorities have been masterfully used against them by the ideology of Middle Classism, wherein, the victories gained in intense struggle over centuries have trapped our children into the “Consumerist” class and anti-working class ideology of dollar-worship. This new religion of money, power, and racism, has been installed by the right-wing Anti-Christian mega-churches who teach hatred and fear as their primary mission; Greed is the underpinning corollary.

For four centuries the devouring, oppressive monster of industrial capitalism did, in fact, stimulate a phenomenal increase of goods and services which have entirely transformed our world, with its concomitant vast increase in our material standard of living. Yet the tools used by the working class, which brought about this “sharing” of the feast, have concomitantly increased the democratic footprint within the System itself. Mature Capitalism of a half century ago was evolving into a quite stable, and comfortable social democracy.

Some of the wealthy were fine with this, as long as the super-profits of imperialism extraction and expansion continued to roll in the excess wealth. Its inner contradictions were not yet insurmountable.

The Soviet threat was always useful to justify exploitation at home and proxy wars abroad. But anti-colonial movements threatened abroad; and home movements for human rights and a share of the pie threatened to disturb the rulers’ complacency. AND, as in the person of Malcolm X, these insurrections were beginning to communicate with one another. Even our “Indians” were getting restless. They even took over Alcatraz!

Now, I know that most of you know most of this quite well, and I don’t mean to bore you with pedantry, or stuff you with a plethora of details.

BUT, how did this three-century dynamic morph itself and reverse field so quickly, and WHY?  And what does our consequent world look like NOW?

The Modus Operandi of Industrial Capitalism has always been permanent expansion, and control of the surplus value thus brought about.  Exploitation of labor, resources, Nature, technology, foreign territories, political Power, and financial instruments have always been intrinsic to the process. Countervailing, regulating, democratizing and balancing political forces and structures have tended to mitigate the damage, and to spread the benefits of this complex social system.

In the long run Capitalism will necessarily eat itself, or eat all its necessary resources on a finite planet.  But the Earth is large, and strong, and resilient, so with intelligent employment of mitigating factors, and general acceptance of modest increase, such as a 4% to 10% profit rate in most industries, and an overall 3% expansion of the system, we had lots of time to address the problem with scientific research, less-intrusive technologies, substitution, recycling, a rational taxing system, education, moral constraint on extreme greed, and other creative modalities.

All this changes with NEO-Liberal Economics

Few of these mitigating, humanizing factors are still in the game, and even those are corrupted.
The Mount Pelerin Society was launched in 1938 with keynote speaker Friedrich A. von Hayek, who thought Hitler to be too far to the left, although he was financed by Krupp and Farben, and had imprisoned or killed many thousands of unionists, Socialists, and Communists, liberals and Christians.  Von Hayek thought that workers organizing a democratic union was tantamount to slavery.  This explicit ploy is presently being used by the Governors of Ohio, Wisconsin, and Michigan. I doubt that the German Aristocrat, von Hayek, ever worked in a factory.

Seven Hayekian Ideas launched the new movement:

1. Collective bargaining leads the worker into slavery
2. Full employment and low inflation are mutually incompatible
3. Free Trade is beneficent
4. A secure livelihood for those who work is incompatible with FREEDOM
5. Laws guaranteeing effective competition can be made and enforced
6. Free markets guarantee the separation of political power from economic power
7. Markets are “efficient” and have intrinsic conscience and wisdom

This new Neo-Liberalism was launched in the the United States in the 1940s and 50s at the University of Chicago by Friedrich von Hayek and his protege Milton Friedman. It is hard to fault von Hayek’s treatise on individual rights, and of the tendencies toward gridlock in Parliamentary government, which often frustrated the citizens toward the acceptance, and later the worship of, Dictatorship, and further, of Totalitarian structures.

BUT! Pay attention! This gridlock which froze the Weimar Republic leading to Dictatorship and subsequent massacre of 50,000,000 people, is being intentionally reproduced TODAY, in America.  For an even more profound analysis read Carl Schmitt, The Crisis of Parliamentary Democracy, 1923.

Hayek’s philosophical individualism came straight out of Enlightenment thinking with no accounting or concern for the democratic rights of the working and lower classes. They were simply not human, like our teachers now.  One tendency of such thought was Scientism, a worship of data and logic, especially mathematical logic.  This wholesale transfer of physics and math into the social sciences became a religion in the mid 19th Century.  Stanley Jevons in England and later Alfred Marshall in America refined this mathematicism into the dominant ideology which still holds sway.   Most disciplines had recovered from this infantile delusion during the next century, beginning with history and psychology.   But Capitalistic economics saw the quantification of value structures as a way to justify their increasing exploitation of man and Nature, consolidation of wealth for themselves, and the mystifying of the population thus to be used as tools toward a consolidation of political power. The Great God of automatic “Efficiency” was born, and is worshiped today in all departments of economics.

The problem then was the Labor movement, and the Social Gospel movement, an independent free press, and the beginnings of public education, which arose as countervailing powers to alleviate the extreme and increasing brutality of exploitation and political corruption, and began to inspire the voting public. As a century of incremental victories were won, the churches forgot their Christianity and were marshaled into becoming the front line troops, and educative prisons for the money machine.

Von Hayek did recognize in horror the herd instinct, with it’s attendant leaning toward collectivist structures, even among the Liberals of the 30s and 40s. Without notable opposition from his mentor, Milton Friedman, and his political colleague, Leo Strauss, gathered a group of ambitious political proselytes including Donald Rumsfield, Dick Cheney, Paul Wolfowitz and Richard Pearle. Already the Neo-Libs were taking over the leading economics schools of the Western world: Harvard, London, Oxford, Berkeley, Sorbonne, and actively suppressed any other way of thinking, and any concern for empirical corroboration of their ideology. The Chicago Boys’ economic team worked to create many “financial instruments” which could corrupt and destroy the otherwise stabilizing world economic system.

The mechanisms of Hedge Funds and Derivatives opened the door for later Credit Default Swaps, tranches, toxic bundling, and a plethora of forms of fraudulent dispersal and securitization of financial assets.  Friedman, with Arnold Harberger, trained the Chicago Boys, who prepared and joined the military dictatorship of General Augusto Pinochet in their American-facilitated overthrow of Chilean democracy, and repeated that effort in Brazil. By the mid 70s they began taking over the entire world to eliminate socially responsible democracies and prepare the way for the Uruguay round of GATT, the IMF and World Bank, and the eventual creation of the WTO as private dictator of the terms, bylaws, and procedures of the World economy.  Only extreme violence and foreign military and economic support were able to accomplish this devastation.

The United States is the spearpoint of this rollback of Civilization. That is why we have the Military.

The details of how this has been accomplished is portrayed in tragic detail by John Perkins, Confessions of an Economic Hit Man, and Naomi Klein, Shock Doctrine.

The Friedmanesque ideology of NeoLiberalism is both a philosophy and a technique. That motive for it arises from the Hayekian fear of collectivism, the fear of anti-colonial struggles, fear of democratization in the home countries by the economic rise of the Unionized working class, and awakened minorities into middle class economic status, and the resentment of the wealthy (mostly white and male) toward being taxed to facilitate this empowerment and perceived affluence of their traditional lessers and enemies.

This not to claim that there were no substantive justifications for their fears, but their traditional racial and class arrogance overrode any serious effort to work out a democratic solution of the problem of humanity, with all our varied historical baggage, cultural distinctions, resources, attitudes and agendas.  They could not see that South Africa was different from Zimbabwe; that Martin Luther King was different from Bigger Thomas; that Allende was different from Stalin; and that an angry, yet humane and sensible, Sukarno was a far better partner to build a humane world than our corrupt and genocidally brutal dictator, Suharto.

The three-century project of Liberal Democracy, paralleled and underpinned by industrial Capitalism, with all it’s obvious flaws and evils, had evolved and matured into a relatively stable, relatively prosperous, relatively humane system, and had created institutions like the UN Human Rights Commission, and the IGY, International Geophysical Year, 1961, which might find a way to democratically address the remaining contradictions.

We really had a chance from about 1955 to 1975. This was the very period during which NeoLiberalism honed it’s skills and grabbed the reins of power, precisely to prevent our human evolution toward a livable and thriving world.

It is true that after Martin Luther King was assassinated, we lost the wise, compassionate, and humanizing focus on the Left, and degenerated into sectarian petty wars for ideological purity, identity politics, and the focus on grabbing a bigger share of the finite pie. This left us gapingly vulnerable to the mystifying racist, machoist, nationalist, anti-workerist, anti-tax purity of the Neo-Liberal ideology.  This ideology, and the secret, treasonable arms deal with Iran, led to the Reagan Revolution, the results of which we see today.  The most obvious results, aside from the world economic crisis and the insane inflicted “austerity solution” which are imposed to destroy the generations of mitigating social programs that democracy had created, are seen in a couple stark graphs. Productivity vs compensation; wealth of 1% vs the median or average income; and union membership vs middle income share of national wealth.

Let’s go back to the foundations of Neo-Liberal economics. In the mid 19th Century the fetish of “scientific” materialism ran rampant, along with the ideology of Individualism and the practice of Imperialism.  The basic idea was that EVERYTHING could be quantified and thus valued in terms of exchange value.  That Mankind was a super-rational maximizing agent of self-interest. Whatever we might choose to value, “purchase,” was, of course, in our best interest, and in the aggregate led to the “Best of all possible worlds.” Thorsten Veblin was the only prominent American economist who disputed such a claim a century past.

A leading modern Neo-Liberal, Hernando de Soto, from Peru, The Mystery of Capital, 2000, explained in great particular, how the codification of property title creates fungible assets which transfer into capital, as such. He articulates how in the wild American West, such forms facilitated the motion and unprecedented growth of such capital, and therefore the Power which follows. He shouts that “If only the poor people of the earth would codify and exchange their intrinsic potential capital in their slum dwellings and crude inventions, they would realize $9 Trillion in real estate, and would thus become rich.”

The only problem is, perhaps Mr. de Soto is wearing blinders and doesn’t know how the System operates, once ANY “property” enters the System, it becomes accessible to the extraction of much of its value by the World trade and banking system, and consequently becomes a hook, liable to indebtedness of the proprietor, who will spend the remainder of his/her days servicing this debt to the masters in New York, or Brussels, or Geneva.


A primary function of NeoLiberalism was to “Globalize” the economy.  Now, just what might this mean?  We have had a globalized economy ever since the triangle Slave trade, which traded human beings for rum, tobacco, and sugar, and for guns with which to capture more slaves. Mono-crop agriculture was developed then by stealing the intellectual property of Africa, whose denizens knew how to grow indigo, and rice, and sugar in large quantities. Well, globalization now means the “race to the bottom,” and the elusion of all potential democratic encumbrances imposed by “sovereign” nations. “tree-hugging” liberals might damage the great American economy by opposing slavery, or 16 hour/day sweatshops, or the killing of union organizers, or the poisoning of rivers.

All this can be blocked by the WTO which makes it “illegal” to hamper “Free” trade. The explicitly anti-democratic governing body of the WTO, the IMF, the World Bank, and other such institutions can impose crippling sanctions on the “sovereign” country, or merely pull the plug on investment, thus rendering the object country incapable of refurbishing its factories, unable to sell its produce, buy supplies, or food, or energy products, and liable to military invasion, or assassination of presidents, or overthrow of their government, which Naomi Klein and John Perkins, among many others demonstrate in detail.

Alan Greenspan instituted decades of a policy of slow growth by the Federal Reserve Bank. This mandate included the requirement of high Unemployment, as a disciplining mechanism over the working class. To create such high Unemployment the capitalists and their government enticed in millions of “illegal” immigrants – exactly as they did in the C19 to work their mines and railroads and factories. This policy coincided with Congressional “perks” for export of capital – lower taxes, incentives, protection, “foreign aid” which is mandated to hire American contractors to build infrastructure, and charge the local government in perpetuity for repayment of the “loans,” etc. Earlier racist movements to scapegoat the immigrants like the Know Nothings, the 100%ers, and the Ku Klux Klan, took over a number of states including Colorado, and came near to overthrowing the government in 1925.

Unknown to American citizens, Timothy Geithner was Assistant Secretary of the Treasury in 1997. In such capacity he personally delivered the mandate to the WTO meeting in Geneva, regarding its Financial Services Agreement and any “instruments” the capitalist world wishes to dump on vulnerable or unsuspecting countries, like Ireland, or Greece. Almost every country complied. U.S. Treasury Secretary Summers provided Brazil with a $41 Billion bailout loan to keep President Cardoso in office, then pulled the plug. Within 15 days Brazil’s economy went up in flames requiring them to sell state assets, especially oil leases and their national electric system. They were also ordered to sell off their five state banks. After the first bank was sold, costing the Brazilian economy some $44 Billion, 2/3rds of the entire country’s reserve, the President, Cardoso, was un-elected, and the Socialist Workers Party candidate Luis Ignacio Lula de Silva came to office. President Lula refused to sell the remaining four state banks, and Brazil has since recovered, recently growing its economy by 70% and joining China and India as a world powerhouse.  It is interesting that the United States did not then invade Brazil, as is our tradition.  Maybe that is not so easy to do anymore.

Why do we Occupy?

In 1864 President Abraham Lincoln wrote to his friend: We may congratulate ourselves that this cruel war is nearing its end.  It has cost a vast amount of treasure and blood … It has been a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of this country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth in aggregated in a few hands and the Republic is destroyed.  I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of War, God grant that my suspicions may prove groundless.”

In 1870, the historian, Henry Adams, Grandson and great grandson of Presidents, wrote: “The belief is common in America that the day is at hand when corporations … after having created a system of quite but irresistible corruption — will ultimately succeed in directing the government itself. Under the American form of society there is no authority capable of effective resistance … Nor is the danger to America alone. The corporation is in its nature a threat against the popular institutions which are so rapidly spreading over the whole world …. and unless some satisfactory solution of the problem can be reached, popular institutions may yet find their very existence endangered.”

—Strider 1/4/2012