How the Markets Really Work

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Leverage: What Could Possibly Go Wrong?

“We’ve said these are the big guys but that means if anything goes wrong, it’s going to be an awfully big mess.” -Harvey J. Goldschmid, authority on securities law

“I’m very happy to support it and I keep my fingers crossed for the future.” -Commissioner Roel C. Campos

I yelled at my computer screen after reading this.

I don’t even know what to say.

The lone dissenter was a software consultant. Poor bastard was the only voice of reason. He probably got absolutely destroyed by the big five after this for daring to dissent.

Agency’s ’04 Rule Let Banks Pile Up New Debt, and Risk: “Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.”

Brilliant. We will only let the largest and most important firms leverage up like this so we can absolutely concentrate the risk in the most critical parts of the financial system.

What could possibly go wrong?

Think About the Massive Ripple Effects

“Every time you tinker with this delicate system even small changes can create big ripples. This is the impossible situation they are in. The risks are that the government's $700 billion purchase of assets disturbs markets even more.” -Dino Kos, former head of the New York Fed's open-market operations

Paulson-Bernanke Steps Created `Big Ripples,' Leading to Rescue: “The $700 billion rescue that the U.S. House considers today reflects the unintended consequences of decisions made by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke since March.

Beginning with the orchestrated purchase of Bear Stearns Cos. by JPMorgan Chase & Co., each step was a bold effort to forestall a collapse of the financial system. The economy grew in the first two quarters of this year, and financial distress eased for a while after the Bear Stearns rescue. Still, each decision to bail out or not created more instability, leading to further runs on securities firms, banks and insurers.

Paulson and Bernanke insist that the program to buy troubled mortgages and other securities is needed to revive lending and restore stability to markets. What they haven't discussed is the risk that they inadvertently make matters worse. By creating a government pool of distressed real-estate and bad debt, they could depress the housing market further. Risk may become even more concentrated through a wave of bank mergers that, if unsuccessful, would stick taxpayers with an even higher bill.”

WOULD? Don’t even worry about that. It WILL stick taxpayers with an even higher bill.

Fannie Mae and Freddie Mac are the ultimate example of the concentration of risk. Mind you, everybody KNEW exactly what the consequences would be back in 1999: Clinton, Fannie Mae: They Knew, Did it Anyways.

Best case scenario: This bailout bill passes and inspires a bounce that can be shorted.

Commodites: Hedgies Puke, Almost Done

On Monday September 29th in Baltic Dry, Commodities, Bubbles I re-iterated: I’m Still Short Commodities as the Hedgies Puke.

Today I’ve reduced that position, leaving me with my last 25% of SMN, DUG, HXD.TO, HED.TO, HOD.TO.

I think the hedgies are almost done puking, take a look at AGU, MON, MOS and POT. I may pick up some of these names for a bounce trade... after Non-farm payrolls and just after the House votes "YES" on the damn bailout.

Clinton, Fannie Mae: They Knew, Did it Anyways

Click to enlarge.

Notice:

1) The Date.

2) Whodunnit?

3) Whocouldanode?

They knew the consequences and did it anyways.

Leading the sheeple to the slaughter is so easy...

Fed Loses $6 Billion, Senate Passes Bailout, People SHAFTED

“This exercise illustrates the difficulties in measuring fair value. It will be interesting to see how and whether the Fed chooses to apply fair-value accounting principles.” –Bank of America report

Fed May Lose $6 Billion on Bear's Assets, Bank of America Says: “The U.S. Federal Reserve may lose as much as $6 billion on a portfolio of mortgage-backed assets it took over from Bear Stearns Cos., according to Bank of America Corp. analysts.

The Fed will today announce its quarterly estimate of the fair value of Maiden Lane LLC's $30 billion of holdings that JPMorgan Chase & Co. considered too risky when it acquired Bear Stearns in March, Bank of America analysts Jeffrey Rosenberg and Hans Mikkelsen wrote in a client note. The central bank valued the assets at $29 billion as of June 30, according to the report.”

So, what do you REALLY think the odds are of the TAXPAYER making money off the bailout bill that the senate just passed? If the Fed can lose $6 billion on $30 billion… how much do you think Paulson can lose on $700 billion that can be indefinitely recycled?

“About half the portfolio is backed by commercial mortgages and half by residential loans. About 80 percent of those are so- called Alt-A mortgages, a step higher than subprime in terms of quality, with the remainder prime mortgages, Bank of America estimates.”

The Bear portfolio is actually far more conservative and of far higher quality than the TOXIC JUNK that Paulson intends to purchase. Naturally, only the worst paper will be sold to him by the banks.

The US taxpayer will end up being the proud bagholder all of the worst securitized paper in the world.

“The valuation of the $12 billion of Alt-A mortgages varies by as much as $5.4 billion depending on whether the analysts use estimates that Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. or Morgan Stanley apply to their own portfolios, the analysts wrote.”

That is one hell of a range on $12 billion. Imagine the random fun an army of accountants could have with a $700 billion portfolio of this stuff? I can’t wait for the Fed itself to dispense with fair value accounting…

Just to add insult to injury, the senate managed to sneak into the bailout all sorts of random and insulting things...

The people get SHAFTED. AGAIN.

via Calculated Risk (Curious About Wooden Arrows for Children?) and Naked Capitalism (More on the Oinking Bailout Bill):

"SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.

(a) IN GENERAL.—Paragraph (2) of section 4161(b) is amended by redesignating subparagraph (B) as sub301 paragraph (C) and by inserting after subparagraph (A) the following new subparagraph:

(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.—Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly—
(i) measures 5⁄16 of an inch or less in diameter, and
(ii) is not suitable for use with a bow described in paragraph (1)(A).

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act."

The Fed loses about $6 billion. The Senate passes the worst bailout bill ever and the people get shafted again.

Just another day in Amerika.

Credit Crisis Chart, No Bottom in Equities

“Funding markets are in complete disarray. With no interbank lending taking place, the daily Libor fixings are no more than a flimsy theoretical construct.” -Christoph Rieger, fixed-income strategist

“Aside from the overnight, which is completely awash with cash, term-lending conditions in the money market are as illiquid as ever.” –Don Smith, fixed-income strategist

Inspired by one of the charts over at Cobra’s Market View I’ve put together a Credit Crisis Chart. (For Cobra’s Credit Risk Watch chart click here.)

The Credit Crisis Chart explained:

1) This chart mainly tracks the ratio of Libor to the 1 month US Treasury Yield in line chart format ($LIBOR:$UST1M, black and red line chart).
2) In the background is the New York Stock Exchange Composite ($NYA, grey area chart).
3) In the background is a measure of volatility as measured by the VIX index ($VIX, green area chart).

How to read the Credit Crisis Chart:

1) As the LIBOR and 1 month US Treasury Yield difference narrows, equities on average have risen.
2) As the LIBOR and 1 month US Treasury Yield difference narrows, volatility on average has dropped.
3) A simple trading system would BUY(SELL) equities on a cross DOWN(UP) of the 20 and 50 day EMAs (blue and red lines) below the 200 day EMA (green line).
4) A simple addition to the strategy would be to BUY additional equities on volatility spikes that are NOT accompanied by a spike in the LIBOR US Treasury spread.
5) A simple addition to the strategy would be to SELL equities short on drops in volatility that are NOT accompanied by a drop in the LIBOR US Treasury spread.
6) Currently, the LIBOR US Treasury spread is so large that stresses in the financial system have reached the breaking point. This is accompanied by an elevated level of volatility. It is therefore probable that equities still have a ways to fall. Therefore, going long stocks for the ‘long term’ is still a bad idea.

via Across the Curve: Libor:

“Overnight Libor has set at 3.79 percent, down significantly from the quarter end pressured level of the previous day. And even though it has been set lower, it remains stressed and elevated.

Longer maturities along the Libor curve have seen rates rise. Three month Libor was set 10 basis points higher at 4.15 percent.

It is too early to make an unequivocal statement but the early returns indicate that the turn of the calendar page to October 1 has not alleviated the stresses and strains extant in the short term money markets.”

Libor Overnight Rate Drops as Quarter-End Funding Squeeze Eases: “The cost of borrowing in dollars overnight fell from a record after funding constraints tied to the end of the third quarter passed, easing an unprecedented freeze in lending between banks.

The London interbank offered rate, or Libor, that banks charge each other for overnight loans slid 308 basis points today to 3.79 percent, the British Bankers' Association said. It surged to 6.88 percent yesterday. The one-month euro rate climbed to an all-time high of 5.07 percent, and three-month dollar loans rose to the highest level since January. The Libor-OIS spread, a gauge of cash scarcity, held near a record.

Credit markets have seized up as banks balk at lending to each other amid heightened concern that more of their peers will collapse. Governments in Europe and the U.S. have rescued five banks in the past week.

Financial institutions deposited a record 103 billion euros ($146 billion) with the European Central Bank yesterday as lenders sought a haven for their money. The ECB today increased the amount of dollars it offered banks overnight by 67 percent.”

Despite the best efforst of all the central banks in the world, global liquidity continues to drain away into the black hole of large scale debt destruction.

I continue to short into equity rallies and cover on big drops…

Inflation, Deflation, Money Velocity and Gold

From David Rosenberg at Merril Lynch (now Bank of America) today:

"Money supply will increase but money velocity will not

We are getting asked repeatedly these days how it is that the government debt creation we are about to see is not going to be inflationary. After all, aren’t we going to see a boom in the money supply? Well, we’re sure that the money supply is going to increase, but at the same time, we are going to see the turnover rate of that money, or what is called money velocity, decline. This is exactly what happened in that 1989-93 period when the Fed massively reflated. Money velocity contracted 13% and this is the reason why the inflation rate was cut in half that cycle and bond yields rallied 400 basis points, though no doubt that downtrend in yields was punctuated by intermittent corrections – as we’ve seen take place in the Treasury market over the past week."

In Gold, Oil, PMs: More Hedgies Get Whacked I wrote:

“Forget about oil demand from the BRIC countries. The whole globe is grinding to a halt. Believe it.

Forget about inflation. There has never been in the history of the world an inflationary run while land prices were declining. The amount of debt being destroyed as the monster of a debt bubbles implodes will suck down all asset prices and just absolutely collapse the velocity of money.

Factor in some serious de-leveraging by every single kind of market participant, and there is no way commodities can resume their ‘secular Bull market’ for years to come.

Take a look at copper for example. Copper just smashed through a multi-year trend line after putting in a long topping formation. Since 2006 prices have been hitting the same highs and getting rejected. This break down is of utmost importance.

Game over.

I’m firmly in the deflationist camp.”

As soon as the fear and panic subsides, the easy money will be made SMASHING gold short as people finally realize that inflation is what we HAD and that deflation is what we will HAVE.

Bailout = EPIC FAIL, But Just Won't Die!

In Short Ban? What Short Ban? I explained how there were different ways to get ‘synthetically short’…

I went short… and stayed short right through the vote.

I first warned that the market could go ‘no bid’ now that a large number of the shorts had been squeezed out in Disgusting Super Spike:

“After this, the markets will absolutely crash… and for the first time in a long time, you’ll see ‘NO BID’ in even the most liquid stocks after this squeeze sorts itself out.”

I snuck another warning into my Banking Index Chart (BKX) on September 23rd:

“I expect that we will soon hit the point where the longs try to sell in quantity and there are no bids from covering shorts covering to firm up the market. I expect prices to just absolutely melt then.”

I can tell you that the only individual stocks that vaporized yesterday were the ones that were on the short ban list. Whole prices were ‘skipped’ on the way down.

Stocks NOT on the short ban list traded just fine.

In Baltic Dry, Commodities, Bubbles I summarized why I’m Still Short Commodities as the Hedgies Puke.

That was before the meltdown. I've to reduced my short exposure on EVERYTHING by 50% on the close yesterday.

Equities are now deeply oversold and the donkeys in Washington will try to revive the bailout monstrosity with all their might.

Naturally, I will re-short on any significant bounce.

Any bounce should fail to clear 1200 on the S&P 500 (SPX). A roughly 50% rectracement would take prices back to around 1155. Heck, we could snap back to the 1180 area.

Despite the large percentage move, volume wasn’t awe inspiring. This was not capitulation selling. Expect more liquidation over the next few weeks… bailout or not.

My short discussion with Tim Knight of the Slope of Hope on Sunday night as the GLOBEX opened for Asia (click to enlarge):

Continuation of the quick discussion on Sunday about staying short into the vote on Monday...

A quick post on covering half of everything Monday on the close...

The Slope of Hope is a great blog, with a great community of active traders.

The Bailout wasn an EPIC FAIL, but just won't die! So be careful out there.

Dark Bailout

Simply amazing...



[ hat tip Socialized Losses ]

Baltic Dry, Commodities, Bubbles

“The fear is that the rescue package is not enough to stop the economy falling into a full-blown recession. And as people fear that problems outside the U.S. might be even worse, we see the euro weaken and remove support for commodities.” -Eugen Weinberg, commodity analyst

“Even if the Troubled Asset Rescue Plan is passed, that doesn't necessarily mean there aren't any obstacles on the road to economic recovery. There are worries about the outlook for the international economy.” -David Moore, commodity strategist

I really hope those two super analysts didn’t just figure that out…

On September 12, 2008 in the post Baltic Dry Index: Smashed, Global Demand Falling I argued:

“The Baltic Dry Index was an integral part of the global Decoupling Theory. In December of 2007 I argued it was nothing but GARBAGE.

A falling Baltic Dry Index will also result in falling commodity prices. Those hoping for a resumption of the commodity Bull are going to get nothing more than a bounce or two. This party is over.”

Since then the Baltic Dry Index has imploded so rapidly that it has made it into the Financial Times…

Over at Naked Capitalism they cover the story well in Baltic Dry Index Tanks.

Oil, Metals, Crops Fall on Concern U.S. Bailout Plan May Fail: “Commodities fell, led by oil, copper and lead, on concern the U.S. plan to spend $700 billion propping up America's banks will fail to unlock credit markets and avert a slowdown in the world's largest economy.

Crude, gasoline, heating oil, copper, lead, corn, soybeans, silver and rice all dropped more than 2 percent, leading the S&P Goldman Sachs Commodity Index to a 3.2 percent decline. While U.S. Treasury Secretary Henry Paulson and leaders in Congress reached an agreement giving the government the authority to buy distressed bank assets, short-term interest rates failed to decline in Asia and Europe as banks restricted lending.”

I’m Still Short Commodities as the Hedgies Puke.

Follow this Trade:

1) Commodities Seeing Demand Destruction, Canada Rolls Over
2) Time to be Short Commodities
3) From Commodity Bubble to Commodity Bear
4) Gustav Fizzles and Commodities Fail

This is all you need to know: PARABILIC = END IS NEAR.

First: When The Momos Go Parabolic…
Second: When The Momos Lead The Way Down
Thirdly: Life After Things Go Parabolic, This Bounce Too Will End.
Most importantly: All Bubbles Are The Same

A while back I posted: Parabolic Commodities: The End is In Sight

Related Posts:
“Pop!” said the Commodity Bubble
The Final Bubble: Commodities
Oil Drops on Subsidy Cuts in China, India, Malaysia, Taiwan

A Tally of Federal Rescues: A Legacy for Your Children

Click to enlarge... this one going to be HUGE.

Breakthrough Reached in Negotiations on Bailout: "Congressional leaders and the Bush administration reached a tentative agreement early Sunday on what may become the largest financial bailout in American history, authorizing the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse.

Speaker Nancy Pelosi, left, Treasury Secretary Henry M. Paulson Jr., center, and Senator Harry Reid, the majority leader, early Sunday.

Officials said that Congressional staff members would work through the night to finalize the language of the agreement and draft a bill, and that the bill would be brought to the House floor for a vote on Monday."

I've noticed a lot of talk about "protecting" and "paying back" the taxpayer. I've even heard about the taxpayer "sharing in the upside".

All such talk is absolute fantasy. Out of 42 systematic banking crises across 37 countries, despite the implementation of a wide range of policies, all resulted in the re-allocation of wealth AWAY from taxpayers and towards debtors (banks). None avoided recessions and all recessions were SEVERE.

Not a single bailout resulted in anything but losses.

*** All Data Sourced from the IMF working paper: Systemic Banking Crises: A New Database ***

via New N Economics: The Real Costs of the Banking Crisis Will Be High! " According to the paper, banking crisis can be broken down into its three phases, which I have summarized, and then comment on below:

(1) Initial conditions – macroeconomic conditions are usually weak before a banking crisis.

Fiscal balances are usually negative (-2.1% of GDP on average); current accounts are usually negative (-3.9% on average); inflation is high (137% on average); GDP growth is average (2.4% on average); non-performing loans – bank loans that are not earning interest and the borrower is likely to default - tend to be high (25% of total loans on average).

RW: In 2007, the annual fiscal balances as a % of GDP were negative in the U.K. (-0.29%) and the U.S. (-1.36%); the current account as a % of GDP was negative in the U.K. (-4.32%) and in the U.S. (-5.30%); GDP growth was 3.06% in the U.K. and 2.03% in the U.S. The macroeconomic statistics satisfied some of the average initial conditions for a banking crisis, with the exceptions of high inflation and a non-performing loans (4.8% in the U.S.).

(2) Crisis Containment – emergency liquidity support and blanket guarantees are commonly used. In the 42 banking crises, 71% were complimented by new liquidity measures, while 29% included blanket guarantees on deposits.

RW: The U.S. Federal Reserve Bank (Fed) has extended its liquidity facilities since December 2007 when the first Treasury Auction Facility (TAF) was announced. In addition, the Fed has opened additional funding measures, the Term Securities Lending Facilities (TSLF) and the Primary Dealer Credit Facility (PDCF); both facilities accept a wide range of collateral from Depository Institutions (regulated by the Fed) and Primary Dealers in exchange for Treasury bills or direct funding.

The Bank of England (BoE), the U.K. central bank, also extended its lending facilities in April 2008. Like the Fed, and under the Special Liquidity Scheme, the BoE now accepts a wide range of collateral, including mortgage-backed securities in exchange for government bills and bonds for a one year term. Further, the government offered a guarantee on deposits at Northern Rock (mortgage lender in the U.K.) during its collapse.

(3) Crisis resolution – reduced regulation is often a theme in the resolution phase, but strict regulatory standards follow the resolution. This does not usually solve the problem, and often, a restructuring of the banking system occurs.
In 86% of the 42 crises, despite regulatory forbearance, governments were forced to intervene directly by closing banks, facilitating mergers, or nationalizations.

RW: Sound familiar? In an effort to avoid marking illiquid assets at their current market values, regulators have turned a blind eye to potentially insolvent balance sheets. A quote from Naked Capitalism:

“So rather than follow the course of action that has been shown to work in Sweden and to a lesser degree in the US S&L crisis, namely, let asset prices fall, strip out bad assets and sell them, combine and recapitalize the good pieces, and sell those to the public too, we have clearly decided to go down the Japan path, of maintaining phony asset prices to keep institutions that would otherwise fail alive.”

RW: I agree, why not force the assets to be marked down to current market values (which is nothing), and let the banking system work it out; history has shown that regulatory forbearance doesn’t work! Eventually, banks will fail. WaMu?

My final thoughts

After reading this paper, it is obvious to me that the current banking crises that are plaguing the U.S. and U.K. are not unusual in the world of banking crises. The difference is: The banking crisis is in developed, rather than developing economies. And in a developed world, a significant amount of capital is at stake. According to the McKinsey Institute, the value of global capital markets in 2006 was $US 167 trillion, where the U.S. held $56.1 trillion and the U.K. held $10 trillion. The current banking crises in the U.S. and U.K. puts $66.1 trillion, 40% of the world’s stock of capital, at stake.

Overall, the fiscal costs and real effects of banking crises are high.

-On average, fiscal costs (RW: net of recoveries, meaning net of the potential profits earned from TARP) average 13.3% of GDP.
-Using an asset management company to manage the portfolio of acquired assets by the government (again, TARP) may lower only slightly the fiscal cost by increasing the recovery rates.
-Output losses (loss in aggregate production) average 20% of GDP during the first 4 years of the crisis.
-RW: In the case of the U.S., there will likely be less output loss and higher fiscal costs, as the two are negatively correlated - higher fiscal costs lower output loss - across the sample of 42 banking crises. The TARP program illustrates a strong desire to go down the fiscal road.

The U.S. banking sector has hit the containment phase of this crisis and moved on toward the resolution phase. However, the banking crisis cannot be fully resolved until the housing market bottoms. I still see that U.S. home sales will bottom this year, followed by a trough in home prices next year, and the start of a healthy recovery in 2010. Once that happens, the mortgage-backed securities will likely assume some positive value, and the U.S. government will finally realize the costs of its interventions.

Overall, the outlook for the U.S. is not good. This paper indicates that ex post (after all is said and done), the costs – fiscal or reduced output – will be high.

Rebecca Wilder"

News N Economics by Rebecca Wilder is an excellent financial blog I visit daily.

Andrew Jackson Had the Courage, Will We?

"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves." -Andrew Jackson, 7th US President

In 1836, Andrew Jackson forced the closing of the Second Bank of the U.S. by revoking its charter.

Interesting... now why is this so familiar?

"The Second Bank of the United States provided a convenient way for the government to handle its affairs. The bank was created when James Madison and Albert Gallatin found the government unable to finance the country in the aftermath of the War of 1812. The War of 1812 had put the United States in significant debt, and the First Bank of the United States had closed in 1811. The debt of the nation led to an increase in banknotes among the new private banks, and as a result, inflation increased greatly. As a result, Madison and Congress agreed to form the Second Bank of the United States.

After the war, despite the debt, the United States also experienced an economic boom, due to the devastation of the Napoleonic Wars. In particular, because of the damage to Europe's agricultural sector, the U.S. agricultural sector underwent an expansion. The Bank aided this boom through its lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. The land sales for 1819, alone, totaled some 55 million acres (220,000 km²). With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created.

In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instated a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom due to the recovery of Europe. The result was the Panic of 1819 and the situation leading up to McCulloch v. Maryland 17 U.S. 316 (1819)."

Central Banks and fiat currency have always imploded. Some just last longer than others...