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Arabica Robusta

Debt: The First 500 Pages | Jacobin - 0 views

  • The style is welcome, 
akin to that of the best interdisciplinary scholarly blogs (like Crooked Timber, where Debt has been the subject of a symposium): clear, intelligent, and free of unexplained specialist jargon.
  • Partly, his maverick status rests on his politics – he is the anarchist saying things about debt, money, markets, and the state that the powers-that-be would rather not look squarely in the face. But largely his argument is a move in an interdisciplinary struggle: anthropology against economics.
  • “Can we really use the methods of modern economics, which were designed to understand how contemporary economic institutions operate, to describe the political battles that led to the creation of those very institutions?” Graeber’s answer is negative: not only would economics mislead us, but there are “moral dangers.”
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  • Graeber’s alternative is to recognize the diversity of motives that guide people’s economic interactions. He proposes that there are three “main moral principles” at work in economic life: communism, exchange, and hierarchy.
  • but principles of interaction present in all societies in different proportions: for example, capitalist firms are islands of communism and hierarchy within a sea of exchange.
  • The most simplistic renditions of neoclassical economics may reduce all human interactions to self-interested exchange. But the idea that society is made up of different but interdependent levels is hardly new in social theory. Neither is Graeber’s view that to talk of a society as a unit may be misleading, since people are involved in social interactions across multiple horizons that may not fit together into a coherent whole.
  • The greed of the Europeans is contrasted with the inscrutable warrior honor of Moctezuma, who would not object when he saw Cortés cheat at gambling. Also, Cortés and his fellows were drowning in debt, and so was Emperor Charles v, who sponsored his expeditions.
  • English villagers were quite happy with market transactions in their place, as part of a moral economy of mutual aid.
  • It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal – and often vindictive – power of the state.
  • For Braudel, capitalism is the domain of the big merchants, bankers, and joint stock companies that feed off the market and reorganize it. For Graeber, the easiest way to make money with money is to establish a monopoly, so “capitalists invariably try to ally themselves with political authorities to limit the freedom of the market.”
  • In place of a materialist economic history, Graeber’s 5,000 years are organized according to a purported cycle of history in which humanity is perpetually oscillating between periods of “virtual money” – paper and credit-money – and periods of metal money. The emergence and rise of capitalism up to 1971 has to be shoehorned into this quasi-mystical framework as a turn of the wheel back toward metallism.
  • What do these units of measurement measure? Graeber’s answer is: debt. Any piece of money, whether made of metal, paper, or electronic bits, is an iou, and so “the value of a unit of currency is not the measure of the value of an object, but the measure of one’s trust in other human beings.”
  • et it doesn’t seem to have made much difference to monetary theory. Texts have no problem acknowledging that money is not a commodity, and then going on to claim that money exists because barter is inefficient.
  • The reason, to be blunt, is that unlike Graeber’s critique, not much of monetary theory itself rests on the historical origins of money. Economics deals with the operation of a system.
  • As for arguments that money is essentially about debt, or essentially a creature of the state: this is to make the mistake of reducing something involved in a complicated set of relationships to one or two of its moments. Economics has generally met the challenges of credit and state theories of money not with fear or incomprehension, but with indifference: if credit or the state is the answer to the riddle of money, the wrong question may have been posed.
  • But to call its value a social convention seems to misrepresent the processes by which this value is established in an economy like ours – not by general agreement or political will, but as the outcome of countless interlocking strategies in a vast, decentralized, competitive system.
  • But however far credit may stretch money, it still depends on a monetary base: people ultimately expect to get paid in some form or other.
  • Graeber’s general reading of Smith’s worldview is quite tendentious: Smith was blind to the flourishing credit economy of mutual aid all around him, had hang-ups about debt, and “created the vision of an imaginary world almost entirely free of debt and credit, and therefore, free of guilt and sin.” The gold standard was a strategy by the powerful to undermine the informal rustic credit economy.
  • The value of gold acted as an anchor for the value of any currency convertible into it. This was not due to any inherent goldness to money, and people didn’t have to believe in any such thing to support the gold standard. There was a big difference, as Schumpeter put it, between theoretical and practical metallism, a difference which does not register in Graeber’s picture.
  • In the modern period, state after state committed to metallic anchors as strategic decisions to enhance trust in their national currencies.
  • The ultimate killer of the gold standard in the twentieth century was not changing minds about the nature of money, but the rise of the labor movement and collective bargaining: deflations became more painful and politically unacceptable.
  • Pierre Berger, a French economist responding to a previous incursion by the anthropologists, wrote in 1966: “With no disrespect to history, one is obliged to believe that an excessive concentration on research into the past can be a source of confusion in analyzing the present, at least as far as money and credit are concerned.” He meant that economics studies a system, and the origins of its parts might mislead about their present functions and dynamics.
Arabica Robusta

Is capitalism terminally ill? | rabble.ca - 0 views

  • On the face of it, that seems like an absurd suggestion. After all, for capitalists, things couldn't be better. Corporate profits and executive pay are going gangbusters. There are few if any impediments for the business sector to getting whatever it wants, whether it's free trade deals, a free hand to bust unions, gut workplace and environmental laws, and pressure governments to do their bidding, whether it's bailing them out and never holding them to account.
  • in an era of globalization and free trade, the ability of capital to give workers higher wages is limited. And cracking down on dissent and becoming more authoritarian, has its limits too, as Syria and Egypt and Libya demonstrate. Capitalism might not be overthrown, but it might be facing a period where its very foundations are eaten away because it continues to exclude too many people from the opportunities they want and deserve.
Arabica Robusta

Over Intransigence of Rich Countries, Developing Countries Win Mandate on Trade for Dev... - 0 views

  • While the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and others adhere to a rigid “neoliberal” ideology that favors deregulation, privatization, and the interests of the global North and the private sector over the poor, UNCTAD has a rich history of favoring people-centered development, promoting interests of the global South, and being a voice of the poor majority in international forums.
  • It is despicable that in a conference focused on trade and development, rich countries successfully prevented UNCTAD from calling for changes to the WTO, to allow more flexibility for development in poor countries. They even successfully blocked a call for a resolution to trade-distorting subsidies in agriculture that damage developing countries every day.
  • The EU and US even opposed inclusion of “Special and Differential Treatment” — the simple historical recognition of the fact that rich and poor countries have different economic capacities and need different rules to promote prosperity — although this was finally included.
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  • There are increasing efforts with global value chains, and a stronger mandate to work on their governance, so as to address unfair distribution of gains across the chain and the resulting detrimental impacts on employment conditions and inclusive growth .
  • Shockingly, developed countries even opposed inclusion of the issue of policy space. What is policy space? By this we mean that developing countries must be free from imposed international strictures and rules that go against their development needs.
  • After this conference, no country from the EU, nor the US or other developed countries, can claim to be in favor of developing countries’ escaping the debt treadmill.
  • Unfortunately, the rich countries’ club of the OECD has thus far dominated international discussions on taxation, which leave out developing countries and their development concerns. On taxation, UNCTAD 14 sadly became yet another example of how determined rich countries are to ensure the exclusion of developing countries, not just from decision making on tax matters, but also from the possibility of getting independent advice on how to stop the enormous losses of money they suffer from illicit financial flows,
Arabica Robusta

Pambazuka - The state, private sector and market failures - 0 views

  • In 2008, Clinton denied responsibility for refusing to regulate derivatives. He changed his mind in 2010, then blaming his advisors, among whom were Treasury Secretaries Robert Rubin and Larry Summers and the Chair of his Council of Economic Advisors, Joe Stiglitz. Larry Summers went on to become President of Harvard University. Joseph Stiglitz went on to be Chief economist of the World Bank and then professor at Columbia University. Summers showed little remorse for his role in the deregulation era. Joe Stiglitz, in contrast, became the best known critic of deregulation.
  • at what point did Stiglitz, in his role as a senior Clinton policy advisor, become convinced of the severe damage that would result from deregulation? ... As one important example, the general tenor of the 1996 Economic Report of the President, written under Stiglit’s supervision as Chair of the Council of Economic Advisors, is unmistakably in support of lowering regulatory standards, including in telecommunications and electricity. This Report even singles out for favourable mention the deregulation of the electric power industry in California — that is, the measure that, by the summer of 2002, brought California to the brink of economic disaster, in the wake of still more Enron-guided machinations.”
  • Professor Stiglitz’s great contribution has been to challenge both these assumptions. As he has shown, asymmetric information is a pervasive feature of how real-world markets operate. The free market is an ideological myth. In the real world, imperfect information makes for imperfect markets.
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  • Before discussing its limits, I will summarize Professor Stiglitz’s response to the problem he calls “market failure.” Professor Stiglitz attributes “market failure” to “lack of transparency.” He has several recommendations on how to check market failure. The first is that government needs to bridge the gap between social returns and private returns, both to encourage socially necessary investment as in agriculture and to discourage socially undesirable investment as in real estate speculation. Second, the government may set up specialized development banks. In support, he cites the negative example of America’s private banks and their “dismal performance” alongside the positive example of Brazil’s development bank, a bank twice the size of the World Bank, and its “extraordinary success” in leading that country’s economic transformation. Finally, Professor Stiglitz cautions against liberalizing financial and capital markets as advised by the Washington Consensus.
  • I am not an economist, but I have been forced to learn its basics to defend myself in the academy and the world. Like you, I live in a world where policy discourse has been dominated – I should say colonized – by economists whose vision is limited to the economy. Professor Stiglitz derides this as “free market fundamentalism” and I agree with him. Like fundamentalist generals who think that the conduct, outcome and consequence of war is determined by what happens on the battlefield, the thought of fundamentalist economists not only revolves around the market but is also limited by it. Just as war is too important an activity to be left to generals, the material welfare of peoples is also too important to be left to economists alone.
  • The Eurozone was created as a single currency for Europe but without constituting Europe as a democratic polity. The result was that monetary policy was formulated outside the framework of democracy. The states in Europe have done to their own people what the Washington Consensus did to African peoples in the 1980s. Unelected governments rule Europe; the EU ruling phalanx is not accountable to anyone.
  • Here is my point: The antidote to the market was never the state but democracy. Not the state but a democratic political order has contained the worst fallout from capitalism over the last few centuries. The real custodian of a democratic order was never the state but society. The question we are facing today is not just that of market failure but of an all-round political failure: the financialization of capitalism is leading to the collapse of the democratic order. The problem was best defined by the Occupy Wall Street movement in the US: it is the 99% against the 1%.
  • It would be a shame if this audience is to walk away from Professor Stiglitz’s lecture with a message that the problem is just one of “market failure” and the solution is a robust state that regulates markets and provides development finance. Is the lesson of the Structural Adjustment era simply that we need strong states to defend ourselves from the Washington Consensus? Or does the experience of the SAP era also raise a second question: What happens if developing countries are forced to push open their markets before they have stable, democratic institutions to protect their citizens? Should we be surprised that the result is something worse than crony capitalism, worse than private corruption, whereby those in the state use their positions to privatize social resources and stifle societal opposition?
Arabica Robusta

There's no need for all this economic sadomasochism | David Graeber | Comment is free |... - 0 views

  • Will we, then, see a reversal of policy? A sea of mea culpas from politicians who have spent the last few years telling disabled pensioners to give up their bus passes and poor students to forgo college, all on the basis of a mistake? It seems unlikely. After all, as I and many others have long argued, austerity was never really an economic policy: ultimately, it was always about morality.
  • We are talking about a politics of crime and punishment, sin and atonement.
  • But in a larger sense, the message was that we were guilty of having dreamed of social security, humane working conditions, pensions, social and economic democracy.
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  • If ever proof was required that the theory is selected to suit the politics, one need only consider the reaction politicians have to economists who dare suggest this moralistic framework is unnecessary; or that there might be solutions that don't involve widespread human suffering.
  • the vicious cycle of austerity. As a larger percentage of government spending has to be redirected to paying rising interest rates, budgets are slashed, workers fired, the economy shrinks, and so does the tax base, further reducing government revenues and further increasing the danger of default.
Arabica Robusta

The Kilburn Manifesto: our challenge to the neoliberal victory | Stuart Hall | Comment ... - 0 views

  • What is new about this phase of capitalism? Its global interconnectedness, driven in part by new technologies, and the dominance of a new kind of finance capitalism mean that, while a crisis of this system has effects everywhere, these effects are uneven. So far the Bric countries seem relatively unscathed, while the impact of economic devastation has spread from Asia and Africa into Europe.
  • The breakdown of old forms of social solidarity is accompanied by the dramatic growth of inequality and a widening gap between those who run the system or are well paid as its agents, and the working poor, unemployed, under-employed or unwell.
  • Neoliberalism's victory has depended on the boldness and ambition of global capital, on its confidence that it can now govern not just the economy but the whole of social life. On the back of a revamped liberal political and economic theory, its champions have constructed a vision and a new common sense that have permeated society. Market forces have begun to model institutional life and press deeply into our private lives, as well as dominating political discourse. They have shaped a popular culture that extols celebrity and success and promotes values of private gain and possessive individualism. They have thoroughly undermined the redistributive egalitarian consensus that underpinned the welfare state, with painful consequences for socially vulnerable groups such as women, old people, the young and ethnic minorities.
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  • Outside party politics new social movements, including environmental, anti-cuts and feminist groups, have not come together sufficiently with the old, defensive organisations of the working class to produce the coalition that might make them an effective political force.
  • This is no time for simple retreat. What is required is a renewed sense of being on the side of the future, not stuck in the dugouts of the past. We must admit that the old forms of the welfare state proved insufficient. But we must stubbornly defend the principles on which it was founded – redistribution, egalitarianism, collective provision, democratic accountability and participation, the right to education and healthcare – and find new ways in which they can be institutionalised and expressed.
Arabica Robusta

Victory at UNCTAD XIII - 0 views

  • In fact, in a private meeting between U.S. civil society and Robert Gerber, the Deputy Head of the U.S. delegation, he told us that he thought that analyzing “the global economic crisis” itself was outside of UNCTAD’s mandate, which was to focus on trade and development. I’m not sure how to make an argument that these things are not related, but I guess when you’re the United States at the United Nations, you don’t have to have a logical argument.
  • He also said the language in the text that was most important to the United States was on UNCTAD’s efficiency, effectiveness, transparency and accountability; we’re looking forward to seeing the U.S. push hard for similar issues regarding the International Monetary Fund (IMF) and U.S. aid in Haiti, among other places.
  • the non-EU bloc of developed countries) was asked directly at one point during the negotiations why he did not want this language included, the representative responded gruffly, “we don’t want any competition in intellectual thinking!”
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  • The former staff of UNCTAD were so concerned about the earlier drafts that they alerted the public through a letter, pointing out the spuriousness of the OECD countries’ objections, and highlighting the importance of UNCTAD’s role: This is neither a cost-saving measure nor an attempt to “eliminate duplication” as some would claim. ... [W]e all fervently believe in the value of maintaining an independent research capability that serves to focus inter-governmental debates on how the workings of the global economy affect developing countries.
  • Lobbying was also a key strategy. Jubilee USA and other allies successfully lobbied the U.S. to improve language on debt sustainability, and several European groups were able to mitigate the EU’s position through appealing to the Norwegian and Finnish governments.
  • On the third day of negotiations “upstairs” where the tough issues were being handled, Ambassador Wasescha made a surprising announcement. He said the JUSCANZ and the EU were prepared to accept the main controversial Paragraphs 16 and 17, if the G77 would give up the paragraphs supporting Cuba and Palestine. Delegates were outraged. It is common knowledge that countries utilize leverage in negotiations, and horse-trading is the norm. But rarely in diplomatic group negotiations is such tit-for-tat so explicitly expressed.
  • Next, the Palestinian negotiator took the floor. “I would like to inform you that a few minutes ago, the Israeli representative and I came to agreement on the text on Palestine. After futile meetings with the Europeans and the JUSCANZ in Geneva for months, we have come to agreement on language in fifteen minutes. So you cannot use this issue to obtain something else you want,” he said. Shortly after, the Cuban negotiator made a similar announcement that an agreement had been reached between his delegation and the United States.
Arabica Robusta

Stability and Growth Pact - Wikipedia, the free encyclopedia - 0 views

Arabica Robusta

Debtocracy | Watch Free Documentary Online - 0 views

  •  
    Broad and critical analysis of financial crisis and EU (especially Greece).
Arabica Robusta

Another financial crisis looms if rich countries can't kick their addiction to cash inj... - 0 views

  • If its effects are at best debatable and at worst laying the ground for the next round of financial crises, why has there been so much QE? It is because it has been the only weapon that the rich country governments have been willing to deploy in order to generate an economic recovery.
  • QE has become the weapon of choice by these governments because it is the only way in which recovery – however slow and anaemic – could be generated without changing the economic model that has served the rich and powerful so well in the past three decades.
  • This model is propelled by a continuous generation of asset bubbles, fuelled by complex and opaque financial instruments created by highly leveraged banks and other financial institutions. It is a system in which short-term financial profits take precedence over long-term investments in productive capabilities, and over the quality of life of employees. If the rich countries had tried to generate recovery through any other means than QE, they would have to seriously challenge this model.
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  • Recovery driven by fiscal policy would have involved an increase in the shares of public investment and social welfare spending in national income, reducing the share going to the rich.
  • Recovery based on a "rebalancing" of the economy would have required policies that hurt the financial sector. The financial system would have to be re-engineered to channel more money into long-term investments that raise productivity. Exchange rates would have to be maintained at a competitive level on a permanent basis, rather than at an over-valued level that the financial sector favours.
  • There would have to be greater public investment in the training of scientists and engineers, and greater incentives for them to work in and with the industrial sector, thus shrinking the recruitment pool for the financial industry.
  • Given all this, it is not a big surprise that those who benefit from the status quo have persisted with QE. What is surprising is that they have actually strengthened the status quo, despite the mess they have caused. They have successfully pushed for cuts in government spending, shrinking the welfare state to the extent that even Margaret Thatcher could not manage. They have used the fear of unemployment in an environment of shrinking social safety nets to force workers to accept more unstable part-time jobs, less-secure contracts (zero-hour contracts being the most extreme example), and poorer working conditions.
  • Greece, Spain, and other eurozone periphery countries could explode any day, given their high unemployment and deepening strains of austerity. In the US, which is considered the home of quiescent workers, the call for living wages is becoming louder, as seen in the current strikes by fast-food restaurant workers.
  • All of these stirrings may amount to little, especially given the weakened state of trade unions, except in a few countries, and the failure of the parties on the left of centre to come up with a coherent alternative vision. But politics is unpredictable. Five years after the crisis, the real battle for the future of capitalism may be only just beginning.
Arabica Robusta

After Greece: Can the Left Change Europe? » CounterPunch: Tells the Facts, Na... - 0 views

  • The public consciousness is, at last, aware of the issues of financial regulation, wealth distribution and the means of production. But questions relating to religion regularly push these into the background (1).
  • Nikos Filis, editor of Avgi, a newspaper with, as main shareholder, the radical left coalition Syriza (2), came to a different conclusion: “The attack may orientate Europe’s future: either towards Le Pen and the far right, or towards a more reasoned approach to the problem. Because security needs cannot be met by the police alone.”
  • “If Syriza had been less intransigent on standing for the rights of immigrants, we would already have 50% of the votes. But this choice is one of the few points on which we all agree.”
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  • They scarcely existed five years ago but now they look like credible candidates to exercise power; and they may be able to relegate their countries’ socialist parties — which share responsibility for the general financial disaster since 2008 — to a supporting role, just as Britain’s Labour Party supplanted the Liberal Party, and France’s Socialist Party supplanted the Radical Party (3). Those changes were permanent.
  • In Athens, that nowhere is all too clear. But austerity’s cruelty, with social and health consequences extending to hunger, cold and increases in infectious diseases and suicides, does not necessarily mean a change of policy (4). Austerity’s architects are well paid to have nerves of steel.
  • Syriza has calculated precisely that free electricity, public transport, emergency food for the poorest and vaccines for children could be financed through more aggressive anti-corruption and anti-fraud measures. The outgoing conservative government admitted that these deprived the public coffers of at least €10bn a year.
  • These measures are not up for negotiation with other parties or the country’s creditors, Milios insists: “They are questions of national sovereignty; they won’t add anything to our deficit. We are therefore intending to implement this policy whatever the outcome of debt renegotiations.”
  • In these circumstances, the European conference on debt that Tsipras called for two years ago in this publication (6) could become a realistic prospect. Ireland’s finance minister backs the idea, and it has a historical precedent in the 1953 conference that cancelled Germany’s war debts, including what it owed to Greece. Syriza hopes the conference it is calling for will provide “the alternative solution which will bury austerity for good.”
  • Merkel has threatened Greece with expulsion from the euro if its government breaks the budgetary or financial disciplines to which Germany is so attached. The Greeks want both to loosen austerity policies and to remain in the single currency. Those wishes are shared by Syriza (8), because a small, exhausted country cannot fight on all fronts at once. “We’ve been the troika’s guinea pigs. We don’t want to become the guinea pigs for a euro exit,” says Valia Kaimaki, a journalist with links to Syriza. “Let a bigger country, such as Spain or France, go first.”
  • Moulopoulos believes that “without European support, it will not be possible to do anything at all.” That is why Syriza accords importance to support from forces beyond the radical left and the Greens, in particular the Socialists. Yet the Greeks have had experience of the surrenders made by social democracy since Andreas Papandreou forced his party to make a major shift towards neoliberalism 30 years ago. “If he had stayed on the left, there would have been no Syriza,” says Moulopoulos. “In Germany too, when Oskar Lafontaine resigned from the government [in 1999], he expressed regret that social democracy had become incapable of even the most insignificant reforms. Globalisation and neoliberalism with a human face completely destroyed it.”
  • Electoral victory for Syriza, or for Podemos in Spain, could demonstrate, contrary to what Hollande or Matteo Renzi in Italy say, the viability of a European politics that rejected austerity. That would challenge more than the German right.
  • Now the threat is much greater. “If we don’t change Europe, the far right will do it for us,” Tsipras has warned. It has become even more urgent to be bold.
  • The task for the left in Greece and Spain, on which much depends, is hard enough without adding onto their shoulders the heavy responsibility of defending Europe’s democratic destiny, and averting a “clash of civilisations”. But that is what is at stake.
Arabica Robusta

Greece Does Battle With Creationist Economics: Can Germany Be Brought Into the 21st Cen... - 0 views

  • these cognitive problems will only matter if one of these people gets into the White House and still finds himself unable to distinguish myth from reality. By contrast, Europe is already suffering enormous pain because the people setting economic policy prefer morality tales to economic reality.
  • The tales of hardship are endless: an unemployment rate of more than 25 percent, a youth unemployment rate of more than 50 percent, a collapsed health care system. The European Union folks may not know much economics, but they sure know how to destroy a country.
  • Interestingly, even their morality tale is at best half-true. Greece was a profligate spender, but what about punishing the reckless lenders? They were largely bailed out by the European Union, the International Monetary Fund and the European Central Bank, who now hold the vast majority of Greek debt. What about punishing Goldman Sachs, which designed the swap that allowed Greece to hide its debt so it could get into the euro in the first place?
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  • Spain and Ireland who had not been profligate borrowers. They had been running budget surpluses before the crisis. This was entirely a story of reckless lenders in Germany and elsewhere making bad loans to the private sector in these countries. Yet, the austerity policies being imposed ensure that the people of Spain and Ireland suffer even if the pain is not quite bad as in Greece.
  • The time has come for the European Union to stop running economic policy based on silly myths. If German Chancellor Angela Merkel and other leaders in the European Union cannot accept reality then Greece and southern Europe would be far better off breaking free of the euro and leave Germany to wallow in its 19th century economic fairy tales.
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