WEBVTT - Downward Spiral: UK House Prices on the Slide

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Marine

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<v Speaker 1>Dogs Money Market Wrap, where we talk about the biggest

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<v Speaker 1>moves in the markets this week and what is driving them.

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<v Speaker 1>I'm Marin's Umset, Web editor at Large for Bloomberg UK Wealth.

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<v Speaker 2>I'm joined Stay Big, senior reporter and author of the

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<v Speaker 2>Money to Steal newsletter.

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<v Speaker 1>John, We're going to go on holiday soon, don't we,

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<v Speaker 1>thank the Lord?

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<v Speaker 2>I know, finally times.

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<v Speaker 1>So before we head off to you know, rainy Scottish

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<v Speaker 1>Islands and that kind of mark, we're going to talk

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<v Speaker 1>about the thing that we know our listeners are mainly interested. Yes,

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<v Speaker 1>it's harsh pressers, honey. He wrote about house pressures this week, John,

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<v Speaker 1>I not going that well, is it?

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<v Speaker 2>It was? You look at it right? Do you want

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<v Speaker 2>them to go up?

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<v Speaker 1>Do you want them to go down?

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<v Speaker 2>It was interesting because this week rate Move Chemo and

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<v Speaker 2>rate Move does asking placy and I've got them. I

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<v Speaker 2>usually I can't help but take that way a pinch

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<v Speaker 2>of salt because obviously it's very early data. It's also

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<v Speaker 2>fueled off people's kind of anchoring bias, and it's always

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<v Speaker 2>the first prices you don't get the newly listed ones

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<v Speaker 2>that have had price reductions included. But so if you

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<v Speaker 2>look at the trend, although the asking prices are obviously

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<v Speaker 2>a lot higher than the achieved prices, the direction of

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<v Speaker 2>travel is usually basically the same as nationwide or the

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<v Speaker 2>O n S or any other house price index. So

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<v Speaker 2>in this case, it was the biggest July fall on record,

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<v Speaker 2>because asking prices usually fall in July because it's just

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<v Speaker 2>a seasonal thing, but this was the biggest amount they'd

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<v Speaker 2>fallen in the month. And also meant what was the number,

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<v Speaker 2>I think it was one point eight percent, Okay, so it.

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<v Speaker 1>Sounds very little bit annualized that and you've got a

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<v Speaker 1>real number.

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<v Speaker 2>Yeah, you basically annualized, be annualized obviously, but also the

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<v Speaker 2>annual rate of growth is down to point one percent,

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<v Speaker 2>So basically prices being flat. Inflation, I've inflation. And the

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<v Speaker 2>interesting thing about it, I guess, is that activity in

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<v Speaker 2>the market is basically normal. In twenty twenty two, when

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<v Speaker 2>interest rates went up, we had a big crash in transactions,

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<v Speaker 2>but prices kind of just trickled down a bit, whereas

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<v Speaker 2>now transactions are basically back to normal, but prices aren't

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<v Speaker 2>going anywhere. So it feels as if maybe just the

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<v Speaker 2>market's waking up to the fact that well, actually interest

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<v Speaker 2>rates are a lot higher. People can't afford to pay

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<v Speaker 2>what you might have wanted, don't we pay, And we're

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<v Speaker 2>just getting that gradual adjustment.

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<v Speaker 1>And prices have actually fallen quite a lot in central London, right, Yeah,

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<v Speaker 1>we keep hearing about particuarly at the top end price

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<v Speaker 1>is way off. I mean, it's hard to get precise

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<v Speaker 1>numbers on this, but when you talk to people about

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<v Speaker 1>premium properties, I'll tell you that prices are down twenty

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<v Speaker 1>percent plus.

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<v Speaker 2>And also that they haven't moved since like twenty fourteen

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<v Speaker 2>or something like that. I mean, it really is. I

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<v Speaker 2>don't think this is even a particily controversial or surprising

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<v Speaker 2>thing you say anymore, because I've heard it so much.

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<v Speaker 2>I even so. Or somebody putting out quite an interesting

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<v Speaker 2>wee contrarian view the other day that maybe now would

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<v Speaker 2>be a good time to buy prime central London property

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<v Speaker 2>because actually it hasn't gone anywhere and the terms is

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<v Speaker 2>down a lot. I mean, I don't know. I mean,

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<v Speaker 2>I think you can point to lots of different reasons

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<v Speaker 2>for that, but it's hard to ask to pinpoint a

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<v Speaker 2>specific one beyond. I mean, I guess it was a

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<v Speaker 2>big beneficiary a capital flight, which I think people forget.

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<v Speaker 2>I think that after the Eurozone crisis and the financial crisis,

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<v Speaker 2>and also that was the time when Saudi Arabia particularly

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<v Speaker 2>was cracking down quite aggressively on its richest people. And

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<v Speaker 2>I say, remember there was an awful lot of capital

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<v Speaker 2>flight from other parts of the world into prime central

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<v Speaker 2>London roughly up until about twenty fourteen. And then obviously

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<v Speaker 2>there was a lot of changes made stamp duty et cetera,

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<v Speaker 2>et cetera, bresit. You know, you can argue with that

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<v Speaker 2>that was healthful or not. I mean it mid stale

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<v Speaker 2>Ingo down. You would think you would act living courage

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<v Speaker 2>more people that buy Counting down and buy till Late.

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<v Speaker 2>So I guess there's a lot of reasons why that

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<v Speaker 2>idea may have sufficlarly.

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<v Speaker 1>Yeah, And we hear a lot of the moment, don't

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<v Speaker 1>we about how Americans are moving to the to the UK.

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<v Speaker 1>If you have Americans, they're coming to the UK, They're

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<v Speaker 1>coming to London, to they coming to Scotland. A lot

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<v Speaker 1>we keep hearing that. I keep reading this in the papers,

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<v Speaker 1>and then I ask Grand in Scotland and yeah, not

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<v Speaker 1>so much.

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<v Speaker 2>They do their taxes. The Americans so have held.

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<v Speaker 1>Well, what happens is that they come to the they

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<v Speaker 1>come to the UK and they think, well, they'll buy

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<v Speaker 1>a house in Scotland or possibly in London, and then

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<v Speaker 1>they find out that it's classified as the second home

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<v Speaker 1>because they're keeping their apartment in New York or wherever

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<v Speaker 1>it is, and the stamp duty is absolutely horrendous. So

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<v Speaker 1>I think you're less likely to see people buying property

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<v Speaker 1>in the UK when they see the upfront cost of

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<v Speaker 1>doing so. And then of course we have this the

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<v Speaker 1>constant story that we hear in numbers will become clearer

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<v Speaker 1>over the next year or so of people leaving the

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<v Speaker 1>UK at the top end, and that that will bring

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<v Speaker 1>them selves through, right.

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<v Speaker 2>Yeah, you would think so. Yeah, maybe it's the timing

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<v Speaker 2>by if you've had your heart set and.

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<v Speaker 1>Finally moving to nothing.

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<v Speaker 2>Hell exactly, I want to live the huge dream. But no,

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<v Speaker 2>I don't know. I don't know. I think I struggle.

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<v Speaker 2>I feel excited about that as a trade, even though

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<v Speaker 2>maybe it is I don't know.

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<v Speaker 1>Anyway, you were mentioning earlier, we were we were making

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<v Speaker 1>a final version of a podcast on housing market to

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<v Speaker 1>go with our series on housing markets is coming out

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<v Speaker 1>in a few weeks. And you mentioned in this correlation

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<v Speaker 1>that you've seen or lack of correlation between transactions and

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<v Speaker 1>spending on refurbishment.

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<v Speaker 2>Yeah, well, this was something that popped up earlier this week,

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<v Speaker 2>and it's not something It was one of the Bloomberd

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<v Speaker 2>colleagues that wrote the piece, but I think it was

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<v Speaker 2>content data from Savos. The number of home renovations getting

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<v Speaker 2>done is like a ten year low, and it's basically

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<v Speaker 2>because usually what happens as you expect that it's planning

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<v Speaker 2>permission for important stuff like you know, changing l extensions

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<v Speaker 2>and things like that, and obviously usually that kind of

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<v Speaker 2>roughly goes in line with transactions because people move and

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<v Speaker 2>then they do stuff. So it seems that people are

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<v Speaker 2>now moving but not doing stuff. And Savos kind of

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<v Speaker 2>puts it down to people just they sort of suggested

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<v Speaker 2>that it's because there's more supply on the market and

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<v Speaker 2>so people are able more readily able to choose kind

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<v Speaker 2>of ove and ready properties and the ones you can

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<v Speaker 2>just move into. But I think you could also look

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<v Speaker 2>at clearly people haven't spend more to get in their

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<v Speaker 2>property because interest rates have gone up. And also, i mean,

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<v Speaker 2>the build cost inflation in recent years with COVID has

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<v Speaker 2>been nuts. So I'm guessing that the kind of like

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<v Speaker 2>implied value of doing a renovation is much much lower

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<v Speaker 2>than it was maybe five years ago.

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<v Speaker 1>It might it also be that there isn't a house

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<v Speaker 1>left in the UK that hasn't already been fully renovated

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<v Speaker 1>programs on the telly for decades. Is there a house

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<v Speaker 1>left in central London, for example, without conservatory out the

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<v Speaker 1>bank and assigned to return? And you know, that's I

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<v Speaker 1>wonder if that's not something to do with it. It's

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<v Speaker 1>almost given how few new houses we building, given that

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<v Speaker 1>the housing stock remains kind of static, given that you know,

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<v Speaker 1>turnover is reasonably high, and renovation has been on the

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<v Speaker 1>go for forever, it's all done. It's all done. Literally, there's

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<v Speaker 1>no one left he needs a conservatory.

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<v Speaker 2>Well yeah, and also people did spend a lot of

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<v Speaker 2>money on that house, is John COVID. So I mean,

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<v Speaker 2>I can't imagine based on that. I mean, I mean,

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<v Speaker 2>it's an interesting thing, you see, But you're right, there's

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<v Speaker 2>a lot of different reasons that it could possibly be

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<v Speaker 2>for that, Okay, well, there we go.

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<v Speaker 1>Here's your chance. Now's the time to go out and

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<v Speaker 1>buy a house, preferably in central London that is pre renovated,

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<v Speaker 1>because there's millions of them right John to notting Hill,

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<v Speaker 1>Thanks for listening to this week's Marrin Talks Money debrief.

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<v Speaker 1>If you like our show, rate review and subscribe where

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<v Speaker 1>me and John on x or Twitter at marinas w

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<v Speaker 1>and John Underscore Steppeic. This episode was produced by some Sadi,

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<v Speaker 1>production of support and sound design by Moses and Questions

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<v Speaker 1>and comments on this show and all our shows are

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