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The term is actually dire straits. A strait is a narrow passage that a ship would travel passing from the sea to a harbor. Dire meant dangerous. The original dire strait would be a channel that would wreck your ship unless you followed exactly the right course. A person that is "in dire straits" would be in a situation where there could be a bad outcome unless they follow exactly the right course of action.

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Q: What does term dire struts originate?
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