Government steps in again, bails out AIG with $85B
Thread started by
eddieboyinla at 09.17.08 - 1:01 am
Another day, another bailout. The U.S. government stepped in Tuesday to rescue American International Group Inc., one of the world's largest insurers, with an $85 billion injection of taxpayer money.
IMAGINE THE POSSIBILITY'S WITH THAT MONEY?
WHERE DOES IT END, WE SHOULD BE MAD, REALLY MAD.
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because Americans love welfare for the wealthy. Americans love to reward corporate failure with billions and punish scholastic failure by with-holding funding from already broke schools. oh yeah America also loves to bomb the fuck out of broke brown people in foreign countries.
Roadblock09.17.08 - 1:46 am
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don't forget the scholastic failure of putting almost zero money into helping students get higher education... hell, in sweden, you get not only your tuition 100% paid, but they pay for a place to live while you're in school too.
What do we get here? loans... loans with big interest.
FuzzBeast09.17.08 - 1:51 am
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"in sweden, you get not only your tuition 100% paid, but they pay for a place to live while you're in school too."
Yup. Even for foreigners! I love Sweden.
imachynna09.17.08 - 2:00 am
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Another, shining example of America being put to sleep.
How much further could this get any worse??
When will it all come to an end??
Perhaps the Yellowstone Caldera will finally blow its top and....
eh, nevermind.
Rest of the country will probably think it just got hot, or something as they choke on sulfur fumes.
bentstrider09.17.08 - 2:33 am
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Alexander Cockburn
wrote:
Last weekend Treasury Secretary Henry Paulson rushed to bail out Fannie Mae and Freddie Mac in the largest nationalization in history,
privatizing the profits and nationalizing the losses, sticking the taxpayers with a $300 billion tab.
marino09.17.08 - 2:37 am
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"privatizing the profits and nationalizing the losses,"
great way to put it. I can see why the govt would need to prop up huge companies that provide jobs and so forth but then these ceo's and top management retain their positions or get handsome payouts.
and what about the taxpayer dollars? are these loans? do the american people get that money back from these low lifes with interest?
Roadblock09.17.08 - 2:50 am
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"and what about the taxpayer dollars? are these loans? do the american people get that money back from these low lifes with interest?"
Yeah. We'll pay interest. :p
When/if these companies become profitable again they will be privatized again.
It's similar to what's going on with health insurance.
The government pays for the poor, the old, the uninsureable. The private sector collects premiums from the healthy.
marino09.17.08 - 3:01 am
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"The government pays for the poor, the old, the uninsureable. The private sector collects premiums from the healthy. "
fuckin wonderful.....
Roadblock09.17.08 - 3:09 am
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can I ask what the point of the government is anyway? if the republikkkans always want to reduce government well.... then lets privatize EVERYTHING. Including the military. ha. let the oil companies pay for their own invasions...
Roadblock09.17.08 - 3:11 am
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It pisses me off that we have socialism for the people and coporations who typically proclaim we are capitalist and need the government off of our backs.
The whole thing reminds me of baseball. We're supposed to be this shining example of capitalism, but our self-proclaimed national past time is a socialist experiment that has succeeded: winning baseball teams deeply subsidize losing teams, each team starts at the same point every season and efforts are made to prevent too much talent from collecting at good teams to prevent too many blowouts.
The teams themselves get massive subsidies and tax breaks wherever they exist. Shit , the Trolley Dodgers got Chavez Ravine for next to nothing, and now we're paying for a bus to shuttle customers to their doors (at no cost to the Dodgers organization).
Imagine how the American people would thrive if some of the care and attention lavished on these rich f**Ks was spent on regular folks.
ubrayj0209.17.08 - 7:55 am
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To borrow a phrase from Robert Reich (Bill Clinton's Secretary of Labor), we now have
Socialized Capitalism
mk452409.17.08 - 8:18 am
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"WHERE DOES IT END, WE SHOULD BE MAD, REALLY MAD. "
Actually, no we shouldn't.
Despite the unsavory nature of our government bailing out for-profit institutions, the risk of AIG failing was not just that some rich guys might not be able to afford the payments for both the yacht AND the helicopter.
The issue was that a failure of AIG posed a "systemic risk" for the American economy as a whole, in that a lot of other banks and financial institutions would then face insolvency as well. While this is great news for those of you that think we would just survive by creating communes and growing our own food and pot and living on the barter system, for those of us that appreciate the basic amenities of modern life, this would have been a problem. (See e.g. "bank panic" and "the great depression" for examples of what happens when people lose faith in the economic system.)
AIG provided insurance for billions of mortgage backed securities (MBSs), which are investments created by buying mortgages from banks, grouping them, and then selling them off on the market. While this is a particularly sketchy industry, it did allow millions of people who would not otherwise have been able to buy homes to do so. (Of course, this also created the housing bubble, the correction of which we're seeing right now.)
In addition, AIG also insures billions of dollars in corporate bonds, and a failure by AIG would force these corporations to provide more collateral on their own to back their own bonds, which means that those companies would not be spending as much on growing and hiring folks.
http://www.tradingmarkets.com/.site/news/Stock%20News/1887071/
"But AIG's problems could beget further turmoil in the market for the debt insurance contracts. That market was worth $58 trillion worldwide at the end of 2007, according to the Bank for International Settlements.
How much of that $58 trillion is AIG responsible for? Nobody knows. Maybe not even AIG. That's part of the problem. The consequences of an AIG failure are one of the "known unknowns" that Washington regulators probably don't want to be further educated on."
The risk with AIG failing was not that some fatcats might not be able to have a third summer house, but that
1- the mortgage market would get even less liquid, making it even harder to qualify for a mortgage, and driving home prices down further and faster,
2- that companies would be unable to grow and hire more folks, thus contributing to our already growing unemployment problems, and
3 - that AIG's failure could trigger a systemic crash, which would create a huge mess globally, as most of the world's economies are tied into America's (e.g. the Chinese own HUGE amounts of our mortgages through the mortgage backed securities market).
If we have a systemic economic failure and end up unemployed and unable to buy the food and and bike parts we need to keep
riding our bikes, then we should be really really mad.
JB09.17.08 - 8:46 am
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Roadblock, I was all set to tear you a new one for you first comment, but then you totally redeemed yourself with this comment,
"then lets privatize EVERYTHING..."
I agree!
I was standing in line at the PostOffice yesterday, and thinking to myself, 'what a poorly run business this is', but then I realized that anything government funded is not a business, it's a charity.
No matter how badly they perform, no matter how badly the public detests them, government institutions will always receive funding, deserved or not; and so the natural order that drives competative business in a free market will never bring the grim reaper calling on these tax-funded failures.
And all of you calling out for socialized education are insane! The voucher system is where it's at for schooling. At least then you have a choice when it comes to giving your kid the best education.
And yes, I have tons of student loans, and I'll probably take more when I go for a masters, but I welcome that opportunity to have a choice.
Eric Hair09.17.08 - 9:54 am
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Yeah, the voucher system is where it's at.
That's what all of those Asian and European countries that are ahead of our students on every educational level are using.
Oh wait, they all use socialized education, maybe it really doesn't suck.
Libertarianism, like socialism, sounds great in theory, but is an Epic Fail in practice.
A well-regulated free-market system with some basic mandated provisions for the education, health, and welfare of the citizens is where its at.
JB09.17.08 - 9:58 am
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Sarcasm over the internet is confusing.
Eric Hair09.17.08 - 10:08 am
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socialized education is another way to say robot factory; quantity over quality.. a long time ago non-profit groups like the Carnegie Institute, the Rockefeller Foundation, the Ford Foundation, and the Guggenheim Foundation set out to influence the amerikan. educational system to favor collectivist ideals rather than those based on the Declaration of Independence and the U.S. Constitution. The Tavistock Institute of Great Britain provided the blueprint for dumbing down the masses through collectivist propaganda.
it totally worked..
pb73409.17.08 - 10:15 am
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JB said:
those Asian and European countries that are ahead of our students on every educational level
Do you know why their test scores are higher? Because the fate of their entire future rests on those scores. So the kids are tutored starting very early. They live and breathe standardized academics.
How can one test have such an impact on a person's life?
Since the entire school system is socialized, there are very few good schools. Students that test high get to go to these schools and choose from a variety of majors. Those that test somewhat lower are subjected to a tiered approach whereby your test score determines what area of study you're eligible for.
My wife tested into a college degree of German!! No, it didn't matter that she didn't want to study German. It didn't matter that she was instead interested in Graphic Design. The test said she was a German major. So she entertained the socialist system, saved her money and moved to the US. Where she could choose to get any kind of education she wanted.
I rest my case. If you need further proof, go stand in line at the post office.
Eric Hair09.17.08 - 10:23 am
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I don't buy into this free market idea, haven't we seen that when markets are left to regulate themselves no regulation get done. These corporations are out to make as much money as possible not to be as moral as possible. When Companies go under because of poor investments the people (government) shouldn't have to pay the bill, the CEO's and others who profit in good times should lose in bad times.
But this credit/mortgage crisis is not the sole fault of corporate America. Remember, average Joes went out and bought things they couldn't afford, refinanced and cashed in on appreciating home and then no one paid their bills. 2001-2007 everyone was jumping into real estate to make a fast buck, main street was acting like wall street, the $ ruled, morality went out the window and now look where these actions have led us.
Sandman09.17.08 - 10:30 am
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Voucher based education is welfare for the upper middle class, it's not a valid solution for a national education policy.
The post office gets my stuff to my door in one piece.
The private alternative breaks a lot of stuff, and more often than not makes me drive downtown for a pickup because I wasn't there to accept delivery.
Privatization is not an automatic good, any more than Government run entities are an automatic bad, despite what Ayn Rand and her tinfoil hat wearing followers might think.
Both can succeed when run by effective leaders and staffed by motivated employees who work hard and go above and beyond, and both can fail when run by corrupt leaders and staffed by demoralized employees who do the minimum necessary to get a paycheck.
JB09.17.08 - 10:37 am
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I will punch the next Republican know-nothing who says they're the part of small government.
cabhauler09.17.08 - 11:04 am
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Voucher based education is welfare for the upper middle class, it's not a valid solution for a national education policy.
Are you trying to tell me that only upper middle class taxes go towards the public school system!? Everyone pays taxes, everyone should get to say how those taxes are spent. Vouchers are the most obvious manifestation of that concept.
And what's not valid about it? You take money that would otherwise be wasted on failing schools, you give it back to the parents and let them choose where to use it.
The post office gets my stuff to my door in one piece.
Ah yes, if it isn't broke don't fix it. But don't imrove upon it either. Don't subject it to fair competition. People said the same thing about the typewriter: It types my correspondence, why would I need a magical computer box? But behold, competition has bred innovation, and now the capabilities of my correspondence are vastly superior to a typewriter.
Both can succeed when run by effective leaders and staffed by motivated employees
And what better motivator than money. Socialized systems give out reliable money, this makes for lazy people. A free market forces you to choose; work for money or be lazy and get none.
despite what Ayn Rand and her tinfoil hat wearing followers might think
I don't know what aliens have to do with this discussion, but cheers to you; the world needs more followers.
Eric Hair09.17.08 - 11:52 am
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As far as the education thing goes, I remember some old folks telling me about how some companies gave them a full ride through college in return for working for their company for X-amount of years.
Sounded pretty cool, but I doubt anyone does that nowadays.
It's more of like; secure funding, find school, get pre-req's done before getting into chosen school, get into chosen school, graduate and hope chosen company thinks your interview skills are worthy enough to be considered for a janitorial position.
That's why I'm still sort of dumbfounded about hearing of people finishing school in 3-4 years time.
bentstrider09.17.08 - 12:06 pm
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"And what better motivator than money."
If you really think money is the best motivator for people, you're in for a long and miserable existence.
Once people have reached a basic standard of living, they are usually motivated by intrinsic goals and their own interests.
See e.g. Alfie Kohn's "Punished by Rewards" - http://www.alfiekohn.org/books/pbr.htm
Vouchers fail because they usually don't provide good access to quality education for anyone other than the extremely religious or the upper middle class, who will use them as subsidies for the private schools where they were already sending their kids. Everyone else would either have to spend additional money out of pocket to get a decent education for their kids, or send them to the now poorer public schools.
Yes, the world does need followers, and nothing makes a better follower than those who slavishly toe the line believing that their efforts are making them pioneers and rugged individualists, rather than sheep who are being shepherded by the whims of corporate need.
JB09.17.08 - 12:29 pm
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"And what better motivator than money. Socialized systems give out reliable money, this makes for lazy people. A free market forces you to choose; work for money or be lazy and get none."
So by this logic those who have money have it because they work harder than those who don't? People are poor because they are lazy? That’s not true.
When you use money as a motivation you get unwanted consequences. What caused Enron to cook their books? Answer: Money! Why did brokers sell mortgages that people couldn't afford? Answer: Money!
I'm not saying that money is bad, but when one assumes that monetary compensation is the answer to all our problems some people take it too far and are will do anything just to make a buck. The most profitable companies are not necessarily the best, they just make more. More money doesn’t always mean better.
What happened to doing a good job because you take pride in your work?
Sandman09.17.08 - 12:30 pm
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WHAT THE HELL ARE YOU GUYZ TALKING ABOUT?
THAT MONEY WAS AND IS AVAILABLE FOR CORPORATE "BAIL-OUTS", ( FOR MANY MORE ARE COMING. )
BUT NOT FOR THE CURE FOR AIDS, FEEDING THE HUNGRY, THE HOMELESS....YOU GET MY POINT RIGHT???
eddieboyinla09.17.08 - 12:35 pm
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eberyone iz alloweded 2 hav opinion
but sum of dem r sympol .. . simpulta . . .
sum of dem r stupud
diz thred no ecksepshun
Knittens09.17.08 - 12:35 pm
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BIG WORDS JUST CONFUSE THE MASSES, WITCH IS OBVIOUS, BY YOUR DIALOG.
REMEMBER THAT EVEN PUPPETS WISH THEY WHERE 'STRINGLESS'.
eddieboyinla09.17.08 - 12:42 pm
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I was TOTALLY joking about privatizing everything. You will hear the most staunch ass republican conservative and when you talk about reducing govt spending on the military ooooh boy are they in favor of the government's TEET. they want more pay more stability more benefits, more military spending, more enlistment. if that isn't SOCIALISM I don't know what is. privatize the military baby! but don't even think about taking taxpayer dollars to do it.
Privatization is mostly an erosion on a nation and the middle class. privatizing means somebody is making a profit which means somebody is looking out for number 1 which means finding ways to make more profit on industries that are essentially commodities. so the only real way to increase profit is to pay the worker less, give them less benefits, and pressure them to work longer hours so a second or third person doesn't have a job (even if the first person gets overtime it's still a net loss to that person). and usually it also means hiring illegal workers for less money which is of course also a drain on government services. this all equates to lower standards of living and crappy goods made in china being UBER marketed to us to buy buy buy so that we are cool in the eyes of our friends which means we have to work work work the longest hours with the smallest vacation time.
NOT TO MENTION that private companies hire good tax lawyers and lobby the government to reduce it's taxes (another way of getting more profit for number 1) which is yet ANOTHER drain on society. private companies should be reserved for non essential shit like movies or entertainment and should be regulated by a strong government in which many many people are participating.
Roadblock09.17.08 - 12:46 pm
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this goes much deeper than corp bailouts.. US war machine requires these corps remain solvent. without bonds for foreign investors to buy with the $$$ they get from US military and contractors the conquest of the middle east would fail. their little economies can't handle that kind of loot and the rest of the world is too smart to buy into the house of cards we call the US economy. it's a circle of stupidity and both major candidates are rolling around in the center of it... laughing at the people who vote for them.
or something like that..
asparagus09.17.08 - 12:47 pm
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@Eric Vouchers are a subsidy for the middle class because the voucher amounts thrown around are usually only 20-30% of what GOOD private schools actually cost.
But I agree with you about College Education. Like your wife I grew up in a country where your test scores determine what you study. My test scores would send me to Theology!!!! Woot! More Atheists for Theology!
I like the american system where pretty much anyone can enter college to study any subject at any time.
@JB about the bailout.... What if we let the mortgage industry collapse? Then maybe the home prices would collapse and young people could afford to buy something instead of spending half of their paycheck on rent or living 6 people to an apartment.
Also I don't hear anything about prosecuting those involved in the mortgage industry debacle. It was just a giant pyramid scheme with the complicity of the government.
marino09.17.08 - 12:48 pm
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"@JB about the bailout.... What if we let the mortgage industry collapse? Then maybe the home prices would collapse and young people could afford to buy something instead of spending half of their paycheck on rent or living 6 people to an apartment.
Also I don't hear anything about prosecuting those involved in the mortgage industry debacle. It was just a giant pyramid scheme with the complicity of the government. "
THAT WAS GOING TO
BE MY NEXT POINT.
housing prices should FALL FALL FALL.
Roadblock09.17.08 - 12:53 pm
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After restraining myself...
Thank you JB for articulating the finer points of this issue.
As for the arguement on being motivated by money, who is at fault, etc., here's my 2 cents:
There is a lot of miseducation occurring, in all areas. I think we can all agree with that. This leads to very poor decisionmaking, like being motivated to screw people in a bad loan because A) You have kids to feed, and B) You didn't know it was such a horrible product. Those may both seem inexcusable or unbelievable, but I've seen it firsthand. Ignorance abounds.
Also, money isn't bad, it only magnifies who you are because it is another form of energy that we each choose to direct. Like the choice we each make to ride a bike. Bikes aren't bad. But what if 40 riders went to a store and one guy stole something? Is biking a criminal activity? No, of course not.
It boils down to this - We are witnessing today an era of gross irresponsibility. And leadership is severely lacking. So if we don't have any good leaders, then what are we to do? Become them. Work hard, fight against bullshit, and show others the way. Know things can't change overnight, but they can change. So quit bitching about it, and STEP UP.
kryxtanicole09.17.08 - 1:13 pm
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I'm down to step up. what's the plan?
Roadblock09.17.08 - 1:25 pm
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"@JB about the bailout.... What if we let the mortgage industry collapse? Then maybe the home prices would collapse and young people could afford to buy something instead of spending half of their paycheck on rent or living 6 people to an apartment.
housing prices should FALL FALL FALL."
Well there are two points here.
1. The mortgage industry is already collapsing, the bailouts are to keep it from wiping out the rest of the economy. See http://ml-implode.com/ - 284! major mortgage lenders have already failed.
2. Housing prices are falling and will continue to do so. Right now we're getting through the Subprime collapse, and then we'll have a little breathing space before the Alt-A / Option ARM mortgage collapse of 2010-2012, which is when the higher priced (Westside, etc.) real estate will begin to tank. (Seriously, this is not an issue you're hearing much about on the MSM, so if you're thinking about buying a house before then, do your homework first.)
But unless we're planning on setting up Midnight Housezz and pooling our money to buy a compound with a 100% cash payment, even those of us young folks without money will need to qualify for a mortgage, and if more banks fail, that's going to mean perfect credit and 20% down, which can be tricky in CA.
JB09.17.08 - 1:29 pm
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fuck credit. live credit free. credit is like an additional leash, and TAX on our whole system. it's bullshit.
"(Westside, etc.) real estate will begin to tank."
can't wait!
Roadblock09.17.08 - 1:33 pm
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It will suck for a lot of people that are over their heads, invested in above their means. It will suck for a lot of people I know, it will suck for most people. It sucks right now for people invested in property. But I feel like we, as a collective group of Capitalist Americans, deserve it - and will pay for it. That's too fucking bad for us. Too bad because we didn't STEP UP, and do something about it sooner. ... Economic collapse? It's going to happen, it has too. Because our current system, based on credit [i.e. FAKE MONEY], has been doomed to fail from the beginning. BIG EPIC FAIL.
It might not be depression era fail, maybe not in our lifetime, but it will. We're paying for it now. The social class divide is getting wider and wider, and Federal Government actions like this only make things worst. Everyone in the US lives WAY beyond our means. Every frivolous $20 meal we eat or $5 beer we drink is a meal that someone doesn't get. Every frugal meal, or cheap beer we drink is one we get to share. I know it's a strange and over simplified analogy, but it's true.
The military is already privatized, and our tax dollars pay for it - ask Dick Cheney, he's making millions.
The economy is going to shit, and unless you're invested in the War Machine, it will effect you too.
You know who to blame, and it isn't the Taliban or the Hasidic Jews.
the reverend dak09.17.08 - 1:51 pm
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isn't credit outlawed in some countries.... ?
Roadblock09.17.08 - 1:55 pm
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And for those too young too remember...
Savings and Loans scandals?
Massive bank bail outs?
Taxpayers stuck with bill for 100s of billions?
John McCain involvement?
It happened in your lifetime.
http://en.wikipedia.org/wiki/Keating_Five
marino09.17.08 - 5:24 pm
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You would never know if you rely on the mains stream media sources for your political education.
Roadblock09.17.08 - 5:32 pm
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Phil Gramm = architect of deregulating banks and major financial institutions = former McCain economic adviser = stepped down after referring to Americans as a "nation of whiners"
JB09.17.08 - 6:11 pm
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http://en.wikipedia.org/wiki/Keating_Five
Last weekend my friend told us that her daughter had put all of a small inheritance in to one of Keating's S&Ls. She lost the entire amount because they convinced her her deposits were as safe as an FDIC insured account.
Evil greedy motherfuckers ruining this country.
Hagbard Celine09.17.08 - 6:22 pm
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I bought two houses right after the keating 5 real estate crash. I still have them.
marino09.17.08 - 7:07 pm
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nice! cant wait for McCain and his crew to fuck it up again so I can get in the market.
Roadblock09.17.08 - 7:16 pm
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Just joking. I think they fucked up enough already. I bought my houses during the early Clinton years.
marino09.17.08 - 7:24 pm
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"http://www.markfiore.com/fundamentals_0"> Mccain 08?
Joe Borfo09.18.08 - 1:56 pm
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I'm kidding Marino. I think if McCain got into office I would very seriously consider becoming an expatriot.
Roadblock09.18.08 - 2:15 pm
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