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General discussion

Social Security Reform

Feb 19, 2004 11:45AM PST

It has been asked why Bush deserves to be re-elected. Aside from the compelling National security issues, high among them on my priority list is Social Security. I favor letting Americans opt to save for our own retirements. There appears to be some momentum building for this, and I believe under Bush it will FINALLY come to pass.

http://www.washingtontimes.com/commentary/20040129-082817-6880r.htm

Evie Happy

Discussion is locked

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Too late for me.
Feb 19, 2004 1:00PM PST
Sad
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Re: Social Security Reform
Feb 19, 2004 1:14PM PST

Hi, Evie.

Private saving for retirement is a great idea -- for people smart enough and with time enough to manage their own investments. Unfortunately, coupling the two criteria makes that undoubtedly a minority of the population, and those who need SS the most (the poor, who generally have NO other retirement savings) are the least capable of managing their own money. So while a great idea in theory, the way the Republicans want to do it would basically cause a feeding frenzy for SS dollars, and end up with the rich getting better retirements, and the poor getting even poorer ones than the pittance they get now.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Didn't even read it did you...
Feb 19, 2004 1:35PM PST

The plan proposed would require very little time or intelligence and would give the less affluent worker a bit more equity with your own retirement funding.

Yes, the rich would get better retirements (they already do) but the poor would get better retirements too.

Contrary to what you seem to think of the "unwashed masses" Dave, the vast majority could handle their own retirement fund every bit as well as you yourself have the capacity to do for your own.

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He obviously didn't read the link.
Feb 19, 2004 11:04PM PST

Or he would have noticed that the plan was developed by the Cato Institute. Not a noticably conservative group.

'We expect this plan to restore Social Security to long-term and sustainable solvency and to do so at a cost that is less than the cost of simply propping up the existing program.'

http://www.cato.org/pubs/ssps/ssp-32es.html

The site linked to will also allow you to download a PDF with more detail.

Bo

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Re: 'The Cato Institute. Not a noticably conservative group.' -- What hogwash!
Feb 20, 2004 2:29AM PST

Bo, calling the Cato Institute "not noticably conservative" is the equivalent of calling the Brookings Institution "not noticably liberal!"

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Cato = Libertarian Dave
Feb 20, 2004 10:13PM PST

Any association with conservatism is with small government conservatism.

Evie Happy

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YOU are the one saying Libertarian views are closest to your LIBERAL views.
Feb 20, 2004 11:23PM PST

Regardless of that your post indicates you did not read the article and/or that you fail to understand what it was saying.

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Re: Didn't even read it did you...
Feb 20, 2004 2:27AM PST

Hi, Ed.

The problem is that many Americans are naive about investments. The recent mutual fund scandal shows that even respected investment companies often work for their own benefit, not that of their shareholders. The only way I'd approve of such accounts is if there's some approval process (such as the State of Texas runs for the Optional Retirement Program to which I belong) whereby the size of the investment pool is used to negotiate lower than average fees, and there's an approved list to keep the naive from being fleeced by fly-by-night operators. Both of those ideas are anathema to Republicans who want a laissez faire system (they call it "competition," but "caveat emptor!" is more accurate), and have shown what they think of using government negotiating power to citizens' benefit by the ridiculous prohibition against doing just that contained in the Medicare "reform" legislation. And you'll note that link (which I did read, btw) talks about a consensus among CONSEERVATIVE groups! Conservatives seem to prefer corporate profits to affordable goods and services for people -- and these accounts would just be another way to transfer wealth from citizens to corporations.

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Hey DK, 'you no playa da game, you no maka da rules'
Feb 20, 2004 4:55AM PST

Typical liberal.

Force everyone else to participate in this ponzi scheme called Social Security while you manage your own retirement.

Bo

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I made be wrong
Feb 20, 2004 5:04AM PST

But I thought the only exemptions to the SS program was Congress and a few Railroad employee union members?

I'd bet that is an alternative to the state employees retirement plan rather than SS.

Not commenting on privatation of SS, I'm still uncertain of that myself.

I could be wrong, often am, more and more sometimes it seems.

roger

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(NT)Opps, 'I made be wrong' = I may be wrong.
Feb 20, 2004 6:53AM PST

.

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Re: I made be wrong
Feb 20, 2004 11:57AM PST

Hi, Bo.

Teachers in many states (including Texas) are also exempt from SS -- in fact, the law discriminates against retired non-SS teachers, who aren't allowed to collect spousal benefits, unlike any other person who never paid into Social Security. The logic behind that is mystifying, at least to me!

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Teachers don't have to pay SS? news to me, is this just college level
Feb 21, 2004 4:28AM PST

or up and down the board?

I knew there were some railroad exemptions from the beginnign of SS, and figured their might be more, but teachers?

Gonna have to ask a relative of mine that is teaching here in NC about that.

So Bo was right, you're against letting others manage their retirment money instead of SS while you have control over yours?

Well an *** umption has certianly made an *** out of me this time.

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Re: Teachers don't have to pay SS? news to me, is this just college level
Feb 21, 2004 12:00PM PST

Hi, Roger.

I believe it varies by State. In Texas college and professional school teachers do pay into SS. But K-12 public school teachers are covered by the Texas Teachers' Retirement System (and also have their own medical insurance program for retirees, currently in very shaky financial shape, a very big concern), and not by SS/Medicare.

As for what Bo says, please read MY posts, not my political opponents', to understand what I think and believe. I'm personally all in favor of privatizing PART of SS, IF there are safeguards in place to ensure that naive investors are protected from predators, or from predatory fees by "legitmate" investment companies. IMCO the Republicans' current privatization proposals are more aimed at generating windfall profits for the brokerages and mutual fund companies than about helping the low-end SS recipients and/or stabilizing the SS system.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Teachers don't have to pay SS? news to me, is this just college level
Feb 22, 2004 4:25AM PST

Regarding reading your posts not your political opponents, I take it you're referring to my

"So Bo was right, you're against letting others manage their retirment money instead of SS while you have control over yours?"

I said that because you said "Teachers in many states (including Texas) are also exempt from SS ...".

Curious, how can SS vary by state? does the program give each state the option to take it's employees out? all state employees? selected ones? just teachers?

I'm confused by your statements

"...(such as the State of Texas runs for the Optional Retirement Program to which I belong) ..."

"In Texas college and professional school teachers do pay into SS."

So if college teachers pay into SS, is the program you refer to a substitute for SS or just an alternative state employee retirement program?

You're a college teacher aren't you? technically anyway? I remember you mentioning dealing more with funding request, etc., than teaching in the classroom. I least I think that's what you've said in the past.

A relative of mine who has taught in grammer, high school, community colleges and university level classes has never heard of exceptions to SS, so it must not apply to NC employees.

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Re: Teachers don't have to pay SS? news to me, is this just college level
Feb 22, 2004 12:59PM PST

Hi, Roger.

I frankly don't know how or why the SS status of teachers came to vary by state -- I just know that it does. The ORP pension program to which I refer is similar to a 401k, except more generous -- I put in about 7% of my salary annually, and that's matched slightly more than 1:1 by the state. That's typical of faculty pension programs, btw -- but before you get exceited about the great deal we're getting, remember that relative to their educational level, PhD's are woefully underpaid compared to others with doctorates, notably MD's and lawyers.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Teachers don't have to pay SS? news to me, is this just college level
Feb 23, 2004 4:28AM PST

"...remember that relative to their educational level, PhD's are woefully underpaid compared to others with doctorates, notably MD's and lawyers."

Hmm, I'm not too sure MD's get that good a deal nowadays, with insurance and all considered.

However, I'm blue collar so all ya'lles looks good to me. Wink

"THE ORP pension program to which I refer is similar to a 401k, except more generous -- I put in about 7% of my salary annually, and that's matched slightly more than 1:1 by the state."

Well the match is much better than normal for working people anyway. Normal I hear is only 50% and ususally limited to around the first 5% you put in. But 401K no longer (in general) have percentage caps, only annual ones. I can contribute up to the point that there wouldn't be enough left to make my SS tax and insurance and minimum tax withheld, etc payments. If I tried to do more, they wouldn't take anything out till the % was lowered.

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The limits depend somewhat on income and plan ...
Feb 23, 2004 6:50AM PST

Some companies have multiple choices, and the rules can be really arcane. The choices available to most employees are sometimes different from those available to "highly compensated employees" (whatever that means).

My employer's 403(b) {essentially the same as a 401(k)} and 457 have a maximum dollar contribution per year (it was $12,000 each for those under 50 last year IIRC, and I think it's $13,000 this year), but the 401(a) has a per cent of income limit in addition to a total contribution limit. The per cent of income for "highly compensated employees" is capped at 5% for our plan. I think the cap would be higher if the non-"highly compensated employees" contributed more the the 401(a) but I'm not sure how that works.

I confess that I only partly understand all of this stuff. It seems like the rules change every time I ask. Also, some of the limits were part of the Bush tax plan and may phase out if the plan does not get extended.

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Granted companies and their plans add restrictions
Feb 23, 2004 7:04AM PST

I was thinking of what according to what I've read (and our plan) that the law now allows plans to not have paycheck % caps and only have the yearly maximum.

The last job I had started a 401K before I left and besides restricting us to 10%, it wouldn't include money made on OT, holiday pay, vacation pay, etc. Only the first 40 hours at regular pay counted as eligible. That was in '95.

Currently I'm allowed basically unrestrictive amount per week (well, after SS, insurance, etc taken out) until I hit the yearly cap. You don't want to hit that till the last week if possible because the company matches 50cent on the dollar for the first 5% you put into the plan. If you max out early, you lose out on some company contributions.

There were rules about highly compensated when I started here, and restricted amounts for them, but I haven't heard of them since they did away with the weekly % caps. I don't know if they still exist for us or not. If they do, they're set very high considering what our 40 hour per week base pay for a year would be.

I've maxed out several years in the last week with careful adjustments, but fell a bit short a few times recently and probably will this year. The higher limits are nice, but even for me, single, no dependants, it's quite a chunk of change to put $12000 to $16000 aside. For someone one making only a bit less than me, $10000 a year could be a true struggle to set aside. So the higher limits don't help as much then.

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Re: Teachers don't have to pay SS? news to me, is this just college level
Feb 23, 2004 12:39PM PST

Hi, Roger.

There are annual contribution limits (I think about $15,000 of one's salary), but I don't make enough to come close to that being an issue!

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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I hadn't heard of it either, but I found a bit of information ....
Feb 23, 2004 3:01AM PST

Check out RETIRED TEACHERS AND SOCIAL SECURITY. According to that article individual states have (more likely, had) a choice regarding inclusion of teachers and some other public employees in social security if the state already has/had a separate retirement program. I presume this means K-12 teachers. Texas and 13 other states opted out of Social Security for their teachers.

There are a few other groups that are excluded from Social Security, but not many. Certain members of religious orders are or can be excluded, et cetera.

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Re: I hadn't heard of it either, but I found a bit of information ....
Feb 23, 2004 9:48PM PST

Hi, Dr. Bill.

Galveston County (Texas) employees also have their own system. It does much better than SS for retirement, but the medical care insurance part is now in deep trouble. I'm not sure how they came to have their own system, though.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re: Hey DK, 'you no playa da game, you no maka da rules'
Feb 20, 2004 11:55AM PST

Hi, Bo.

Did I say I was against privatization? I said I was against privatization unless the "little people" are given a fair shake -- something the Republicans are apparently unwilling to do, because it'll reduce the resulting windfall profits to the investment industry. Who, btw, are now #3 in contributions to the Republican Party after energy and pharmaceutical companies -- I'm sure pure coincidence, relative to the Bush policies favoriing all three industries to the detriment of the environment and the average citizen.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Allowing everyone to save ...
Feb 20, 2004 10:39PM PST

... for their own retirements is for the little people and the big people. I would bet that a lot of those little people would feel differently after only a few years of banking that 6% instead of giving it to the government for safe keeping. You would be surprised how quickly that nest egg grows. Those who don't trust themselves can still count on the politicians to manage their money for them. For all the paying in I have no guarantee that when I reach 65 the age won't have been raised to 70 (which is what all the realists on both sides of the aisle admit to), and no guarantee that my benefit might be reduced or taxed to the same effect. And I am robbed of the opportunity to leave that portion of wealth I generated to my heirs.

Social Security is a boondoggle that sucks money out of the private sector and with that money gives government control over people's lives in very fundamental ways. All of your arguments go to Social Security as a mechanism for income redistribution and welfare.

Unfortunately saving and investment have become dirty words for the left. Nobody talked about the "poor" actually saving that tax rebate for a rainy day, it was all about giving "rebates" to the poor because they will go out and spend it. Capital gains are supposedly only for the rich, when with the trading opportunities available now, anyone can be in the stock market if they choose (remember the days when it was impossible to buy less than a 100 share block w/o the fees/commission being so high it would suck up profit?). But you oppose any tax policy that would encourage personal savings and investment on the basis that only the "big guys" benefit.

I would bet that if SS, unemployment insurance, and that portion of income taxes we pay for "benefits" were instead deposited into a "personal life savings" account for each American, VERY quickly this notion of government as protector would disappear. Because most people would rather have control and ownership over the fruits of their labor and the true security of knowing that money is there should they fall on hard times, need medical care or support themselves in their retirement years.

Evie Happy

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Re: Allowing everyone to save ...
Feb 21, 2004 11:50AM PST

Hi, Evie.

C'mon, please read what I and other liberals write, here and elsewhere. This is NOT about "saving and investment" being a dirty word. I do a lot of both, I assure you. This is about trying to insure that those who are naive in saving and investing are really given an opportunity to do that, and not fleeced by fly-by-night operators, or even taken advantage of by "legitimate" investment firms that charge fees that are well above average. Worse, even reputable brokerage houses have problems with problems of "churning" (rapid trading that gradually loses account assets due to the trading) -- only the most egregious examples are usually rectified.

The hands of some of the conservative darlings are not at all clean in this area. The local news-only station, KTRH, is owned by Clear Channel, a large soft-money contributor to the Republican Party and Bush-Cheney. They routinely run very seductive ads for "subordinated debentures" paying over 10% interest. While the ads do say that the principle is not insured, they also claim that the investment is "almost like money in the bank," or very similar wording. Anyone with any financial acumen understands that at a time when a 10-year government bond is paying a bit over 4%, an investment paying over 10% must be (and is) very risky indeed. But your average McDonald's worker is very unlikely to understand that...

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Not so Dave...
Feb 22, 2004 12:17AM PST
This is about trying to insure that those who are naive in saving and investing are really given an opportunity to do that, and not fleeced by fly-by-night operators, or even taken advantage of by "legitimate" investment firms that charge fees that are well above average.

This is simply about LOOSING CONTROL over wage earners because once control is lost so is dependancy.

It is another fine example of why the ghettos are kept full and on welfare and voting the Democritic ticket.

To be perfectly blunt, you are saying quite plainly that the average less affluent citizen is too STUPID to be allowed to manage their own money so your friendly big government must do it for them. Lack of money equates to stupidity in your stated opinion (which is also the opinion of the Democritic Party).
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Re: Not so Dave... Ed, you're unbelievable.
Feb 22, 2004 10:02PM PST

You claim that I claim to be expert on too many things. One thing YOU are NOT an expert on is my thought processes and motivations. I'll thank you NOT to say "what this is simply about," because you're totally off-base. When I state what I think and believe, that is in fact what I think and believe, and I'm tired of your claiming to know what's in my mind better than I do!

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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So you now disagree with what you yourself previously stated?
Feb 23, 2004 11:11PM PST
I'll thank you NOT to say "what this is simply about," because you're totally off-base. When I state what I think and believe, that is in fact what I think and believe, and I'm tired of your claiming to know what's in my mind better than I do!


Because all I stated was what you already had--that you think (and have so stated) that the unwashed and uneducated masses are too ignorant to be allowed to manage their own finances.

I am not imagining this as it is what YOU STATED right here in this thread. No one had to be a mind reader when they can read the words you typed.

The following are ALL YOUR WORDS and they indicate EXACTLY what I stated--that this is about losing control of the lower income people. How ya gonna keep um down in the ghetto after they can invest their own monies?

This is about trying to insure that those who are naive in saving and investing are really given an opportunity to do that, and not fleeced by fly-by-night operators, or even taken advantage of by "legitimate" investment firms that charge fees that are well above average.

But your average McDonald's worker is very unlikely to understand that...

Many of those in lower-paying jobs are in those positions because they lack the education and/or intelligence to do better for themselves.

The only way I'd approve of such accounts is if there's some approval process (such as the State of Texas runs for the Optional Retirement Program to which I belong) whereby the size of the investment pool is used to negotiate lower than average fees, and there's an approved list to keep the naive from being fleeced by fly-by-night operators.
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Re:Re: Allowing everyone to save ...
Feb 22, 2004 6:00AM PST

Hi Dave,

I have read what you've written, and it boils down to the average Joe Schmoe American is too stupid to save his own money and you think the government should do it for them. Tell me, why DID you educate yourself on investing? I'm thinking because you had some money to invest and wanted to get the most for it. Don't you think that others might be similarly motivated? Dave it doesn't take a rocket scientist to put the money into a variety of funds and/or bonds, CD's or moneymarket savings accounts. Your argument about the cost of this investment is also specious. It costs me or the homeless guy the same amount to purchase a EE bond. And you would be surprised how quickly things add up. In less time than you think, those poor people will be rich with real wealth sitting in an account with their name on it. But then government loses its control which as Ed so rightly points out is the problem.

They keep dragging this one Enron guy in front of the cameras who lost everything when Enron went under. Well I'm sorry but I have NO sympathy for that idiot! Anyone who ignores the constant message of diversification from every angle does so at their own peril. As a stop-gap -- maybe permanently -- the government could certify certain funds as "government approved" investments. Then those who trust the government with such decisions can choose those ... how about that?

Evie Happy

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Re: Allowing everyone to save ...
Feb 22, 2004 10:23PM PST

Hi, Evie.

Unfortunately, our educational system generally makes no effort to teach students about the proper handling of money or investments. Many of those in lower-paying jobs are in those positions because they lack the education and/or intelligence to do better for themselves. What makes you think those folks have the ability to make informed investment decisions for themselves? In an ideal world, everyone could -- but life isn't fair, and
not everyone has the knowledge, ability, or inclination to handle their own investments.

>>Your argument about the cost of this investment is also specious.<<
You show your ignorance. Most brokerages have a graduated scale of commissions, based on total assets with the company. Quick and Reilly, for example, charges $29.95 per trade for those with under 100k in assets, $24.95 for 100k-250k, $19.95 for those with 250k to $1 million, etc. Some mutual funds have "Loads," some don't. (The "load" is money that isn't actually invested for the investor, but is instead in effect a commission for the fund). Those that do again have a variable load schedule based on size of account -- the larger, the lower. My proposal -- only truly no-load funds should be allowed as privatized SS accounts. No such language in the Republican plan. The fund gets an nnual management fee that's a %age of net assets, so the "no-load" company is still making money, just not taking as much from the investor. Of course, the fund industry association spends a lot of money trying to claim that load funds are worth the extra money, but in all but a few very specialized instances, Morningstar data show that's simply not true.

>>Anyone who ignores the constant message of diversification from every angle does so at their own peril. <<
Three points. First, until fairly recently (when the practice was banned) many companies forced folks to have primarily company stock in their 401ks, and inertia is a powerful force, especially when things seem to be going well. Even today, the company "match" for K's 401k is in the form of company stock, which she can then exchange into a diversified investment. (In her case, there's no exchange fee; with some 401ks, there is) Secondly, there's a powerful incentive in the tax code to keep a major part of assets in company stock -- the setup should be changed, but there's no move to do so. Assets in a 401k are taxed as ordinary income at distribiution, even though much of their value may represent capital gains. The one exception is company stock -- if you keep careful records and take your 401k as a lump sum in company stock at retirement, you can pay the ordinary tax rate on the ORIGINAL COST of the shares in the year you retire, and then pay the much lower capital gains tax rate on sale of the shares. So even savvy investors are being tempted NOT to diversify by that ridiculous tax policy. ALL assets in 401k plans should receive that tax treatment, not just the company stock. And finally, the company leaders were all lying through their teeth to the employees about how marvelously their company was doing and what a great investment the shares were, while quietly dumping their own. That's why the whole bunch of them (including Ken Lay) should be in jail for a good long time -- they're just as much thieves as if they'd held up the employees and investors
at gunpoint.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!