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Dear AIG - I quit.; going after bonuses a mistake
Topic Started: Mar 25 2009, 04:22 AM (1,253 Views)
Mikhailoh
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If you want trouble, find yourself a redhead
Op-Ed Contributor
Dear A.I.G., I Quit!
Peter Ahlberg

March 24, 2009

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.

I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.

I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.

That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”

That may also be why you authorized the balance of the payments on March 13.

At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.

You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.

Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”

Sincerely,

Jake DeSantis

http://www.nytimes.com/2009/03....html?pagewanted=all

Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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apple
one of the angels
"I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it. "

huh.. how did AIG answer the country's call?


poor guy.
it behooves me to behold
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Luke's Dad
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Emperor Pengin
Deutsche's HR Department has a busy month ahead of them, what with all the new hire paperwork they are processing right now.
The problem with having an open mind is that people keep trying to put things in it.
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Mikhailoh
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If you want trouble, find yourself a redhead
Apple, AIG's new head was asked and agreed to come in late last year for $1 a year to straighten the mess out. And he is trying to. Now the same government has thrown him under the bus for populism.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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apple
one of the angels
i see.. i thought the statement referred to AIG.
it behooves me to behold
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Horace
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HOLY CARP!!!
Quote:
 
Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.


My goodness, a trace amount of intellectual honesty from this guy. I am impressed, I didn't know people who worked in that industry had it in them.

Of course, it's one small and obvious step from "overpaid" to "funneling money from everybody else's life savings into your own bank account", since that's where their compensation ultimately comes from.

But that bit of honesty is beyond even this whiner.

He entered into that industry for exactly one reason, the same reason everybody in that industry enters into it. To make as much money as possible.

It's a shame, he seems relatively bright. I bet he could have done something useful with his life.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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Mark
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HOLY CARP!!!
Atlas is Shrugging.

I love it.
___.___
(_]===*
o 0
When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells
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Horace
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HOLY CARP!!!
:lol2:

For bizarro world in which "atlas" performs no useful service for the rest of the world.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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QuirtEvans
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I Owe It All To John D'Oh
Horace
Mar 25 2009, 07:10 AM


He entered into that industry for exactly one reason, the same reason everybody in that industry enters into it. To make as much money as possible.

That's so not true. I entered it for the babes.

More seriously, the ridiculous money is undoubtedly the prime motivator, but it isn't the only one. The excitement, the adrenaline rush, the intellectual challenges, and the feeling of being a "master of the universe" also have an impact. Otherwise, there's no reason anyone would stay longer than five years at the top ... they have all the money they'll ever need.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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John D'Oh
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MAMIL
QuirtEvans
Mar 25 2009, 07:17 AM
the feeling of being a "master of the universe"
Don't any of these people know about video games?
What do you mean "we", have you got a mouse in your pocket?
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Mikhailoh
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If you want trouble, find yourself a redhead
And just what is wrong with making as much money as possible? Does that alone somehow mark someone as ignoble? I don't think so. What this guy's talking about is agreeing to stay on under a contractual agreement then getting screwed by having the government essentially cancel them due to public pressure. That's mob rule.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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1hp
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Fulla-Carp

Quote:
 
The excitement, the adrenaline rush, the intellectual challenges, and the feeling of being a "master of the universe" also have an impact.


Uhhh, if we were talking about nuclear physicists this might be appropriate. Otherwise, they were a bunch of Joes working for the man, and getting paid well for it. Considering that most of them seem to be intellectual challenged, they could get these same feelings skiing off the top of Park City onto a double black diamond.

Hmmm, thinking about it I think the ski run is a better choice.
There are 10 kinds of people in this world, those that understand binary and................
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Red Rice
HOLY CARP!!!
I understand the guy's anger at being thrown under the bus by the manufactured outrage of Congress and the White House.

But still:
Quote:
 
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes.

He's gotta realize how that looks to taxpayers who pumped $180 billion into his failing company. And it makes his sacrifice to work for $1/year seem rather hollow if he knew he was in line for a bonus like that.
Civilisation, I vaguely realized then - and subsequent observation has confirmed the view - could not progress that way. It must have a greater guiding principle to survive. To treat it as a carcase off which each man tears as much as he can for himself, is to stand convicted a brute, fit for nothing better than a jungle existence, which is a death-struggle, leading nowhither. I did not believe that was the human destiny, for Man individually was sane and reasonable, only collectively a fool.

I hope the gunner of that Hun two-seater shot him clean, bullet to heart, and that his plane, on fire, fell like a meteor through the sky he loved. Since he had to end, I hope he ended so. But, oh, the waste! The loss!

- Cecil Lewis
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Horace
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HOLY CARP!!!
QuirtEvans
Mar 25 2009, 07:17 AM
Horace
Mar 25 2009, 07:10 AM


He entered into that industry for exactly one reason, the same reason everybody in that industry enters into it. To make as much money as possible.

That's so not true. I entered it for the babes.

More seriously, the ridiculous money is undoubtedly the prime motivator, but it isn't the only one. The excitement, the adrenaline rush, the intellectual challenges, and the feeling of being a "master of the universe" also have an impact. Otherwise, there's no reason anyone would stay longer than five years at the top ... they have all the money they'll ever need.
Granted, but all of those things are side effects of the money. Well, maybe not the intellectual challenges.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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Luke's Dad
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Emperor Pengin
Red Rice
Mar 25 2009, 07:36 AM
I understand the guy's anger at being thrown under the bus by the manufactured outrage of Congress and the White House.

But still:
Quote:
 
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes.

He's gotta realize how that looks to taxpayers who pumped $180 billion into his failing company. And it makes his sacrifice to work for $1/year seem rather hollow if he knew he was in line for a bonus like that.
Yeah, I can't really disagree with you there.
The problem with having an open mind is that people keep trying to put things in it.
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Horace
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HOLY CARP!!!
Mikhailoh
Mar 25 2009, 07:27 AM
And just what is wrong with making as much money as possible? Does that alone somehow mark someone as ignoble?
How they go about making as much money as possible is the ignoble part. These people are smart enough to figure out whether they're overpaid and where that money ultimately comes from.

The path of least resistance for people with good heads but no desire to do something real to make a fortune is to enter the financial industry. It's why some ridiculous percentage of harvard grads go there. An industry with institutionalized compensation rates which are essentially theft from the rest of us.

Since there's a critical mass of clever people there who are motivated purely by money, and who don't care how they get it, we end up with CDSs and such, and the rest of us pay even more than we used to to keep them afloat.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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QuantumIvory
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Senior Carp
Mark
Mar 25 2009, 07:12 AM
Atlas is Shrugging.

I love it.
Apparently so do a lot of others....it's now at #21 on Amazon.
"I regard consciousness as fundamental. We cannot get behind consciousness." -Max Planck

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Copper
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Shortstop

The guy's in it for the money.

Good for him, that's the way it works. There is nothing wrong with that, nothing at all.

You certainly can't fault his love of money by citing the taxpayer’s love of their money.

If it’s OK for taxpayers to love money, then it’s OK for him to love money.

The Confederate soldier was peculiar in that he was ever ready to fight, but never ready to submit to the routine duty and discipline of the camp or the march. The soldiers were determined to be soldiers after their own notions, and do their duty, for the love of it, as they thought best. Carlton McCarthy
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Red Rice
HOLY CARP!!!
Copper
Mar 25 2009, 08:23 AM
If it’s OK for taxpayers to love money, then it’s OK for him to love money.

It's not okay for him to love my money.

It's the whole "privitization of profits, socialization of losses" thing that I object to.
Civilisation, I vaguely realized then - and subsequent observation has confirmed the view - could not progress that way. It must have a greater guiding principle to survive. To treat it as a carcase off which each man tears as much as he can for himself, is to stand convicted a brute, fit for nothing better than a jungle existence, which is a death-struggle, leading nowhither. I did not believe that was the human destiny, for Man individually was sane and reasonable, only collectively a fool.

I hope the gunner of that Hun two-seater shot him clean, bullet to heart, and that his plane, on fire, fell like a meteor through the sky he loved. Since he had to end, I hope he ended so. But, oh, the waste! The loss!

- Cecil Lewis
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Improviso
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HOLY CARP!!!
Red Rice
Mar 25 2009, 08:29 AM
It's the whole "privitization of profits, socialization of losses" thing that I object to.
Here, here...

I'm in that camp also.
Identifying narcissists isn't difficult. Just look for the person who is constantly fishing for compliments
and admiration while breaking down over even the slightest bit of criticism.

We have the freedom to choose our actions, but we do not get to choose our consequences.
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QuirtEvans
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I Owe It All To John D'Oh
Improviso
Mar 25 2009, 08:46 AM
Red Rice
Mar 25 2009, 08:29 AM
It's the whole "privitization of profits, socialization of losses" thing that I object to.
Here, here...

I'm in that camp also.
Me as well.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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Copper
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Shortstop
Red Rice
Mar 25 2009, 08:29 AM

It's the whole "privitization of profits, socialization of losses" thing that I object to.

I agree, there are a lot of knuckleheads in Washington.

Did Hurricane Katrina set the precedent for this?

The Confederate soldier was peculiar in that he was ever ready to fight, but never ready to submit to the routine duty and discipline of the camp or the march. The soldiers were determined to be soldiers after their own notions, and do their duty, for the love of it, as they thought best. Carlton McCarthy
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Piano*Dad
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Bull-Carp
Copper
Mar 25 2009, 08:23 AM


It's the whole "privitization of profits, socialization of losses" thing that I object to.
Paul Krugman is in the same camp, BTW. That is not a left-right political difference.
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Mikhailoh
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If you want trouble, find yourself a redhead
Horace
Mar 25 2009, 07:51 AM
Mikhailoh
Mar 25 2009, 07:27 AM
And just what is wrong with making as much money as possible? Does that alone somehow mark someone as ignoble?
How they go about making as much money as possible is the ignoble part. These people are smart enough to figure out whether they're overpaid and where that money ultimately comes from.

The path of least resistance for people with good heads but no desire to do something real to make a fortune is to enter the financial industry. It's why some ridiculous percentage of harvard grads go there. An industry with institutionalized compensation rates which are essentially theft from the rest of us.

Since there's a critical mass of clever people there who are motivated purely by money, and who don't care how they get it, we end up with CDSs and such, and the rest of us pay even more than we used to to keep them afloat.
You are painting financial industry workers with a very broad brush. Buying low and selling high and adding value is the bedrock of a capitalist economy. Who are you to say that the way the whole indsutry makes their money is bad? Do you not have any investments? If you do you are hoping to make money the same way. There are a whole lot of ethical, hard working financial guys andf gals out there. The majority, I would say.

I object to the government coming in and invalidating existing contracts for no other reason than they are unpopular. When Congress and a host of government agencies who is every bit the participant that the financial folks are in this crisis start giving up their salaries and excessive perks THEN they can BEGIN to talk about being outraged at those who are temporarily nursing at the public tit.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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QuirtEvans
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I Owe It All To John D'Oh
Mikhailoh
Mar 25 2009, 10:51 AM
Horace
Mar 25 2009, 07:51 AM
Mikhailoh
Mar 25 2009, 07:27 AM
And just what is wrong with making as much money as possible? Does that alone somehow mark someone as ignoble?
How they go about making as much money as possible is the ignoble part. These people are smart enough to figure out whether they're overpaid and where that money ultimately comes from.

The path of least resistance for people with good heads but no desire to do something real to make a fortune is to enter the financial industry. It's why some ridiculous percentage of harvard grads go there. An industry with institutionalized compensation rates which are essentially theft from the rest of us.

Since there's a critical mass of clever people there who are motivated purely by money, and who don't care how they get it, we end up with CDSs and such, and the rest of us pay even more than we used to to keep them afloat.
You are painting financial industry workers with a very broad brush. Buying low and selling high and adding value is the bedrock of a capitalist economy. Who are you to say that the way the whole indsutry makes their money is bad? Do you not have any investments? If you do you are hoping to make money the same way. There are a whole lot of ethical, hard working financial guys andf gals out there. The majority, I would say.

I object to the government coming in and invalidating existing contracts for no other reason than they are unpopular. When Congress and a host of government agencies who is every bit the participant that the financial folks are in this crisis start giving up their salaries and excessive perks THEN they can BEGIN to talk about being outraged at those who are temporarily nursing at the public tit.
I would object to them invalidating them, too.

The proposal isn't to invalidate them, it is to tax them.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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