Iran Air Shot Sown, Civilians Killed, American Commander Given Medal
US National debt $2,602,377,712,041.
Interest on debt $214,145,028,847.
On July 3 the USS Vincennes was in Iranian territorial waters without permission of the Iranian government. Two surface to air missiles were fired which shot down Iran Air flight 655 killing 290 civilians and crew.
For their "heroism" the ship's crew was awarded combat action ribbons and Commander Lustig, the air warfare coordinator received the Navy's Commendation medal for his "heroic achievement" in "his ability to maintain his poise and confidence under fire".
An investigation by the US magazine Newsweek found that the Vincennes was pursuing Iranian gunboats and testing the Aegis computer systems (the most advanced fire control system in the world) for the very first time. An unfortunate chain of mistakes; led to the plane being missed from the ship's civilian flight schedules, warned on the wrong frequencies and misidentified as a fighter (a US sailor forgot to rest the device used to scan transponders).
To cover up this mistake the Us military began lying immediately, claiming flight 655 was flying outside the civilian corridor (it wasn't), that it didn't respond to warnings (true it couldn't the warnings were broadcast on a military frequency), that the Vincennes was protecting a ship under fire from Libyans (it wasn't), that the Vincennes had been in international waters (it wasn't) and that flight 655 was descending (it wasn't).
The U.S. Comptroller of the Currency report stated that less than ten percent of Savings and Loan failures were strictly due to economics.
Drexel Burnham Lambert pleads guilty to six felony violations of security laws.
US National debt $2,857,430,960,187
Interest on debt $240,863,231,535.
On January 1, the Canada US Free Trade Agreement (CUSFTA or FTA) goes into effect.
The Lincoln Savings and Loan Association of Irvine, Calif., collapsed. Lincoln's chairman, Charles H. Keating Jr., was faulted for the thrift's failure. Keating, however, told the House Banking Committee that the FHLBB and its former chief Edwin J. Gray were pursuing a vendetta against him. Gray testified that several U.S. senators had approached him and requested that he ease off on the Lincoln investigation. It came out that these senators had been beneficiaries of $1.3 million (collective total) in campaign contributions from Keating. 
A Government Accounting Office issued a report that identified insider abuse and fraud at 64% of the S&Ls that failed in 1987.