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The Biz Roundup April 1

GM announces it will no longer require bailout money

(From today’s New York Times) GM announced today that it would not be needing any additional government loans, saying that it has “found” $20 billion. GM had earlier this week asked Congress for $17.1 billion to help it continue operations until August. . . .

At a surprise press conference, new GM Chief Executive Frederick “Fritz” Henderson outlined where the over $20 billion had been found. “We looked under sofa cushions, checked under the vending machines, desk drawers, payphones, stuff like that. We found $26.31 in [former CEO] Rick Waggoner’s couch alone. That was especially awesome, because we really need the twenty bucks!”

“Recycling was another big thing. We had soda cans, Odwalla bottles — each one is worth a nickel, and that may not sound like much, but they were just piling up in the recycling bins where they weren’t doing the stockholders any good. We also sold a lot of stuff on eBay, like ball point pens, autographed baseballs, laptops, a whole bunch of stuff we weren’t using. We even found a Monet that had dropped behind Ray’s (Chief Financial Officer Ray G. Young) couch. It must have been there a long time, because Ray didn’t even remember it being on the wall. . . .”

Henderson credited former GM CEO, Rick Waggoner, with the vision and leadership to put the program into place in December. “After he received the March deadline from Congress, Rick knew he had to do something revolutionary to turn the company around, so in record time he planned and implemented this program to find change lying around . . .

While the $20 billion allows GM to avoid any further government loans at this time, financial analysts are quick to warn that this is a one-time revenue event. “Finding quarters on the floor is not a viable long-term business model,” said William Troy, auto industries analyst at Bear Stearns. “GM still has to do the hard work of restructuring their business.”

Alan Greenspan died in 1998

(From the Associated Press) The Treasury Department has confirmed that Alan Greenspan, the former Chairman of the Federal Reserve Bank, passed away from a massive coronary on December 3, 1998, but that the information was withheld from the public for fear of worsening the Mexican and Asian financial crises. Although rumors of Greenspan’s decade-old demise have circulated in the last week, the surprise announcement has provoked criticism of both the Clinton and Bush administrations. Many are questioning whether allowing the nation’s central bank to be effectively leaderless for eight years may have contributed to the current financial crisis . . .

“. . . we were in the middle of a meltdown in Asia and Mexico that threatened worldwide economic collapse. The death of Chairman Greenspan would have sent fatal shocks through the financial world,” explained former Clinton chief of staff, John Podesta, in an interview on Fox News. “Getting through the first set of Congressional hearings with, well, with him was hairy, but we soon figured out that it didn’t take much to make it convincing.”

“We couldn’t really tell,” said Chris Dodd (D-Conn), current chairman of the Senate Banking Committee, who has questioned Greenspan numerous times in committee hearings during the last eight years of Greenspan’s chairmanship. “In hindsight, there were several red flags, like his lips never moving. We could never hear him. He also never made any sense, but we always thought that was because he was so much smarter than we were.” . . .

“While the origins of our current recession are complex,” Nobel prize-winning economist Paul Krugman said, “it probably didn’t help that the chairman of our nation’s central bank was dead for almost a decade leading up to the crisis. It certainly changes the way we look at many of the decisions he made . . .

Critics, however, are wondering why the ruse was continued after the financial crisis of 1998 passed. Many critics fault the Bush administration for continuing the cover-up until Greenspan’s “retirement” in 2006. Members of the Bush administration contacted for this article refused to be interviewed, but one official wishing to remain anonymous defended the action. “Listen, there’s no evidence that if Greenspan had actually been alive that he would have done anything differently.”

House passes bill ending recession.

(From the Washington Times) In a rare bipartisan effort, the House today passed a bill officially ending the recession on Memorial Day. Citing the need to “get our country back to work,” both House Democrats and Republicans voted nearly unanimously on the Get Our Country Back To Work (GOCBW) Act. The bill still faces minor opposition in the Senate and possible revisions, but party leaders are confident that a final bill can be enacted and signed by the president by the end of April.

The bill orders all unemployed workers back to their jobs, mandates consumer and business lending at 2006 levels, and requires that all American adults return to pre-2007 consumption levels. Provisions include flooding mailboxes with credit card and second mortgage offers. “By the end of June, we expect that every American will receive five zero-interest credit card offers every day and at least nine mortgage offers. While that doesn’t come close to pre-2007 levels, we believe it’s enough to re-inflate the credit and housing bubbles,” said Speaker Nancy Pelosi (D-Calif). . . .

Most controversial, however, are the banking provisions. Declaring all troubled assets “now fixed” and the markets for those assets “in full working order,” the bill allows for the purchase by the government of exotic financial instruments, such as the collateralized debt obligations that started the financial crisis, at “full value.”

“If we say that we’ll buy performing assets at full value, then other people in the market will buy them at full value because they can always sell them to us,” a Treasury spokesman said. “That was our a-ha moment. It’s not like economics is rocket science.”

“What we need in this economy is more irresponsibility, of the kind that the past two presidents inspired,” said economist Tyler Williams of DeLong University. “While this bill has many imperfections, it’s basic premise is sound: everyone should start acting like there’s no problem and poof! it will go away.”

Have a happy first of April!

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