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Solyndra: It Just Keeps Getting Worse

   Posted by: Pat    in Budget/Economy   Print Print

If these reports keep coming out, the thesaurus will have to add Solyndra to there synonyms for ‘debacle’, ‘embarrassment’, and ‘crony’. The Washington Post reports on the latest outrage; How the Obama administration told Solyndra executives to delay announcing their layoffs and bankruptcy until after the 2010 midterm elections:

The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released e-mails show.

Solyndra’s chief executive warned the Energy Department on Oct. 25, 2010, that he intended to announce worker layoffs Oct. 28. He said he was spurred by numerous calls from reporters and potential investors about rumors the firm was in financial trouble and was planning to lay off workers and close one of its two plants.

But in an Oct. 30, 2010, e-mail, advisers to Solyndra’s primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3. The midterm elections were held Nov. 2, and led to Republicans taking control of the U.S. House of Representatives.

“DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” a Solyndra investor adviser wrote Oct. 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd – oddly they didn’t give a reason for that date.”

Good, transparent governance this is not.

The WaPo article finishes by detailing yet again how the American tax payer was taken for a ride by the Obama administration’s Department of Energy and Solyndra investors:

On Nov. 3, 2010, Solyndra announced it would lay off 40 workers and 150 contractors and shut down its Fab 1 factory. The department agreed to continue giving Solyndra installments of its federal loan despite the company’s failure to meet key terms of the loan, and in February restructured its loan to give investors a chance to recover $75 million in new money they put into the company before taxpayers would be repaid.


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Just was reading this Washington Post story on the Solyndra debacle and found this gold in the beginning of the piece:

Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work.

Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.

Sooooo the US government had to hurry up and give money to a failing business. Sounds like good public policy to me! Here’s my guess of one of the possible internal Department of Energy discussions about whether the government should lend Solyndra millions of dollars:

Obama official #1: ‘We have to get this 500+ million dollar loan to Solyndra ASAP!’

Obama official #2: ‘Why?’

Obama official #1: ‘Because if we don’t it will go out of business very, very soon.’

Obama official #2: ‘If that is true than maybe we should take even more time to investigate the company. This might be a bad investment.’

Obama official #1: ‘Shut up! Loan approved.’

Ridiculous, I know, but probably not far from the truth. Maybe I’m also being too harsh calling these fake DOE characters ‘Obama officials’, after all it’s not like the President himself was an integral part in pushing and promoting this colossal boondoggle of tax payer dollars. Oh wait, he was:

President Obama visiting the Solyndra solar plant. The worker smiling beside him no longer has a job.

I’ll have more on this gross waste of American tax dollars soon.

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1. ‘Obama’s Approach Is Not How to ‘Live Within Our Means’ – Jeffrey Anderson, The Weekly Standard

This piece is a friendly reminder that President Obama’s recent talk of cutting spending and decreasing our nation’s debt is large departure from his policies and very recent past priorities. President Obamas’s budget for 2011 (rejected in the Senate 97-0 and the last time he actually put his plan down on paper for judgement) showed his true colors; Ever increasing government spending and deficits that grow and grow:

But even if our levels of taxation had stayed at that postwar high of 20.6 percent, that wouldn’t have come anywhere near covering Obama’s unprecedented appetite for spending. Obama’s budget calls for spending an average of 24 percent of GDP across ten years. Pre-Obama, the last time the federal government spent 24 percent of GDP was during World War II (see table 1.3).

Obama disingenuously suggests that if he had been faced with a surplus in 2000, he would have used it to help pay off the debt. Yet three straight $1 trillion-plus deficits haven’t lessoned his appetite for “investments” (particularly in Obamacare, fast trains, and “green energy”), nor his desire to borrow another $2.4 trillion for the next year and a half.

In addition, Obama once again falsely implied that he somehow has a plan to reduce deficit spending by $4 trillion. That’s a phantom $4 trillion from a phantom plan. The only real plan Obama has put forward is his budget, and deficit spending under his budget would be $1 billion a day higher than under the Paul Ryan-authored House budget. In all, Obama’s 10-year budget calls for raising our national debt to a staggering $27.6 trillion — from $14.5 trillion today and $9.986 trillion shortly after he was elected.

2. ‘China’s Military Flexes Its Muscle – Tom Vanden Brook and Calum MacLeod, USA Today

A medium-length article detailing some of the latest developments of the Chinese military and how the US military is reacting to them:

The United States has far more ships and warplanes worldwide, but in just two decades China has created the largest force of submarines and amphibious warfare ships in Asia. Its air force has added hundreds of fighter jets comparable to U.S. F-15s and F-16s. This year China’s military announced it had successfully tested a military fighter jet — the J-20 — that based on video appears to have radar-evading stealth characteristics.

China also announced it is about to launch its first aircraft carrier and is developing an anti-ship missile that can strike from 900 miles away, according to the Pentagon report.

3. ‘If a Law Doesn’t Work, Waive It Away?‘ – John E. Sununu, The Boston Globe

Former Senator John Sununu lucidly explains how the Obamacare waiver campaign showcases the Health Care Reform law’s haphazard and reckless nature. It may not seem like much to ask, but I would like our democratically elected leaders to know what is in a law before they pass it and force us citizens to live under its yoke:

HHS began shutting down the waiver program – an action it announced on a Friday afternoon, the customary way to bury bad news in Washington. Companies now face a September deadline to apply for protection. After that, they’re out of luck. According to the administration, without the special treatment, health care premiums for 3 million workers would have gone up by 10 percent or more. A note to social engineers of all parties: If you have to protect 3 million people from a brand-new law, it probably wasn’t very well written in the first place.

That this was an unintended consequence is clear from the fact that the law never contemplated a need for waivers in the first place. In a stroke of bureaucratic magic, HHS simply granted itself the power, and started dispensing the passes. Only when independent groups started pressing for transparency did things begin to shut down.

The broader lesson here is that the constant need for special waivers is symptomatic of poorly written public policy. It’s a signal that the cost of compliance is unreasonably high; the benefits are hard to measure; and either legislators or regulators have failed to do their homework.

4. ‘The Independent Payment Advisory Board Could Be Obama’s Achilles’ Heel – Doug Scheon, Huffington Post

Speaking of Obamacare failures and unintended consequences, even the Huffington Post has come out against the Independent Payment Advisory Board (IPAB), which empowers unelected bureaucrats to determine medicare coverage:

For conservatives, Independents and a growing number of Democrats, the Independent Payment Advisory Board (IPAB) that was created with the passage of last year’s health care law represents the worst of health care reform. IPAB would allow an unelected board to singularly enact spending cuts in the Medicare program through binding recommendations to reduce Medicare spending.

Last weekend, Reps. Tim Bishop of New York and Eddie Bernice Johnson of Texas were the latest Democrats to join the increasing bipartisan effort that opposes IPAB as they signed on as co-sponsors of Rep. Phil Roe’s bill to repeal it. Quite simply, IPAB has so many opponents because it embodies centralized planning from Washington, D.C., and enables unelected bureaucrats to make decisions about people’s health care. The contrast couldn’t be more clear: a new government body (IPAB) charged with taking resources away from the beloved Medicare program.

5. ‘Why Is the Left So Frustrated with Obama? – Jay Cost, The Weekly Standard

For many conservatives, it is difficult to understand that many liberals are unhappy with President Obama. Leave it to the always enlightening Jay Cost to explain why many liberals have good reasons to be upset with the man they held such hope for:

Between 1968 and 2004 liberals did not win a single presidential election. Republicans won seven of the ten elections held during this period, and Southern, moderate Democrats won the other three. Worse for liberals, both Jimmy Carter and Bill Clinton regularly governed without much regard for the liberal flank of their own party – as can be seen in Carter’s opposition to a universal health care bill sponsored by Ted Kennedy, and Bill Clinton agreeing to NAFTA, a balanced budget, and welfare reform…

Then along comes Barack Obama, an extremely appealing candidate for liberals. For starters, his background as a state senator in Hyde Park indicated pretty clearly that he was on the left-hand side of his party. Yet at the same time Obama proved himself extremely adept at avoiding the kind of entanglements that undermined candidates like Dukakis and Kerry. There was no Willie Horton furlough flap. No Kerry moment – “I voted for it before I voted against it.”  And, unlike Al Gore, Obama could articulate traditional Democratic themes without sounding like an over-rehearsed imitation of William Jennings Bryan.

Thoughts? Questions? Recommendations?

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“Fight of the Century” – Keynes v. Hayek

   Posted by: FMFP    in Budget/Economy   Print Print

George Mason economist Russ Roberts has teamed up with video producer John Papola again for Part 2 of Keynes v. Hayek titled “Fight of the Century.” The first web video, “Fear the Boom and Bust,” was a major success, drawing lots of attention to the contrasts between the two economists’ theories. In short, the two Leviathans in the econ world represent the competing visions for how much government intervention is optimal for people’s well-being and the nation’s long term growth. John Maynard Keynes takes the position that government needs to spend and regulate more to address a shortage in the country’s labor and consumer spending habits. Conversely, Frederick Hayek wrote about the perils of a command and control economy where the government sets prices, redistributes wealth and determines the supply levels. He envisioned a laissez-faire economy where the masses made their own decisions as to what they needed and when, rather than a few people far away trying to predict and plan for the tastes, needs and abilities of the many. Check out the debate here:

The second video, released today, places the economists in the ring to duke it out. Testifying before a committee on the success of their theories, the 2009 Obama stimulus is used as the representative for Keynes’ economic theory. Keynes obviously defends the stimulus as a proof positive that Keynesianism works – the main data point being the fact that the Great Recession ended in the summer of 2009. While this might be true technically, Hayek argues, the country is up to its knees in debt two years later due to all the government spending and the unemployment rate is still just as high (hovering around 9%). A well-written back and forth explaining each economists’ position, it’s worth your time to watch this educational and very entertaining second round of Keynes v. Hayek, “Fight of the Century:”

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For those not shaken enough by the Greek financial crisis (and this is more than possible as the Greek’s spending behavior seemed so abnormally destructive and self deluding, in other words ‘that’s the Greeks, not us’) the collapse of the Irish debt situation should get your attention. More importantly, it should awaken those tasked with running the United States government. The Wall Street Journal breaks down the steps Ireland will need to take to get their house in order (emphasis mine):

The measures are draconian. The government plans to shed nearly 25,000 public-sector jobs, slash welfare spending and reduce the minimum wage. A new property tax will be introduced, water charges imposed, and the tax base expanded to bring in lower-income earners. It all adds up to €10 billion in cuts and €5 billion in taxes over the next four years.

Ministers argue that such radical measures are needed to tame Ireland’s gargantuan budget deficit, which this year stands at 32% of GDP—the largest in Europe—and to reasssure investors who have stampeded out of Irish government debt. Yields of Ireland’s 10-year bonds reached a record Friday of nearly seven percentage points above benchmark German bunds.

Yikes. Though the US debt level is no where near Ireland’s astounding 32% level, it is solidly moving in the wrong direction. Ireland is now forced to live the worst of both worlds for a modernized economic state: higher taxes and less government services.

Economist Robert Samuelson describes the Irish bailout’s fallout for the rest of Europe:

The proposed rescue of Ireland, as with Greece before, represents a gamble that Europe can arrest growing doubts and win the patience of bond holders and voters: the investors not to continue dumping bonds (of Ireland and other countries) in panic, which raises interest rates and could precipitate a self-fulfilling financial collapse; and the ordinary citizens to tolerate austerity (higher unemployment, lower social benefits, heavier taxes) without resorting to paralyzing street protests or ineffectual parliamentary coalitions. Whether the gamble will succeed is unclear, as are the potentially chaotic consequences if it doesn’t.

With Portugal on the docket, and much more critically Spain (whose economy is bigger than Ireland, Portugal, and Greece’s economies combined), the EU is undoubtedly facing a financial crisis. When will the German voters bankrolling these bailouts say ‘enough’s enough’? Will the protests in Britain and France over government decisions to either cut back on education spending or raise the retirement age start to paralyze their respective state’s ability to address their growing debt issues?

These crises in Europe may not only foreshadow a future one in the United States, but according to Dr. Robert Shapiro, who served as Under Secretary of Commerce for Economic Affairs in President Clinton’s administration, they may negatively impact our economy drastically right now. Shapiro argues that “a default in Spain would endanger French and German banks and that would have serious consequences for U.S. financial institutions because they all have counterparty risk. Just as Lehman Brothers spread to Europe, a European banking crisis would spread to the United States.”

Many Western states have been living a life of getting their cake and eating it too. ‘I want low taxes and lots and lots of entitlement goodies.’ This combined with a willingness to pay for this all by letting others buy your bonds is unsustainable. In many ways, I view the rioting teenagers and college students in Britain and France as rather pathetic. The situation they’ve been handed is almost entirely not their fault, but now their just worried about getting to eat their cake. Want another metaphor? These youth are seemingly willing to throw good money after bad. Well, the way these governments have spent, more like bad money after bad.

For a worthwhile debate on the present and future role of American government and spending, I highly recommend this debate between Congressman Paul Ryan and New York Times columnist David Brooks.

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