When an Administration starts picking winners in a democracy, it usually picks losers. There are many reasons however a winner doesn't want to be tied up with government red tape and bureaucracy that comes with the money, however, losers will jump at the chance to feed at the public trough. So it is with the so called "green" initiative that the Obama Administration has been promoting with our money.
To date there have been three very public failures, namely Solyndra ($535 million), Ener1 ($118 million) and Beacon Power ($43 million.) Now if my math is correct, that is nearly three-quarters of a trillion dollars that just disappeared from your and my pockets!
The President would tell you that new technologies are risky and that failure is the part of the future benefits of green. While we agree with that statement, it is not the business of government to decide which solutions are winners and losers. At least that has always been the case in the US where it is the market that decides who is the winner.
100 years ago, government did not give Henry Ford the money to start his assembly line or fund Edison's research in light bulbs or phonographs. In more recent history, Bill Gates outsmarted other entrepreneurs to create Microsoft and Steve Jobs created products that the world can no longer get along without. This is the way it should be done. The same should be for companies trying to create green products.
The President is taking the wrong tact and we can see it by the lack of success his funded companies are having. In the upcoming bankruptcy trials and any Congressional hearings, we feel confident in predicting that malfeasance, theft, and lack of controls over the entire development process will be found in each and every one of these companies. The reason--it was not THEIR money. It was given to them by the government so they did not shepherd it, care for it, safeguard it or treat it as the valuable asset it was. In other words, they did not have any skin in the game.
When an entrepreneur puts his or her money into a venture, they carefully evaluate all expenses because they do not want to lose it. That is not the case when money is given to you.
We all have heard of stories of lottery or the famous Publishers Clearing House who get instant wealth and before long the money is gone and they go bankrupt. It is part of human nature to think that the money will never run out. Unfortunately, it does. The same goes for government funding of businesses. It is meant to fail.
Additionally, when government gives money it comes with strings and the bureaucrats that no entrepreneur would want to deal with. So, we have poorly prepared individuals who see the opportunity to get into the public trough through their connections. No wonder these ideas fail.
If an enterprise has the "right stuff", it will find venture capitalists to fund their company. This is no place for the government as they are not in that business and do not have the expertise to evaluate a venture. Failure is written all over these ideas.
That is my opinion, what is yours?
Conservative Tom
House Republican Says ‘Three Is A Trend’ in Another Stimulus-Funded Green Company Bankruptcy
(CNSNews.com) – The third federally subsidized green energy company to declare bankruptcy seems to indicate a pattern, said Rep. Cliff Stearns, chairman of the House Energy and Commerce subcommittee on oversight and investigations.
“One bankruptcy may be a fluke, two could be coincidence, but three is a trend,” Stearns said in a written statement. “Our investigation continues, and we are working to ensure taxpayers never are never again stuck paying hundreds of millions of dollars because of the administration’s risky bets.”
Joe Biden visits Ener1 plant in 2011. (AP Photo)
The Obama administration has already been under fire for a $535 million stimulus-funded loan it made to California-based solar panel company Solyndra, which filed for Chapter 11 bankruptcy protection last fall before being raided by the FBI. The House Energy and Commerce Committee has been investigating the Solyndra loan.Also late last fall, the Massachusetts-based Beacon Power, green energy storage plant that got $43 million in stimulus funds, filed for Chapter 11 bankruptcy protection.
Ener1 announced the Chapter 11 filing one year to the day that Vice President Joe Biden visited a Greenville, Ind. plant on Jan. 26, 2011.
“President Obama was prophetic this week during his State of the Union address when he casually remarked, ‘Some technologies don’t pan out; some companies fail,’” Stearns said.
In his 2011 State of the Union address, Obama pledged to put 1 million electric vehicles on the road by 2015. The next day, Biden visited an Ener1 plant in Greenville, Ind., where he said, “Well, ladies and gentlemen, here at Ener1, we’re going to harness electricity and bring it to the world like Edison did more than a century ago,” said Biden. “We're going to reshape the way Americans drive, the way Americans consume, the way Americans power their lives.”
Ener1 makes at least the third company that received money from the Recovery Act to file for bankruptcy protection.
“Unfortunately, you can now add Ener1 to the growing list of failed companies that went belly up after hundreds of millions of dollars in administration backing,” Stearns continued. “Sadly, the Department of Energy’s jobs record seems to grow worse by the day -- first Solyndra, then Beacon Power, and now Ener1 -- and it is American taxpayers who are paying the price.”
CNSNews.com first reported Thursday that the bankruptcy announcement came a year after the Biden visit.
Ener1 spokesman Guy Westermeyer told CNSNews.com the Chapter 11 filing would not effect the federal grant. He said the grant specifically went to Ener1 subsidiary EnderDel.
"EnerDel plans to continue working with the DOE to complete the project for which it received funding through the ARRA grant it was awarded in August, 2009," Westermeyer told CNSNews.com in a written statement. He added, "EnerDel proactively applied for a grant from the 2009 American Reinvestment and Recovery Act (ARRA) to help create a lithium-ion battery market industry in the U.S, where one did not previously exist."
Fact-checking….
ReplyDeleteAbout $100 billion was loaned to emerging technology companies. So, instead of evaluating the whole project as negative because three of them failed, why not look at all of them?
Here is the scorecard…
http://www.usatoday.com/money/markets/story/2011-11-20/stimulus-stocks/51323470/1
The conclusion…
"It will take years before the full impact of stimulus-funded companies is apparent, while Solyndra-like mistakes typically reveal themselves quickly, he said.
"If it succeeds, it will succeed because a handful of companies produced extraordinary results," said Sandell. "The lemons always show up first. That's the story of the venture capital business."
To me, this is like investing in a sector of the stock market. You diversify, because you know that some will fail, many will plod along, and a few will turn out like Amazon.com or Apple Computer. But it will take years to know which of these IPO's launched with help from stimulus money will become Fortune 500 companies. That will cover the losses from these three failures many times over. It is mostly a matter of perspective, as this guy says.
---David
Hey Tom, check your math...
ReplyDelete"To date there have been three very public failures, namely Solyndra ($535 million), Ener1 ($118 million) and Beacon Power ($43 million.) Now if my math is correct, that is nearly three-quarters of a trillion dollars that just disappeared from your and my pockets!"
That is about $700 million, not $700 billion. The total investment in tech was about $100 billion. So that means these three companies represent only 0.7% (1/7 of 1%) of the total investment.
Sorry, but I'm just trying to keep it real on this blog.
---David