This week, Bruce, Michael and Dale talk about Tesla, Ukraine, and the missing Malaysian airliner.
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You’d think, by now, governments would have figured out how poor they are at picking winners and losers.
Of course, they haven’t as witnessed by the witless California government continuing to push solar energy.
California’s Riverside County is producing more solar energy than anywhere in the U.S., with close to a dozen solar plants either online or proposed.
“On the face of it, it looks like a good deal. They talk about all these huge jobs and long-term benefits to the county. The truth is, it’s a very short term,” Riverside County Supervisor John Benoit said. “We’re going to be carrying the burden of having these types of facilities for decades to come, and because of the incentives that have been provided by federal and state government, there’s virtually nothing left for the county government or the local people to get benefit back after the small number of construction jobs are gone.”
Unlike Riverside’s 500 megawatt natural gas-fired facility, which pays $6 million a year in property taxes, a solar plant being built a few miles away will pay next to nothing, just $96,000. When Riverside balked at its own upfront infrastructure costs and tried to impose an impact fee, the industry sued.
So Riverside has hundreds of square miles carpeted with solar panels and no jobs to speak of and barely any revenue to show for it.
But surely, as promised, this has led to cheap, reliable and renewable energy, right?
Yeah, not so much:
Solar also promised to be a cheap source of power, fueled by the sun. What the industry didn’t say is the technology only converts a fraction of the sun’s energy, and the intermittent nature of sunshine does not produce the power promised.
And Stanford economist Frank Wolak, a California energy expert, said solar could boost consumer energy bills up to 50 percent, a finding similar to the state Public Utilities Commission. Solar power from two recently approved plants range from $100 to $200 per megawatt hour, at least 8 times higher than the $16 consumers pay for natural gas.
“It’s probably 50 percent more (than coal or natural gas) today,” Benoit said. “Five years ago, it was probably a 100 or 150 percent more costly to generate a kilowatt with solar. The cost of these panels has come down dramatically. But still, getting back to the old equation, do you want to spend a little bit more to be green? And the legislature and the governor in California have said clearly, we’re going to do that.”
But at what cost to consumers and to what benefit to much of anything except government’s chosen crony, er, beneficiary? Instead of allowing markets – i.e. consumers and producers – to decide on the mix, government has unilaterally taken that away from them and made the decision itself.
After all, the autocrat has decided:
Answering critics at a solar ribbon-cutting earlier this year, Gov. Jerry Brown laid down the gauntlet, affirming his commitment to solar energy and saying he would “crush” opponents of solar.
“There are going to be screw-ups. There are going to be bankruptcies. There’ll be indictments and there’ll be deaths. But we’re going to keep going – and nothing’s going to stop me,” Brown said.
I can believe that. Somebody needs to tell Brown the whole effort is a ‘screw-up’.
But since government is involved, the crony gets the treatment other industries don’t:
“There’s been a policy to fast-track and install these utility-scale renewable energy installations that are on the scale of five to 10,000 acres each,” said April Sall of the Wildlands Conservancy. “We’ve seen thousands of acres of the desert bladed and now undergoing utility-style construction to basically convert that from pristine habitat that included those sensitive plants and animals, to becoming potentially a dust bowl.”
Now imagine if these actions and plans were those of “Big Oil”. Yup, you don’t have to imagine long, do you? But in this case?
The two largest green groups in the U.S., the Sierra Club and Natural Resources Defense Council, have remained silent on the impact of Big Solar on land use and endangered species, which is not so with gas, oil or coal. Sall and other local environmental groups say the Washington-based organizations see climate change as a bigger threat and therefore won’t get involved.
Shoddy “science” is their excuse and they’re sticking with it.
And that’s your update on the imperial blue state model today. And yes, it’s going down the tubes which is why this cartoon applies to more than small business in the state:
But open the same amount of federal land to fossil fuel exploration and exploitation?
The Obama administration will open public lands in six Western states to more solar projects as part of a solar energy road map it publicized Tuesday.
The Interior Department set aside 285,000 acres in Arizona, California, Colorado, Nevada, New Mexico and Utah for the initiative. Firms can apply for waivers to develop projects on an additional 19 million acres.
Imagine 19 million acres covered in solar installations. That won’t have any environmental impact on eco-systems, will it?
And if it does, well, they’ll just “waiver” them, because, you know, this is a favored industry. Regulation? Yeah, most likely not at all as stringent as those applied to those old “dirty” fuels.
Which brings us to an ironic point. Remember in years past when we fought against the dumping of government subsidized products from other countries on our shores.
Guess what? We’re now the target for much the same argument:
China’s Commerce Ministry said Friday that it is investigating possible solar equipment subsidies by the U.S. and South Korea and their impact on Chinese manufacturers, widening a trade spat at a time of oversupply and weakening demand for solar power equipment.
The ministry has launched an anti-dumping and anti-subsidy probe into polysilicon imports from the U.S., as well as an anti-dumping probe into imports from South Korea, it said in separate statements on its website.
Yes I know, China is as hypocritical as they come, but, apparently, so are we.
It’s called crony capitalism (or as mentioned previously, venture socialism). Again government, using your money, is subsidizing an industry that can’t make it alone because in reality there’s no market demand for their product. By subsidizing them, government is socializing their losses. This administration has heavily subsidized the domestic solar industry (and even then we see industry business failures right and left) and is forcing a product on the market to satisfy a political agenda even when alternate and more viable (but unfavored) products are available much more cheaply.
The administration has since approved 17 major solar projects on public lands producing about 6,000 megawatts of power, Salazar said.
“We have made huge strides in the last three-and-a-half years, but we realize we are only at the beginning of this effort and that there’s a lot more to do,” Salazar said. “I have no doubt that the United States will lead the world in solar energy development.”
My guess is those 17 solar projects will end up on more acreage than has been approved by the administration for oil exploration.
“Huge strides”? Not in any market sense. What he’s talking about is the administration making “huge strides” in forcing a product into a market that is not in demand by that market, ignoring the environmental impact of such projects (even while being more restrictive on fossil fuel development) and generally playing the “central planning” game. Government knows better than you and the markets about what we need, or didn’t you know that?
Sort of reminds me of those new light bulbs they forced on us which are now being found to cause skin damage due to UV light leakage.
But hey, I’m just a prole, what do I know?
Oh, and here’s where you have to read between the lines. Note the spin involved in this sentence:
The areas selected in the plan minimize “resource conflict,” Salazar noted, meaning they avoid regions where solar development would edge out exploration for other natural resources.
What that also means is the administration has successfully exempted up to 19 million acres of federal land from fossil fuel exploration.
The plan released Tuesday would expedite solar project approval while cutting some up-front costs for developers, Steve Black, counsel to the Interior Department, said Tuesday.
Translation: The favored industry will get favored treatment all paid for by your dollars (or borrowed ones, most likely).
Environmental groups? Forget about it. You haven’t a chance on this one. You’’ll be steamrolled just like the rest of the country. Save your money and effort for something you can tie up and delay – anything to do with fossil fuels. You know, the life blood of our commerce?
Yeah, concentrate there. The administration will be glad to help.
And neither have anything in common with real capitalism. But they do have a tendency to privatize profits while socializing losses.
Examples abound, and unsurprisingly, most come in the “green” industries associated with long-time Democratic fund raisers and Obama supporters. For instance, one with which we’re all familiar:
The most publicized instance of so-called “crony capitalism”—investing taxpayer dollars in firms tied to political donors—is the failed solar panel company Solyndra. The Fremont, Calif., firm was the first to receive a taxpayer-backed loan guarantee from the Department of Energy (DOE) in September 2009, worth more than $530 million. The funding for the loan was allocated in the controversial stimulus package passed earlier that year.
Obama bundler George Kaiser was a major stakeholder in Solyndra through his Kaiser Family Foundation, and made several trips to the White House in March 2009 to meet with senior administration officials. In July 2009, Kaiser bragged about securing face time with “all the key players in the West Wing of the White House,” as well as his “almost unique advantage” when it came to steering taxpayer funds toward his pet causes.
“There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and in the next 18 months,” Kaiser told members of the Tulsa Rotary Club. “And our selfish parochial goal is to get as much as it for Tulsa and Oklahoma as we possibly can.”
Although things did not pan out for Solyndra—the company filed for bankruptcy in September 2011—Kaiser can expect to see a better return on his investment than American taxpayers. As part of an agreement to restructure Solyndra’s loan agreement in 2010, Obama’s DOE granted priority status to private investors like Kaiser with respect to the first $75 million recovered in the event of the firm’s bankruptcy, a move that many suspect violated federal law.
Taxpayers, meanwhile, are unlikely to recover much of the money invested on their behalf.
Sound familiar (*cough* GM *cough*). There the bankruptcy laws were tinkered with as well. And in the case of Solyndra, that isn’t the full extent of the cronyism:
Emails uncovered by Congressional investigators reveal that Solyndra helped secure its $535 million loan guarantee with the help of Steve Spinner, another prominent Obama donor. After bundling more than $500,000 for Obama in 2008, Spinner was named to the White House transition team and later served as “chief strategic operations officer” of the DOE loan program that funded Solyndra.
Here’s the other shoe:
Spinner’s wife Allison worked for a law firm that represented Solyndra and several other green energy outfits that applied for taxpayer funding. Records show that her firm, Wilson Sonsini Goodrich & Rosati, received $2.4 million in federal funds in legal fees associated with Solyndra’s loan application.
Ethical questions? Conflict of interest? Bah. And what in the world is the Federal government doing paying a law firm of an applicant for legal services in relation to their loan application?
Like I said, Solyndra is just one of many examples. It just happens to be the best known of the bunch. I would bet you never heard of this little bit of cronyism:
California investment guru John Doerr, for example, has personally contributed more than $170,000 to Democratic campaigns and committees since 2008, and more than $2 million over the past 20 years. His investment firm, Kleiner Perkins Caufield & Byers (KPCB), which lists former Vice President Al Gore as a partner, has given more than $1 million to Democrats since 2005.
An early and outspoken advocate for federal investment in “green” technology, Doerr was named to the president’s Economic Recovery Advisory Board in 2009, where he helped craft the $787 billion stimulus package. Of the 27 companies list in KPCB’s “green-tech” portfolio, 16 received some form of taxpayer support.
Another prominent Obama donor who has benefitted handsomely from the president’s policies is Steve Westly. A frequent guest at White House events and state dinners, Westley served as California co-chair and a National Finance Committee member of Obama’s 2008 campaign and currently sits on the DOE’s Energy Advisory Board.
He has bundled at least $700,000 in campaign donations for Obama since 2008 and personally given about $260,000 to Democratic campaigns and committees since 2007.
Westley’s investment firm, the Westly Group, had a financial stake in four green energy companies that received more than half a billion dollars in federal funding in 2009. The group’s website once touted the firm as being “uniquely positioned” to take advantage of the influx of taxpayer funding in green technology, and currently notes that “To win in the clean technology space, a company must navigate the halls of government.”
Westly has openly acknowledged that knowledge of federal policy is key to investing in green technology. In response to a reporter’s question about which green energy companies he likes to invest in, Westly said: “Who cares what I think. Let’s talk about ‘what does Obama like? Here’s what he likes,’ because here’s where the federal government is putting money. And let me tell you, whatever he likes, that’s what I like.”
Access and a relationship equal profit. Nice, if you’re an insider, huh?
Here’s something Obama “liked”:
One of the companies Obama “liked” was the Exelon Corporation, a Chicago-based utility and recipient of hundreds of millions of dollars in stimulus funding. One of the most politically connected firms in the country, Exelon employees have made up one of President Obama’s top sources of campaign contributions throughout his career.
Exelon was Obama’s fourth-largest campaign donor when he ran for Senate in 2004, contributing more than $73,000, according to the Center for Responsive Politics. The firm donated $326,000 to Obama’s presidential campaign in 2008. The firm has ties to several top Obama bundlers, as well as to Obama campaign adviser David Axelrod and former White House chief of staff and current Chicago mayor Rahm Emmanuel.
As the Washington Free Beacon reported in June, an Exelon subsidiary was recently awarded a lucrative 20-year contract to install solar panels manufactured by federal inmates on government facilities.
The “Chicago way”.
Finally, cronyism comes in many forms:
DreamWorks Animation CEO Jeffrey Katzenberg has bundled at least $500,000 for Obama’s reelection campaign, and is the largest contributor to Priorities USA, the Obama-allied Super PAC.
The Securities and Exchange Commission is currently investigating whether DreamWorks made illegal payments to Chinese officials in order to secure exclusive film rights in the communist nation. The New York Times reported that Katzenberg, as well as Vice President Joe Biden, were intimately involved in negotiating an agreement under which China would up its annual quota of foreign-produced films from 20 to 34 and allow studios to keep a greater percentage of box-office revenue.
DreamWorks announced a $2 billion deal with the Chinese government in February to build a production studio in Shanghai just days after Chinese Vice President Xi Jinping held an extensive meeting with Barack Obama in Washington, D.C.
Nice to have the leverage to engage the president and VP in your business pitch, no? Guess 500K bundles help make that happen.
So, wondering what happened to all the money? Still perplexed as to what the stimulus was spent on? Bruce Bartlett knows:
“As of March 31, $452.6 billion of net stimulus funds had been disbursed in ways that show up in the national income accounts. Of this, the vast bulk, $399.7 billion, went for transfer payments. Another $9.6 billion went for subsidies and $68.1 billion for capital transfers to state and local governments. Only $37.8 billion went for consumption and $11.8 billion for investment — the only two categories of outlays that we know add to growth.”
And in the “investment” category, most of that apparently went to cronies.
That’s no way to run a government – an honest government, that is.
E. J. Dionne, naturally, makes an effort today in the WaPo to do exactly that. Speaking of Obama and Democrats in Ohio and Colorado, he talks indirectly about the auto bailout:
None of this surprises Sen. Brown, a proud pro-union liberal who campaigned with Obama in Ohio last week. Brown notes that Obama has gained ground in his state both by being tough in enforcing trade rules on behalf of American companies and by pursuing a “high-end manufacturing strategy” that appeals to the nation’s “historical pride in manufacturing, and in making things.”
For Brown, who faces reelection this year, one of the voters he keeps in mind is the “guy in Zanesville who made big things with his hands and now has gone from $17 an hour to $11 an hour.”
The candidate who speaks to voters like Brown’s Zanesville worker — and to his white-collar equivalent in Colorado — is likely to win the election. Mitt Romney hopes the national unemployment rate will get them to vote Republican. Obama’s challenge is to offer an economics of national pride and renewal that answers the sense of betrayal these voters began feeling long before he took office.
That outlines some of the problem the Obama record has. Of course, unspoken here is the auto bailout and how that effected workers. The implication is the bailout was a net positive. Of course Obama, et al, think that workers will reward him for that move.
But the entire record of the auto bailout on the left has been one of spin. And most of that spin has been about as disingenuous as one can imagine. Even Dionne creeps around it by mentioning that the workers took a haircut in average salary (well, at least for new workers).
However, the assumption is that’s the worst that happened (hey, at least they still have a job) and workers will be grateful. Or, business as usual, a politician used taxpayer money and debt to buy votes, you have a problem with that?
Well yes, I do.
In fact, the auto bailout is a case study in crony capitalism. It is a situation where government interfered and overruled normal bankruptcy procedures, reorganized the payback priorities so debt holders were stiffed, bought up the majority of the stock in the new company (GM) and handed much of the control to a favored constituency (labor).
Then they told an absolute lie (GM has paid back its debt) and have consistently pretended that all is well with the company when it is not. This is the real result of the bailout:
General Motors (GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.
Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.
Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.
But that’s not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.
Include that $18 billion gift, and taxpayers’ true loss climbs to nearly $35 billion.
So that’s ground truth on where GM stands today. But that’s not helpful to Obama, is it? So how can Obama and company make this picture seem a little brighter? Well good old crony capitalism, that’s how. We have the end of the 2nd quarter nearing and it is critical to the spin of how well GM is doing to see good 2nd quarter results, no?
The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how "successful" GM is.
Well guess who is buying GM vehicles in huge quantities (HT: Steve)?
We now learn that government purchases of GM vehicles rose a whopping 79% in June.
The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year.
Wow. What a surprise. Add a few accounting gimmicks:
One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, "GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May." 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.
And you’re likely to see a “good” earnings report even when the stock is at an all time low, inventories are huge and crony capitalism instead of real sales is the means of spinning the news in a positive direction.
Remember that when you hear the GM “success story”.
Yes, just three. You’re right, I could probably make it 30 or 300. 3,000 even! But for brevity sake, three current examples where government has no business yet feels somehow justified in intruding or regulating in a manner that limits freedom.
First is an example of excessive regulation which in reality is an example of crony capitalism, where a regulation or mandatory licensing creates a state enforced bar to entry into an industry.
Louisiana has a plethora of such laws which regulate or license all sorts of things that few of the other states do. An example? The manufacture of caskets is illegal unless, well, you read it:
Brown, a soft-spoken man who is only the fifth leader of a monastery that dates to 1889, said he had not known that in Louisiana only licensed funeral directors are allowed to sell “funeral merchandise.”
That means that St. Joseph Abbey must either give up the casket-selling business or become a licensed funeral establishment, which would require a layout parlor for 30 people, a display area for the coffins, the employment of a licensed funeral director and an embalming room.
“Really,” Brown said. “It’s just a big box.”
Indeed it is. And buyers should have a choice as to whether to buy it or some other casket. They likely could pick up the Abbey’s “big box” for much less than it might cost to buy a similar casket in a "licensed funeral director’s” place given the required overhead that the regulatory mandate places on such entities.
In effect, the mandate acts as a high bar to entry. It is likely the existing funeral industry in LA helped write the law. That’s called “crony capitalism”. The Abbey simply provides the illustration of the result. If freedom equals choice, LA is in the choice limiting business with regulatory and licensing regime like this.
Some good news on that front:
The monks won round one in July, when U.S. District Judge Stanwood R. Duval Jr. ruled Louisiana’s restrictions unconstitutional, saying “the sole reason for these laws is the economic protection of the funeral industry.”
As you might imagine, the other side is not happy. So is it the state that is appealing? Well not the state, exactly:
The Louisiana State Board of Embalmers and Funeral Directors, which has argued that the law protects consumers, has appealed, and the circuit court in New Orleans will hear the case in early June.
That’s right … the protected want to continue to have their state protected industry … protected. Good lord, if consumers have real choice, well, they might not buy the crony capitalist’s overpriced “funeral merchandise”.
And, of course, that state isn’t the only one with choice limiters working to cut down on your freedom. Our next two examples come from the state of New York. I know, shocking.
Case one – Mayor Bloomberg of NYC has decided that you fat folks just shouldn’t have the right to decide (there’s that choice thing again) on the size of “sugary drink” you can buy.
New York City plans to enact a far-reaching ban on the sale of large sodas and other sugary drinks at restaurants, movie theaters and street carts, in the most ambitious effort yet by the Bloomberg administration to combat rising obesity.
The proposed ban would affect virtually the entire menu of popular sugary drinks found in delis, fast-food franchises and even sports arenas, from energy drinks to pre-sweetened iced teas. The sale of any cup or bottle of sweetened drink larger than 16 fluid ounces — about the size of a medium coffee, and smaller than a common soda bottle — would be prohibited under the first-in-the-nation plan, which could take effect as soon as next March.
The measure would not apply to diet sodas, fruit juices, dairy-based drinks like milkshakes, or alcoholic beverages; it would not extend to beverages sold in grocery or convenience stores.
“Obesity is a nationwide problem, and all over the United States, public health officials are wringing their hands saying, ‘Oh, this is terrible,’ ” Mr. Bloomberg said in an interview on Wednesday in City Hall’s sprawling Governor’s Room.
“New York City is not about wringing your hands; it’s about doing something,” he said. “I think that’s what the public wants the mayor to do.”
Nanny Bloomberg assumes New Yorkers need a mommy. That they’re fat because of their diet of sugary drinks of a certain size. He’s sure if he limits you to 16 fluid ounces of such belly wash they’ll slim right down. Nanny Bloomberg also assumes that the public wants him to intrude into every deli, fast-food franchise, food cart and sports arena to save them from themselves.
Because that’s a nanny’s job – limit choice. Limit freedom. All for the common good, of course. (added: here’s a distant cousin’s view – “Sixteen Ounces of Bull”. Amen, cuz).
Case 2? Well it seems a couple of state legislators in NY want to outlaw anonymous posting on the internet. A couple of Republicans, by the way.
New York State Senator Thomas O’Mara recently proposed legislation that would ban anonymous postings on websites in his state. The bill requires citizens posting on any blog, social network, message board or other forum, to turn over their full names, home addresses and IP address to web site administrators for public posting. Supposedly it is being pushed as an “anti-bullying” step.
His cohort in this nonsense, however, reveals the real purpose. State Assemblyman Jim Conte released a statement saying:
…the legislation will help cut down on the types of mean-spirited and baseless political attacks that add nothing to the real debate and merely seek to falsely tarnish the opponent’s reputation by using the anonymity of the Web. By removing these posts, this bill will help to ensure that there is more accurate information available to voters on their prospective candidates, giving them a better assessment of the candidates they have to choose from.
Or, the “let’s limit free speech to protect politician’s reputations” bill.
As the Center for Competitive Politics points out:
Anonymous speech has played a part in our political process since the very founding of our nation. Alexander Hamilton, John Jay, and James Madison wrote the Federalist Papers, which where primarily targeting voters in New York, under various pseudonyms. The Supreme Court upheld this precedent in McIntyre v. Ohio Elections Commission, noting:
“[u]nder our Constitution, anonymous pamphleteering is not a pernicious, fraudulent practice, but an honorable tradition of advocacy and of dissent. Anonymity is a shield from the tyranny of the majority.” McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 357 (1995)
“But political speech by its nature will sometimes have unpalatable consequences, and, in general, our society accords greater weight to the value of free speech than to the dangers of its misuse.” McIntyre, 514 U.S. 334, 357 (1995)
Everyday in just about every way, our freedoms are under assault at all levels of government in this country. I spend a lot of time recording those at a federal level. But just as pernicious and certainly just as dangerous are those at local and state levels.
The cumulative result is we live in a much less free society than we did 100 years ago. 50 years ago. in fact, 20 years ago.
These three examples can indeed be multiplied by hundreds if not thousands. They are fairly common unfortunately. They cost a lot to enforce. They’re unnecessary. Most important though, in each case they limit choice and thereby freedom.
Frog. Pot. Rising heat.
Time to start getting serious about turning off the freedom limiting burner.
Well the Washington Free Beacon has an idea:
President Obama’s most recent green energy fixation—algae—may suffer from the accusations of cronyism that have plagued his broader effort to promote non-fossil fuel energy sources through massive federal subsidies.
May suffer? Read on:
Solazyme, a San Francisco-based firm that specializes in the plant matter, has received more than $25 million in federal grants and contracts as part of Obama administration’s controversial stimulus package, and is poised to receive millions more as part of the president’s recent efforts to promote green biofuels such as algae.
The firm employs a former member of the Obama-Biden transition team who, according to one online bio, “played a key role in developing the energy provisions in the economic stimulus bill.”
That’s right, the usual – crony capitalism. And in this case, you get a twofer. San Fran Nan’s district benefits.
Be nice if the guy who claimed he was going to change “politics as we know it” wouldn’t revert to “politics as usual” at every opportunity to pad his re-election campaign and help out his cronies, huh?
Ed Morrissey sums up the “new” GM:
Americans sunk tens of billions of dollars into General Motors in 2008 and 2009, money which they won’t see any time soon, if at all. The Obama administration strongarmed senior creditors in an unprecedented politically-engineered bankruptcy to get taxpayers to eat the costs of old pension obligations and boost the UAW. All of this was done in the name of making GM a stronger company so that they could eventually pay back the bailout and make better decisions in the future. [emphasis mine]
Remember the other day when I talked about corporate cultures and how it was important to change them when a company is going down the tubes because of their present one? And how bankruptcy – real bankruptcy – has a tendency to help make that corporate culture change a reality.
Yeah, well that didn’t happen at GM with predictable results:
Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.
That’s right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen – a 7 percent stake in the company. …
Peugeot can undoubtedly use the cash. Last year, Peugeot’s auto making division lost $123 million. And on March 1 – just a day after the deal with GM was announced – Moody’s downgraded Peugeot’s credit rating to junk status with a negative outlook, citing “severe deterioration” of its finances.
In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.
An analysis by auto industry consultants IHS said it is “somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalise its European production, cut costs, or deal with labour rates.”
Well, the investment in Solyndra was “somewhat baffling” to most analysts, but it didn’t stop the Department of Energy from guaranteeing it, did it?
GM needs a 7% stake in Peugeot like it needs the Chevy Volt. Don’t forget, it loses money every year in Europe. And now it owns 7% of another car company posting huge losses.
It hasn’t yet been able to pay the tax payers back for the “investment” they were forced to make in the company although they have found the time to pay bonuses to employees and executives, some of whose accomplishments apparently include this decision.
Peter Schweizer points out:
Forget for a minute the religious question and look at who wins big here: Big Pharma. This mandate is not really about condoms or generic versions of “the pill,” which are available free or cheap in lots of places. This is about brand-name birth control drugs and other devices that some consumers swear off because they are too expensive. The Health and Human Services (HHS) mandate requires health-insurance companies provide contraceptive coverage for all “FDA approved contraceptive methods.” It does not insist on generics. And it does not offer any cost containment.
What’s more, the mandate prevents health-insurance companies from having copays or deductibles for the benefit. This is the perfect set up for Big Pharma. Since the drugs will be paid for by a third party (insurance companies, who will pass the cost on to employers and the rest of us), the consumer won’t worry about the price. Expensive brand names will no doubt see demand rise. Ask more health-care analysts why the cost of medical services continues to rise so rapidly and near the top of the list is the fact that a third-party payment system won’t contain costs.
Need Big Pharma on your side in healthcare mandate struggle? Looking for a way to put private health insurance companies out of business (or have them abandon the market)? This is a great way to help that along. I imagine there are other things to mandate for “free” as well, if you can get this one to stick (and have Big Pharma on your side and not screaming about it, after all, you didn’t say they had to give their stuff away for “free”).
By the way, when you finally have your way with the insurance industry and see private insurance companies get out of the healthcare insurance business, you’ll no longer need Big Pharma, will you?
When you finally have a single payer system and that single payer is government, then you will decide what will be paid for drugs and medicines, won’t you? After all, who are they going to sell their stuff too if not the single payer? Innovation and new drugs? Hey, they’re overhyped. And anyway, people who live longer cost health care providers (uh, that would be government) money.
It’s like the red kangaroo Dale talks about. You can see this convergence coming from a mile off, but seemingly we can’t (or won’t) do a thing about it.
Lomborg points out that when the global warming scare was at its height, Germany bought in, hook, line and sinker. And, as is their way, decided they’d become the “photovoltaic world champion” as it switched to solar power.
How much did the German government commit to this pursuit of clean and green? $130 billion dollars.
What happened when this tax payer funded gravy train left the station?
Germans installed 7.5 gigawatts of photovoltaic capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.
Because, you see, solar power is more expensive than that nasty fossil fuel generated energy. Details, details.
Anyway the government handed out $130 billion in subsides, German’s responded and the net result was a huge drop in greenhouse gasses, namely CO2, right? Yeah, not so much:
Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly 8 million metric tons—or about 1 percent – for the next 20 years. To put it another way: By the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.
Reality … what a slap in the face that must have been. Suddenly, the German government gets “religion”:
According to Der Spiegel, even members of Chancellor Angela Merkel’s staff are now describing the policy as a massive money pit. Philipp Rösler, Germany’s minister of economics and technology, has called the spiraling solar subsidies a “threat to the economy.”
But, as usual, the German government had to learn this the hard way. Markets, we don’t need no stinkin’ markets. For a $130 billion dollar “investment”, Germany now gets 0.3% of its total power from solar. Any guess why governments should steer clear of picking winners and losers?
The German government has burned $130 billion to raise the average power bill by $260 a year and delay the dreaded temperature increases by … 23 hours.