Your Tax Dollars at Work

[onmyknees]

The $831,000,000,000 economic “stimulus” that President Obama spearheaded and signed into law requires his administration to release quarterly reports on its effects. But “the most trnsparent administration in history is now four reports behind schedule and has so far not released any reports whatsoever in 2012. Its most recent quarterly report is for the quarter than ended on June 30, 2011. [...]
Section 1513 of the American Recovery and Reinvestment Act of 2009 (the “stimulus”) explicitly states, “In consultation with the Director of the Office of Management and Budget and the Secretary of the Treasury, the Chairperson of the Council of Economic Advisers shall submit quarterly reports to the Committees on Appropriations of the Senate and House of Representatives that detail the impact of programs funded through covered funds on employment, estimated economic growth, and other key economic indicators.” (The head of the Council of Economic Advisors, currently Alan Krueger, is appointed by the president, confirmed by the Senate, and works within the Executive Office of the President. He is the president’s chief economic adviser.)


Wonder if this is the reason ..................

So far, 36 companies that have received federal support from taxpayers have either gone bankrupt or are laying off workers and are heading for bankruptcy. This list includes only those companies that received federal money from the Obama Administration’s Department of Energy. The amount of money indicated does not reflect how much was actually received or spent but how much was offered. The amount also does not include other state, local, and federal tax credits and subsidies, which push the amount of money these companies have received from taxpayers even higher.



The complete list of faltering or bankrupt green-energy companies:

1. Evergreen Solar ($24 million)*
2. SpectraWatt ($500,000)*
3. Solyndra ($535 million)*
4. Beacon Power ($69 million)*
5. AES’s subsidiary Eastern Energy ($17.1 million)
6. Nevada Geothermal ($98.5 million)
7. SunPower ($1.5 billion)
8. First Solar ($1.46 billion)
9. Babcock and Brown ($178 million)
10. EnerDel’s subsidiary Ener1 ($118.5 million)*
11. Amonix ($5.9 million)
12. National Renewable Energy Lab ($200 million)
13. Fisker Automotive ($528 million)
14. Abound Solar ($374 million)*
15. A123 Systems ($279 million)*
16. Willard and Kelsey Solar Group ($6 million)
17. Johnson Controls ($299 million)
18. Schneider Electric ($86 million)
19. Brightsource ($1.6 billion)
20. ECOtality ($126.2 million)
21. Raser Technologies ($33 million)*
22. Energy Conversion Devices ($13.3 million)*
23. Mountain Plaza, Inc. ($2 million)*
24. Olsen’s Crop Service and Olsen’s Mills Acquisition Company ($10 million)*
25. Range Fuels ($80 million)*
26. Thompson River Power ($6.4 million)*
27. Stirling Energy Systems ($7 million)*
28. LSP Energy ($2.1 billion)*
29. UniSolar ($100 million)*
30. Azure Dynamics ($120 million)*
31. GreenVolts ($500,000)
32. Vestas ($50 million)
33. LG Chem’s subsidiary Compact Power ($150 million)
34. Nordic Windpower ($16 million)*
35. Navistar ($10 million)
36. Satcon ($3 million)*

*Denotes companies that have filed for bankruptcy.


Wasn't the task of taxpayer accountability assigned to Joe Biden? LMAO

[Stavros]

Wonder if this is the reason ..................

So far, 36 companies that have received federal support from taxpayers have either gone bankrupt or are laying off workers and are heading for bankruptcy. This list includes only those companies that received federal money from the Obama Administration’s Department of Energy. The amount of money indicated does not reflect how much was actually received or spent but how much was offered. The amount also does not include other state, local, and federal tax credits and subsidies, which push the amount of money these companies have received from taxpayers even higher.

I did explain to you why Solyndra and other 'green energy' firms in the US have run into trouble some time ago so there is obviously no point in finding the post again. If you had a clue about energy production and energy markets in the US you would indeed be concerned at green business failures, or would you? Are you such a champion of the alternative? If not, why aren't you cheering on their demise as the US seeks a resurgence of its own fossil-fuel, carbon-based energy industry and the 'promise' of self-sufficiency it claims it will deliver?

Because your sole aim is to find a policy failure to pin on the Obama Presidency, even if it is caused by market failure rather than his administration's policy. As I pointed out in the earlier post, it isn't only in the US that green firms are in trouble financially.

If you want a brief intro on some aspects of the energy crisis that is going to develop over the rest of this century if alternative energy sources are NOT developed that are commercially viable, technologically efficient, and so on, this short article on geotechnology might help
http://pmrl.ce.gatech.edu/papers/San...na_2011vvv.pdf

But I get the impression you are not as interested in the energy industry as you are in politics, so

Fact Check This:
The war in Iraq has cost the US $823.2bn since 2003 - and in 2011 cost $49.3bn, only $4bn less than 2003 when the invasion happened.

Figures and analysis can also be found in your own Congressional Research Service here:
http://www.au.af.mil/au/awc/awcgate/crs/rl33110.pdf



It's your choice as an American where your government spends its money.

[Prospero]

An excellent post Stavros.

[broncofan]

As Stavros' post indicates, the amount of money spent on these green companies is but a tiny fraction of that spent invading Iraq. I would much rather the government make investments like this in the hopes they pay off than spend money overseas inadvisedly invading countries that haven't attacked us.

I did not add up the numbers, but I think of the ones marked with asterisks we're talking somewhere on the order of a couple billion dollars. This is not a trivial amount, but it's not a catastrophic loss either, given that the President is trying to promote the development of alternative fuels. It seems to me that when you spend money trying to promote start-ups you acknowledge that there is going to be a reasonable (or even large) failure rate, as there is for all start-up companies.

I also think the stimulus was a good idea, and that the Republicans' Neo-Hooverism would have crushed the economy. We've hade many discussions on here about the role of government in promoting economic activity and regulating markets. Part of this is subsidizing promising technological advances; the FDA does this with orphan drugs, the federal government did it here with green companies. Do you see why it was a worthwhile effort? There's a limited supply of oil in the ground and by and large we are beholden to other large powers and cartels to procure it.

[broncofan]

http://www.statisticbrain.com/startu...e-by-industry/

I posted this article which has the rate of start-up failures by industry. You'll note that the rate is almost uniformly high across industries. Two things worth noting. The green companies listed have one implied disadvantage and one implied advantage over other start-ups.

The advantage is that they do not have to capitalize. I'm not sure what the terms of their financial arrangment with the government was, but they did not have to raise the money used to start their business and so their borrowing costs (if they exist) are low.

On the other hand, that they are subsidized by the government acknowledges that these are companies operating with high barriers to entry, producing products that are not currently competitive in the marketplace. If they were, there would be thousands of creditors and equity investors waiting to give them money. I think this second implied disadvantage is greater than the first advantage and indicates the failure rate in such circumstances is going to be greater than for start-ups generally.

Either way, what you are doing OMK is taking a series of investments that were intended to promote a very promising line of research that could have yielded an enormous pay-off in terms of energy self-sufficiency and pretending there was no potential upside because it wasn't realized. This is hindsight analysis. I think it was Einstein who said, "if we knew what we were doing it would not be research." This is not to be blase about the potential waste of funds as clearly the potential success of such endeavors needs to be considered. But so does the upside, which you don't care about because your guys did not recommend the initiative, and it wasn't realized. Had it been realized, you would then be talking down the benefits and not talking up the costs.

[broncofan]

I think the reason green companies need to be subsidized is not necessarily because there is a market failure but because the market participants have different goals and incentives than the government. Market participants buy debt or equity because they believe taking into account the risks and benefits there is an expected profit.

Here are a list of things that a private investor would not factor into his model because he would not capture these benefits as personal profit. First of all, not having to buy oil from Saudi Arabia and being beholden to them politically as a result. Let me also point out that oil prices likely include a significant risk premium, based on uncertainty about the supply and its sensitivity to political events. This likely exacts a cost on the average consumer over time. The government also is going to consider what happens to the price of oil twenty or thirty years down the road when we still have the same (or greater according to Stavros' article) energy needs and the normal operation of our economy depends entirely on the cooperation nay goodwill of our suppliers. There's also the issue of environmental cost, something that's almost always an externality for businesses and that itself has downstream effects on human beings in terms of the quality of the resources we depend on.

In sum, it makes sense that the government would invest in companies whose products the market will not bear. In doing so, if there is not a clear-cut market failure, the rate of failure of these start-ups is going to be greater than that of the average start-up. But the total benefits to everyone will be underestimated by market participants because they are not captured by them.

OMK said fact-check this- So far on this thread I can see several problems with his data mostly pointed out in Stavros' initial rebuttal.
1. does not account for the difficulties green companies have had everywhere.
2. does not properly account for the upside of success in such an endeavor.
3. does not acknowledge the nature of the energy crisis our country faces and the need for bold initiatives.
4. does not account for the size of our national budget and the relative costs of other government expenditures.
5. does not acknowledge that start-ups generally have a high rate of failure, that it will be higher when market participants do not want to provide funds to the start-up.
6. That there are situations when the government should want to support initiatives individual investors do not and in those situations, analyzing the costs in purely economic terms defeats the purpose of the intervention.

[Stavros]

I think the reason green companies need to be subsidized is not necessarily because there is a market failure but because the market participants have different goals and incentives than the government. Market participants buy debt or equity because they believe taking into account the risks and benefits there is an expected profit.

Here are a list of things that a private investor would not factor into his model because he would not capture these benefits as personal profit. First of all, not having to buy oil from Saudi Arabia and being beholden to them politically as a result. Let me also point out that oil prices likely include a significant risk premium, based on uncertainty about the supply and its sensitivity to political events. This likely exacts a cost on the average consumer over time. The government also is going to consider what happens to the price of oil twenty or thirty years down the road when we still have the same (or greater according to Stavros' article) energy needs and the normal operation of our economy depends entirely on the cooperation nay goodwill of our suppliers. There's also the issue of environmental cost, something that's almost always an externality for businesses and that itself has downstream effects on human beings in terms of the quality of the resources we depend on.

In sum, it makes sense that the government would invest in companies whose products the market will not bear. In doing so, if there is not a clear-cut market failure, the rate of failure of these start-ups is going to be greater than that of the average start-up. But the total benefits to everyone will be underestimated by market participants because they are not captured by them.

OMK said fact-check this- So far on this thread I can see several problems with his data mostly pointed out in Stavros' initial rebuttal.
1. does not account for the difficulties green companies have had everywhere.
2. does not properly account for the upside of success in such an endeavor.
3. does not acknowledge the nature of the energy crisis our country faces and the need for bold initiatives.
4. does not account for the size of our national budget and the relative costs of other government expenditures.
5. does not acknowledge that start-ups generally have a high rate of failure, that it will be higher when market participants do not want to provide funds to the start-up.
6. That there are situations when the government should want to support initiatives individual investors do not and in those situations, analyzing the costs in purely economic terms defeats the purpose of the intervention.

You are right to go beyond markets as a factor in the difficulties green energy is facing right now -not just in the US, but also in Germany and China where firms went bust this year. Markets are important in the obvious sense, that if people don't want to buy electric cars, they can't be forced to. Same with solar panels. When you go beyond that simple concept of the market, there are other factors. When people think of oil and gas, they tend to think of the stuff they put in their car, and what they cook, and heat their home with. They don't think of the plastics and acetates coating their pens, their laptops, their flat screen tv's, the clingfilm on a sandwich -all of which come from petroleum. The capital cost of fitting solar panels is still high, but for a homeowner, particularly in a state like Florida or California, or in places with guaranteed sunshine, like central Africa, Hawaii or Saudi Arabia, it should be more common, and this week there was a report on Saudi Arabian plans for green energy alternatives.

But if the market is sluggish, it doesn't matter how financially better off people would be with solar panels, if they are saving on basics like food and transport, they are not going to spend on something like a new roof with solar panels. Same with electric cars. On the broader scale, fossil fuels are easy to move around, they can be stored in bulk, they are crucial to the chemicals industry as well as heating and transport, and most of all, the major independent oil companies measure their profits in billions of $$ where small green energy companies are just into millions, if that. The tax revenue from these companies from the oil industry is vastly superior to green energy, and that's with tax breaks and creative accounting!

This past 18 months, apart from a glitch earlier this year, has shown the US reducing its dependency on petroleum exports, and developing more of its own indigenous supply. It is because of the very big bucks, and also the widespread and relatively cheap fossil fuel infrastructure that exists, that underpins petroleum's dominance in the energy market. If you want a return on your investment, Exxon is still a better bet than Windmills Inc, if you can afford to buy their stock.

But at some time, there has to be a shift in the energy transition, it doesn't just make sense in terms of an energy mix that offers consumer choice at value prices, long term investment is needed to improve the technology deficits, the storage problems, and the attraction of alternative energy as an everyday choice. I dont know if any of the firms getting subsidies from the govt were exploiting the opportunity, maybe they were, but then I thought the US was going to do something about the colossal subsidies paid to its farmers, which makes the subsidies to alternative energy look like pocket money....
http://farm.ewg.org/