Streetwise Professor

May 12, 2013

A Crony Capitalist For the Space Age. And the Renewables Age. For the Age of Obama.

Filed under: Economics,Politics — The Professor @ 1:34 pm

Electric vehicle manufacturer Tesla’s stock rocketed up last week after the company reported positive earnings and operating cash flow for the first quarter.  The stock had been heavily shorted, and short covering evidently fueled the stock’s take off.

Color me skeptical.  The company was heavily shorted for good reason, and is even more ripe for shorting after the run-up.  (Personal opinion.  Not investment advice.  You’re on your own about that.)

For one thing, although operating results did improve from the (really terrible 3/4Q12), the much hyped earnings number was put into positive territory by two items: a write down of a warrant that Tesla granted the Department of Energy as part of a $465 million DOE loan to the company, and FX gains (mainly on yen).  Not repeatable.  And the first seems highly dodgy to me-a squishy number based on an assumption that Tesla will be able to pay off the loan.

I’m also skeptical because of the near miraculous nature of the turnaround. Mere months ago, the company was in dire straits:

It’s a lucky thing for Tesla Motors shareholders that the U.S. Department of Energy loves the company’s loan applications.

Without the hundreds of millions of dollars Tesla (US:TSLA) has received from the federal government this year, the electric-car maker’s financials would be gasping for air as 2012 winds down.

Given the ugly state of Tesla’s finances — and the company’s sky-high valuation: almost $4 billion — it will rank among the top candidates in Silicon Valley for a 2013 stock collapse, unless it receives significantly more cash next year.

I get a whiff of a company that needed a miracle to stave off disaster.  Maybe it got one, but I am always skeptical of miracles whenever accounting is involved.  And that’s certainly the case here.

The shorts have been bloodied, but they’ll be back.  Indeed, this seems like a typical battle in a war between a dodgy company and short sellers.

But I am most skeptical because of Tesla’s not-really-founder-but-biggest-investor, Elon Musk.

Mr. Musk is Occupy’s favorite crony capitalist.  And Occupy is one of Mr. Musk’s favorite movements.

Yes, once upon a time Musk started a real business, Paypal, that proved very successful without any government help.  That was then, this is now.

Musk has three ventures: Tesla, SpaceX, and SolarCity.  All are heavily dependent on government largesse.

Take Tesla for starters. It received the $465 mm loan from DOE, but it also benefits from a $7500/car federal subsidy for electric cars.  Moreover, it benefits from the State of California’s Zero Emissions Credit program.  In its infinite wisdom, CA mandated that all the major auto companies sell a certain number of zero emissions vehicles.  If they don’t they have to buy credits from companies that do make them-namely, Tesla.  This was also essential in putting the  company in the black in Q1, and the company is sitting on $250 mm worth of these credits.

IOW, Tesla’s profits are courtesy of you, the taxpayer-and also courtesy of the shareholders of Ford, GM, Toyota, Honda, etc.

Next consider SpaceX.  This venture provides evidence of Musk’s love for Occupy: he has promised that this private space venture will go to Mars, and wears an Occupy Mars shirt to make the point.

It is also touted as a privately capitalized space venture, which it is, I guess, but it is also almost completely dependent on government contracts.  The private money is attracted by the scent of public money.   Sorry, but a company that is dependent on NASA’s IV for support is not truly a private company: the company is basically a cutout between the investors and the taxpayers.

The company has not exactly covered itself in glory.  It had serious trouble with its initial launches, including an embarrassing episode in which the ashes of Star Trek’s Scotty, James Doohan, were on a SpaceX craft that didn’t make it into space: it crashed instead somewhere in the South Pacific.  Which I guess would have been great if James Doohan had starred in South Pacific.  Don’t worry, though.  As a precaution, some of Mr. Doohan’s ashes were retained, and that part of the beloved actor’s remains did make it into space as he desired.

And speaking of Broadway and movie classics, Musk is auditioning for a role in a summer stock Music Man with his boosterism of SpaceX:

You don’t have to be a believer in conspiracy theories to wonder why senior government officials are so committed to going the commercial route in space. Even a cursory review of SpaceX programs and plans reveals reasons for doubt. The questions begin with a business strategy that isn’t just disruptive, but downright incredible. Mr. Musk says that he can offer launch prices far below those quoted by any traditional provider — including the Chinese — by running a lean, vertically integrated enterprise with minimal government oversight that achieves sizable economies of scale. The economies of scale are possible, he contends, because there is huge pent-up demand for space travel in the marketplace that cannot be met within the prevailing pricing structure. By dropping prices substantially, this latent demand can then be unlocked, greatly increasing the rate of rocket production and launches. When combined with other features of the SpaceX business model, the increased pace of production and launches results in revolutionary price reductions.

There isn’t much serious research to demonstrate that the pent-up demand Musk postulates really exists, nor that the price reductions he foresees are feasible. He has suggested in some interviews that launch costs could decline to a small fraction of current levels if all the assumptions in his business plan come true, and he has posted a commentary on his web-site explaining how SpaceX is already able to offer the lowest prices in the business. It’s hard to look inside the operations of a private company, but SpaceX does seem to be doing all the things necessary to minimize costs such as using proven technology, building as many items as possible in-house, and hiring a young workforce willing to work long hours. And to his credit, Musk has committed over $100 million of his own money to the venture. However, his rockets have major performance limitations compared with other launch vehicles in the market, and they are not yet rated as safe for carrying people. Becoming “man-rated” will necessarily increase the role of federal officials in monitoring SpaceX operations, which is not good news for a business model grounded in minimal government oversight (traditional launch providers say government regulations and overhead charges are a key driver in their own pricing policies).

Downright incredible sounds about right.  It sounds like a con to me.  Especially the whole “economy of scale” thing.  That’s the kind of thing defense contractors say to get the government to buy more units of a plane or ship.  It’s not good economics.

And Musk’s winning personality was on display when questioned about SpaceX’s launch failures:

Mr. Musk recently responded to a question from Space News reporter Amy Svitak about the two-year delay in accomplishing that second Falcon 9 launch by observing, “In the space business that’s on time.” Perhaps he was irritated by the reporter’s implied criticism, but it goes without saying that if astronauts on board the space station are awaiting supplies, a prolonged launch delay could spell big trouble.

What a guy.  Takes your money, and then gets peevish when you accuse him he’s blowing it.

Then there is SolarCity, an installer of solar panels.  The solar industry has raked in $4.1 billion of stimulus money, and the government thinks that SolarCity in particular has played fast and loose with the numbers to  get more than it should:

Last July, federal investigators subpoenaed SolarCity Corp., SCTY +9.10% the largest installer of residential solar panels, as part of a probe into whether solar-power companies received excessive government grants.

. . . .

Even before the Treasury Department’s inquiry into grant applications filed by SolarCity and other installers, House Republicans had questioned the program’s effectiveness in creating jobs. Congress declined to renew the grant program at the end of 2011, and only projects that were being planned by that date can receive grants today.

The government is looking into whether SolarCity and other firms misrepresented the fair-market value of solar systems in order to boost the value of the grants they received. In its suit, SolarCity says two of the company’s subsidiaries received smaller-than-expected grants. The company doesn’t say exactly how much funding it applied for originally, but it says the final grants issued by the Treasury Department were $8 million less than was proper under the law.

But SolarCity is doubling down on the chutzpah, and suing the government, claiming the government has paid it too little!:

Now, SolarCity is pushing back with a lawsuit that alleges the opposite: some of the taxpayer-funded grants it received weren’t as big as originally promised.

The suit, filed quietly in February in the U.S. Court of Federal Claims, comes as SolarCity and other industry players are defending solar-friendly government policies, and it could undermine the industry’s message that solar power will soon be viable without government help.

Solar businesses have cratered around the world: China, Spain, Germany.  The industry is addicted to government support.

Elon Musk has a plan to get rich.  It involves you.  The taxpayer.  You pay taxes.  The government gives huge dollops of that money to Elon.  Elon gets rich.  Who could possibly object? Who could deny Elon’s genius?

He certainly thinks he’s a genius.  He has no hesitations in telling people so.

And there is a kind of perverse genius here.  In the Age of Obama he has found the key to riches.  Get in good with the government-by, you know, sponsoring an inaugural ball.  And then let the government give you the goodies.  Then sue the government if they don’t give you enough goodies.

And then preen before the world, touting your genius-and your environmental credentials. (Pay no attention to that private jet behind the curtain!) (Musk quit the Zuckerberg-created immigration lobbying effort because it bought ads supporting politicians who support immigration changes but also had the temerity to support the Keystone pipeline.)

What a repulsive man.

Repulsive, yes, but sadly, Elon Musk is a Man For Our Age, in more ways than one.

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  1. If you talk to anyone in the securities lending world, ask them who are the big holders of Tesla stock and whether they are deciding not to lend once the shorts start to come back out. The shorts have to borrow to deliver and if the longs don’t lend, it will just drive the stock even higher. Once that starts to happen, load up on downside gamma.

    Comment by Charles — May 12, 2013 @ 4:58 pm

  2. Musk like any great salesman knows the way the wind is blowing and makes best use of it.

    On the subject of SpaceX – follow the money – who hurts should it succeed and who is pushing the it’s not going to work stories? There is nothing particularly complex in what SpaceX are doing, and successful docking with ISS makes certain under performing aerospace giants look a little well uneconomical.

    Tesla, probably the first electric car company to acknowledge the problems with batteries, they have been honest and taken the responsibility of setting up a charging network. Would I invest – hell no, gotta let a couple of waves of creative destruction happen first.

    Comment by Steve — May 12, 2013 @ 5:09 pm

  3. interesting logic.

    Defense manufacturers rely heavily on govt contracts and subsidies, i guess they are not truly private companies either huh ?

    and the last time they borrowed from the feds was 2010, and they’ll be paying it back five years early.

    you also ignore several important factors – 1) 25% of people who drive a Tesla buy one, they’re selling 400 a week, and 2) Tesla makes EV drivetrains for Toyota and Mercedes, which whom they are developing a common open source charging platform (think android..), the consumer demand is there.

    SpaceX is also the first private space co to successfully make ontime deliveries to the ISS. again the demand is there…

    Elon Musk’s personal qualities or political views are irrelevant to his investors as long as he delivers results – same as other liberals like Buffet, Jobs, Schmidt etc.

    The shorts are largely politically motivated which is why they are getting killed – many now with 100% losses.

    best of luck with your investment ‘theories’, i truly hope you don’t back them up with $$$$


    A street professional of 20+ years.

    Comment by mhj — May 12, 2013 @ 8:05 pm

  4. Haha to the Musk sock puppets trolling the blogs. SWP has been around much longer than any of you 😉

    Comment by Q — May 12, 2013 @ 11:13 pm

  5. Crony capitalist trolls are not as bad as weird foreigner trolls who sound like Agency or State Dept hacks posing as Scandinavians.

    See this blogger’s stubborn refusal to admit Benghazi was about gun and MANPAD smuggling to the Al Nusra terrorists (who tried to shoot down Russian flight from Egypt and missed). But if you were flying to Instanbul would you mention it? Wouldn’t want to get tapped on shoulder by Turk siloviks.

    Most Turks like most sane Mudeat people don’t support Erdogans neo Ottoman Empire ambition.

    Comment by Narodnik — May 13, 2013 @ 12:37 am

  6. Bamksters like m h j also know they never have to deliver gold on shorts no downside to shorting gold ever at least as long as devil man Bernanke gives JP Morgan free zero interest money for nothing ‘chicks for free’. Until some day Asians laugh at CON ex rigged price and at Bloomberg spy terminal propaganda about glorious toilet paper divudends. Misspellings from autocorrect on phone

    Comment by Narodnik — May 13, 2013 @ 12:42 am

  7. Meanwhile, this is jaw-dropping:

    According to Kershaw’s “Hubris”, in 1930s Germany this behaviour had a name; it was called “working towards the Führer”.

    Comment by Green as Grass — May 13, 2013 @ 5:10 am

  8. This is an ordered and paid journalism at its worst. Anyone having some spare cash can buy any story to be written by this author no matter how far off reality it might be. No integrity at all.

    Tesla Model S – the best performing, most innovative sedan ever created. Pre-cursor to the mass market electric car. 3000+ employees.

    Threat to oils, existing car manufacturers, car dealers.

    Space X – the first private company to resupply the international space station (currently the only other resupplier is Russian government). The first transparent transportation pricing published on their website. The largest rocket engine manufacturer in the world. 3000+ employees.

    Threat to a lot of big, comfortable “Cost Plus” contract organisations that was really reaping NASA (taxpayer in this author’s words) money.

    SolarCity – is the largest solar power provider in the US who is installing solar panels completely for free and charging customers less than their current utility providers (requires 25 year contract).
    1600+ employees.

    Threat to big utilities…

    Btw: Paypal is software, the new business are Hardware (and software). It cost a tiny bit more to start such operations. If you don’t appreciate such Herculean tasks, at least your government does.

    Skeptical is not the right word to call yourself if you doubt Musk. Joker is.

    Dummy lesson in loans, grants, subsidies etc: loans are loans – anyone can ask for them, but you’ll have to convice the lender that you are sound with your plans to get one. And it’s the lender that makes the decision not anyone else eg taxpayer)

    Repulsive is to read such articles – this is not written as one opinion. Such article is written with a paid agenda. A lot of Joker’s feeling extreme heat.

    Comment by Forin513 — May 13, 2013 @ 8:55 am

  9. Paid for? Hahahahahahaa. Sounds like projection, Musktroll.

    I am arguing on my own time.

    The ProfessorComment by The Professor — May 13, 2013 @ 9:47 am

  10. Not convincingly:/ Unless you do live in your ‘own time’ alternative reality… Unlikely.

    You know yourself better who’s trolling on Elon Musk’s name, pouring dirt with zero substance. Repulsive? – no intelligent person will care. Narrow minded – absolutely, still no intelligent people will care.

    Comment by Forin513 — May 13, 2013 @ 10:14 am

  11. Forin513’s rant sounds suspiciously similar to Musk’s paranoid rants about NY Times. Entertaining to say the least but mostly just sad.

    Comment by Q — May 13, 2013 @ 10:30 am

  12. @Forin513. If no intelligent person cares, why are you bothering? Oh. I guess that question answers itself.

    The ProfessorComment by The Professor — May 13, 2013 @ 1:24 pm

  13. Getting NASA out of the routine launch business is a good thing. SpaceX seems to be doing a good job of cutting out a lot of the BS and gold-plating endemic to the traditional space sector–their development timelines have been remarkably rapid and the product appears to be heading toward reliability at least as quickly as past rockets. If the government is going to pay for launches anyway, I’d rather they outsource to innovative companies and make more rational decisions about risk and cost. That said, I’ve often commented that the best thing to do for the US space program would be to evacuate and destroy the International Space Station, which absorbs resources wildly disproportionate to the benefits it yields.

    With respect to Tesla and Solar City I’m more inclined to hate the game than the player. Our EV and solar subsidy polices are dirt stupid. Tesla seems to have built a better EV business than the other losers, but the category itself is a useless taxpayer drain. Solar City came up with a slightly better business model for exploiting the idiotic subsidies we give to solar power. Is it better to have a lower quality of subsidized firms if the whole category is a bad idea? There might be some theory of the second-best story, but that seems like overthinking.

    Comment by srp — May 13, 2013 @ 1:25 pm

  14. @Forin513. I am curious. Whom do you think would pay me? And why?

    The ProfessorComment by The Professor — May 13, 2013 @ 3:16 pm

  15. Your rhetoric is incredibly dull and short sighted. Tesla is the most interesting new technology to come along in decades – yes even more so than Apple’s in my own opinion. If Tesla releases a car that costs $40k and goes 500 miles on a charge what will you say then? If that happens and I were you, I would just keep my mouth shut and get another job which doesn’t involve sharing your opinions with others. Are you willing to tell everyone who pays your salary or who you own stock in? Aerospace, Oil or ICE auto companies?

    Comment by Tim — May 14, 2013 @ 2:04 pm

  16. But it doesn’t go 500 miles or cost $40K. All those government subsidies and it stills sucks and is overpriced 😉 Sorry – A car is not an iPhone. But enjoy staring at your Elon Musk poster and doing unspeakable things.

    And Tim, you’re either Elon or you have the very unique ability of sharing his total paranoia. Congratulations.

    P.S. Great job at countering the actual math in the post 😛

    Comment by Q — May 14, 2013 @ 3:11 pm

  17. Q: do you know the difference between past and present tense? It’s funny how talentless people like you and the author always criticize those who accomplish meaningful things. Jealousy and envy – not a good thing.

    Comment by Fred — May 15, 2013 @ 12:13 am

  18. No Fred, I champion successful entrepreneurs and innovators. I applaud success. What I don’t applaud are frauds who cooks books and attempt to build their wealth on the backs of and at the expense of tax payers while also funneling millions to Obama (or any politician) for political favor.

    Many readers of this blog are indeed successful and wise enough to know what a con Elon Musk truly is. Sorry to disappoint you with this sad reality and mathematical fact.

    Comment by Q — May 15, 2013 @ 12:11 pm

  19. What Q said. And to add to that, per your theory, Q and I should be jealous of anyone who accomplishes something, and cutting them down. Which we’re not. So your purported explanation explains nothing.

    Take note: don’t draw conclusions on the basis of one data point.

    No, the fact is that I don’t admire people whose primary accomplishment is figuring out how to game the system and make money off of subsidies extracted from taxpayers by coercion.

    The ProfessorComment by The Professor — May 15, 2013 @ 12:30 pm

  20. Dear “professor”

    Everyone is free to use Elon’s methods – loans etc, – copy them if you can’t come up with things like that – create businesses, value. Why moan about it? Jealous – because in reality it is generally unachievable? Especially for those of you who can only point fingers, cry, complain and try to belittle anyone more successful than yourself. Jokers

    NYT article – spot on to your article. Who pays you? – I’ve no idea. But it’d be even more sad if you writing this literal nonsence on your own accord…(if you’re not paid – maybe do some journalistic investigation to find some customers – take leads from Broader?). Btw, if to go to NYT article – Broader was cought out by data and it was futile for them to argue they knew that, whatever they put out there it was for reputational damage control. Musk mentioned in one sentence in his article in one unrelated sentence about Broader driving his brother – it was a hint for him to shut up, as they could also have published what he was taking about in that car… Think about it.

    Remember one point if you will: check in 5 years: Most of the cars will start being like Model S. The iPhone was the first of the kind, look at the phone market now. It’s a new chapter in autos. The big auto CEOs have big eyes now (like yourself) – they have to adapt, quick or else…

    I am a sucker to bait on your nonsense but I am a fan, a fan of better and more interesting future and at the moment there’s one person who’s really bringing it to us.

    Btw, How do you like them apples today? – with a secondary offering and a “shut up Jokers” early payback of the DOE loan? Surely there’s another conspiracy to moan about. – please write more garbage… For your own and your customer’s fun to look back in a few years and show them how insightful you were… Good luck!

    For now watch this:

    Comment by Forin513 — May 15, 2013 @ 5:15 pm

  21. Forin, you’re sounding like Elon again 🙂 I guess sock puppetry is an art form all to itself. Anyway- It’s not working. Everyone who reads this blog understands math and Elon’s math is pure bullshit.

    Comment by Q — May 15, 2013 @ 7:49 pm

  22. One of the guys on Tesla forums sold his 2006 BMW M5 two weeks ago, bought Tesla stock with it, then sold the stock and bought a new Model S. Great story. Tesla is the most interesting story in years. Professor, Q and whoever wrote this article: Have any of you ever tried to build a car, a rocket or an internet company? Have you ever even taken a car engine apart and put it back together? Didn’t think so. Probably can’t even change the oil on your car. I change the oil on my car and I am looking forward to not doing so in the future as it is very messy and I am always spilling the old oil on my garage floor.

    I am not going to ask any questions because Q doesn’t know how to answer them directly. Rhetoric only works on people who do not have a well thought out life. Does that sound like anyone you know? (That’s a rhetorical question – you are not supposed to answer it)

    Comment by Fred — May 15, 2013 @ 10:24 pm

  23. Yes. Fred. Why is it that I suspect you’ve spent just as much time harassing Owen Thomas over the past few years? He caught on to Elon’s habit of lying a long time ago 😉

    Keep trying to intimidate people. It will never change the fact that everyone in Bay Area (save for a gaggle of delusional fanboys) knows Elon is full of shit, basically stealing money from tax payers and lying to investors :)) He’ll go down. It may take some time but it will happen. And none of your foot stomping and chest thumping will save you from the reality that will be exposed… most likely in a court of law.

    btw Fred, the sock puppetry doesn’t work. We’ve seen it. We recognize it and it’s about as genuine as that rug covering Elon’s bald head 😉

    Comment by Q — May 15, 2013 @ 10:37 pm

  24. Re interesting story. There are so many stories just like that, and if you have any historical perspective you know about them, and how they often turn out very badly. Whether it is dot coms in the 90s or radio in the 20s. Many very similar stories on the way up . . . a lot of tearful stories on the way down.

    One could tell similar stories of the Ponzi schemes in Russia in the 90s.

    Indeed, the retailing of those “great stories” is exactly the kind of thing that feeds the frenzy that exacerbates the magnitude of the crash. That’s the Music Man, con game angle here. You are feeding the easy money, lottery ticket con game aspect of this fred.

    And enough with the jealousy stuff. Envy is the last thing I feel for Musk. That is the Musk script, apparently, because it is a standard line in many of the comments here and elsewhere this post has run-and it’s total bullshit in my case.

    And fine. Go ahead. Create businesses: but on your own dime or the dime of private investors, not on the dime of taxpayers and the shareholders of other companies. There’s also a distinction between creating businesses and creating value when there are huge subsidies: subsidies are usually a sign of value destruction not value creation. If value is created, who needs the subsidies?

    The title of the post is about crony capitalism. That stands: Tesla and Musk feed on the teat of the government, and Musk curries political support, like any good crony capitalist. If Musk and Tesla are so effing great, people, why the need for government support? Not just the loan, but the other subsidies?

    Re the secondary offering, I think Goldman’s take was suitably skeptical. And for most companies-companies not the subject of passioned frenzy by true believres-a stock issue is considered bad news signaling that the stock is overpriced (based on the information insiders have) and/or that the company is having problems raising other less information sensitive and dilutive forms of capital and/or that it signals that the company has cash flow issues.

    The ProfessorComment by The Professor — May 16, 2013 @ 10:34 am

  25. Q – Thank you for the compliment. Not many people can sound like Elon.

    Elon’s math is bullshit? Right:) – the only math that is bs is the one that’s presented by your types. Elon’s math is verified, regulated and is out there under this symbol: TSLA – and it’s showing $10B. If you argue that, no reason can convince you… Hopeless case.

    And yes – never in the future buy a Tesla car … just stay with whatever was there yesterday, just as you stayed with your Blackberry, Nokia or the like (no, you haven’t missed anything…)…

    If seriously, I do not understand your negativity; lucky out of the US no one has any of that political bs that you are venting. And the main majority of the sales will be outside.. Great for everyone, lets hope they start building overseas factories ASAP – the cars will get cheaper, more capacity,, less dependency on your government – win/win

    Comment by Forin513 — May 16, 2013 @ 10:37 am

  26. Talk about circular reasoning. The math is right because the stock price says so. Whatever.

    I also stayed with nothing of those things.

    And political bs? That’s exactly what the whole subside program is. Political bs.

    You are just a mouthpiece for the con, Forin. You are trying to bring Tinker Bell back to life by believing. Whatever. I’m naturally a skeptic, and I know more than enough history to have observed the implosion of more such “transformative” stories than you can count.

    The ProfessorComment by The Professor — May 16, 2013 @ 10:46 am

  27. professor: if there are subsidies, loans etc – they are there created to be USED! No one, except you, expects Musk to be a charity man. Whatever the means he’s using he’s doing an amazing job, even if it was only for his own benefit – But it’s not – it’s for everyone’s, future generations.

    Government provisions are created for a reason. And only you don’t understand that you can’t build a sustainable engineering business (not just some software from a garage) from your own funds. Nissan, GM can’t do it – how can Tesla or SpaceX could? It’s possible but the chances of any startup succeeding is 5-10%. Could you start a corner shop with your own money, probably. Would you like to risk that, probably not (Walmart is just 1 mile down the road). But someone brave would do that – because they know it can be done, and at shame changing success

    I’m a fan of his 99% – because of his products – tangible, real and GROUND BREAKING products. You are saying its all smoke and mirrors – but that would not fly to space, accelerate like nothing else, get amazing unheard reviews, respect and votes with customers’ wallets.

    What he’s doing probably no human in recent history done – and you are crying about taxpayers money. It’s government’s decision how to invest those money not taxpayers’. You don’t agree with that – get elected and argue that on Capitol Hill.

    What are you even arguing in your article about?? If I heard you speaking your arguments, I’d think you can’t write – having so little common sense and appreciation for others’ hard, proven work – how could you?

    Comment by Forin513 — May 16, 2013 @ 11:08 am

  28. At the end of the day – I don’t know Musk as well as you do. But we all know his products – and that’s what matters. If not for him – they would not exist and it would be a loss – don’t need to argue that

    Comment by Forin513 — May 16, 2013 @ 11:11 am

  29. I agree that government subsidies are created for a reason. A bad reason, almost always. They are the fruit of crony capitalism. I cannot praise the genius of someone who is so dependent on the state.

    And really, Forin, you need to get a room. What’s more, a healthy skepticism is always advisable where investment is involve. The True Believers are the ones who get smashed.

    The ProfessorComment by The Professor — May 16, 2013 @ 11:26 am

  30. Are you Russian, Forin? Because your attitude of “no one can start a business without state support” is oh so Russian. How many sustainable “engineering businesses” are, and have been, started in the US without government support? A huge number.

    Yes, most startups fail. But that’s no reason to subsidize startups, especially when the subsidy process rewards the political hacks and cronies, and not the people with truly good ideas.

    And yes, the people who do start are brave. Let Elon Musk be brave, and go it alone, without relying on the coercive power of the state to shelter him from the gales of creative destruction.

    You are arguably the most clueless commentor I’ve had around here in a long time. Your cluelessness, moreover, is peculiarly Russian in its belief that state support is necessary for entrepreneurship. Which is why there are so few entrepreneurs in Russia.

    And are you kidding me re “government’s decision, not taxpayers”? FFS. That’s exactly the problem. Exactly. Very easy for bureaucrats and Congressidiots to spend other people’s money on projects advanced by political fixers.

    I repeat. You. Are. Clueless.

    The ProfessorComment by The Professor — May 16, 2013 @ 11:48 am

  31. So then correct your article – the argument here is about laws, government and their decisions and not about Musk’s achievements.
    And no Im not kidding – these are gov decisions, so be in government or shut up.

    Re startup support, I refer to huge scale engineering ventures such as building mass market auto-maker using unproven technologies and space launch that are bigger that most other contries’ similar organizations. Not to a corner shop biz example that was addressed to you.

    I’m not from your camp, that’s why I’m clueless to you. What do you know about Russia – expert.. You’re clearly barking a wrong tree in this whe article and comments. That’s why the argument will never go anywhere. Write your gov moans in a separate one and you won’t need to argue. But then it won’t be interesting in comments of course, or maybe not? And then again who’ll pay you for such article? Worthless

    Here’s something for other readers: Musk answering some of your questions in a simple manner. Don’t expect your camp to
    understand as you won’t be hearing anything (your ears are deaf to that):

    And here’s some for the loser camp to vent some more:

    Comment by Forin513 — May 17, 2013 @ 2:44 am

  32. Well, some people claim that without government support international air travel would have been impossible. Large pressurized airframes from Boeing and early jet engines were made possible by WWII. Airbus is a government startup altogether. Then there are the subsidies and bailouts of airlines.

    Comment by So? — May 17, 2013 @ 3:55 am

  33. @So? Yeah. Airbus is a government startup. And pretty much a monstrosity. Re airline bailouts, subsidies, etc . . . umm, N wrongs don’t make a right. Those are bullshit too. Re international air travel. Well, I have to say it: So? WWII was a negative net present value project, by a huge margin, even if some good came of it. Such a bullshit argument to offer in response to the Tesla situation, which is so obviously different that I’m embarrassed for you that you brought it up.

    @Forin. Sorry. The whole idea of being a citizen in a free country is the ability to tell the government to back off and f*ck off. “Government decision.” The state is not a separate, independent actor in the US-I understand how that is not the case in Russia, and hence why you are confused on this point. (Also know from your IP that you aren’t even in the US so . . . )

    And your grasp of economics is rather dim. Huge startup costs often make it uneconomic to pursue a new product: they are certainly not, by themselves, a justification for subsidies. It’s that kind of economic illiteracy that has saddled taxpayers around the world with white elephant subsidized projects. Also, FYI, startup costs can actually be an entry barrier that gives protection to the first firm in a market.

    Re the rest of your comment. Use Google translate. Or something.

    Re answering questions. Hasn’t answered questions about the dodgy accounting (touting profits generated by one off items), the funding model, and most importantly, the dependence on subsidies.

    The ProfessorComment by The Professor — May 17, 2013 @ 2:45 pm

  34. I’m indifferent to Tesla. It’s all about energy density and petroleum-based fuels have been the benchmark for over 100 years. Unless there is some kind of breakthrough (nuclear batteries, cold fusion, antimatter, microscopic black holes, whatever), EVs are a shell game.

    Comment by So? — May 18, 2013 @ 1:13 am

  35. […] that he or someone manipulated the prices of Tesla and Solar City stocks: I stand by that analysis. Second, I argued that the supposed visionary’s true genius was for feeding lustily at the taxpayer […]

    Pingback by Streetwise Professor » Hey Elon-Put *OUR* Money Where Your Big Fat Mouth Is — June 2, 2015 @ 7:20 pm

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