Streetwise Professor

September 5, 2011

Truly an Exemplar of the “Green Jobs” Movement–and Crony Capitalism as Well?

Filed under: Economics,Energy,Financial crisis,Politics — The Professor @ 4:13 pm

There has been a lot in the news lately about the bankruptcy of solar panel maker Solyndra, the recipient of both massive Federal largesse (a mere $535 million), and lavish praise from Obama as the exemplar of the potential for green jobs and Federal programs to support them.  “The future is here” spake Obama (starting about the 9:00 mark):

Now, I actually have to agree completely with Obama on this one.  It is indeed a great example of what we can expect when subsidizing “clean energy” companies. Incredible potential to propel our economy for years. Right. But in which direction?

But that issue has been well-covered by others.  I want to focus on a narrower issue.  Remember in 2009, when the secured creditors of Chrysler were expropriated (that’s a nice way to say “hosed”) when that company went into bankruptcy?  Their purportedly senior claims were in fact subordinated to junior, unsecured creditors.  The secured creditors were the subject of vitriolic criticism from Obama personally, and from the administration and its media water boys.  It was an early indicator of the crony capitalism to come.

In the Solyndra case, a major Obama bundler George Kaiser–from very red-state Oklahoma, of all places–is an investor in Solyndra.  More to the point, when the company was in trouble back in March, it borrowed $75 million dollars, in part from the George Kaiser Family Foundation.   Crucially, this loan was made senior to most of the outstanding debts owed to the Federal government ($385 million out of the $535 million in total provided by Uncle Sucker).

So it will be quite interesting to see whether Kaiser, the Obama donor, gets the Chrysler secured creditor treatment, or whether the administration will have found a strange new respect for the virtues of strict adherence to priority rules in bankruptcy.

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4 Comments »

  1. And then there is the GM cramdown which took retirement money (401Ks, etc) out of many hard working, tax payers (not all of whom are union members future retirement security to the long term benefit themselves and their families to the benefit of the unions and trial lawyers whose funding helps assure power retention. And then of course there is the largely unaddressed issue of disenfranchising the responsible courts. Thank you as always for your courage, for always seeking the truth no matter where it leads and doing it sometimes hilariously from time to time. Cheers!

    Comment by James Black — September 5, 2011 @ 6:44 pm

  2. Look out, SWP, SO is just around the corner. The greeniac cometh…

    Comment by Howard Roark — September 5, 2011 @ 7:42 pm

  3. I wasn’t going to comment, but as Mr. Roark specifically called me out…

    We are supposed to take the conclusion that subsidizing solar power (e.g. with loan guarantees) is a Bad Thing. However, this ignores several facts, such as that the Chinese subsidize solar power to a far greater extent than the US (which makes it more difficult for the US to compete on price) and that the price of silicon has unexpectedly fallen recently, so that Solyndra’s main selling point – that its solar modules didn’t use silicon – became far less of a winning factor.

    The subsidies to Solyndra may have been flawed, given that its business strategy was faulty – it tried to massively scale up its production at a time when the prices of conventional PV fell – but this doesn’t remove the case for learning from mistakes and continued government promotion of sustainable technologies to increase US competitiveness. In any case it is certainly preferable to the tens of billions of dollars that, say, the coal industry receives every year.

    Comment by Sublime Oblivion — September 6, 2011 @ 7:59 pm

  4. From my point of view the chief item here isn’t whether new technology firms fail and go under….the die off faster than restaurants…it’s how the bankruptcy will be handled. I watched, slack-jawed, as the Administration used every dirty trick in the book to subvert decades of bankruptcy law in favor of their union buddies when Detroit went belly-up. Will it happen again? At the very least, this will be a demonstrative to Kaiser on where he stands in the rankings…

    Comment by Swoggler — September 7, 2011 @ 7:31 pm

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