American Elephants

A Pretty Face and A Sexy Body Just Aren’t Enough! by The Elephant's Child


Fisker Automotive has furloughed its U.S. workers. Now they have hired a law firm for a potential bankruptcy filing. Fisker has not produced a car in about eight months and is losing the interest of two prospective China-based buyers.

Fisker has raised $1.2 billion in equity, and has also had about $336 million of its $529 million line of credit with the federal government frozen because of its failure to meet certain production mandates. A payment on the government loan is due this month.

In March, co-founder Henrik Fisker resigned as executive chairman of the company. Mr. Fisker and Fisker CEO Tony Posawatz were believed to have disagreed over whether the company could feasibly grow with  its current cash situation.

Another government effort to pick winners and losers appears to bite the dust. You can see why those with all sorts of government money to spread around might fall for the sexy lines of this car, but one would think the $100,000+ price for the car would cause some hesitation. I thought we looked upon the 1% who could write a check for this car with some disfavor— so why is it the government’s business to provide them with toys?

So The Karma and Fisker Automotive may join Solyndra and the long, long line of green failures — inspired by the need to “reduce our dependence on foreign oil” — a need eliminated by our own plentiful natural resources, if Obama would just stop blocking our access. And they were supposed to save the planet from global warming, but the planet isn’t warming and hasn’t been for nearly 20 years.

The free market does a much better job of picking winners and losers. Hard-nosed investors who are putting up their own money do real investigation and analysis before they invest a single cent, and in spite of their expertise they have some failures. I’m sure investing in a new start-up is exciting. I bet Obama even got to drive one. But it’s not his own play money that Obama is investing. And it is not the government’s job to decide what goods our economy is going to produce.

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Reblogged this on A Provocative Mind.

Comment by Elisha

What I find particularly irritating about a story like this..,is that it illustartes the virutual LACK of any type or kind of expertise in the government. If you wanted to collect an incompetent group of buffoons to make decisions..,you’d be hard pressed to find higher incompetence than the government. With the sole exception of our military (which is second to none)..,
lunacy is their stock and trade. Pick any area you like..,and there are all kinds of examples of sheer stupidity. The IRS, FBI, DHS, EPA, FDA, DOJ and on and on. The causes for this incompetence are two-fold. One is called “Diversity”..,and the other is called “The Peter Princple”. Diversity started out with good intentions..,but all it’s engendered is a string of people being put into jobs for which they are not qualified. It doesn’t matter what your background or what your experience is..,it only matters if you’re someone who fits a preconceived idea of what we’re “missing”. Best example is the great pretender himself – Barrack Hussein Obama. A TOTAL unqualified zero, who is only elected because of “what” he is..,not “who” he is.
The second cause of our problem, is the “Peter Principle”. It states..,that people are promoted to their highest level of INcompetency. For example, the person at the top , MAY have been a great “Agent” or “Operative”, but the next step up the career ladder might be “Administartion”..,where the person is out of their element. Look at the buffoon, who was at the top of GSA. He’s photographed in a tub with a glass of champagne
.ALL on our dime. How could he be so stupid ? Because he’s in a job, one step above whatever he was competent at. Look at the clowns in the EPA. “Maybe” they’re good scientist..,but when they want gasoline at 8 dollars a gallon..,it’s obvious they are completely clueless about the economic impact something like that would have. Perhaps the best example was the BP oil spill. It took forever for anything to happen. Why ? Because they don’t teach real world situations to academics..,of which we have an over abundance in government. We have “theorist” without experience, making decisions about us and our tax dollars. Until these people are held accountable for their actions..,we can expect more bad judgement and more waste.

Comment by Michael B.

Not surprising. The Karma is absolute garbage mechanically and actually pretty dull and unexciting to drive (yes, I have driven one… two, in fact) as opposed to the Tesla Roadster, which uses tried and true Lotus underpinnings and is quite fun to drive.

We had the Tennessee Environmental Conference here at the hotel a few weeks ago (at the start of Spring Race Week at Bristol Motor Speedway, just 22 miles away, and which we host the sponsors and the NASCAR officials – go figure), and while we had a Tesla and a Chevy Volt (another miserable failure of a car) on display, the majority of the discussions had to do with “alternative fuels” – hydrogen (our city has a few of those), propane (we have several police cars that run on it), and bio-diesel (there are now 5 stations in the area which have pumps for it). Nothing was said about problems in the electric car field, and even hybrids (which enjoy a market-based success; see the Toyota Prius) got limited discussion. The thing everyone noticed about THIS conference, though, was that almost everything they talked about involved private (read: corporate) participation and investment, and the willingness of local industry to do so, WITHOUT government interference and coercion.

Comment by Lon Mead

I think you first have to recognize that we are all human, and subject to the errors of the species. Beyond that, you’re right of course. It is a problem of bureaucracy, and the bigger the bureaucracy the more everybody is trying desperately to get ahead, and who is going to tell the emperor that he doesn’t have any clothes on?

Republicans make the argument for much smaller government, but don’t explain it very well. You just did.

Comment by The Elephant's Child

I have read elsewhere that they aren’t much of a car. GM did not want to make the Volt. They said it was not ready for prime time, but Obama insisted that they make it. GE, when Immelt was a Jobs Council guy, was going to buy hundreds, but now that the jobs council is unnecessary (we do have lots of jobs now, don’t we) they decided not to buy any. There is a very interesting story in the car mess that should make a fascinating book.

I read, quite some time ago, an account by a very knowledgeable engineer, who said authoritatively that they had exhausted all the elements in the periodic table, and they just had no idea where a breakthrough in battery technology would come from. Current scientific and engineering knowledge had no answers. It would have to be a real breakthrough. Elsewhere, it was noted that batteries for electric cars cost as much as a new car, well, in the $15,000-$20,000 range — which made used electric cars almost unsalable. The Roberts Electric went 45 miles on a charge back around 1900.

Comment by The Elephant's Child

A sweet looking car, now put a gasoline engine in it and start making some money!

Comment by hey_sherm

Hey, let’s all ignore Tesla Motors! You know, Motor Trend’s Car of the Year for two years in a row? Yeah, THAT Tesla. Let’s all ignore the fact that no company or individual, whether private or public, elected or appointed or hired, is infallible! And let’s all just focus solely on the companies invested in that have failed. Because if we pay any attention to ones that have succeeded, that might dilute our completely partisan point somewhat. We certainly don’t need balance when examining this issue, do we?

Oh, also please completely ignore the management and leadership of those respective companies, because obviously they are all robots controlled from the Oval Office.

Comment by Edward Hotspur

The federal government has a appointed tasks. They do not include picking what products the private economy will produce. If Tesla turns out to be a success, something I doubt, good for them. Picking winners and losers is not the government’s business, and the government has no right to “invest” taxpayer money in such schemes. If the product is worthwhile, venture capitalists will flock to support it.
The federal government doesn’t get to decide who is fallible or infallible. That’s where all the graft, crony capitalism and sheer crookedness comes in.

Comment by The Elephant's Child

1) The government invests vastly more in oil companies through subsidies. If that’s not ‘picking products’, I don’t know what is. The government invests all sorts of the taxpayers’ money in all sorts of things that have zero chance of making money. And it is one of the government’s tasks. Tesla is already a success, so your doubt is unfounded. The private sector, along with each company’s management decisions, decided who was and was not infallible. The government literally gave X number of electric car companies loans, and some were successful and some weren’t – just like in the private sector.

At the same time, the government funds lots of research that is highly beneficial yet would not be funded otherwise because…

2) Venture capitalists don’t invest in products that are worthwhile. They invest in products which they believe can make them money.

3) If this bothers you, then by all means, please tell the venture capitalists how much money there is to be made from the military, social security, Medicare, Medicaid, oil subsidies, farm subsidies and pork projects, because apparently venture capitalists do not yet know about this huge opportunity.

Comment by Edward Hotspur

1) Sorry, the government does not “subsidize” the oil companies. The oil companies get the same kind of tax-break that every other business gets. In their case it’s called an oil depletion allowance. Manufacturers depreciate their equipment and buildings because they are worth a little less each year. When an oil company extracts oil, there is less left in the ground — different names, but the same kind of depreciation. President Obama has called the oil depletion allowance a subsidy because he is opposed to the oil companies on ideological grounds, but it isn’t. Look it up.
Is Tesla successful as a profitable company that has paid off it’s loans and earned a profit for shareholders or just because Motor Trend likes it? I haven’t read that it is a great success.

2). Of course Venture Capitalists invest in products that are worthwhile. A worthwhile product is one that consumers want and earns money for the company and the venture capitalists. A company that does not make a profit soon goes out of business.

3)Venture Capitalists pool their funds to invest in businesses that they believe will become successful. They do a lot of very careful cost-benefit analysis before risking their own money. Because they are so careful, they mostly have more winners than losers, but they do have losers. Our federal government has invested taxpayer money in “green” firms owned and/or run by his campaign backers. It’s well documented. Apparently not much cost/benefit analysis goes into government investments of taxpayer money, for the list of bankruptcies and flops is quite long. The cronies do quite well, often getting bonuses just before they go bankrupt.

Social Security, Medicare, Medicaid, are what is called “Entitlements.” Long established, people pay into them throughout their working years. It was assumed that larger groups of young working people would always be able to cover the payments to the old folks, but this has proven to be false. Social Security and Medicare are going broke, and if the entitlements are not reformed will go bankrupt in the not too distant future. National Defense is the business of government, Constitutionally designated. The farm program is a mess, but Congressmen representing farm states aren’t about to give up on it or reform it. Badly needs reform. Congressmen do like to get benefits for the businesses in their districts, and much of it is excessive or ill advised. You need to pay attention to what your congressmen are doing.

4). I might recommend Henry Hazlitt’s Economics in One Lesson Excellent book, short, millions of copies sold, only about $10.

Comment by The Elephant's Child

1) Oil companies get the same breaks other companies get PLUS subsidies on top of that because of the way the tax break is figured – shockingly based on revenue derived from equipment rather than on the equipment itself like all other companies must do.

2) A worthwhile product is one that is “sufficiently important, rewarding, or valuable to justify time or effort spent” – which means not just financially.

3) I’d like to see your documentation on the claim that VCs ‘mostly have more winners than losers’. Ample documentation exists detailing times when the government has bailed out the private sector. Private sector = not that great at business, it would seem.

Looks like you have some reading to do.

Comment by Edward Hotspur

Try a little common sense. You may think a product is “worthwhile” emotionally, but if it does not turn a profit, it won’t be around for long. If venture capitalists don’t have more winners than losers (and they do) there would be no venture capitalists. Most people don’t invest money just to lose it. You are mistaken about the subsidies, and oil companies pay millions in taxes, as well. Please remember that our economy runs on fossil fuels. Electric cars run on natural gas, which runs the power plants that produce the electricity. Ethanol is another government sponsored solution that is a complete failure, being dirtier than gasoline, emits more, and is playing hob with world food prices.

The government has bailed out the “too big to fail” businesses. Widely regarded as a mistake. Example: the federal government bailed out General Motors and Chrysler, because they were “too big to fail.” Their problem was vastly overgenerous union contracts that left them unable to complete with foreign companies building cars here in right-to-work-states. We have bankruptcy laws and bankruptcy courts that deal effectively with companies in trouble. Instead, the administration shafted the bondholders, who by law were required to be paid first, forced the automobile dealers (private businesses who simply bought their stock from the car companies) out of business, and handed off a third of car company stock to the UAW simply because they liked unions more than the businesses. Unlawful and illegal. And of course they gave Chrysler to Fiat. Union employees at Delphi were rescued. Salaried employees got screwed.

It was an enormous scandal, but the press hushed it up. Dodd-Frank was supposed to deal with the “too big to fail” idea, which is damaging to the country, but it did not, and is a useless law. If you took my book suggestion as insulting, it was not meant that way. It’s a useful and popular book.

Comment by The Elephant's Child

I am not mistaken about the oil subsidies. They get to claim deductions based on the revenue generated by their equipment, not depreciation on the equipment itself. This means that when gas prices are high, oil companies get to claim a larger deduction, unlike literally every other industry.

If a limited number of people have a disease that can be cured via research, and venture capitalists won’t invest in that research, your position is just to let them die, right? That’s the impression you’re giving. Yet this would be a worthwhile investment, no?

You’re also wrong about venture capitalists for two reasons. First, are ALL venture capitalists successful? No, they are not.Some of them DO, in fact, disappear. Second, venture capitalists invest in a wide variety of businesses, and most fail, but the ones that are successful are often more than enough to offset the failures. So your claim that venture capitalists invest in more winners than losers is false.

If you’re going to now claim that the media is some secret organization beholden to the government, I’m done talking to you. Last time I checked, Fox News was the most popular cable news service and Wall Street Journal the most popular financial newspaper in America.

Comment by Edward Hotspur

According to the US Energy Information Administration (EIA) in 2010, federal energy subsidies (cash grants, targeted tax breaks, R&D support, preferential loans) totaled $37.1 billion. Renewables ($14.674 billion)LIHEAP ($8.241 billion) Conservation programs ($6.597 billion) substantially more than coal ($1.358 million) natural gas and petroleum liquids ($2.820 billion) and nuclear power ($2.499 billion). Per unit of energy produced, subsidies for renewable energy vastly exceed those for fossil fuels. In the electrical sector “solar is being subsidized by over 1200 times more than coal and oil and natural gas electricity production.

Here’s an explanation from the American Petroleum Institute, from PolitiFact Ohio and from the New York Post. If you follow the Energy Tribune, or Master Resource, it’s easier to keep up on energy issues.

I don’t follow Motor Trend, because I have no interest, but the Karma roadster costs around $100,000 and has had a habit of turning into a brick if the battery isn’t charged up. Tesla’s model S, average list price $82,000, gets $46 million of low-interest loans from the DOE and a $7.500 federal tax credit as well as various state and local subsidies. It’s effective CO2 emissions are considerably more than a large SUV. Government environmental credit schemes required other auto makers to pay Tesla more than $40 million in 2012 to “offset” the emissions of their gasoline engine vehicles. The Obama administration has a long list of bankrupt “green” companies— “winners” they have subsidized because??? The subsidies haven’t worked because they were misguided, the world has moved on, and there has been no global warming for over 15 years, CO2 is not the cause of warming, and it was all a fraud. Billions of taxpayer money simply wasted. Count Fiskar as one of the failures. It was pretty though. Maybe if it had a gas engine. Try to get your facts straight.

Comment by The Elephant's Child

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