American Elephants

Another Day, Another Bankruptcy. Too Bad, Taxpayers! by The Elephant's Child

And so it goes. Beacon Power has followed Solyndra into bankruptcy, potentially leaving taxpayers on the hook for $43 million. Beacon is a Massachusetts company that was highly praised by renewable power activists, and consequently got loan guarantees from the federal government. The company promised to build storage devices for the intermittent power produced by wind and solar facilities.

In 2005, Beacon’s shares traded for $47, in February 2011 the price was down to $3.44 and in late October the share price hit 11¢. One more proof on the long list of proofs that the government is just no good at picking winners and losers. When will they ever learn?

Venture capitalists pool money, their own and others, to invest in promising businesses. They do a whole lot of investigating and due diligence before they invest a penny, because if the business does not succeed, it’s their pooled money that is lost. So they are very, very careful.

Government has no such problems. Solyndra is a massive example. The government’s position —as enunciated by Obama — has been that when things are too risky for venture capitalists and private investors, then government must step in to bring the dream to fruition.  And since it’s all new and daring, then we must expect some failures along the way. But the dream is correct, and we must do everything possible to change the United States into a renewable energy country.  Is that what he meant by that hope and change stuff?

As more of the Solyndra debacle becomes public, the bigger the scandal becomes.  The company was urged by the Department of Energy to put off their bankruptcy filing until after the election.  The first thing the company did was build a state-of-the-art factory with all the amenities — no putzing around in a garage or even one of the empty industrial buildings so readily available in California with an economy in the tank. No locating in a state that is more friendly to business. Big bonuses for the executives, as taxpayers were cut out of recovering any cost from the sale of the facilities.

Beacon wants to keep its business running, according to company officials, so they apparently still believe, in spite of an inability to turn a profit.  Government is not qualified to pick private businesses in which to invest taxpayer money.

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