Friday, August 10, 2012

Solyndra was a good bet? Really?

Michael Grunwald--senior national correspondent at Time Magazine--has a new piece out wherein he argues that Solyndra's collapse and the loss of some $500 million in taxpayer funds was not only scandal-free, but actually not a bad thing at all. That's not to say that Grunwald applauds the loss of money, but that he thinks there was nothing particularly wrong with the DOE loan to Solyndra:
The federal clean-energy loan program that the infamous solar-panel maker was a part of was designed to finance risky ventures, and Solyndra was a reasonable risk: an innovative manufacturer with huge private backing and an opportunity to transform the industry.
But what is Grunwald's assumption--that the loan to Solyndra "was a reasonable risk"--actually based on? He fails to actually make that case, to supply any evidence showing why the risk was reasonable. Instead, he opts for a phony narrative:
But the industry transformed itself first. Silicon prices plunged, Solyndra’s advantages vanished, and the firm went bust. It happens. The Bush and Obama Administrations both selected Solyndra from 143 applicants for the program’s first loan, and investigators found no evidence that political interference made that happen.
First, note that Solyndra never had an advantage. This is exactly why it came looking for funds from the Feds, because private investment wasn't sufficient, owing to the fact that people in the venture capital game had come to realize that the numbers were no longer in Solyndra's favor, that Chinese companies not only had better technology, but would also undercut Solyndra's prices by a country mile.

Second, while it is true that Solyndra applied for a loan under the Bush Administration, the loan was never approved. Why? Because people at the DOE and OMB had doubts about the loan, about whether or not the risk was reasonable. The loan application was still open when Obama took office and as I noted previously, it was the Obama Administration that pushed the application forward, ignoring red flags and concerns opined by people in the know at the OMB. Heading up that push was one Steven Spinner, put in charge of overseeing the DOE loan program by President Obama.

And finally, with regard to there being no "political interference" involved, Spinner is also evidence that this was not the case, either. As the ABC story which broke the Spinner angle notes:
Many of the emails [pushing the OMB to sign off on the loan] were written just days after Spinner accepted a three-page ethics agreement in which he pledged he would "not participate in any discussion regarding any application involving [his wife's law firm] Wilson [Sonsini Goodrich & Rosati]."
As I'm sure everyone can guess, his wife's law firm was handling the loan application on behalf of Solyndra. Spinner was himself a major campaign bundler for Obama and in some of his e-mails, he singled out other big-time Obama supporters--like George Kaiser--who were invested in Solyndra. And as we all know, the DOE ultimately allowed the loan to be subordinated, thus guaranteeing these big time donors first crack at recouping their investments--above and beyond taxpayers--when Solyndra went belly-up.

Grunwald isn't dealing with the facts at all in his assessment of Solyndra. The DOE loan to Solyndra was bad news; the risk wasn't reasonable and the approval was engineered for purely political reasons. Still, Grunwald want more Solyndras because "No More Solyndras is just another way of defending the fossil-fuel status quo."

Apparently, Grunwald is not even keeping up with current events. As Scott Shackford reports at Reason, the vaunted Chinese manufacturers of solar panels are losing money hand over fist:
China’s top ten photovoltaic makers have accumulated a combined debt of 17.5 billion U.S. dollars so far, leading the whole industry to the brink of bankruptcy, data from U.S. investment agency Maxim Group showed.
Goodness. That’s 35 Solyndras!
The real problem here is the market for solar panels: it's far, far smaller than we've been led to believe, than the DOE and various others have estimated. It doesn't matter how cheap the panels are if the market for them is almost non-existent. And it doesn't matter how much money you pour into a manufacturing company if the company is manufacturing something no one wants to buy. Success is an outright impossibility.

But never mind all of that. What we need are a couple of hundred more Solyndras. Then all will be well. Right.

Cheers, all.

2 comments:

  1. On a side note, I gave up believing in "fossil fuels" a long time ago. I took a quick look at how many BTUs were represented by our oil consumption in just one year, did some really gross estimates of the amount of dinosaurs that might translate into, looked at available square miles of land to inhabit, carried the 2, and came to believe that our "fossil fuels" come from some source other than decomposed flesh.

    Some time later, I found a few articles concerning the deepest hole in the world, and what they found at the bottom.

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  2. Deepest hole in the world...Harry Reid? :)

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