"When they allow a talk show host to play them like a two-dollar banjo, they demonstrate what kind of backbone they'll bring to the job later on, if we elect them. After they get elected will they continue to allow Jeff Crank to put a nickel in them and wind them up every Saturday morning?"

Barry Noreen, former columnist, Colorado Springs Gazette

Wednesday, September 14, 2011

LEMONADE FROM LEMONS?


By

ROBERT HARKINS

The president demands that Congress pass, and pass quickly, another 450 billion dollar spending stimulus. While the president has yet again commanded airtime, he has offered nothing in writing. Nevertheless, he insists that additional billions must be spent on infrastructure (roads and bridges), education, and other noble causes, if the nation is to “jump start” an economy left gasping from the previous trillion-dollar stimulus. It is hard to believe that after squandering a trillion dollars on infrastructure there are road and bridge that still need to be rebuilt. The president argues that Republicans must now at last—if Americans are to escape economic Armageddon— put country over party and patriotism over their crass pandering to corporate fat cats. He does not mention his failed “investments” in the fat cats Chrysler and General Motors.

Americans may recall that tax payer “investments’ in Chrysler resulted in billions in losses just as tax payer investments in General Motors has produced a Chevy Volt that hardly anyone wants to buy. The Administration and General Motors trumpeted the falsehood that the Volt was the first totally electric car. In fact, the Volt’s gasoline engine makes the car go, so to speak, and is not there— as General Motors and the Administration claims— simply to recharge the Volt’s batteries. The Nisan Leaf, an electric car, outsells the Chevy Volt by four to one. Where then are the returns on the American taxpayers’ investment in Chrysler and General Motors?

An evaluation of presidential intelligence is long past due. The adolescent child, who decides to sell lemonade in front his home, must address market principles. How shall he decide what to charge for a glass of lemonade? Well, he must look to the cost of lemons and sugar, and sell his product at a price that covers his costs, shows a profit and is competitive with the adolescent capitalist selling lemonade just down the street.

Precisely the same analysis must be made by the butcher, baker, candlestick maker—and any president with the temerity to invest billions of American tax dollars in a private corporation. The corporation misjudges inexorable market principles at its peril. Indeed, the business landscape is littered with corporate corpses that misjudged cost, profit and competition.

The president, however, in angry reiterations of a once compelling grand eloquence believes that government may abolish the laws of the market place, embrace business failures, and with rhetorically constructed visions of a once and future utopia create wealth out of words. President Obama granted a half billion dollars low interest loan guarantee to Solyndra, a California solar energy company. The company, incorporated in 2006, sells solar panels. However, “Two months before the federal government provided a $535 million federal loan to the company,

auditors found that Solyndra, the bankrupt solar company, had significant financial difficulties, reports. In a deepening scandal that threatens to ensnare members of the Obama administration, PricewaterhouseCoopers found that the company's finances “raise substantial doubt about its ability to continue as a going concern.” Two months later the company was awarded the loan under a green jobs program.[1]

In the five years from its incorporation to President Obama’s grant of a half billion-dollar loan guarantee, Solyndra never made a cent; indeed, it lost 550 million dollars. It then blew nearly all of the 555 million dollar taxpayer loan guarantee before filing a petition for bankruptcy. Solyndra, and the president simply refused to address precisely the same problem confronting the would-be adolescent lemonade seller: how to price a product so as to defeat the competition and make a profit.

Solyndra executives, before they lobbied President Obama for a half billion-dollar loan, knew that China, the seller just down the street, sold solar panels as a price far more competitive than the price at which Solyndra was able to sell solar panels. A company that cannot make a profit goes broke. Solyndra, however, chose a strategy inaugurated by the president. The solar panel corporation, “green” and therefore politically correct borrowed a half billion dollars from the taxpayers. The president then agreed to place the taxpayer on the hook should Solyndra collapse.

As tax payer money paid out to Solyndra— a corporation that never made a dime—did not somehow abolish market forces, their executives waited until they had spent virtually all of the half billion dollars and thereafter filed a petition for bankruptcy. The company that President Obama promised would be the flagship of Green technology fired 1100 workers. The FBI, as part of its investigation, has impounded Solyndra’s computers and other evidence. Congressional hearings are investigating corruption in the Obama Administration.

While Obama Administration officials claim they are shocked by the demise of Solyndra, an FBI investigation reveals that President Obama and administration officials regularly attended Solyndra corporate meetings. Journalist Bob Beauprez writes that,

Early press reports following Solyndra's bankruptcy announcement disclosed that hundreds of thousands of dollars were contributed by shareholders and executives of Solyndra to the Obama 2008 campaign. One of the company's largest investors, George B. Kaiser of Tulsa, reportedly contributed $53,500 personally and bundled large amounts more for Obama in 2008. Kaiser is a billionaire with banking and oil and gas interests that rank him among the wealthiest people in the world. Noting that in the first five years of operation the company had sustained $558 million in losses, the audit report said Solyndra "has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders' deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern." [2]

Should the president have invested American taxpayer money in Solyndra? Well, what do you think?

My new book, Renegades, Their Betrayal of America. Her Revolution and Renaissance is now available at Amazon.com and will soon be available on Kindle. Type in Renegades and Robert Harkins. Thank you.



[2]Bob Beauprez “Obama's Pet Billionaire at Solyndra May Take White House Down”httpfinance.townhall.com/.../11/obamas_pet_billionaire_at_solyndra_make_take_white_house_down

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