Cronyism or Capitalism?

         

         Solyndra failed because their cylindrical technology was superior to flat panel design.  It captured more energy for a longer time during the day.        

         The tubes were more expensive to produce than flat panels, but they had advantages in efficiency, weight, and wind resistance.

         The essential material in solar panels is so expensive that panel makers needed to squeeze every milliamp possible out of their panels.

         Solyndra failed because of a huge price drop in the main component of solar panels, silicon.

                  Silicon is essentially sand.  The Earth’s crust is 28% silicon. Sand is virtually free, and the supply, for all practical purposes, is inexhaustible.  We will never run out. But silicon must be 99.99% pure to work in solar panels, and much purer to work in electronics, and it is expensive to purify silicon to that level.

         Solar-grade silicon cost $24.00 a Kg in 2004, but worldwide demand for solar panels, computers, and smart phones drove the price to $450.00 per Kg by 2008.  Predictions were that this would remain unchanged until at least 2012.  Instead, the high price of pure silicon caused massive increases in production and the price has fallen dramatically.

         The Chinese government helped the development of cheaper panels by pumping not $535 million, but billions of dollars into production companies, which are selling purified silicon and solar panels internationally.

         China subsidized far more development then did the US, and we are paying the price.  China produces 27 times more pure silicon than the US, and the gap is getting wider every day.  China and Germany lead the world in solar panel production.

        

         When the cost of pure silicon dropped to $50.00 a kilogram, an 89% drop in price, with an almost certainty of lower prices to come, the marginal efficiency of the costlier cylindrical cells became irrelevant overnight.  Solyndra made the right choice by suspending all production.

         You don’t keep making a better buggy whip when it is abundantly clear that everyone is switching to automobiles.

        

         How does Congress respond?  By attacking the Obama administration and demanding all green energy subsidies be stopped.  By attacking subsidies funded during the Obama administration.  There was no mention of subsidies on oil, natural gas, or coal, industries that are already so profitable (and ecologically damaging) that they need not, and should not be supported by taxpayers.  The Chinese couldn’t have wished for a better response.

         What is happening to solar energy development is the result of technological breakthrough and intelligent planning, not some law of economics that decrees government subsidy of business will always fail, as Republicans have insisted.

         The energy producers measure the efficiency of energy in dollars per Kilowatt, and by that measure coal, oil, and natural gas win out over solar power, which is why fossil fuel industries use that yardstick.  Quite soon, solar panels will reach that level of cost effectiveness, without releasing carbon into the environment.  Fossil fuels, on the other hand must always release billions and billion of tons of carbon annually, and steady increases in pollution are unavoidable.

         But they are leaving out human and environmental costs, which must be paid in human misery and taxpayer money later.  In effect, the carbon polluters are getting a massive tax-funded subsidy.  As a result, solar power in the United States is left in the dark.

         I don’t think it is necessary for me to explain why many of our elected officials are trying to suppress solar power, and instead subsidize coal, oil, and natural gas.  Most Americans realize that corporations are supplying the lion’s share of political campaign money.  It’s not even a conspiracy; they’re doing it in broad daylight.

        

         The true motive behind these attacks is to discredit the Obama administration by any means possible.  Almost all negative articles about Solyndra come from biased sources such as the Washington Times, Bloomberg News, News Corp (The Wall Street Journal, and Fox News), The Washington Post, and other right wing outlets such as American for Prosperity, (Aka Americans for the Prosperity of the Koch Brothers)

         Republican politicians are scrambling to put a negative spin on this bankruptcy to prove cronyism, embezzlement, lack of oversight, and presumably, that President Obama is clueless and incompetent.

         The Solyndra loan guarantee was not in essence a stimulus project; it was an energy policy project.  But since it was in the stimulus bill, the money was guaranteed during the Obama administration, and it might be fair to say with insufficient oversight.

May 2005: Just as a global silicon shortage begins driving up prices of solar photovoltaics [PV], Solyndra is founded to provide a cost-competitive alternative to silicon-based panels.

July 2005: The Bush Administration signs the Energy Policy Act of 2005 into law, creating the 1703 loan guarantee program.

February 2006 – October 2006: In February, Solyndra raises its first round of venture financing worth $10.6 million from CMEA Capital, Redpoint Ventures, and U.S. Venture Partners. In October, Argonaut Venture Capital, an investment arm of George Kaiser, invests $17 million into Solyndra. Madrone Capital Partners, an investment arm of the Walton family, invests $7 million. Those investments are part of a $78.2 million fund.

December 2006: Solyndra Applies for a Loan Guarantee under the 1703 program.

Late 2007: Loan guarantee program is funded. Solyndra was one of 16 clean-tech companies deemed ready to move forward in the due diligence process. The Bush Administration DOE moves forward to develop a conditional commitment.

October 2008: Then Solyndra CEO Chris Gronet touted reasons for building in Silicon Valley and noted that the “company’s second factory also will be built in Fremont, since a Department of Energy loan guarantee mandates a U.S. location.”

November 2008: Silicon prices remain very high on the spot market, making non-silicon based thin film technologies like Solyndra’s very attractive to investors. Solyndra also benefits from having very low installation costs. The company raises $144 million from ten different venture investors, including the Walton-family run Madrone Capital Partners. This brings total private investment to more than $450 million to date.

January 2009: In an effort to show it has done something to support renewable energy, the Bush Administration tries to take Solyndra before a DOE credit review committee before President Obama is inaugurated. The committee, consisting of career civil servants with financial expertise, remands the loan back to DOE “without prejudice” because it wasn’t ready for conditional commitment.

March 2009: The same credit committee approves the strengthened loan application. The deal passes on to DOE’s credit review board. Career staff (not political appointees) within the DOE issue a conditional commitment setting out terms for a guarantee.

June 2009: As more silicon production facilities come online while demand for PV wavers due to the economic slowdown, silicon prices start to drop. Meanwhile, the Chinese begin rapidly scaling domestic manufacturing and set a path toward dramatic, unforeseen cost reductions in PV. Between June of 2009 and August of 2011, PV prices drop more than 50%.

September 2009: Solyndra raises an additional $219 million. Shortly after, the DOE closes a $535 million loan guarantee after six months of due diligence. This is the first loan guarantee issued under the 1703 program. From application to closing, the process took three years – not the 41 days that is sometimes reported.  OMB did raise some concerns in August not about the loan itself but how the loan should be “scored.”  OMB testified Wednesday that they were comfortable with the final scoring.

January – June 2010: As the price of conventional silicon-based PV continues to fall due to low silicon prices and a glut of solar modules, investors and analysts start questioning Solyndra’s ability to compete in the marketplace. Despite pulling its IPO (as dozens of companies did in 2010), Solyndra raises an additional $175 million from investors.

November 2010: Solyndra closes an older manufacturing facility and concentrates operations at Fab 2, the plant funded by the $535 million loan guarantee. The Fab 2 plant is completed that same month — on time and on budget — employing around 3,000 construction workers during the build-out, just as the DOE projected.

February 2011: Due to a liquidity crisis, investors provide $75 million to help restructure the loan guarantee. The DOE rightly assumed it was better to give Solyndra a fighting chance rather than liquidate the company – which was a going concern – for market value, which would have guaranteed significant losses.

March 2011: Republican Representatives complain that DOE funds are not being spent quickly enough.

House Energy and Commerce Committee Chairman Fred Upton (R-MI): “despite the Administration’s urgency and haste to pass the bill [the American Recovery and Reinvestment Act] … billions of dollars have yet to be spent.”

And House Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL): “The whole point of the Democrat’s stimulus bill was to spend billions of dollars … most of the money still hasn’t been spent.”

June 2011: Average selling prices for solar modules drop to $1.50 a watt and continue on a pathway to $1 a watt. Solyndra says it has cut costs by 50%, but analysts worry how the company will compete with the dramatic changes in conventional PV.

August 2011: DOE refuses to restructure the loan a second time.

September 2011: Solyndra closes its manufacturing facility, lays off 1,100 workers and files for bankruptcy. The news is touted as a failure of the Obama Administration and the loan guarantee office. However, as of September 12, the DOE loan programs office closed or issued conditional commitments of $37.8 billion to projects around the country. The $535 million loan is only 1.3% of DOE’s loan portfolio. To date, Solyndra is the only loan that’s known to be troubled.

http://thinkprogress.org/romm/2011/09/13/317594/timeline-bush-administration-solyndra-loan-guarantee/?mobile=nc

        

Gatesgate

  

            So I am not talking about discrediting the police report.  I am talking about how reports are written to put the writer in the best light possible and the subject in the worst light.  If we could take police reports as the truth, the whole truth, and nothing but the truth, we could do away with criminal courts altogether.

            All the reporting person has to do is use vague terms such as 

"tumultuous manner" to muddy the waters.

            The Daily Howler evaluates how the media is doing its job.  (Actually, how it is not doing its job!)  It doesn't report on the facts per se, but it shows how the media gets things wrong, and how they make up stories instead of gathering information, and how they pick up each other's misinformation and repeat it without ever checking for veracity. 

            People that are related to policeman or are personal friends of policemen are excused from jury duty because they tend to take the word of  a police officer over the testimony of anyone else.

            That being said, the police report says a witness described two black men with backpacks.  The woman that called 911 says she didn't say black men or backpacks, and the tapes back her up.

            The second reporting officer does not mention the woman telling the color of the men or the backpacks. 

            Again, all this is irrelevant to what the press is doing.  They are creating stories about the incident based on what they think happened, or what they want to have happened.  It is the media that has turned this into an issue of racial profiling.  Any judgment about what really happened cannot come from the scant information the news media has at hand.

            Police and judges both know that eyewitness testimony is the least reliable of all evidence.

            It is the media and Obama haters that have made this a national issue.

            Think about this.  How many times daily in America does a white cop talk to a Black man through his front door? I would guess several times a day in New York City alone.  Multiply this by all the Black communities in the country and you have a lot of incidents that never made news anywhere.

           

            This is national news only because Obama aired his opinion, which was almost as dumb as when Nixon claimed that [Charles] "Manson is guilty".  Obama should have stopped when he said he didn't know the details of the incident.  If he had, the story would be over.

               My opinion is that white men in America don't know how sensitive Black men are about the way police talk to them because they have never experienced it themselves.  Regardless of what actually happened, and what words were actually said, we should keep this in mind.

         The other side of the coin is the charge of “disorderly conduct”.  This has been a tool of officers at the scene for over a century.  The courts have given police leeway to break up or prevent riots using disorderly conduct as a misdemeanor charge, allowing them to arrest people that could conceivably incite or touch off a riot.

         The officer must consider if the disturbance is drawing a crowd, and if the crowd is becoming alarmed by what they are witnessing.

         The officer at the scene makes the judgment, the desk officer or judge make the call as to whether or not to press charges.  Just because the police release the arrestee without charging him does not indicate that the arrest was improper, but it also doesn’t indicate that is was proper.

         Do police abuse this power because of racial bias?  Of course they do.

         Do police use this power to stifle dissent?  Yes they do, and many times they infringe on 1^st Amendment rights. 

         What we do know in the Henry Gates episode is the crowd was seven  “unidentified passersby”. What we don’t know is was that too many people for safety and was how alarmed were they?
These are both judgment calls. Remember, the police don’t have to wait for a riot to start. They have been allowed to arrest someone before things get out of hand if they feel the situation warrants it.

         Did Professor Gates overreact? Probably.  Did Sergeant Crowley overreact?  Maybe.  Did President Obama overreact? Yes, as a sitting President he did, as a Black American, probably not.  Did the media overreact?  Absolutely!

        

         What bothers me is that Gates told his daughter in an interview that the police report was untrue. “Well, the police report was an act of pure fiction. One designed to protect him, Sgt. Crowley, from unethical behavior. I was astonished at the audacity of the lies in the police report, and almost the whole thing from start to finish was just pure fabrication. So yes, I felt violated all over again.”

         Now, it is not a serious abuse of police power to arrest and release someone on a disorderly conduct charge.  It is understandable that Gates could forgive Sgt. Crowley for that, and sit down and have a beer with him.  After all, most people would agree that it is bad public policy to allow citizens to shout at and insult police officers in public, and it is proper for police to demand respect, especially if that disrespect may escalate into unruly conduct.  Maybe having a beer in the White House compensates for having his constitutional rights violated.  Or maybe he exaggerated just a teensy bit, and so did Sgt. Crowley, and they are both willing to forgive and forget.        

         But writing a police report that is an act of pure fiction is a serious abuse of police power, and a serious crime, as well.  Why hasn’t Gates pursued this? More importantly, why haven’t the media pursued this?  Why haven’t reporters even attempted to find out what happened on the porch?  Why have reporters picked one side over the other and made up justifications to support their guy?  Why hasn’t someone other than Gate’s daughter asked him that question?

          This answer is easy.  It’s because the entire system of journalism in America is broken, that’s why.  It is broken because newspapers, TV networks, TV and radio stations, are no longer independent entities.  They are owned by large corporations run by powerful CEOS, and they obey the orders of their masters.

Gravymeister Aug. 3, 2009

           

Stimulus


         Referring to the “famous” first two questions of the Republican caucus/conference, they reflect two central questions concerning government involvement in economic recovery.    

 

         I am not an economist, but there are a few things about Keynesian theory that I do understand.  Briefly, in a recession, when banks are not lending, entrepreneurs are not funding start ups, and consumers are not spending, the government can stimulate the economy by using deficit spending to put money directly into the economy as a whole.  Of course, it matters how they inject the money.   Deficit spending multiplies the effect of each dollar added to the economy.  Across the board tax cuts are not the most effective stimulus.

         Across the board tax cuts for the rich, as envisioned by Chris Matthews, are another thing altogether, whatever that phrase might mean.

         Bear in mind that Herbert Hoover in 1932 raised taxes (after he had cut them), and attempted to balance the federal budget, two policies that are considered to be the worst things one can do in a recession. 

 

        

         In congressional testimony given in July 2008, Mark Zandi, chief economist for Moody's Economy.com, provided estimates of the one year multiplier effect for several fiscal policy options. The multipliers showed that increased government spending would have more of a multiplier effect than tax cuts. The most effective policy, a temporary increase in food stamps, had an estimated multiplier of 1.73. Making the Bush tax cuts permanent, had the second lowest multiplier, 0.23. A payroll tax holiday had the largest multiplier for tax cuts, 1.29. Refundable lump-sum tax rebates, the policy used in the Economic Stimulus Act of 2008, had the second largest multiplier for a tax cut, 1.26.[2]

 

         It seems clear from this example that the high multiplier effect from food stamps is because food stamps can be used only for consumption.  They can’t be invested or hoarded.  On the other hand, people that are already consuming as much as they want could use huge tax cuts for investing, which may encourage long term growth, but will not result in an immediate stimulus.  They could also send tax cuts to offshore bank accounts, where they will have no effect on our economy.

 

         A payroll tax holiday has an immediate stimulus effect because it puts the money into worker’s paychecks immediately.  The effects of tax reductions or credits are delayed because they come into effect the next year.  Early filers of refunds can get their money in January, for instance, but not sooner.

         One of the biggest criticisms from the tea partiers is that Obama hasn’t done anything to create  private sector jobs now.  There is little the President, or Congress for that matter, can do to stimulate job growth quickly.  The government can authorize large-scale public works, but it takes time to get the contracts written, the companies organized, and workers hired.

         The right wing is engaging in doublethink when they accuse Obama of trying to create socialism by hiring more government employees instead of creating private business.  I am sick and tired of Republicans claiming they are in favor of small business.  Would all Democrats who oppose small businesses please raise their hands?

 

         After watching the Republican-Obama conference I was pretty sure Obama knows about the multiplier effect.  The way he answered the questions seemed to indicate that he is aware of current economic theory. However, I think this talk about a spending freeze is pure propaganda. Freezing spending at a defecit level is what you want to do.  As noted above, you don’t try to balance the budget during a recession, and you have to engage in deficit spending to gain the multiplier effect.  I have no idea if Mike Pence or Paul Ryan know that much about economic theory.  Pence seems to dabble in foreign trade for the most part.  Ryan, on the other hand, is involved in Ways and Means and Budget.  This doesn’t mean he knows diddly about economics, although he should.  In fact, all politicians should know these basics and more.  It does mean Pence is very influential, however.

 

         In perusing the daily newspaper letters to the editor, it is clear that Americans are abysmally ignorant of how their economy (or their government) works.  It’s not their fault.  The above concepts are not gibberish to me because I was an econ major, and worked in consumer finance and even on Wall Street.  I don’t know if Obama or Olbermann or Maddow could educate people about these theories, but it is difficult for voters to make intelligent political decisions when they don’t have a clear grasp of the issues or the mechanisms involved.  Every week I read a letters to the editor explaining that a government budgets are exactly like a household or business budgets, and therefore the government can’t spend more than it takes in.  I don’t know about your household budget, but mine lacks the power to tax others, and does not have the right to print money.

        

         That said, I would like an immediate tax credit of $1500.00 for my 2009 taxes, and I am sure most Americans would like the same.  We did get the two $250.00 stimulus checks, and an additional $300.00 tax credit, but it wasn’t enough. (Married couples on Social Security got $800.00, $400.00 each).

 

         Should politicians and reporters start talking about the multiplier in public discourse?

         I think they should.  Hopefully, it would encourage the public to ask relevant questions of their lawmakers, possibly even look up things for themselves, and dispel some of the outright lies we are being fed daily.  Of course, our lawmakers and news media prefer the situation the way it is now, where they can lie and mislead with virtually no risk of discovery.  Like the radio and TV hosts, they can continue to push our hot buttons to keep us off balance.

Rush has 400,000,000 good reasons to keep up his antics.

        

Gravymeister, Feb. 4, 2010