## Saturday, September 17, 2011 ... /////

### Solyndra: a textbook example of green economic insanity

Solyndra was a solar panel company founded in 2005 which went recently bankrupt, despite half a billion of subsidies from the Obama White House.

An excellent idea – cylindrical panels surrounded by mirrors – but its prize is not infinite.

In early 2009, they would ask Bush Jr White House for a donation. He told them "wait, I still have to study your proposal" which is a diplomatic version of "f*ck off". It would have been much better if the undiplomatic but much more accurate reaction were used but at least, Bush Jr didn't pay a penny. The pampered parasitic solar as**ole CEOs went ballistic: how arrogant George W. Bush has to be not to simply pour a billion of dollars into their solar throats!?

However, once Obama took the office during the same month, the company whose executives raised $100,000 for the Obama campaign was suddenly bombarded by the taxpayer money. A crony feedback loop. The company was visited by Schwarzenegger as well as Obama and the latter guy gave them half a billion (and it could have been a whole billion or more): that's what you normally do to your friends whom you barely know. Ideologically colored nepotism in action. This amount of money is insanely high because the whole revenue during 2009 and 2010 was about$100 million per year only. If you realize that there is only a tiny profit margin if any (profit is at most a small fraction of the revenue), you see that you would clearly need many decades to repay the investment. It was never going to be repaid because the company was never competitive.

These days, the media are full of people who are sure that it had always been clear that the company had to go bust, see e.g.:

Forbes: Solyndra: Yes, It Was Possible To See This Failure Coming

Fox News: Why Solyndra Failed
for two examples from recent hours. And I agree with that. But people making huge investments are often optimistic about their future. The easier it is for them to get the money, the more optimistic they may become. They may believe that a billion (which is only spent once) is something that they would easily repay in the future because the company would be producing billions, trillions, or quadrillions, or whatever other numerals these people detached from reality were capable of learning. :-)

Well, instead, reality took over. The products were self-evidently uncompetitive so they couldn't be sold for a price that would generate profit.

It's likely that if you were a careful investor and you were investing your own money, you would be a bit more careful about your billions and you wouldn't pay half a billion for such a bad investment. But Obama et al. don't have to care about details such as a billion of dollars. It's just 1/14,000 of the American GDP so why shouldn't he splash it into the toilet? It creates such a good signal and it makes such a funny sound which is worth paying. ;-)

The world of subsidies and crazy assumptions about totally different prices of things in the near future is an extremely risky world. There will eventually come new revolutions in the energy industry. But they will first take place, and then politicians will know about these revolutions. It can't be the other way around: it can't be that the politicians first know about the breakthrough, and then it inevitably happens.

Also, you may speculate that some subsidies or bans that distort the market in one country or another will help your project to become viable. But such a speculation may turn out to be invalid because the government policy may change and because someone else gets even bigger subsidies (e.g. in China or another country where it's common to subsidize and distort things) and your prices will no longer be competitive, anyway. Including subsidies and distortions of the markets into your calculations is a very risky and very dirty Al Gore rhythm to plan your future profits. People shouldn't include speculations about distortions into their economic planning.

An approximate scheme of Solyendra Green. Click to get to Soylent Green's blog.

I share the hopes that this scandal may make huge American state-organized "investments" into Al-Gore-like fraudulent industries impossible in the future. Europe and other places are learning their lessons, too. The European lessons may look less concentrated (20% unemployment in solar Spain is just a non-story) but they speak the same overall language.

The U.S. taxpayers may have lost half a billion but this loss may have good consequences, too. Tens of millions of people may finally see the light and realize that everyone who talks about the imminent demise of carbon-based energy is a crackpot who can make you completely broke within a year.

Some politicians such as Obama may think that they are able to pick the ultimate winners even though the whole markets consider them to be the ultimate losers. Obama doesn't even understand that he is 10 times more stupid, and not 10 times brighter, than the venture capitalists of the world (because he has no experience and he has passed on market tests, unlike the naturally rich investors!). And he will probably not be able to learn the lesson. But the American people may learn that they have to be more careful about the choice of politicians who are given the power to make similar decisions. When they choose badly, billions – and because this is just a tip of an iceberg, hundreds of billions – are splashed into the toilet.

As people start to understand that Obama is a mere amateur when it comes to economics and politics, various legitimate and illegitimate criticisms arise. Ron Suskind's book, Confidence Men, says that the women in Obama's team were being discriminated. Such things may happen even (and maybe especially) to the most PC president in the U.S. history. Obama's mistake here is, of course, that he hired similar whining feminist bitches in the first place.

One of their male spokesmen recommends him to panic and fire all his employees. Not sure whether Obama would be wise if he paid any attention to her.