Owning Solyndra
Kevin Drum makes a pleas for liberals to, in effect, rally around Solyndra and be proud of the investment. I am sure Republicans would give the same advice to liberals. I want to look at a few of his arguments.
First, for libertarians like myself, the argument that Republicans did it too, or the Republicans started it, are a non-starter. In particular, I actually thought the Obama Administration's attempt to blame Bush for Solyndra was an Onion article, since its almost a caricature of this administrations refusal to take responsibility for anything. Unlike Republicans, I don't see this so much as an Obama failure as a government failure, and I don't really care if it is of the red or blue flavor.
Second, the fact that private investors put their own money into it is irrelevant. Private investors poured money into Pets.com too. Obama was pouring my money into Solyndra, and yes the fact that it is my money makes a difference.
Further, private investors put their money into Solyndra years before the taxpayer did. It may well have been that they had a reasonable expectation at that time of investment returns. That is their problem. Our problem is that by the time Obama put our money into the company, it was pretty clear to everyone in the industry that Solyndra was going nowhere.
Drum and his source, Dave Roberts, attempt to argue that the drop in silicon prices and addition of low-cost solar capacity in China didn't occur until months after Obama's decision to fund Solyndra. But that is a tortured argument. In point of fact, everyone in the industry saw this coming - after all, the capacity Roberts describes as coming online in June was under construction months and years before that, and was known to be coming by everyone in the industry. When I was in a global manufacturing business, we kept up with everyone's plans for capacity additions -- I can't even imagine waking up one day and saying, "huh, a bunch of capacity just opened in China." (by the way, it is pretty typical of liberals to see prices as a given, rather than as a part of a feedback system where high prices lead to actions that might well lower prices over time).
This timeline is therefore pretty disingenuous
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%.
I am sure that this is wildly logical to a journalism major, but someone in business would laugh off the implication that what happened in June was wholly unforeseeable in March. Want more proof? The loan guarantee itself is proof. Years earlier, the company attracted a billion dollars of private capital. Now it takes a government guarantee to get capital? And you think nothing had changed with the insider's perception of the opportunity?
A good analogy might be if I invested in Greek bonds today. And then in 3 months the Greek government defaults and I lose all my money. I suppose I could craft a timeline that said the default did not happen until months after my investment, but could anyone living right now say that I really had no reason on September 16, 2011 to expect a Greek default?
The real howler in the article is this one:
There was no scandal in the loan process, and there's nothing unusual about having a certain fraction of speculative programs like this fail. It's all part of the way the free market works.
First, I agree there is no scandal here if one defines scandal as something out of the norm. Republicans want to count political coup on Democrats so they want to say this is fraudulent. But fraudulent implies that we could find honorable technocrats who could have avoided this problem. We can't. This kind of failure is fundamental and inseparable from the act of government trying to pick winners, and would exist no matter what people were in place.
Second, calling this "the way free markets work" is obscene. Free markets don't use force on investors to make them put money into certain investments.
But more importantly, government loan guarantees go only to those companies who the free market has chosen NOT to fund. If the free market was willing to toss another half billion into Solyndra, its owners would not have been burning a path back and forth to Washington. So by definition, every single government loan guarantee in this program is to a company or a technology that the free market, knowledgeable investors, and industry insiders have rejected as a bad investment. For the program to work, one has to believe that Obama, Chu, and some career energy department bureaucrats have a better understanding of commercializing technologies than do private investors (who are investing with their own money) and industry experts.
Postscript: I have to also comment on this from the timeline:
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.
The author glosses over it, but this is the $75 million I discussed the other day that dropped the US out of the senior position and guaranteed that the taxpayer would lose everything rather than only a portion of the investment
The notion of giving it more time was absurd. Even closed with everyone laid off the company is burning a million a week in cash. How much was it burning when open? And if it was totally clear at this point that the market had fundamentally shifted and the company could not compete, what the hell was the time going to help? Maybe they were hoping to win the Publishers Clearing House Sweepstakes? I suppose it could have been to give them time to try to sell the company, but there is no evidence any such discussions were taking place.
In fact, it is pretty clear that the US Government got played with that $75 million investment. Any private lender who had allowed someone else to grab the senior position for a trivial investment in a company on the express train to chapter 7 would be fired immediately.
And if you want fraud, you might look at Solyndra's summer asset sales. All the company's assets of any liquidity and value were sold over the summer to Argonaut, who also happens to be the owner of the majority state AND the company who invested $75 million in return for the senior position. Depending on the sale price for this self-dealing, one could argue that the time the $75 million bought was merely the time needed to loot the company of any valuable assets before it went bankrupt.
Postscript #2: I have written before about how much expertise about business tends to be claimed by liberal journalists and places like Think Progress. I had a funny thought trying to imagine the Think Progress business school and what it would teach. Might be a parody I need to write sometime.
Pat:
Wow, Warren. You disemboweled that argument. Nicely done.
September 16, 2011, 11:01 amNoah:
Your timelines lacks January 2009 when the Bush administration said it needed more information before making a decision.
Within three months, the Obama administration said yes. Two and half months into a new administration they are still looking for the bathrooms yet completed the due diligence.
September 16, 2011, 11:18 amTed Rado:
Warren:
An excellent piece.
The banking system works because bankers and major investors have the skills, analytical methods, and experience to determine the risks involved in a proposed loan or investment. Once investors and bankers have turned it down, there is a strong expectation that the proposed investment is no good. For the USG to then step in and say they know better and guarantee a half billion loan is beyond stupid.
Unfortunately, this is not an isolated case. If one studies the DOE website, the number of phony projects, driven apparently by "green" zealotry, is astonishing. Prototype plants are being built where apparently no prelim studies, that any competent engineer would do, have been done. Ninety nine percent of the projects can be shown to be nonsense in an afternoon's study.
As you have aptly pointed out, if the USG left their noses out of all this, businessmen and engineers would find the winners and losers, and not fritter away their money on the latter. I did many of these kinds of prelim studies during my career in engineering, and we avoided many faulty projects thereby. The DOE seems to revel in mindlessly pushing money out the door.
The cure is very simple: The USG should get their noses out of EVERYTHING that can be done by private enterprise. Period!! I came to this conclusion fifty years ago. Many trillions of dollars of waste later, the USG is still playing grownup, much to my dismay.
September 16, 2011, 11:24 amMJ:
This whole exercise should be humbling for technocrats and pushers of "industrial policy", but it is clear from Drum's statements that that is not what will happen. Instead, they will double down on a losing hand and keeping searching for potential blame targets.
September 16, 2011, 11:30 amsean2829:
I think there was a culture that has developed in the climate change commmunity and the actions it feels warrent promotion. If you look at how people parse out blessings for worthy carbon credit projets, it seems one of the requirements is that you only get carbon credits if there is not a good market based reason to do it in the first place because under that logic you don't need the incentive for carbon credits. Perhaps that type of thinking permeates the with the folks who approve projects for government funding.
September 16, 2011, 11:36 amCTD:
Unlike Republicans, I don’t see this so much as an Obama failure as a government failure, and I don’t really care if it is of the red or blue flavor.
Warren, that's because you don't think like Drum. His mind, like that of so many, has been warped by years of tribalistic Red team vs. Blue team thinking. It's literally the only way he's able to understand the world now.
The only knowledge parameters he now carries are:
1) My tribe rulez
2) Your tribe droolz
This is not unique to Drum or liberals, btw. I have a strong suspicion that a good portion of the (justifiable) outrage over the TSA's overreach on the part of Republicans will evaporate the moment it's not a useful club with which to beat Obama with.
September 16, 2011, 11:36 amJay:
Government has the right to take our money through tax laws - ultimately enforced with guns. The remark about the tax money being given to Solyndra somehow relating to a free market can only make sense to those wanting to distort facts and failures of Obama and his administration.
September 16, 2011, 12:02 pmsteve:
"But more importantly, government loan guarantees go only to those companies who the free market has chosen NOT to fund. If the free market was willing to toss another half billion into Solyndra, its owners would not have been burning a path back and forth to Washington."
I am picking a nit here but I don't believe this statement is true. Private investors will happily accept government gaurantees of their investments even if they were going to make them anyway (FDIC, FHA to name two). If you were going to risk a half a billion dollars and had a friend in Washington, why not spend a little time and effort to obtain a loan guarantee?
Of course, that is not the end of the story and such interventions distort even healthy markets over time leading to disaster. Nevertheless, I think it is an error to simplify your positions to the point were they are easily rebutted.
September 16, 2011, 12:44 pmMesa Econoguy:
A few thoughts:
1) This is the leftist version of taxpayer fund conduit to defense contractors, except you don't get a viable product, so it's probably a larger fraud than the right's version.
2) I believe the Bush Admin. said no (nein?) to these clowns on their original request, but don't have confirmation.
3) There are many more green examples like this, not just the failed concerns.
September 16, 2011, 2:50 pmSmock Puppet, Democrat Loan Guarantor For Hire (Cheap!):
>>>> Could anyone living right now say that I really had no reason on September 16, 2011 to expect a Greek default?
Why yes, Warren, YES INDEED... I'll say it.
September 16, 2011, 11:01 pmSmock Puppet, Stater Of The Obvious:
>>> Two and half months into a new administration they are still looking for the bathrooms yet completed the due diligence.
Why were they looking for the bathrooms when it's clear they still haven't found their asses using both hands?
September 16, 2011, 11:03 pmSmock Puppet, Stater Of The Obvious:
>>> As you have aptly pointed out, if the USG left their noses out of all this, businessmen and engineers would find the winners and losers, and not fritter away their money on the latter.
Oh, they'll fritter away lots of money, don't be foolish. The difference is, it'll be the money of people who chose to risk it, not people who had it forceably taken away and risked "for them".
Mistakes will be made, and corrections will occur. This is where the Business Cycle comes from.
September 16, 2011, 11:11 pmErisGuy:
Technocracy applies gloss to corrupt politicians. The technocrats won't learn anything because their masters, who have the money, will continue to fund Solyndras for the Hollywood-style accounting and campaign donations.
September 17, 2011, 7:15 amAnonymous Mike:
Re: The $75 million loan
There was a story in the AJC (link from Instapundit - http://www.ajc.com/news/nation-world/obama-admin-reworked-solyndra-1182334.html) that states that Argonaut, which fronted the money in the fed-allowed loan restructuring and therefore allowed them to take priority over the feds in bankruptcy liquidation, is the investment vehicle of the George Kaiser Family Foundation.
The AJC claims that billionaire George Kaiser, who heads the George Kaiser Foundation, was a major fund raiser for the 2008 Obama campaign and met with White House aides at least 16 times since 2009.
Now I'm not a big conspiracy theorist, I do believe in Occam's Razor in terms of being able to explain machinations by base human stupidity, and I'm willing to let the facts play out but....
.... this does seem to stink does it not?
September 17, 2011, 8:11 amtomw:
Two things:
September 17, 2011, 9:22 am1) investors will get a return, so are less willing to allow their investment to be diluted by outside investors IF they really believe in their product. True investors would not want government muddling around in their business, especially being on the board of directors... IMO
2) Kaiser seems to have hollowed out Solyndra before the bankruptcy declaration, AND put themself first in line as a creditor post declaration, all for a measly $75 mil... Nice investment return if you can get it.
Ted Rado:
Smock Puppet:
Yes, mistakes are made by private industry, but a very high percentage are avoided by proper studies BEFORE big bucks are spent. (I did many such studies over the years). Further, firms that make big blunders pay the price, where the USG does not (the taxpayers get screwed instead). The problem is that the USG plunges ahead without such studies. The problem is further exacerbated by technically illiterates (read Nancy Pelosi) pushing stuff they know nothing about (read ethanol).
I cannot imagine very many of these projects going ahead without USG subsidies. If the subsidies did not exist, I am sure that 99% of these USG-backed projects would never have gotten off the ground.
Unfortunately, as in the Solyndra case, there are many who will try to ride the latest USG nonsense to make a quick buck. Every USG-backed idea draws the rats out of the woodwork. I see no cure for it other than to stop these programs and subsidies entirely.
September 17, 2011, 9:36 amFrankenstein Government:
Well struck. I think this is one of the most insightful looks I've seen on Solyndra. I have added you to the blogroll, which means you have one new stalker.
September 17, 2011, 2:08 pmBenjamin Cole:
Solyndra was a bad idea, and the feds have no biz financing it. Obama made a stupid decision, possibly corrupt. There is plenty of venture capital, private equity, and huge corporate money in the energy sector. No need for feds.
That said, Solyndra cost taxpayers about the same as one day of the Iraqistan wars that have been going on for 10 years.
Can we first shoot the elephants before swatting at gnats?
September 17, 2011, 10:05 pmMal:
This is Andrew McCarthy take
http://www.nationalreview.com/articles/print/277512
September 19, 2011, 4:30 pmepobirs:
Kevin Drum: Defending the indefensible.
Is there any surer indication that something was obviously a steaming mound of fail than for Kevin Drum to call upon libs to circle the wagons around the suspect item?
September 20, 2011, 10:41 pmepobirs:
Benjamin Cole:
Apples and oranges. The government had no good reason to be in the solar panel business. The conduct of war, OTOH, is very much its business. Whether it is being done effectively or at a reasonable doesn't divert from the other issue. Invoking the wars is just handwaving to distract from the issue at hand.
September 20, 2011, 10:44 pmruralcounsel:
Kevin Drum fulfills the stereotype of big government liberals; total economic ignorance, lack of logical reasoning power, substitution of emotional fantasy, total inability to admit obvious error, and the instinct to double down when virtually nothing will save your cherished narrative.
Not unlike Alyssa Rosenberg and her recent ThinkProgress defense of abusive eminent domain in the Kelo vs. New London fiasco. She frets that a movie made about it will make New London and eminant domain look bad because the promised economic development that was supposed to result turned into a waste dump. Go figure.
Mindless automatons in the ideology wars. Only forward gears, no feedback loops. Morons.
September 21, 2011, 6:04 amCTD:
"Mindless automatons in the ideology wars. Only forward gears, no feedback loops. Morons."
I'm stealing that.
September 21, 2011, 7:05 amEd Darrell:
Then, of course, we'll find your posts here supporting Obama's plan to stop pouring money into oil companies. Certainly they don't need the extra boost, as anyone of any financial acumen can see -- nor have they needed a boost from the government for years, so you'll probably start asking the government to get your money back from the oil companies, right?
Yeah, it's true that some saw the minor glut of capacity coming -- the Chinese government, for one. So they rushed even more money to Chinese solar cell manufacturers to make sure that when the shake out came, China would be on top. Our wise Republican friends saw the writing on the wall, and insisted on ending government support for U.S. cell makers. We can always buy 'em from China, right? No reason to keep jobs and businesses at home when we can get the products cheaper from the commies.
By the way: I've been searching for your post warning of Solyndra's failure from early in 2009. Am I just missing it?
September 21, 2011, 7:31 pmDMac:
I'll look forward tothe "Think Progress MBA" syllabus. I imagine it would have a number of Soviet era retreads, like how to manufacture 5 lb. nails, when you are measured on tonnage, not satifying actual customer demand.
September 22, 2011, 7:55 amCMJDad:
You're right Ed, stop pouring tax money into oil companies, and auto makers, etc. But at least we get something back from the oil companies and auto makers.
September 22, 2011, 12:42 pmthe other coyote:
Ed:
Please tell me exactly how the government is pouring money into oil companies. I work for one, and I only see money going one way: from us, to the government, in taxes and royalty payments.
September 22, 2011, 1:05 pmSmock Puppet, Promoter of Government Scams:
>>> Maybe they were hoping to win the Publishers Clearing House Sweepstakes?
California State Lottery, dude. It was up to 321 million dollars, and they had gotten this really, really bitchin' lottery wheel program and wanted to give it a chance.
:D
.
.
.
(Yes, I made that 321 number up).
September 22, 2011, 2:58 pmSmock Puppet, Promoter of Government Scams:
>>> Our wise R,publican friends saw the writing on the wall, and insisted on ending government support for U.S. cell makers. We can always buy ‘em from China, right? No reason to keep jobs and businesses at home when we can get the products cheaper from the commies.
As opposed to our wise BUSINESS EXPERTS, who wrote the whole thing off as a BAD DEAL years before.
Because those foolish bozos clearly have no idea whatsoever how to make money, the USA through most of the last decade and more making more all by itself than the other 7 of the g8 nations, and more than all of the rest of the world less the g8 nations, combined.
Naw, pay no attention to them, they don't understand how to pick good investments.
Ed, you're too stupid to pour piss out of a boot if the instructions were printed on the heel for you: Not only do you not understand this stuff, you don't even grasp just how incredibly little you do understand.
I could go into considerably more detail if you ask, to justify the above, but I doubt if you would listen, and am pretty sure you wouldn't learn jack or sh** if you tried. If you actually DID want to learn something, one of the more obvious places to hang out would be Carpe Diem, a blogspot blog that is run by an economics professor who actually knows his sh**, being a graduate from the same GWU program Walter Williams used to run.
September 22, 2011, 3:05 pmSmock Puppet, Promoter of Government Scams:
Ted:
By no means was I taking issue with the legitimate non-governmental intrusion process. :D
I was just noting that, even though private industry DOES make mistakes, too... often lots of them... they're doing it with investment money, not my social security taxes...
September 22, 2011, 3:09 pm;-)
Smock Puppet, Promoter of Government Scams:
>>> That said, Solyndra cost taxpayers about the same as one day of the Iraqistan wars that have been going on for 10 years.
I dunno, Ben. You want to give me US$500 to "Feng shui" your house free of its rather blatant aesthetic issues**, or would you rather give it to the local government to hire cops to deal with the two rival gangs that live a couple miles away from you and drives through your neighborhood once in a while shooting at each other...?
The "Iraqistan wars" as you put it, are a legitmate, specified function of government. It's in the Constitution.
Funding businesses that private investment won't touch? Not so much of a much. They've done it, yeah, but usually not in total defiance of business sense, and usually only with success in cases where the money in question was "government level" and not something private industry would LIKE to have paid for themselves.
And regardless -- it's still not really a legitimate function of government, just one we've historically "looked the other way" on...
=====
September 22, 2011, 3:19 pm**
So **I** say, anyway. After all, I'm the Feng Shui expert. Who are you to disagree?
Trust me. You'll like the change. I should hope so, for $500... :D
Ed Darrell:
Oil subsidies: See the Becker-Posner blog: http://www.becker-posner-blog.com/2011/05/the-us-tax-subsidies-for-oil-companiesposner.html
Here's a National Journal explanation: http://www.nationaljournal.com/daily/reigniting-subsidy-debate-obama-takes-on-oil-gas-20110912
If you think you can explain it, go ahead and try. I'll especially look for your pre-August 2011 explanation for why Solyndra is a bad deal, and I'll watch for your explanation for why we should stop funding oil extraction with tax breaks. Please drain your boots, though, will you?
September 22, 2011, 3:40 pmSmock Puppet, Promoter of Government Scams:
Ed, give me some evidence you'll actually change your opinion if I demonstrate you wrong, and I'll spend the time overall.
I notice, for example, that you did NOTHING to refute even the simple argument I gave you, which was that, if American business experts, with a long history of backing winning horses better than anyone else in the world, won't back it, then why do you fantasize that "government experts" with a strong rationalization for telling people what they WANT to hear, are going to do BETTER?
And I still say, you need first of all to start reading up on economics, you don't understand squat. You are, as Asimov described it, "Wronger than wrong" -- because you THINK you understand it and don't understand how utterly you don't. Economics is called "the Dismal Science" partly because of how woefully difficult it is to truly understand. There are a host of true concepts built into it which are counter-intuitive and/or seemingly paradoxical. If you don't know who Bastiat is, what the subject of his essay "That Which is Seen, and That Which is Not Seen" is, or cannot explain the Principle of Comparative Advantage without looking them up, then I claim my assertion, that you're ignorant and don't know it, and worse, don't grasp how BAD that situation is, is proven, QED.
Clearly, you can go look them up and I can't prove you did that, but then you're lying to yourself, which is your issue to deal with, not mine. If you can't identify those two simple things, then you should begin to realize, personally, you don't know squat -- they are fairly important, basic elements of an understanding of economics that anyone with an opinion they believe worth expressing ought to be able to explain to anyone else right off the bat, at least to the point of explaining the gist of the idea, if not the full logical justification for the latter two.
>>> I’ll especially look for your pre-August 2011 explanation for why Solyndra is a bad deal
I'm not claiming *I* said it, that was Warren, remember?
However, I did say it indirectly, back in April, 2009:
Solar Power: Flat-Out Wrong For All Time
I basically point out how ludicrous pretty much ALL land-based solar power is, which essentially says "Solyndra is doomed"... Even IF you came up with a 100% perfect panel, the land surface area you'd have to cover to even get the stated goal of 20% alternative energy would be ludicrous and guaranteed to trigger Green resistance en masse. There ARE a couple mechanisms that COULD be justified, but only barely -- OTEC (see article) and SPS (justifiable mainly because, while very expensive to initiate, you get an active space presence to go with it)... Mind you, I'm NOT advocating either, just that they do have SOME possible chance of justifying themselves economically, unlike ANY AND ALL OTHER CURRENT SOLAR POWER PROPOSITIONS. OTEC is the one most likely to succeed IF you put any government money into it and it might succeed with a fairly low total investment. It could be done vaguely effectively in the 1920s (IIRC, that's when a VERY small pilot plant was built in the Caribbean), but longer-term value/ROI and scalability issues are in the way.
Wind power is just as stupid, but I can't justify that quite as readily with simply understood and verified numbers, I will grant.
The overall problem in all cases is ENERGY DENSITY and GRADIENTS. We can do a fairly good job of pulling energy from a gradient of about 400-600 degrees, lower than that, our current systems rapidly slide. Even Lonnie Johnson's JTEC does poorly at low gradients, and that's the best system (not scaled AFAIK, but ought to work from what I do, which is limited) for producing useful power (claims roughly 60% efficiency) I'm aware of.
Solar energy and wind energy represent the worst of all options -- inconsistency, low gradients, and low density. Just ONE of those tears at the overall, over-time efficiency of a system radically. All three are a rather blatant side-out.
September 22, 2011, 4:24 pmSmock Puppet, Promoter of Government Scams:
As to specifics -- from Becker's piece:
>>>> as I indicated at the beginning, the US does directly subsidize oil producers. Although estimates of the exact value of these subsidies vary, most analysts put them at several billion dollars per year.
Funny. An assertion with no attempt to explain who is getting them, why they claim to need them, or anything else. However, notice that his claimed amount is: "several billion dollars per year".
From another blog entry here, Russ R shows what a ridiculous crock this is, since they pay FAR more than that in taxes:
@ Dan:
“Washington provides untold billions directly and indirectly to fossil fuel companies…”
Really? I hope you’ve got some evidence to back up that statement. (And not just tax deferrals that apply equally to all industries.)
In the meantime, allow me to introduce you to reality…
Let’s open up page 32 of ExxonMobil’s most recent annual report and add up the total amounts the company paid to government vs. investors:
Sales-based taxes: $28,547 million
Other taxes and duties: $36,118 million
Income taxes: $21,561 million
Government Total: $86,226 million
Interest expense: $ 259 million
Net income: $31,398 million
Investor Total: $31,657 million
Conclusion: ExxonMobil pays 2.7x more to governments than it does to investors.
=================
So Becker whines that they're getting SOME of their money back from the government. Do you file a return claiming you should get some of your income taxes back? Do you cash the check when they send it to you? So why, essentially, should Exxon not do what is essentially the same? I'll bet you get a lot more than 5% back most of the time.
Posner's argument is flat-out stupid, in that it seems to appear to him that oil companies shouldn't get the exact same tax breaks that any other non-oil business gets to claim.
September 22, 2011, 5:52 pmSmock Puppet, Promoter of Government Scams:
Regarding the Journal piece:
>>>> The White House says changes to the Section 199 manufacturing credit alone would bring in $902 million in revenue in 2011
Ooooooooooh! A WHOLE BILLION DOLLARS! Only ONE TENTH OF ONE PERCENT (!!!!) of what The Great Big 0 (aka "President Downgrade") overspent in each of his two years in office!
Woooo, we're on a major ROLL now!! That'll pay for his overspending in only TWO THOUSAND YEARS!!! Well, except it's less than the interest on his overspending...
That chart in the photo, BTW, is pretty misleading, in that "production expenses", I'm betting, don't touch on the FAR GREATER expense of what it costs to actually LOCATE AND GAIN THE RIGHTS to the oil in question. Or the expense of building the refinery itself, and getting permissions from the half-a-billion federal, state, and local agencies that need to be petitioned. That is all certainly a major part of the final cost of any barrel of oil, yet is "hidden" from anyone who doesn't have sense enough to spot the weasel words on the chart for what they are.
September 22, 2011, 6:05 pmSmock Puppet, Corrector of Fallacious Propositions:
>>> "No reason to keep jobs and businesses at home when we can get the products cheaper from the commies."
Here's a starter piece on Economics for you:
The Nation That Lost Its Jobs, But Got Them Back
Then go wiki "Comparative Advantage".
And after that, realize that, of the $600 retail price of an iPhone, "Made in China", China got to keep US$6.54 for manufacturing it. Yes, US$6.54
So "shipping jobs to commies" is a good idea, when they're that marginal. Any high-tech manufacturing going overseas (actually, ANY manufacturing), well, allow me to pull out the world's smallest violin to play my vast lament on. If it's cheaper to SEND IT HALFWAY AROUND THE WORLD than to make it here, then there likely wasn't much money to be made on it here in the very first place.
September 22, 2011, 6:20 pmthe other coyote:
Ed, not that stupid domestic manufacturing tax "subsidy" crap again, please. The blog you point to is pure politics recycling the same "oil companies should pay because of [non-existent] global warming" b.s.
Every other US business gets to take advantage of those tax provisions, even businesses that have a significantly higher profit margin than we do. If you're going to eliminate these deductions for domestic producers, then eliminate them for GM, Chrysler, Coca-Cola, Caterpiller and John Deere, too.
September 23, 2011, 7:44 amthe other coyote:
PS - Ed, as you've admitted, money is not "poured" into oil companies. We take nothing from the federal government other than tax deductions that every other US manufacturer is entitled to take. We PAY significant sums to the US government in income taxes and royalty payments. There is a big difference between looting my family of $6 (the $1.50 per American that got flushed down the Solyndra toilet) and not collecting revenue under a tax scheme designed to manipulate the US manufacturing market. Any claim that the two are equivalent is nothing but envy wrapped up in global warming hysteria.
September 23, 2011, 7:48 am