…plods on. My thoughts on last week’s SLS announcement, over at PJM. As usual, the comments are chock full of foolishness.
Category Archives: Economics
A Rogue Trader
…in a massive “green jobs” fraud:
The fraud – conservatively estimated at $38.6 billion, though others believe it could be at least 20 times bigger once his secret trading accounts in a file mysteriously marked “Stimulus Package” are fully investigated – comfortably exceeds the paltry $2.3 billion losses run up by UBS trader Kweku Adoboli.
Though full details of the Uber Rogue Trader – known only by his initials B.O. – have yet to be released, he is believed to be either of Hawaiian or Kenyan birth, with a plausible speaking manner and a deceptive aura of competence and gravitas. He is said to be “coolly unrepentant” about his crime, which, he claims, he was only doing to provide “hope and change” to his 200 million victims.
The fraud appears to have centred around an arcane taxpayer-swindling system first devised by Kenneth Lay of Enron known as “Clean tech” or “green jobs.” B.O. – who joined the bank in January 2009 – is believed to have persuaded colleagues and shareholders that he could boost the institution’s flagging profits by spending $38.6 billion on a “loan guarantee program” for clean tech start up companies. He also claimed that in the process he would create “65,000 jobs”.
This really is criminal fraud. But I won’t hold my breath waiting for the Justice Department to do anything about it.
SLS Thoughts From Jeff Greason
I had a brief email exchange with Jeff Greason, CEO of XCOR Aerospace but also (and more importantly in the context of this post) member of the Augustine panel, to get his thoughts on last week’s SLS announcement.
“We’d Be Marching On The White House”
Nice to see them admitting to their racism.
The Never-Ending Emergency
Thoughts on the growing abuse of supplemental spending.
Want Less Inequality?
Stop subsidizing schools and universities. The whole system really is a disaster.
Nice ROI
Solyndra spent about two million on lobbying for a half a billion in loan guarantees. And the money went to Democrats. Your money. Your involuntary campaign donation.
This is a perfect example of why the government shouldn’t be in the business of helping business. It’s an inherently corrupting process.
[Update a few minutes later]
Solyndra, the logical end point of Obamanomics:
No wonder many Democratic strategists predicted their party’s 2008 landslide win would usher in a generation of political dominance. Obamanomics, essentially, would divert taxpayer dollars to the Green Lobby – and then into the campaign coffers of the Democratic Party. This is what crony capitalism is really all about: politicians enriching favored businesses, who then return the favor. Or maybe it’s the other way around, Who cares, really. It’s an endless, profitable loop for both.
Note how Goldman Sachs is always involved, as well. I would hope that Obamanomics has been thoroughly discredited by now. But based on the continuing defense of some commenters here, probably not.
[Update a couple minutes later]
A doomed quest:
President Obama’s campaign tour for another half-trillion-dollar stimulus will not work for a number of reasons, and one of them is terrible timing. As he tries once again to assure the public that government agencies can take borrowed money and translate it into shovel-ready jobs, four facts drown out the effort. The Solyndra bankruptcy disaster is a sort of open-sore advertisement not to do these things. The special elections in New York and Nevada suggest that the voters are not receptive to the idea that more federal debt means more private sector jobs. The European meltdown daily shows the world the terrible wages of massive public debt. And the current Republican primary campaigning is reminding the public that nearly $5 trillion in borrowed money between 2009 and 2011 was an abject failure. Consequently, the vocabulary of that misguided effort — euphemisms like “stimulus,” “shovel-ready,” “investments,” and “infrastructure” — now provokes laughter rather than applause.
That’s the good news. The bad news is that it’s going to take many painful years to undo the damage that all of these big spenders, Republicans and Democrats alike, have done to the economy.
[Update early afternoon]
The myth of nonpartisan civil service:
…this career civil servant is concerned that a default coinciding “with the 2012 campaign season” could hurt the president’s reelection effort. That is his biggest worry, not what is in the best financial interests of the American people. As Lachlan Markay writes over at the Heritage Foundation, “The Administration was essentially letting the 2012 campaign dictate decisions on the federal government’s financial involvement with Solyndra. They were not responding to normal profit-and-loss signals.”
Which is why the government shouldn’t be making these decisions.
The EU
If Bernanke tries to bail out the Eurocrats by printing money, expect a revolt that made previous Tea Party rallies look like Sunday picnics.
[Update a few minutes later]
Don’t even think about it:
In the days leading up to the collapse of Lehman Brothers, then French Finance Minister (now IMF Managing Director) Chistine Lagarde told then-Treasury Secretary Hank Paulson that he could not allow Lehman to fail. The ramifications would be catastrophic, she said. She was mostly right.
Three years later, it will be Angela Merkel talking to President Obama,Treasury Secretary Geithner and Federal Reserve Bank Chairman Ben Bernanke with exactly the same message. The United States government and the Federal Reserve must come to the rescue of the Eurozone or the ramifications will be catastrophic. And she will say that she needs roughly $1 trillion in financial guarantees and liquidity support. That’s the number that will calm the markets.
She will do this publicly (it will be leaked to the FT or the NYT) because (a) she wants to maximize the pressure on the US to ride to the rescue and (b) she wants the blame to fall elsewhere in the event that the “situation” goes haywire.
And there will follow perhaps the defining moment of the Obama Presidency. If Obama goes forward and provides all or part of the $1 trillion guarantee, he will likely cut his own political throat in so doing. If Obama declines to go forward and provide all or part of the $1 trillion guarantee, he will likely preside over the second massively destabilizing financial panic in four years, thus insuring a second Great Recession, thus cutting his own political throat.
It’s not like he has the unilateral power to do it anyway. Bernanke is nominally independent (particularly since he just got reappointed) and there’s no way he’d get it through Congress. I wonder if Merkel doesn’t understand what powers an American president does and doesn’t have?
SLS Thoughts
…from the Space Access Society:
NASA HQ just gave in to prolonged Congressional pressure and announced a vehicle configuration for the SLS “Senate Launch System” heavy-lift launch vehicle project. The project will be run under traditional NASA practices; the cost multiplier over doing the job commercially will thus presumably start out on the rough order of fifteen times as expensive.
Note we said, start out. We see indications that the NASA organizational dysfunction that causes that huge cost multiplier is not a constant, but rather has been growing in recent years. We thoroughly expect that SLS project cost will grow and schedule stretch, just as Constellation program costs and schedule did.
We predict that at some point, it will be as obvious that SLS will never fly usefully as it was obvious that Constellation was going nowhere, and SLS too will be expensively cancelled. We hope that SLS will go away before it’s wasted even more scarce dollars (and impacted even more actual useful NASA projects) than Constellation – but we wouldn’t bet on it at this point.
The only hope is that people in Congress who don’t normally pay attention to space will start to notice, given the fiscal issues that the nation faces.
And on CCDev:
Human spaceflight will remain a risky business for a long time no matter who is in charge, the industry and FAA, or NASA. The only way it will become completely safe in our lifetimes is if it is made so expensive that we no longer do it at all. NASA getting their way on changing how CCDev is run may ultimately produce exactly that result.
Indeed.
Our “Federal Family”
…is floundering:
It is a wonder, this faith-based (and often campus-based) conviction that the government that brought us the ethanol program can be trusted to precisely execute wise policies that will render the world predictable and progressive.
For two years, there has been one constant: As events have refuted the Obama administration’s certitudes, the administration has retained its insufferable knowingness. It knew that the stimulus would hold unemployment below 8 percent. Oops. Unemployment has been at least 9 percent in 26 of the 30 months since the stimulus was passed. Michael Boskin of Stanford says that, even if one charitably accepts the administration’s self-serving estimate of jobs “created or saved” by the stimulus, each job cost $280,000 — five times America’s median pay.
And research by Garett Jones and Daniel M. Rothschild of George Mason University’s Mercatus Center indicates that just 42.1 percent of workers hired by entities receiving stimulus funds were unemployed at the time. More (47.3 percent) were poached from other organizations, and 10.6 percent came directly from school or outside the labor force.
Obama’s administration, which is largely innocent of business experience, knew its experts would be wizards at investing taxpayers’ dollars. Oops.
“Floundering” is too kind a word, I think. Can I be emancipated from this “family,” please?