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Tags: Larry Summers

‘When Government Plays a Part, It can Bring the Private Sector Along.’



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The House Energy and Commerce Committee released some White House and other e-mails relating to Solyndra. Unsurprisingly, there were many, many warnings that this was a quite risky method of using taxpayer dollars, and it appears those warnings were ignored:

White House Aide Aditya Kumar in an e-mail to deputy White House communications director Dan Pfeiffer and other White House staffers:

  “Dan: Some background.  This is a Recovery Act Grant. Details: Will be first DoE Loan Guarantee since 1980s (since the geothermal grants in the 80s, I believe).  Total amount will be $535M (with a $107M govt subsidy).  This is a solar panel manufacturing company in Fremont, CA.

Story is two things: JOBS: Solyndra estimates this will create thousands of jobs (over 3,000K was on estimate I saw but not sure how dated that was);

When Government Plays a Part, It can Bring the Private Sector Along: Solyndra has secured over large amounts in private capital which is a story in itself.”

Of course, all of the Solyndra jobs are gone, and perhaps this is a good example of government playing a part it shouldn’t.

Venture capitalist Steve Mitchell in an e-mail to George Kaiser, an Obama donor and Solyndra investor:

“Solyndra selected [Goldman Sachs] as the “banker on the left” for its S1 filing which will occur tmrw. Morgan Stanley is co-leading the IPO. The politics and pressure around this selection was nothing short of ridiculous at some level.”

E-mail from Solyndra investor Brad Jones to  top Obama economic adviser  Larry Summers:

“One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money (I’d prefer my opinion about that specific company to be between us). Every administration seems to feel it knows better than the private markets how to allocate capital, and I’ve just never seen that be true.”

UPDATE: Wait, there’s more!

Aditya Kumar to Jacob Levine of the Office of Energy and Climate Change:

“feels like Rahm wants this too (barring any concerns) — POTUS involvement was Rahm’s idea.”

A May 8, 2010 memo from an unidentified figure in Solyndra to George Kaiser Family Foundation Executive Director Ken Levit (George Kaiser was one of Solyndra’s largest investors):

The past five months have witnessed a tremendous competitive headwind for the company coupled with some severe management mistakes. Cutting to the chase – we will not be going public during 2010 and our longer term business plan looks to be somewhat in jeopardy….”

I think there is still a plan here to getting a solid return out of Solyndra for ourselves (and our friends and family shares alongside us) but we have pushed out any significant positive event until 2011 and perhaps 2012.

Three weeks after this memo reveals there will be no public offering, that the long-term business plan is in jeopardy, and there is a plan to get a “solid return for ourselves”… Obama spoke at Solyndra:

 

It was during this event that President Obama declared, “companies like Solyndra are leading the way toward a brighter and more prosperous future.”

Tags: Barack Obama , Larry Summers , Solyndra

Our Delicate Stimulus



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Presume for the sake of argument that the Obama administration is correct that the stimulus and their other efforts to decrease unemployment and build a prosperous economy could have worked, but were impeded by factors beyond their control: “This recession turned out to be a lot deeper than any of us realized,” “a string of bad luck,” “the Japanese earthquake” “an Arab Spring” “economic headwinds from Europe” “uncertainty from the debt-ceiling debate” “globalization” “automation” “ATMs,” and so on.

Put aside your inclination to roll your eyes and exclaim, “excuses, excuses” for a moment, and examine what this argument really is: Obama and his congressional allies came up with a plan that could work, but only if the conditions were right, or near-perfect. Any economic instability or unforeseen circumstance, in Japan, Europe, or the Arab world, would impede its effectiveness to the point where our current circumstances — 8.1 percent unemployment, millions under-employed, 2.2 percent quarterly GDP growth, etc. — are the very best anyone could possibly expect.

Then it would be fair to ask, it wasn’t much of a plan, was it?

The specifics of economic instability are hard to predict — if this were easy, we would all be successful investors — but the general phenomenon of economic instability around the globe doesn’t seem that hard to foresee. Europe and Japan have aging populations. China’s boom appears unstable and unsustainable. The Middle East never seems all that far from a conflict, and third-world countries, home to so much of the world’s industrial base, can suddenly find themselves torn apart by political and social instability. And was the success of Obama’s economic plan really contingent upon the raising of the debt ceiling, again and again, without contentious debate, for the entirety of his presidency?

If an economic plan can only be effective if it enjoys stable, growth-promoting conditions at home and abroad . . . how good a plan is it? Because a lot of plans can work in those circumstances.

Are there no other alternate plans or visions that are a bit more resilient? Ones that cultivate the entrepreneurship of hundreds of thousands of American businesses, large and small, instead of relying on officials in Washington to make the right decision again and again? Larry Summers himself said that the federal government makes a lousy venture capitalist, and the philosophy of extending the taxpayers’ resources to a business like Solyndra is privatizing the gains (it’s not like they would trade us the patent for their products) and socializing the losses.

Of course, we can argue, and will, that there were a lot more flaws in the stimulus and Obama’s overall economic philosophy than bad luck and factors beyond his control. But it’s worth noting that even if we accept the Obama interpretation of events and accounting for all of their excuses, he and his administration are asking America to buy into a plan has already proven too risky, too delicate, too easily impeded to be effective.

Tags: Barack Obama , Larry Summers , Solyndra , Stimulus

Within 24 Hours, the Double-Dip Recession Threat Returns



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At the White House, yesterday:

Q    Thank you, Mr. President.  Back in July, your budget office’s Mid-Session Review forecast that unemployment would be 7.7 percent in the second — in the fourth quarter of 2012.  Will this package deal lower that projected rate?  And also, is it going to do more to boost growth and create jobs than your Recovery Act?

THE PRESIDENT:  This is not as significant a boost to the economy as the Recovery Act was, but we’re in a different situation now.  I mean, when the Recovery Act passed, we were looking at a potential Great Depression and we might have seen unemployment go up to 15 percent, 20 percent — we don’t know.  In combination with the work we did in stabilizing the financial system, the work that the Federal Reserve did, that’s behind us now.  We don’t have the danger of a double-dip recession.

At the White House, today:

At an off-camera briefing this aftermoon, National Economic Council director Larry Summers said that a failure to pass the tax cut compromise President Obama negotiated “would significantly increase the risk” of a double-dip recession.

Tags: Barack Obama , Larry Summers

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