While President Obama proudly touted his “visionary” support of green energy in the debate this week, the taxpayer funded house of cards continued to collapse around him.
First, electric vehicle battery manufacturer A123, a recepient of $300 million in stimulus funds, announced that it already had one foot off the bankruptcy cliff.
Massachusetts-based A123 Systems Inc AONE -68.75%, maker of advanced batteries for electric automobiles, has announced it expects to miss payments on some of its debt, and may need to seek bankruptcy protection.
That turns out to have been part of a process to allow another company, Johnson Controls, to get a deal for A123’s automotive business.
Partially lost in the news about this miraculous appearance of a financial savior is the fact that any number of A123 employees may soon be added to Obama’s “jobs lost” tally.
Johnson Controls planned to keep the factories running but said it was too early to give details about A123 employees or customers.
On Wednesday, another solar company, Satcon Technology, announced that it would be seeking Chapter 11 protection. This despite the fact that it had just received $3 million from a DOE grant at the beginning of this year.
As if that wasn’t enough bad news for one week, Solyndra solidified its hold on the “Failure That Keeps On Failing” title.
It appears that American taxpayers will recoup exactly zero dollars from this “investment”.
Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt, won’t be able to provide lenders ranking ahead of the government with a full recovery, the company’s financial adviser Eric Carlson said today.
The failed solar-panel maker generated about $117 million from assets sales, including the proposed sale of its manufacturing facility to a unit of Dublin-based Seagate Technology Plc (STX) for $90.3 million, subject to competing offers at a Nov. 14 auction, Carlson testified under questioning from Solyndra lawyer Maxim Litvak.
Adding to this economic horror story is evidence that U.S. subsidies played a role in the market factors that led to Solyndra’s demise.
So to recap: the Obama administration gave a $500 million dollar loan guarantee to a company that was dependent on sky-high polysilicon prices, but simultaneously threw hundreds of millions of dollars at domestic polysilicon producers. The latter subsidies – when combined with billions in indirect subsidies to solar producers and consumers – inevitably helped stoke overcapacity in the domestic and global polysilicon markets and a resulting collapse in polysilicon prices that – wait for it – eviscerated Solyndra’s business plan and ultimately killed the company. And when Solyndra declared bankruptcy, the Obama administration immediately blamed China.
An examination of the negative consequences of federal interference in the market through subsidization and regulation would fill several volumes. The history is there for all to see and it reads like a “how not to” primer for business, yet Washington is in the grip of people who believe that they’re on our side and “helping”.
With friends like these…