Obama’s ‘Green’ Energy Failures

October 19, 2012 Leave a comment

By ASHE SCHOW | THE FOUNDRY | OCTOBER 19, 2012

It is no secret that President Obama’s and green-energy supporters’ (from both parties) foray into venture capitalism has not gone well. But the extent of its failure has been largely ignored by the press. Sure, single instances garner attention as they happen, but they ignore past failures in order to make it seem like a rare case.

The truth is that the problem is widespread. The government’s picking winners and losers in the energy market has cost taxpayers billions of dollars, and the rate of failure, cronyism, and corruption at the companies receiving the subsidies is substantial. The fact that some companies are not under financial duress does not make the policy a success. It simply means that our taxpayer dollars subsidized companies that would’ve found the financial support in the private market.

So far, 36 companies that have received federal support from taxpayers are faltering — either having gone bankrupt or laying off workers or heading for bankruptcy. This list includes only those companies that received federal money from the Obama Administration’s Department of Energy and other agencies. The amount of money indicated does not reflect how much was actually received or spent but how much was offered. The amount also does not include other state, local, and federal tax credits and subsidies, which push the amount of money these companies have received from taxpayers even higher.

The complete list of faltering or bankrupt green-energy companies:

  • Evergreen Solar ($24 million)*
  • SpectraWatt ($500,000)*
  • Solyndra ($535 million)*
  • Beacon Power ($69 million)*
  • AES’s subsidiary Eastern Energy ($17.1 million)
  • Nevada Geothermal ($98.5 million)
  • SunPower ($1.5 billion)
  • First Solar ($1.46 billion)
  • Babcock and Brown ($178 million)
  • EnerDel’s subsidiary Ener1 ($118.5 million)*
  • Amonix ($5.9 million)
  • National Renewable Energy Lab ($200 million)
  • Fisker Automotive ($528 million)
  • Abound Solar ($374 million)*
  • A123 Systems ($279 million)*
  • Willard and Kelsey Solar Group ($6 million)
  • Johnson Controls ($299 million)
  • Schneider Electric ($86 million)
  • Brightsource ($1.6 billion)
  • ECOtality ($126.2 million)
  • Raser Technologies ($33 million)*
  • Energy Conversion Devices ($13.3 million)*
  • Mountain Plaza, Inc. ($2 million)*
  • Olsen’s Crop Service and Olsen’s Mills Acquisition Company ($10 million)*
  • Range Fuels ($80 million)*
  • Thompson River Power ($6.4 million)*
  • Stirling Energy Systems ($7 million)*
  • LSP Energy ($2.1 billion)*
  • UniSolar ($100 million)*
  • Azure Dynamics ($120 million)*
  • GreenVolts ($500,000)
  • Vestas ($50 million)
  • LG Chem’s subsidiary Compact Power ($150 million)
  • Nordic Windpower ($16 million)*
  • Navistar ($10 million)
  • Satcon ($3 million)*

*Denotes companies that have filed for bankruptcy.

The problem begins with the issue of government picking winners and losers in the first place. Venture capitalist firms exist for this very reason, and they choose what to invest in by looking at companies’ business models and deciding if they are worthy. When the government plays venture capitalist, it tends to reward companies that are connected to the policymakers themselves or because it sounds nice to “invest” in green energy.

The 2009 stimulus set aside $80 billion to subsidize politically preferred energy projects. Since that time, 1,900 investigations have been opened to look into stimulus waste, fraud, and abuse (although not all are linked to the green-energy funds), and nearly 600 convictions have been made. Of that $80 billion in clean energy loans, grants, and tax credits, at least 10 percent has gone to companies that have since either gone bankrupt or are circling the drain.

UPDATE: Some of the companies on this list received money from government agencies other than or in addition to the Department of Energy. We are updating the numbers to reflect the most accurate figures available.

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UK Austerity to cut 10 billion pounds in Social Benefits

October 9, 2012 Leave a comment

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 9, 2012

The British Minister of Economy, George Osborne, said Monday that he intends to cut another 10,000 million pounds in spending by cutting the expenses on social benefits by 2016-17. Osborne said the goal is to reduce the deficit.

While speaking to a crowd of Tories, Osborne said that he wants to eliminate aid to large families and housing subsidies for people who are under 25 years of age.

These cuts would be in addition to the reduction of 18,000 million pounds taken from government obligations through the approval of a bill announced in 2010, which affected pensions and subsidies and has involved hundreds of thousands of layoffs in the public sector.

In his speech to the militants “Tories” who met during the annual Conservative Party gathering, the Minister of Economy insisted on saying that while the wealthiest people should bear the  brunt of the crisis, it is also “fair” that the cuts are distributed throughout the whole population, including citizens who are dependent on state-sponsored programs. Osborne refused in multiple occasions to impose higher taxes on the richest people in the UK.

He promised however, to limit the income of citizens receiving social benefits, as well as aid given to the unemployed, the young, single mothers, disabled and low-income families; so that these people do not receive anymore help than those who go out looking for work.

Osborne announcement of the reduction of social benefits was immediately received with criticism dependent groups, while the minister said he will rule out raising taxes on high incomes. How is it that the wealthiest will bear their brunt of the crisis then?

He also dismissed the idea of ​​a new tax on mansions of more than two million pounds (2.47 billion euros), an idea first introduced by the Liberal Democrats, partners in the coalition government.

The minister warned the people that he would combat tax evasion in order to increase revenues. He said that he would fight “mercilessly” tax evasion and penalize those who attempt to evade payment by way of accounting maneuvers.

“We will finish what we started,” Osborne said to his fellow party allies, as he reminded the crowd about the government’s plan to reduce the deficit and debt which he associated with cutting help to the neediest people, while the size of government remains the same.

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Spanish Government makes official the Looting of Pension Funds

September 29, 2012 Leave a comment

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 29, 2012

It did not take too long for the Spanish government to dip into the rapidly disappearing pension fund reserves. After presenting its 2013 budget, the Finance Minister Cristobal Montoro announced that the government led by Mariano Rajoy will make use of Social Security, retirement and other supplemental funds to help with the liquidity problems the central government faces as it becomes more expensive for Spain to meet its obligations.

The Executive now counts the 3,063 million from the Social Security Reserve Fund as part of its budget, which it now has stolen from Spanish people who saved and paid into the system for decades. The Social Security Fund has become the piggy bank to obtain quick cash after the Social Security administration itself had tapped into the reserve at the beginning of September, because it did not have enough money to make the payments to its contributors. Ironically, the government has also announced an increase of 1% in pension payments for 2013, which makes one wonder where will the money come from if the system cannot even afford to send the checks out now.

The Government approved the reform plan imposed by the European Union which is a commitments from the Memorandum that opens the door to ask for financial assistance in the form of credit to bailout Spanish banks with a maximum of 100,000 million euro, but that consultants estimate will be of around 53,000 million euros.

The State Budget for 2013 is included in the so-called Spanish Strategy for Economic Policy and a plan that includes up to 43 laws specified in the Official State Gazette (BOE).

The macroeconomic conditions used to create this new budget have not changed from the last time which was filed with the same spending ceiling. Thus, the official forecast remains that GDP will contract by 0.5% in 2013. This is a very optimistic figure when compared to other analysis services such as the one issues by Citi, who expects a decline of 3.3%.

State spending will grow in 5.6% in 2013, mainly due to interest on the debt in the next year, which will amount to some 10,000 million euros. The total amount to be paid in interests for loans requested by the Spanish government will reach nearly 38,000 million euros.

The Deputy Prime Minister, Soraya Saenz de Santamaria, said that this budget contains more spending adjustments than changes in income. In it, 58% corresponds to expenditures, while 42% refers to income. She said that the government remains committed to social spending, which will represent 63.6% of total expenditure. The only items that increase are: pensions, grants and debt interests that make up the increase in government spending.

According to the budget, tax revenue projections for this year will be met fully. For 2013, it is expected that non-financial income will increase to 4% over budget, and 2.6% on budget execution.

The government expects to collect 4.375 million euros with the implementation of new tax measures, increasing taxes and fees included in the 2013 budget. The greatest impact on revenue will come from corporate taxes, the document says, by eliminating the deduction for depreciation for large companies, which will provide 2.371 million euros.

It creates a new 20% tax on lottery prizes, which will affect 40% of the prizes that exceed 2,500 euros. In total, the tax will add 824 million euros to the state coffers. Taxes on net worth will collect 700 million euros. These 1524 million euros will join together with 90 million euros that the government will obtain from eliminating the tax deduction on the purchase of primary residences, which was announced last July.

With these figures, the government has assured Europe that it will comply with its goal to keep the deficit below 4.5% of GDP for 2013.

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France to subsidize jobs for young people

August 21, 2012

By LUIS MIRANDA | THE REAL AGENDA | AUGUST 21, 2012

The government led by Francois Hollande will offer subsidized employment to young people for periods that will vary between one and three years.

The French Minister of Labour, Michel Sapin, has indicated that the French government will launch the program called “future jobs” for young unemployed and will subsidize those jobs from the state budget.

The program consists of temporary job positions for anyone who is unemployed with the objective to “further their training and integration,” said Sapin in an interview with the radio station ‘Europe 1′.

The minister has defended the initiative, despite its cost to public finances because “is one of the priorities for 2013″ and also despite the government ‘s alleged commitment to reduce the deficit, specifically limiting it to 3 % of Gross Domestic Product (GDP) next year. Such a goal is seen as far fetched since France is not giving any signs of economic growth or significant recover. In fact, France together with Italy and Spain are countries which are seriously struggling to make their sovereign debt payments.

In that regard, Sapin has emphasized that markets have confidence in France as it shows that those who lend money “are even willing to lose some money.” France has echoed petitions by other European nations to get some kind of deficit amnesty in order to keep afloat due to their lack of capacity to meet their obligations.

Sapin believes that the latest French debt auction helps support his vision, because some of the purchases of short-and mid-term bonds were awarded negative interest rates. He has emphasized that the problems of unemployment — 4.3 million unemployed — can not be resolved quickly, and that it is a problem his government inherited from the previous administration.

With this move, France intends to avoid the unemployment debacle seen in other countries such as Greece and Spain, where the number of people without a job has pushed the rates over 24 percent for the young. In the case of Spain, people are calling the current generation of young, educated men and women as the “lost generation” whose member are unable to find work despite their academic achievement or experience.

With the start of the subsidized employment program, France to keep at least part of its population from starting popular protests to the austerity measures adopted by the government. “It is not enough to change the president or Congress” said Sapin before recognizing that France needs to adopt emergency measures such as “futures contracts” and proposed “deep reforms”.

The measures announced by Sapin include seeking funding for social programs “that does not penalize the companies competitiveness,” he added. It is important to remember that France recently passed a 75 percent increase in taxes for people earning just over $1 million a year as part of the policies to collect more money to finance the state’s increasing expenses.

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France To Raise Top Tax Rate To Shocking 75%

August 8, 2012 1 Comment

By SAMUEL BLACKSTONE | BUSINESS INSIDER | AUGUST 8, 2012

Francois Hollande, the newly elected socialist president of France, looks set to achieve one of his main campaign goals and will impose a 75 percent tax rate on people earning more than $1.23 million per year, reports the Washington Post.

It’s thought that the tax, which is a marked increase from the previous rate of 48 percent, will be implemented by next year, according to AFP.

Ministers have said that the tax will be temporary, and is part of a plan to balance France’s books by 2017. Taxes already introduced are thought to be bringing in $8.7 billion this year.

Élie Choen, a past economic adviser for Sarkozy and Hollande, explained that the motivation was more political than financial, when talking with The Washington Post.

“From a strictly economic point of view, I wouldn’t recommend these policies,” he said. “But that’s not what this is. This is clearly designed to create some kind of consensus in this country for structural reforms.”

By increasingly taxing the wealthy, Hollande hopes to garner increased support for increased austerity measures. Government spending cuts have begun in efforts to meet a plan to balance the budget by 2017 and are sure to continue. In effect, this move will serve as political points and an “I told you so” moment for Hollande’s future socialism-inspired policies.

As many wealthy French citizens bemoan the hike, wealthy Americans are doing the same to a proposed Obama tax hike from 35 percent to 40 percent currently being deliberated in Congress. Even ardent Obama supporters who understand and are willing to foot the bill for the tax hike, including Hollywood actor Will Smith, are amazed and aghast at the French plan.

As Will Smith put it, “75!…God bless America.”

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