Last week ABC news brought to light problems with the Green Energy Loans program the Obama administration set up 2 years ago. It seems that the loans meant to creat green jobs for americans by giving money to companies to create electric sports cars. That sounds great but it seems one of the companies, namely Fisker, has in these past 2 years only designed and built one model of car, the karma seen at right, in Finland. Understandably many people are angered by this recent development and now Republicans in congress have started calling for a large scale probe of the loans which are already being looked over due to one a loan recipient, Solyndra, declared bankruptcy.
The spokesperson for Fisker has said that none of the loan money is being used in Finland but seeing as they have just begun making preparations to do anything at all in the US, nobody has seen any concept for what the car will look like, it is doubtful they set aside 500 million dollars for 2 years, and the companies first car has yet to even go on sale Fiskers assurances aren't doing much calm people down.
I'm quite glad they will be investigating these loans further, but the big question is what should be done if they do find misuse of funds? Some companies to receive these loans are using the loan they received to purchase only american goods and services but as that is far costlier then outsourcing they are considered noncompetitive and are having trouble making enough profits to pay back the loans. And what should be done with Fisker now that they are preparing to begin production in the US? Is it right to take back the loans and what determines if they should be taken back?
4 comments:
Solyndra was definitely not a good investment, however aren't some investments going to fail no matter what happens? Hopefully Fisker will pull through.
Dealing with the question of how to punish the misuse of money, I think that if a percentage of it can be repaid, it should be. But, one must realize how competitive the green market it and how difficult it is to actually design things for the green market. Maybe Fisker simply needs a few more years.
It depends upon what the conditions the money was given to the company to use, but in general, it is not the entire company that is misusing the money and punishing the whole company for a small number of misusers might lead to a worse consequence. If a person was skimming money from a fund and a certain percentage of the fund automatically returns to the donator, then many other people might be laid off etc to cover money lost, which might be worse than just firing that person(s), even if it sends a stronger warning.
It would be very interesting to know what the government finds in the investigations. Obama has committed to investing in clean energy and understands that the manufacturing of these technologies will either be created in the US or in other countries. In order for the US to remain competitive in energy economy they must produce more energy efficient technologies. However, it seems that Obama’s plan has failed and now looks bad on his part. Many can say that what happened to the Green Energy Loans is a symbol of foolish federal handouts. In addition, Solyndra has not only filed for bankruptcy, but has also laid off 1,000 workers, the opposite of what Obama was hoping to cause.
I loved how relevant this post was to the housing bubble / Bear Sterns crisis video that we watched in class.
I think that there should definitely be an investigation. It seems that capitalism runs well on greed & corruption, so I honestly can't say I would be too surprised if there was some sort of misuse of money (goodness I'm so jaded). That being said, I think we would need to handle that misuse with extreme delicacy so as to insure we don't pop any bubbles or cause any businesses to fail.
I agree with Kore in that punishing the whole company is not always the best option. First and foremost, green energy is a huge deal & if we go around crushing green companies, we might take huge steps back in the scientific world. In addition, we could ruin more companies through small systemic risk & the connections between companies. I think for the present we just need to find out if there actually is any corruption. If there is none, we just need to let the chips unfold & let capitalism have it's way.
If there is corruption, I think we need to come up with a better way to regulate our loans so as to prevent loan failures like that of Solyndra. Perhaps a commission (yay jobs!) that oversees the use of American loans & prevents corruption & greed from taking over. We definitely do not need another Bear Sterns incident.
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