If you pay attention to the 24/7 news cycle you have heard about Solyndra. For those of you who don't spend your days watching the business channels, Solyndra was a solar power company that received around $500 million in loans from the federal government and now declared bankruptcy. It appears to me that they essentially stole the money and had no serious intention of ever paying it back. I really hope their executives do some serious jail time, but I doubt they will.
But setting outright corruption aside, suppose the folks at Solyndra had perfectly good intentions but were simply incompetent. Should our federal government be in the business of giving out large loans to companies? It ought to be obvious to anyone but the most naive that doing so invites corruption and cronyism. Even without corruption, loaning money is risky. I have no problem with people risking their own money, that is what makes capitalism work, but the government is gambling with our money. I don't think the government should have any role in determining which companies are worth investing in and which aren't. Solyndra was owned in part by George Kaiser who is worth around $10 billion- if he wants $500 million he can come up with it himself.
Loaning to startups is especially risky since they have not demonstrated an ability to make a profit. A lot of smart business people lose a lot of money on failed startups. And giving a massive amount of money to a company that has not demonstrated an ability to make a profit is downright stupid.
Among other massive government loans are $529 million to Fisker Automotive that was founded in 2007 but has yet to sell a single car and has 150 employees. Now maybe it will be profitable, but if Mr. Fisker can really design great cars, he ought not have problems attracting private funding. He has spent his career in the Auto industry including high positions in Ford and Ashton Martin. So he certainly has the connections to get that kind of dough if he has a good idea. Of course, it was easier to call Al Gore and get use that political connection to get some federal government cash. The feds wouldn't know the difference between a profitable car and a money pit and probably ask fewer questions- they haven't spent their lives in the auto industry.
Tesla motors was given a $465 million loan- it ran at a $154 million loss last year. http://www.sec.gov/Archives/edgar/data/1318605/000119312511054847/d10k.htm
The government is loaning $1.6 BILLION to BrightSource energy, a company founded in 2004 and has never made a profit. http://www.energyboom.com/solar/brightsource-energy-files-250-million-ipo Ironically, it is being sued by the federal government for violating the Endangered Species Act. Only the government could loan money to a company while pressing a lawsuit that could potentially destroy the project they are loaning money for....
I'm not saying these companies are necessarily going to fail, what I am saying is that the government shouldn't be risking our money, especially by making low interest loans that offer little return even if the companies do become profitable. I will gamble with my money and put it in start ups I believe will be profitable. I will either lose every penny or make a nice profit. The people who run these companies are wealthy and connected in their own right. They know people who have the cash available to invest/loan, if they can't convince people they know that the investment is a good one, why should we throw public money at them?
We should all say fuck you to these leeches. If you want to take a risk, use your own damn money and wealth should be made based on value provided to customers not getting large "loans" through political connections.
Prozac, check your PM settings.