Definition: Crony capitalism - a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.
The crony capitalism of the Obama administration has been on full display the last month or so, focusing on the unrelenting compulsion of the administration to waste away taxpayer money and wealth on ill deserving, non-profitable business ventures of the political friends of the Democratic party and the President. Can any American recall any other Presidency in their lifetime that was so blatant and careless with our money in rewarding it's friends with little value in return?
The Obama administration's version of crony capitalism seems to be focused on alternative energy companies, starting with Solyndra, a bankrupt solar panel manufacturer company in California. As you may know frm news reports, the administration approved a half a billion dollar loan to the company even though PriceWaterhouse, the Office Of Budget Management, White House officials, the Treasury Secretary, the head of the President's Economic Council, and other informed sources warned, ahead of granting the loan, that the company was unlikely to survive or flourish.
Within two years after granting the loan, the company went under and the FBI, Congress, and other government organizations are investigating potentially criminal behavior. Solyndra's top executives have claimed their fifth amendment rights in front of Congressional hearings in order to protect themselves in any subsequent criminal actions.
The latest disgraces from the Solyndra disaster include:
* It has become known that the Department of Energy likely broke the law by subordinating the Federal loan to the investments of private investors, a clear violation of the loan program. This subordination included putting the interests of a foundation with strong ties to a major Obama fundraiser, George Kaiser, ahead those of the American taxpayer. Crony capitalism?
* This subordination will make it impossible for the government to recoup any of its loan since the assets of the bankrupt company will likely fall short of satisfying even the private investors that were moved ahead of the taxpayer.
* In a circular conflict of interest twist, an Obama appointed advisor to the Energy Department, Steven Spinner, was a major driver of approving the Solyndra Federal loan even though his wife worked for Solyndra's law firm. A New York Times article from early October discussed Solyndra-related emails: "The emails show Spinner discussed the pending final decision often with Solyndra officials, Energy Department colleagues, and the White House budget office. Crony capitalism?
* An LA Times article from September 26, 2011 quoted a person who was involved with these discussions as saying, "It was completely predictable that there would be a colossal failure among the bets." I assume the bets included giving a half a billion dollar loan guarantee to Solyndra without doing proper due diligence. See more about how the government "bets" using taxpayer money as explained from Joe Biden below.
* Numerous sources are now reporting that California-based Solyndra donated $7,500 to the California Democratic Party and company employees had also contributed more than $20,000 to Democratic candidates. Crony capitalism supreme?
Solyndra is pure cronyism and it cost the American taxpayer over half a billion dollars for nothing in return.
But solar panels are not the only source of alternative energy cronyism capitalism. Comparable cronyism and waste is also prevalent in the Obama administration's support of alternative auto technology.
According to a recent ABC News report, Fisker Motors is a Finland based automotive company that is working to develop electric cars. Unfortunately, two years ago the Obama administration approved a taxpayer backed loan for $529 million for this Finnish company to help with their technology development.
Why U.S. taxpayer dollars went to back a government loan to a Finnish auto company should have every American up in arms, especially considering how fragile and desperate our domestic car industry was. However, since then, the following distressing situations have arisen:
* The first line of cars from Fisker is being assembled in a rural Finland auto plant owned by a another Finish company, Valmet.
* The reason given for building the U.S. financed cars in the Finland boondocks, according to the Fisker owner and founder, Henrik Fisker, is that: “There was no contract manufacturer in the U.S. that could actually produce our vehicle. They don’t exist here.”
* This situation arose despite the fact that Vice President Joe Biden hyped the loan as a way to create thousands of American manufacturing jobs. Two years after the half billion dollar loan and risk, no U.S. Jobs have been created beyond some preliminary engineering work, but no manufacturing jobs.
* Fisker went on to say: "We're not in the business of failing; we're in the business of winning. So we make the right decision for the business. That's why we went to Finland."
* Fisker is more than a year behind in rolling out its $97,000 luxury electric vehicle. Only forty units of this luxury model have been made and only two of the forty have actually been sold.
* The ultimate objective of the Federal loan to the Finnish company was to get a viable, low cost electric car developed but two years after the loan was approved, no one outside of the company has even said an artist's conception of what this low cost car might look like.
* Joe Biden still believes that the company will eventually build tens of thousands of electric cars at a closed down GM factory Fisker
* A General Accounting Office review found: "DOE cannot be assured that the projects are on track to deliver the vehicles as agreed. It also means that U.S. taxpayers do not know whether they are getting what they paid for through the loans."
* The Department of Energy has also invested almost another half a billion taxpayer dollars with a loan to another electric car manufacturer, Telsa Motors.
* SEC filings show that Telsa has never had a profitable quarter and has no experience in mass auto production. It eventually wants to “mass produce” an electric car that costs about $57,000.
This really smells like another Solyndra. Hundreds of millions of taxpayer dollars put at risk with start up companies that could not raise enough capital from the private investment market, an investment market that is run by people who actually know what they are doing from a venture capital perspective. Why would the Federal government be so careless with our money? Easy question to answer if you delve into the ABC report:
* One of Fisker's biggest financial supporters, records show, is the California venture capital firm Kleiner Perkins Caufield & Byers. Kleiner Perkins partner John Doerr, a California billionaire, hosted President Obama at a February dinner for high-tech executives at his secluded estate south of San Francisco.
* Doerr and Kleiner Perkins executives have contributed more than $1 million to Federal political causes and campaigns over the last two decades, primarily supporting Democrats. Doerr serves on Obama's Council on Jobs and Competitiveness.
* Former Vice President Al Gore is another Kleiner Perkins senior partner. Gore could not be reached for comment.
* A former Tesla board member, Steve Westly, is an Obama bundler who raised hundreds of thousands of dollars for the president in 2008 and for his 2012 re-election campaign.
* The Westly Group was also a financial supporter of Tesla Motors until Tesla went public in 2010, and Westly continues to back the company.
* Tesla's founder and CEO, Elon Musk, is a major political contributor who has primarily backed Democrats, including Obama.
* According to published reports, another Tesla investor is Nick Pritzker, a donor to Obama and a cousin of Penny Pritzker, the national finance chair of Obama's 2008 campaign.
What a surprise, just like Solyndra, Obama cronies and supporters get free use of taxpayer money. In return, Obama and Biden and other Democrats get campaign re-election funds and support. A cozy, scandalous, significant conflict of interest that raises numerous, odious questions:
* Why were hundreds of millions of U.S. taxpayer dollars shipped out of the country to the benefit of the friends of the political class and a foreign car manufacturer?
* Why were hundreds of millions of taxpayer dollars spent on vehicle development on cars that the vast majority of Americans will never be able to afford?
* How many American jobs do we really think will be created if these companies are to make the small amount of autos that cost anywhere from $57,000 to $97,000? Most new cars sold in America go for far less than even the $57,000 price.
* Are we to believe there really was not any U.S. auto manufacturing facility that could have been used to begin the Fisker manufacturing process vs. going out into the Finnish countryside for the factory? How much more advanced could a rural Finnish factory be over any number of U.S. factories? Shouldn’t the money been given to a U.S. car manufacturer to build up the domestic expertise of design and manufacturing of electric cars in this country and not Finland?
* Why were conditions not put in place that would have at least provided Americans with a look at what their loan guarantee was going to look like?
* Since both Solyndra and Telsa have never had a profitable quarter of financial results, isn’t Telsa closer to a Solyndra fate than a successful loan?
Answers to these questions can all be covered by a classic Joe Biden statement relative to these alternative energy projects: “Folks, we're making a bet," Biden said on Oct. 27, 2009. "We're making a bet on the future, we're making a bet on the American people, we're making a bet on the market, we're making a bet on innovation.”
Great, billions of taxpayer dollars at risk via all of the administration’s energy loans and Biden thinks we are just betting on some quite large long shots, given the financial track record and operations records of Telsa, Fisker, and Solyndra. Betting taxpayer money in support of political supporters. Disgraceful.
But the cronyism and favoritism in alternative energy does not end with these car companies and Solyndra. Consider just a sampling of other Obama administration conflicts of interest:
* In late September, the Department of Energy approved a $737 million loan guarantee to a company Solarserve that is working on a solar plant in Nevada. Given Obama's history of cronyism with Solyndra, Fisker, and Telsa, it should come as no surprise that this project was also infected with cronyism. Turns out that the brother-in-law of Nancy Pelosi, Ronald Pelosi, is second in command at the primary energy investment fund that backs the Solarserve effort. Surprise, surprise.
* The Department of Energy also recently granted a $135 million loan guarantee to a wind power company, Brookfield Asset Management. For the past two years, the company has been represented by the lobbying firm called Heather Podesta and Partners, LLC. If the name Podesta sounds familiar, it should be. Heather Podesta, a top election campaign fundraiser for Obama, is married to Tony Podesta who is the brother of John Podesta who has served long and loyally in Obama's past political efforts. Disgusting conflict of interest.
* It seems to never end. News reports indicate that the Department of Energy handed out another loan to another solar company in September, this one worth $1.37 billion, to BrightSource energy. This company wants to build the largest solar power plant in the world. A former board member of the company, John Bruson, is Obama's nominee for Commerce Department secretary.
Unbelievable. Risky bets on risky companies by people in government that know nothing about standard business processes, never mind alternative energy technologies. One of the consistent things about these guaranteed loans is that we do not hear any Democrats complaining that loans were made to Republican-friendly companies. You know if that was the case, that word would surely get out. It has not, so we can safely assume that the rampant capitalism cronyism going on is purely Democratic.
We have got to find a way to get money and corporations out of our election processes in order to minimize this cronyism. The first step should be to forbid any organization from contributing to any political campaign. Only individual Americans could contribute. There is no other way to minimize this disgraceful waste of taxpayer money and corruption of our political processes.
Two quotes come to mind:
"If a technology is viable in the market, no government support is required. If a technology is not viable in the market, no amount of government support will make it viable." Author unknown. If any of these companies and their products were viable in the market, smart venture capitalists would provide all of the needed funding and money required to bring the products to market.
"These cronyism connections suggest that the Obama administration was not only 'felony dumb' in its handling of the DOE loan program, but consciously corrupt." Congressman Brian Bilbray, as reported in the National Review on September 29, 2011. Disgraceful, scandalous cronyism and felony dumb, that about sums it up.