More wild and crazy adventures in Barack Obama's command economy, courtesy of the Washington Examiner:
It's more than a little disheartening when the chief executive officer of one of America's most storied Fortune 500 corporations is "comfortable" with the fact that his company created a mere 10 jobs with a $25 million grant under President Obama's economic stimulus program in 2010.
The CEO in question is Honeywell's David Cote, and the stimulus grant involved came from the Department of Energy to advance Obama's green energy agenda. The funds were to be used by Honeywell's UOP subsidiary to build a biofuels technology demonstration plant in Oahu, Hawaii, supposedly creating 85 construction jobs and 40 permanent positions in each succeeding year.
There were gushing promises of a thousand permanent jobs ultimately resulting from the Oahu plant, but so far it's just the ten permanent positions, plus claims of 85 temporary construction jobs.
If Cote ever starts feeling uncomfortable with that, he can cheer himself up by remembering that his company is doing better than Fisker Automotive, Obama's little Solyndra On Wheels, which just defaulted on its first $10 million loan payment to the Department of Energy... which gave it nearly $200 million of our money. Anticipating the collapse of the company it once subsidized so lavishly, DOE has already seized $21 million from Fisker accounts, so we taxpaying chumps are only a little over $170 million in the hole.
When it was up and running, Fisker was a glittering example of Obamanomics, causing vast amounts of redistributed wealth to vanish as it pumped out an incredibly expensive car nobody wanted to buy. From Bloomberg News:
Fisker Automotive Inc. spent more than six times as much U.S. taxpayer and investor money to produce each luxury plug-in car it sold than the company received from customers, according to a research report.
The Anaheim, California-based company made about 2,500 of its $103,000 Karmas before halting production last year, disrupting its plans to use a $529 million U.S. loan to restart a shuttered Delaware factory owned by the predecessor of General Motors Co. (GM) The Karma was assembled in Finland.
Fisker was allowed to keep using money from its Energy Department loan after violating its terms multiple times, according to a report released April 17 by PrivCo, a New York-based researcher specializing in closely held companies. It said it based its report on documents, including the loan agreement, obtained through the U.S. Freedom of Information Act.
“They made a mistake” in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said of the Energy Department in an interview yesterday. “Should they have fought this sooner? Obviously -- as soon as it became evident that they had begun to default.”
They were selling a hundred-thousand-dollar electric car, and losing half a million bucks on every sale. Brilliant!
The Energy Department disputes the accuracy of reports that claim to have predicted disaster as early as December 2010. But really, how difficult was it for the solemn guardians of our public treasury to notice that this company's business model involved losing hundreds of thousands of dollars on every car?
Another way to look at this disaster is that the true price of a Fisker car was something like six hundred thousand dollars, but absolutely no one was willing to pay the real price, so it was necessary to pretend the price was only $100,000. Subsidies are used in a similar manner to prop up the feeble demand for other "green economy" products.
Who thought a six-figure car assembled in Finland was a wise object of taxpayer subsidies to begin with? Back when the Fisker disaster started to unravel, Obama apologists were prone to shrieking that the Administration wasn't using American money to subsidize Finnish jobs - it was all supposedly heading for a factory in Delaware that would build more budget-friendly $60,000 electric cars. But the Delaware factory went dark a year ago, having produced exactly zero of these Eco-Mobiles For the Little Guy.
As for the rest of the Fisker inventory, Bloomberg News says "about 1,600 were purchased by customers; another 338 cars were destroyed during November's Superstorm Sandy while parked at the Port of Newark, New Jersey." $200 million in precious taxpayer funds - blown by the President who claims he can scarcely attend to the most vital duties of government unless he's given more tax money - to build less than 2,000 cars, 20 percent of which got wiped out by a hurricane.
That's a lot of useless static to pump into the delicate information system of an advanced economy. Genuine demand is exploited for profit; politically-connected, ideologically-generated false "demand" is a sinkhole for wealth that generates little in the way of healthy, permanent employment. When the value of political connections as a resource increases, the value of other resources is distorted. Profitably matching resources to demand is extremely challenging, but politicians love to pretend that it's easy. These illusions leave a great deal of expensive debris behind when they shatter.