Washington: A doomed, but undeterred, venture capitalist

Writing at Bloomberg, Yale law professor Stephen Carter gets this exactly right about why the U.S. Energy Department makes for a lousy venture capitalist:

[T]he venture capitalist is disciplined in his lending by two forces that government does not face. First, if the venture capitalist makes too many bad bets, he will lose his investors. Government loan guarantee programs, on the other hand, can be refunded by Congress as often as politically convenient, and have been known to grow larger after making bad bets.

Second, venture capitalists face potential liability for breach of fiduciary duty if they fail in the duty of care and loyalty imposed by law on those private individuals who handle other people’s money. Government officials and departments, with minor exceptions, are shielded from lawsuits by the doctrine of sovereign immunity.

There is no way to subject a federal loan guarantee program to the discipline of the markets, and that might be reason enough for the government to stay out of the business of picking winners and losers.

One would have thought the Solyndra debacle would have made as much clear. Nope: Another $1 billion in green-energy loan guarantees were pushed out the door this week.

But have no fear: Only $737 million is going to a company with reported ties to Nancy Pelosi and…wait for it…Solyndra.

– By Kyle Wingfield

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43 comments Add your comment

@@

September 29th, 2011
4:05 pm

UNFRICKINBELIEVABLE!

Jefferson

September 29th, 2011
4:12 pm

ADM…now there some wellfare too.

ByteMe

September 29th, 2011
4:27 pm

Yep, there’s those crazy investments that turned into things like velcro, the Internet, cool new artificial limb technologies, “memory” foam… all funded by the US Government.

But to hear Kyle tell it, it’s all about $16 muffins (another fake story).

MarkV

September 29th, 2011
4:41 pm

The Solyndra case is remarkable more for something one does not hear than for what one does hear. All one hears about is the government loan guarantee money that may be lost. It is the usual spiel: the government that cannot do anything well. What is lost in the debate is that here is a private sector company that has failed. The company in the private sector, which is always praised so much in comparison with the public sector, where any failure is always trumpeted out as ‘government outrage.”

@@

September 29th, 2011
4:45 pm

ADM was among many…Monsanto, Sodexo and Tyson Foods, who wrote and sponsored “food safety” bills. We all know how passionate liberals are about the safety of their food.

I say get rid of the Dept. of Agriculture. They’re nothing more than a bag man.

Kyle Wingfield

September 29th, 2011
5:38 pm

MarkV: Private companies fail all the time. What’s different is that most of them don’t have the political connections to get $535 million loan guarantees from a government whose workers knew the venture was going to fail (and predicted that failure right down to the month).

Another difference between private-sector failures and public-sector failures is, as Carter alluded, that the public sector often treats failure as a reason to dump even more money into a program — because the decision-making too often is political, rather than economic.

Hmmm…where have I heard something like that before? Oh, yeah:

“If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”

ragnar danneskjold

September 29th, 2011
6:05 pm

Corruption runs deep among elitists.

I Report (-: You Whine )-: Thee Magnificent!!! mmm, mmmm, mmmmm! Just sayin...

September 29th, 2011
6:10 pm

Look at the dough they pile on the obozo reelection kampaign, which is going to make the crash of Solyndra look downright subdued.

Venture Capitalists of the losers indeed.

MarkV

September 29th, 2011
6:10 pm

Kyle Wingfield @5:38 pm:
Kyle, your response does not deny the point I have made. Which was, that regarding Solyndra all the talk is about the failure of the government, which apparently has made mistakes, while the private sector company made the main mistakes. In a more general sense, in both the public and private sectors work fallible people making mistakes. But the mistakes of those in the public sector are always criticized more harshly, and the government is always portrayed as inept, while the private sector is being praised as panacea.

thewindwhistler

September 29th, 2011
6:30 pm

I am a great believer in green energy. It is the savior of the planet.

Lil' Barry Bailout

September 29th, 2011
6:32 pm

crazy investments that turned into things like velcro, the Internet, cool new artificial limb technologies, “memory” foam… all funded by the US Government.
————————

Yeah, and guess what, those are all products that the government had to have to solve some actual problem. Your Idiot Messiah’s failed investments seem to go to things nobody really wants, or that can be purchased more cheaply from existing sources.

@@

September 29th, 2011
7:08 pm

Not too many liberal commenters on this one. Too blatantly obvious to deny.

“There are none so blind as those who WILL not see.”

Redneck Convert (R--and proud of it)

September 29th, 2011
8:17 pm

Well, if I want Green Energy, I’ll eat a salad with double bleu cheese dressing.

Anyway, I just popped in here to see what @@ was up to. I kind of miss her on Bookman’s blog now that she’s been kicked off.

ByteMe

September 29th, 2011
8:27 pm

Aww, Lil Barry, you don’t get that Solyndra was trying to produce solar energy panels in a different way to solve a problem?

So how’s Algebra I going for you?

Lil' Barry Bailout

September 29th, 2011
8:39 pm

What problem would that be? The raging market demand for solar panels that cost three times what their competition sold them for?

Lil' Barry Bailout

September 29th, 2011
8:42 pm

Bookman blocks people when he gets tired of losing.

Comrade MarxistV

September 29th, 2011
8:49 pm

MarkV

September 29th, 2011
6:10 pm

Kyle more than obliterated your pathetic attempt to defend what is clearly a case in point and class study in ‘crony capitalism’ with your usual bombastic use of repetitive fascist blather. Kyle is completely accurate in pointing out only the lil barry obozo part of government was the actual failure for giving Solyndra $535 million loan guarantees, while the competent parts of government were sending up red flags and flares all over the place to stop what the watchdogs knew was a corrupt if not criminal deal that was destined to fail leaving the taxpayers with the fiscal loss .

Kyle Rules!

JDW

September 29th, 2011
8:49 pm

Kyle you crack me up…a great, outstanding wonderful VC would kill for 2 real successes out of 2 deals and here you guys are blathering over a deal gone bad. Lets invest a billion It works like this….

Deal 1 $100 Billion return zero full loss minus $100 million
Deal 2 $100 Billion return zero full loss minus $200 million
Deal 3 $100 Billion return zero full loss minus $300 million
Deal 4 $100 Billion return zero full loss minus $400 million
Deal 5 $100 Billion return zero full loss minus $500 million
Deal 6 $100 Billion return not so good got our money back still minus $500 million
Deal 7 $100 Billion return not so good got 2X money back still minus $400 million
Deal 8 $100 Billion return better got 4X money back now plus $100 million
Deal 9 $100 Billion return good got 6X money back now plus $400 million
Deal 10 $100 Billion hit one got 10X money back now $1.3 Billion to the good

More than doubled our money in 4 to 6 years life is good. Those losses, we don’t worry about them so much.

JDW

September 29th, 2011
8:51 pm

OOOOPS 2 out of 10 deals

Lil' Barry Bailout

September 29th, 2011
8:52 pm

Washington: A doomed, but undeterred, venture capitalist
—————————-

Best headline of the year for Kyle’s blog.

Washington never lets ineptitude and failure get in the way of their fascist power grabs and central planning.

Comrade MarxistV

September 29th, 2011
8:56 pm

That’s failed central planning.

Kyle Rules!

Rafe Hollister

September 29th, 2011
9:01 pm

Kyle, prolific today. W6ish you would save one for Saturday, when working folks have time to blog.

As Rush Limbaugh said today, Solyndra making solar panels for $60 and selling them for $30 and OBlamer’s regime couldn’t figure out they might fail. Corruption pure and simple. Still trying to figure out which scandel will do him the most harm, Solyndra or Fast and Furious. Buying guns for drug dealers I think will win out, if we ever get the truth out of these corrupt ideologs.

Lil' Barry Bailout

September 29th, 2011
9:06 pm

Americans are better off when the free market, rather than federal bureaucrats, allocates your $1 billion in capital, so your scenario is meaningless, JDW.

Comrade MarxistV

September 29th, 2011
9:07 pm

Where will the “fast and furious” lil obozo corruption end?

Kyle Rules!

JDW

September 29th, 2011
9:44 pm

@Larry…”Americans are better off when the free market, rather than federal bureaucrats, allocates your $1 billion in capital, so your scenario is meaningless, JDW.”

Only to the blind Larry only to the blind…check out this bit from Michael Porter in Financial Times….

“We’ve let all kinds of obstacles fall in the way of the US as an effective and efficient and productive place to do business,” he says, citing skill gaps, poor infrastructure, and the burdens of health benefits, regulation and litigation. At the same time, “other countries have offered a better value proposition”.

While Prof Porter retains an underlying optimism, this loss of competitiveness obviously pains him. “This is shocking for the US. If you go back 100 years, you find that the US really was a huge pioneer in public education … The US was a real pioneer in creating a national, very deep university system … The US was a pioneer in the interstate highway system … We stepped to the plate in the past and made very, very bold investments in the fundamental environment for competitiveness. But right now, we can’t seem to agree on any of these things.”

All government funded investments. If we go your way then none of the critical long-term investments we need will be made. We will continue to eat our young quarter by bleeding quarter.

http://www.ft.com/cms/s/0/5a62e6d0-e046-11e0-ba12-00144feabdc0.html#ixzz1ZObCpkId

MarkV

September 29th, 2011
10:41 pm

Comrade MarxistV @8:49 pm
Why are you so eager to show how dumb you are?

Lil' Barry Bailout

September 29th, 2011
10:54 pm

Nice try at spinning away from your earlier post regarding your Idiot Messiah’s failed crony capitalism. You failed to notice in your cut ‘n paste of Porter’s statement that he said the “US” did these things, not the “US government”…and indeed, 100 years ago, the federal government didn’t have anything to do with universities or public education, and there was no interstate highway system.

Try again!

hsn

September 30th, 2011
2:39 am

MarkV said, “Kyle, your response does not deny the point I have made. Which was, that regarding Solyndra all the talk is about the failure of the government, which apparently has made mistakes, while the private sector company made the main mistakes. In a more general sense, in both the public and private sectors work fallible people making mistakes. But the mistakes of those in the public sector are always criticized more harshly, and the government is always portrayed as inept, while the private sector is being praised as panacea.”

You make an excellent point, MarkV, that to “err is human.” This will be true for all people working private sector jobs or government jobs. But you are looking at the argument from a rational vewpoint.
You see, to Wingfield and the rest of his Con friends, the U.S government is this gigantic evil, “foreign,” America-hating entity that NEVER does anything right, except when it has to drop bombs on miniature nations or pour billions into supporting the military industrial complex. The only things that get the Cons excited are wars, mayhem,fear, and bloodshed.
But don’t hold your breath. As soon as a Republicoon gets into the White House, the same fools will be telling us that it is our “patriotic” duty to support the same government they apparently hate anytime the White House occupant is a Democrat.
Kyle Wingfield is a disgrace to journalism, and journalists – if, he claims to be one.

JF McNamara

September 30th, 2011
6:08 am

Yeah, cause America has never suceeded in advancing technology… This is extremely short sighted and based on one event. Why not list some of the government’s big winners?

Lil' Barry Bailout (Unexpectedly Revised Downward)

September 30th, 2011
7:40 am

hsn: Republicoon
———————————-

Why the racism, hsn? Does the thought of a black conservative White House bother you?

JDW

September 30th, 2011
7:43 am

@Barry…”Porter’s statement that he said the “US” did these things, not the “US government”…and indeed, 100 years ago, the federal government didn’t have anything to do with universities or public education, and there was no interstate highway system.”

You Dufus these things aren’t debates they are facts. Government did in fact lead the way in all of these. Starting with the first state chartered public university in 1785…hummmm wonder what previously forward thinking state government was responsible?

Lil' Barry Bailout (Unexpectedly Revised Downward)

September 30th, 2011
7:50 am

Nice try JDW, but if you want to make that case then you’re agreeing with conservatives that state and local governments work better for such things than federal government, since the feds had nothing to do with starting up public schools and state universities. And as we’ve seen in recent decades, the more federal government gets involved, the worse these institutions perform.

To paraphrase our President Reagan, federal government isn’t the solution to the problem, it IS the problem!

Lil' Barry Bailout (Unexpectedly Revised Downward)

September 30th, 2011
8:29 am

Washington’s Quietest Disaster
Student loan defaults are growing, and the worst is still to come.
Article

When critics warned about rising defaults on government-backed student loans two years ago, the question was how quickly taxpayers would feel the pain. The U.S. Department of Education provided part of the answer this month when it reported that the default rate for fiscal 2009 surged to 8.8%, up from 7% in 2008.

This rising default rate doesn’t even tell the whole story. The government allows various “income contingent” and “income-based” repayment options, so the statistics don’t count kids who were given permission to pay less than they owed. Taxpayers shouldn’t expect relief any time soon. Thanks to policy changes in recent years and fraudulent government accounting, the pain could be excruciating.
——————-

Thanks, federal government. Another rousing success after taking over the student loan system.

MarkV

September 30th, 2011
9:28 am

hsn @2:39 am: While I appreciate your comment about my post and agree with you about the hypocrisy of the Republicans, I draw the line at your insult of Kyle Wingfield: “a disgrace to journalism, and journalists – if, he claims to be one.” Although I disagree with Kyle about most things, I believe he is, unlike some of the visitors to this blog, someone I could debate things with rationally.

Voice of Reason

September 30th, 2011
10:31 am

How is this legal?

Voice of Reason

September 30th, 2011
10:34 am

Also, I can see from a quick skim of the comments that MarkV and his liberal buddies have completely missed the point, whether intentionally to deflect the embarassment of the scandal to their world view or because they are idiotic, I don’t know. I ‘d like to believe the former.

MarkV

September 30th, 2011
11:02 am

Voice of Reason@10:34 am: “Also, I can see from a quick skim of the comments that MarkV and his liberal buddies have completely missed the point, …”

Since I made a point by my comments (@4:41 pm & 6:10 pm), I could have hardly “missed the point.” Try some logic next time.

hsn

September 30th, 2011
1:03 pm

@MarkV 9:28 am:

I appreciate the fact that you can debate Wingfield “rationally.” I made the comments I did about him because, in almost all of his blogs, he seems to rubberstamp “anything” the Republicans propose.
He acts like a right-wing talkshow host on these pages where Republicans ARE NEVER WRONG about anything.

That is not responsible journalism.

hsn

September 30th, 2011
1:59 pm

Lil’ Barry Bailout (Unexpectedly Revised Downward) said @ 7:40 am: “Why the racism, hsn? Does the thought of a black conservative White House bother you?”

————————————————————————————–

Take a second look at YOUR handle.

Lil' Barry Bailout (Revised Downward)

September 30th, 2011
2:51 pm

hsn thinks it’s OK to call certain people “coon”.

Why the racism, hsn?

Lil' Barry Bailout (Unexpectedly Revised Downward)

September 30th, 2011
3:19 pm

Obozo says America has gotten “a little soft”. Surely he’s talking about the folks who have figured out they can maintain their lifestyle by sucking off the government teat through unending unemployment benefits, food stamps, section 8 housing, taxpayer-provided cell phones, ad nauseum.

Obozo: Soft in the head. Loser.

Comrade MarxistV

September 30th, 2011
8:35 pm

MarkV

September 29th, 2011
10:41 pm

You mean to point out how dumb you are and even dumber to pose under different names to compliment yourself? :lol:

MarkV

October 1st, 2011
9:28 am

Comrade MarxistV September 30th, 2011 @8:35 pm: “MarkV. You mean to point out how dumb you are and even dumber to pose under different names to compliment yourself?”

Comrade MarxistV, Why are you so eager to show that you are even dumber than you have demonstrated earlier?