This is, what, about the eleventy-dozenth “green energy” company to go under despite the Obama administration’s subsidies?
A California solar energy company that was unable to meet a deadline for an Energy Department loan guarantee last year has sought bankruptcy protection in Delaware.
Solar Trust of America’s Chapter 11 filing on Monday listed assets between $1 million and $10 million, and liabilities between $10 million and $50 million.
Gee, who coulda predicted this?
Evergreen Solar Inc., the Massachusetts clean-energy company that received millions in state subsidies from the Patrick administration for an ill-fated Bay State factory, has filed for bankruptcy, listing $485.6 million in debt.
Here comes more comparisons of Obama to Carter. From The Daily Capitalist:
There was a huge internal fight at the Fed between the anti-deflationists and the anti-inflationists, and the anti-deflationists won. The Fed decided they would fight deflation through “quantitative easing” or “QE.”
With QE, another tool the Fed has to increase money supply, the Fed buys Treasury debt (bills, notes, and bonds) from its primary dealers and prints money to pay for it. This puts money directly into the economy.
It’s not as if this is something new. From last year through April of this year, the Fed bought $1.25 trillion of debt issued by Fannie Mae and Freddie Mac. They also bought about $700 billion of Treasury debt. This put $2 trillion of new money into the economy. This apparently wasn’t enough.
The second important thing they announced is that they will replace their Fannie/Freddie paper with Treasury debt. This seems harmless at first because the Fed is not increasing its total debt holdings—yet.
They announced this with a seemingly innocuous statement: that they would keep their current level of debt at about $2 trillion. In Fed-speak this means they are clearly worried about the sinking economy, and that they will print as much fiat money as they think is necessary to increase the money supply to induce inflation.
In economic terms, buying Treasury debt is called “monetizing” debt. In plain English it means that the government prints money to pay for its debts. This policy has been the downfall of many governments who destroy their currency through hyperinflation.
As soon as unemployment starts to go up again, and I believe it will, the politicians will be all over the Fed to “do something.” That something will be massive QE. I am quite sure that the Fed has not figured out how much QE they will need and that they are unsure of its impact on the economy.
I have a pretty good idea of where it will all end up. Since they are not dealing with the underlying problems, this papering over of the problems will lead to inflation and economic stagnation, a phenomenon we saw in the 1970s called “stagflation.”
With the current Administration and Congress talking about higher taxes on small businesses (by letting the Bush tax cuts expire) and greater regulation (Obamacare), it sure doesn’t seem that businesses are going to be eager to hire; therefore, unemployment isn’t looking like it’s gonna get any better in the near future, and may in fact get worse, especially as businesses start to fail at a greater rate. The logic is simple: if businesses go under, their employees become unemployed, thereby increasing unemployment.
In other words, Welcome Back, Carter!
The Obama Sacrifice Plan
Chrysler and GM Considering Bankruptcy
The confusion starts with this report from the Wall Street Journal:
WASHINGTON — The Obama’s administration’s leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.
The move would in essence split both companies into their “good” and “bad” components. The government would like to see the “good” GM to be a standalone company, according to an administration official. The “good” Chrysler would be sold to Fiat SpA, assuming that deal is completed, this person said.
GM and Chrysler have had bankruptcy attorneys devising plans for such a move in recent months.
President Barack Obama’s task force has told both companies that the administration prefers this route as a way to reorganize the two auto makers, rather than the prolonged out-of-court process that has thus far frustrated administration officials.
GM looks increasingly like it will be forced into filing for bankruptcy protection, sometime in mid-to-late May, in a plan where the automaker breaks into two companies, the surviving entity a “new GM” that maintains key brands such as Chevy and Cadillac and some international units, say several people familiar with the situation.
Two big, confusing questions occur to me:
The only thing I can think of is that Obama didn’t wanna upset the UAW… but then, bankruptcy for GM at any time will anger the UAW, because the bankruptcy judge would be free to rewrite the union contracts–and probably would.
So why all the unnecessary fol-de-rol if all Obama is gonna do, in the end, is send GM and Chrysler to bankruptcy court?
As I say, it’s got me confused.
This guy makes a lot more sense than the endless bailout-mania does:
“If companies fail, you need to let them fail,” former SEC Chairman Richard Breeden told the Senate Banking Committee Thursday. Mr. Breeden went on to trash almost every premise behind Treasury Secretary Timothy Geithner’s year of bailouts. “We seem to have policy makers who either don’t understand it or are afraid to use it,” he said of Chapter 11 of the bankruptcy code.
Turning to Mr. Geithner’s latest idea of an overall regulator of systemic risk, Mr. Breeden said: “It won’t work to try to assign planning for every potential risk in the economy to a single agency unless we want a centrally planned economy like the old Soviet Union. . . . It is particularly hard for me to see a case that any single group of regulators did such a good job [in anticipating the current crisis] that they deserve becoming the Über Regulator of the country.”
And then he does offer one good reform idea:
Mr. Breeden proposed a simple reform in which courts would be given the resources to quickly process an AIG-sized bankruptcy. He recommended “a special ‘systemic bankruptcy’ court composed of federal District or Circuit Court judges with prior experience in large bankruptcy or receivership cases,” much as the Foreign Intelligence Surveillance Court specializes in weighing warrant requests related to foreign spying in the U.S.
So why aren’t the Democrats doing this? Simple… government money = government power, and they’re all about more power for the government (to be fair, some Republicans are as well, but not to the degree that Democrats are).