Monthly Archives: April 2015

Venture Capital

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The Department of Energy’s Loan Guarantee Program—its green energy loan program—is a money loser, according to the GAO.

The Government Accountability Office says the DOE’s oft-touted $28 billion loan program will cost taxpayers $2.21 billion over the lifetime of the loans. Not only that, the costs to taxpayers for green loans has risen about $500 million as “the result of loan guarantee defaults” from companies like Solyndra and Abound Solar.

That’s not bad by itself; the sorts of projects and companies being loaned to via this, essentially, venture funding program are high risk, losses are normal, and for a venture capital effort to lose money overall isn’t at all unusual.

What makes this particular program and its losses bad, however, is that it’s a government program. True venture capital entities, whether they fund through lending or any other method, are private companies. The participants in a private venture capital enterprise are voluntary participants who know, or have the opportunity to learn, beforehand the risks entailed in such a thing and who commit their own money to the effort.

When government gets involved in venture capitalism, the participants—the taxpayers—are not voluntary, they’re dragooned into the effort by the government’s commitment of those taxpayers’ money; the taxpayers have no opportunity to evaluate, before their money is irrevocably committed, the risks being run; and government is committing OPM to the enterprise, not its own money (indeed, the government has no money of its own to commit; it has only those taxpayers’ money).

Government has no legitimate role in the venture capital market.

Another Necessary “Letter”

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There is a bill beginning its long journey through the House that instructs DoD to deploy within two years (which is “promptly” as such things— both legislative and arms—go) systems capable of handling Russian cruise missiles and other weapons systems that Russia has been developing in direct violation of the decades old Intermediate-range Nuclear Forces Treaty.

The House Armed Services Committee attached this to the 2016 defense authorization bill. This legislation is significant enough in its own right, but the motivation behind it is interesting for another reason, too.

Here’s Congressman Mike Rogers (R, AL), Chairman of the Armed Services Committee’s Strategic Forces Subcommittee:

For years, we’ve been urging the Obama administration to get serious about Russia’s violation of the INF treaty.

Its response: we’re talking to Russia. While Obama talks, Putin cheats on treaties and invades his neighbors. We must take Russia’s actions seriously, and this authorization of DOD funding does just that. The United States will not be unilaterally bound by any treaty.

Another group of Congressmen have recognized the need to talk directly to foreign governments, since this administration seems incapable of doing so in any serious manner.

A Financial Literacy Quiz

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It’s short, and it’s from AEIDeas.

Personal Finance Quiz. There three basic questions are often used to test basic financial literacy.

  • Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: more than $102, exactly $102, or less than $102?
  • Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
  • Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

Only 27% of young adults could answer all three questions correctly.

Answers at the second link.

Those Clinton Foundation Donations

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On the matter of the Clinton Foundation’s need to refile some past tax reporting records because others had discovered that the Foundation had underreported its income, the Foundation’s Acting CEO Maura Pally offered this:

We made mistakes, as many organizations of our size do, but we are acting quickly to remedy them. And [we] have taken steps to ensure they don’t happen in the future.

Fair enough. Based solely on this instance of underreporting, it’s difficult to lay the error off to corruption or incompetence, even though the erroneous underreporting is a massive error, and the underreported donations occurred while Hillary Clinton was sitting in the Secretary of State’s chair.

But then Pally added this:

the group has already announced that it will accept funding from only a “handful of governments….”

Thus, in addition to giving the appearance, if as yet undemonstrated fact, that the Secretary of State’s influence was…available…Clinton, through Pally, is giving the impression that the President’s chair will be similarly available to selected foreign governments, should she be elected.

The woman is either oblivious, and so incompetent, or she’s a corrupt politician, and so unfit.

Hmm….

A Thought on a Mayor’s Statement

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What Baltimore Mayor Stephanie Rawlings-Blake actually said:

It’s a very delicate balancing act. Because while we tried to make sure that they were protected from the cars and other things that were going on, we also gave those who wished to destroy space to do that as well.

What she said she meant in the next day’s press conference:

I was asked a question about the property damage that was done, and in answering that question I made it very clear that we balance a very line between giving protesters—peaceful protesters—space to protest. What I said is, in doing so, people can hijack that and use that space for bad.

That’s an entirely legitimate reading of her initial statement: “In the course of,” not “by deliberate, separate decision.”

I think there are a number of factors in play that led to the NLMSM’s distortion (in my view) of Rawlings-Blake’s original statement:

  • the mayor’s fatigue—a thin read; leaders aren’t supposed to be tired, but the fact is, they’re human
  • losing sight of the fact that whatever she says will be presented in sound bites—no matter the difficulty of acting on that recognition while speaking extemporaneously
  • the NLMSM’s interpretation also is plausible
  • nevertheless, the NLMSM’s routine distortion of politicians’ statements in order to generate “a unique slant” about which to write, or because it has personal axes to grind
  • coupled with the NLMSM’s decision to take such a shocking statement (under their interpretation) at face value rather than first questioning whether an American city’s mayor actually could mean such a thing
  • the NLMSM’s haste to be first in the news cycle

It didn’t help that the Detroit police official interviewed so extensively, especially on Fox News, and so many other allegedly responsible public officials who were interviewed apparently took the mayor’s words under the NLMSM’s interpretation at face value rather than themselves asking whether a mayor really could intend such a thing.