Friday, March 15, 2013

On Fisker and Politics


Obama will give a speech today advocating more support for alternative energy vehicles. He wants to set up a (another) Trust Fund to achieve his goal. The TF will be funded by revenues from oil and gas leases. The Prez wants to throw another $2b down the electric car rat hole.

It’s an interesting day for the President to be bring up this idea as there is some evidence that another of Obama’s prior investments is turning into mush. The next Solyndra is setting up to be Fisker.


Fisker is private, so no numbers to look at. Therefore my thoughts on Fisker are just speculation. That said, something is up. The boss and founder of Fisker, Henrik Fisker, left the company yesterday. That’s never a good sign.




If there is to be a problem with Fisker, there will be blow-back to Obama. In 2009 Obama rushed to lend Fisker money. There will now be a lot of disclosure of what went wrong at Fisker. I can’t wait for the details.


The Department of Energy announced the Fisker loans in September of 2009. The original deal was for a total of $528m.




After the announcement there were a number of individual loans made to Fisker by the Federal Financing Bank. These are the details on the individual advances made by the FFB:




5/2010 – $60m

6/2010 – $17m

7/2010 – $16m

8/2010 – $17m

9/2010 – $16m

12/2010 – $20m

1/2011 – $17m

2/2011 – $1om

3/2011 – $9m

4/2011 – $7m

5/2011 – $3m


Total = $192B


Bingo! Only $192m of the $538m that was committed was lent out. Why would that be?


I have no direct knowledge of what happened back in 2011 when the DOE pulled the plug on the balance of the loan advances, but this is unusual. In any loan agreement (including loans made by the FFB) there are Conditions Precedent for draw-downs under an existing loan agreement. For the FFB to stop making loans, there had to be a legal reason; it had to be a covenant violation.

Typical covenants would include things like 1) A minimum net worth ratio, 2) minimum liquidity ratio, 3) revenues, 4) specific milestones of progress, 5) change of management, 6) change of control etc. There is always one provision that is a catchall – Material Adverse Change (MAC).

What was it that caused the change of heart at the DOE? When did it realize that something was “not right”?

The timing is suspicious. What was happening in May of 2011? The answer is that by this time, the DOE knew that Solyndra was going into the tank. The DOE renegotiated its Solyndra loans to allow other lenders in. The DOE agreed to subordinate its loans (a sure sign that something was about to hit a fan). Where the coming losses at Solyndra a factor in setting Fisker adrift?


My take on this? Fisker has a problem. If they do not sell themselves to a Chinese buyer pretty soon, Fisker will be in the headlines. If things go in that direction, the DOE loans will be at risk – another Solyndra might be in the making.

My problem with this is the calendar. Something bad happened sometime around May 2011 when the advances to Fisker were pulled. If there was information about a Fisker problem back then, why was there no disclosure? This is Federal money that was lent to a start-up private company. One would think that the tax payers (and voters) would have had some information about what was happening with their money, no?

Romney tried to nail Obama about the President’s lending policies for alternative energy programs. Mitt waved the Solyndra flag, but no one cared, and it was never a campaign issue. But I do wonder what would have happened if the real reason(s) for pulling the Fisker plug were made public prior to the election. Obama got a pass on his mistake with Solyndra; I think he would not have gotten a second pass if it were known that there was another bad loan on the books.


The questions are, Who knew what? When did they know it? When was this communicated to Obama (if ever)? And if there was a problem that the WH was aware of, why didn’t they disclose it prior to the election?


Lots of speculation by me in this report, so be guided accordingly. I have somewhat of a track record on these things. I was the only one to publish a report that Solyndra was going broke, before it went broke. I’ve got that whiff of rotten eggs again. Link to my report: Government Investment Disaster in the Works??




  1. chance you take says:

    Good job connecting the dots here, I think. Graphic especially appropriate.

    How can we short this?

  2. Calvin Harris says:

    He’s thrown away gargantuan amounts of money on alt energy crap and he wants so spend more.

    If he gets away with this it is proof that all of wash is nothing but a conspiracy to steal america blind.
    As if we needed more proof.

  3. same old gov’t.This is the democrats weapons of mass destruction.We the people just keep getting destroyed.Sad to say,it will never end.

  4. I am very curious about why you use the term “electric car rathole”. Don’t you think it’s about time that we gave up on the obsolescent technology of the internal combustion engine? We cannot continue damaging our environment, just so we can go on driving our gas guzzlers that are slowly killing us.

    However, I totally agree with you about the Obama administration lending any more money to the alternative energy industry, whether it be Solyndra, or some other company. After all, if these companies really want to develop some type of alternative energy technology, they should shoulder that financial responsibility themselves. That’s why I thought that this type of corporation usually budgeted some of their money into research and development. If a corporation wants to develop some type of different technology and/or products that they are going to make huge profits from, why should the American taxpayers foot the bill for their potential profits?

    The entire Solyndra affair was a huge screwup for the Obama administration, and it could have cost him dearly. I really don’t believe that President Obama was trying to get away with anything improper. I just think that his staff and advisers didn’t investigate Solyndra thoroughly enough. I am very glad that he’s not making the same mistake again.

    • I’m all in favor of new technology. But when the government showers huge money on political donors to make green stuff, I draw the line.

      This is not the role of government in my opinion. This is a private sector effort. If money is to be made or lost it should be born by those who are at risk.

      The DOE lent 190m to Fisker. The return to the taxpayer will be at best 2%, while the taxpayer shoulders all of the risk. In other words, the taxpayer put up the money for Fisker to gamble on Green. If it had worked out, Fisker would have added to his billions. But if it fails, the poor suckers, the taxpayers, get hit.

      Where’s the fairness in that outcome?

      • But What Do I Know? says:

        Well said, Bruce. The problem is not trying to come up with new green technologies, it’s that the people in charge hand out money to their cronies, who will benefit if it works but bear no loss if it doesn’t.

      • The problem with all this “green” tech is twofold:

        (1) as Bruce already explained, most of the focus so far has been about kleptocrats and political cronyism. Figuring out what is the “best” alternative energy source is not really part of the discussion; figuring out which entity gives the biggest campaign contributions is the obsession, never mind focus. Obviously, that process will produce big campaign donors, not good energy sources… its all about the incentives

        (2) even if electric cars work “in theory” or “in the research lab”, that doesn’t mean they can be produced reliably and at a low enough cost to be viable out in the real world. Hundreds of people were building gas and steam powered cars, for decades. They never made it past the hobbyist buyer group — they were expensive, required constant tinkering / maintenance, etc. It wasn’t until Henry Ford figured out a way to mass produce a cheap reliable car that horseless carriages went mainstream. Same with the PC — the Apple II wasn’t the first (Atari and Commodore beat them that I know of — probably others too). It wasn’t until Jobs and Wozniak made a PC that was cheap and user friendly enough for the masses that PCs took off.

        Electric cars are too delicate for the average user (too much maintenance / upkeep that requires expertise the average person and average mechanic don’t have). Electric cars are too expensive — both purchase price and battery replacement costs. Producing and disposing of the battery is an expensive pain in the @##. A very wealthy “green” hobbyist might have the time, money and knowledge to operate an electric car … but Joe and Jane Average do not.

        Solar panels are a joke — energy-wise, the weeds on Joe Average’s driveway are far more efficient at converting solar energy to what the plant needs. Solar panels only work in select areas that have sufficient sunlight — the dandelion weed grows just fine from Maine to Florida to Texas to Oregon.

        If alternative energy is going to work, we need a Henry Ford or a Jobs/Wozniak. We don’t need a politician. We certainly don’t need political corruption, but even if Washington DC wasn’t so ethically compromised — the cold facts are that legislation isn’t needed and neither is money. Better ideas are needed, and that is something that (for centuries) has come from people tinkering in their garages / work benches. Madame Curie, Issac Newton, the Wright brothers, Hewlett and Packard, Jobs and Wozniak … all did their best work in a garage or attic workspace. Thomas Edison’s early work happened in a train car while he worked as a train conductor. James Watt was home schooled, and “invented” the steam engine while tinkering on a workbench trying to fix a newcomen engine. Watt never finished a formal apprenticeship, ergo he wasn’t allowed to work as engineer.

        The one alleged counter-argument that is always cited — the Manhattan project to build an atomic bomb — is a terrible example. Albert Einstein, Enrico Fermi and Robert Oppenheimer had developed all the theories long before (in Europe). The US government has never invented anything. Not because they haven’t tried.

        You can’t just throw money at a problem and assume it will get solved. We need a critical mass of people who tinker with stuff on their workbench — instead we have either politicians / salesmen or we have people with formal academic training (ie stuff that society understands well enough to have an established formal education process).

        We no longer have an army of “geeks” who like to play with alternative energy ideas in their basement / garage. Those people are ridiculed as nerds or hermits or socially awkward losers … society wants super-extroverted salesmen instead (be they lawyers or bankers). The people that used to have pocket protectors and wanted to work for NASA have been socially engineered out of existence. They are no longer available to design better gadgets in cars for Government Motors either.

        A $2 billion slush fund for corrupt politicians and their campaign donors is not going to make alternative energy solutions practical. It just won’t.

      • I agree that the government shouldn’t give large corporations big subsidies to develop new products or technologies. They should pay for that themselves because they are the ones who are going to be reaping the profits. However, for small businesses, I can see where some type of development grants might be okay.

        • Blane — you are an idiot. People like you are destroying this country. You want bigger government, YOU should pay for it by yourself. Stop volunteering everyone else’s money to pay for your asinine ideas.

  5. Perhaps the Senator from Texas, Ted Cruz, should be spearheading an investigation into this malfeasance. Lets cut the head off of this beast before blowing any more money on green energy stuff. We cannot afford to be wasting any money on unproven, unsustainable green tech. Thanks Bruce for the insight.

    • Are you actually naïve enough to think that any member of Congress from of all places, Texas, would be capable of actually exercising any type of objectivity while investigating something like alternative energy? I would be willing to bet that any politician from Texas probably has ties to the oil industry, the main opponent of any type of energy production that isn’t related to petroleum.

      As for unproven, that is a total fallacy, and you know it. Whether you believe it or not, electric cars actually do exist. And to top it off, most of them are actually very efficient. Granted, as for now, most of them are quite expensive, simply because they haven’t yet sold that many of them. Like everything else, the price will go down as more of them are produced and sold.

      As for sustainability, how can you actually say that green technology isn’t sustainable? Production of electricity for automobiles is very sustainable because you can always put new batteries in them. Wind technology (windmills) is also very sustainable, not to mention nonpolluting. Most of them are very capable of generating a long and steady amount of electricity, even in low wind conditions. Solar power is also a very sustainable method generating electrical power. The technology for building solar panels has developed to the point that they are capable of generating a good supply of electricity, even in low sun conditions.

      Also, you should also be very aware of the fact that petroleum is probably the most unsustainable type of energy production there is. After all, it’s a well proven fact that the earth is running out of oil and natural gas.

      Before you make this type of claim, you really should read some more about sustainable alternative energy production sources. If you do, you’ll see that a lot of what you just wrote is totally wrong.

      • Seems like Blane is one of those enviro-terrorists, filled with “facts” he made up while Gore was inventing the internet…

        • If being a person who cares about our increasingly delicate environment, and someone who doesn’t want to endure the hardships caused by global warming because we humans insist on dumping huge quantities of greenhouse gases into the atmosphere, somehow qualifies me as being an enviro-terrorist (whatever the hell that is), I guess I am one.

          As for facts, I didn’t make anything up. Everything I said can easily be investigated by anyone. Of course, you might actually have to listen to something other than Rush Limbaugh, Glenn Beck or FOXNews to find out the truth.

          Developing some type of better, less harmful ways of generating electricity and powering automobiles is crucial to the survival of the planet. Despite the fact that GW Bush trying very hard to suppress any type of information about greenhouse gases and global warming, these two things actually do exist, and they must be dealt with somehow.

          As I said in a couple of my other posts, I very much agree that giving large corporations large amounts of taxpayers money to develop new technologies is not the way to go.

          • Pocket Protector says:

            Blane, look up the SBIR program. It’s an effective way to channel the collective inventive power of all the tinkerers hiding in unknown small businesses throughout the country to solve a specific problem. If Obama were truly serious about alternative energy, he’d bring the DOE into the SBIR program, and let them issue RFPs and hand out R&D contracts just like the military does.

          • Blane is an uneducated fool that just dribbles whatever mindless propaganda he is told to say

  6. Been a mechanic for 40 years.When comparing an electric car to gas or diesel they never take into consideration the recycling of the batteries which are NOT recyclable.If they did the carbon pollution of an electric car excedes that of an SUV! This is not the point of the blog though.The point is that Gov’t should not be using our money to fund winners and losers in any kind of bissness other than defense,as there is just to much opportunity for corruption,ie.the Gov’t scandle with the boeing aircraft tanker being passed over for the european Airbus tanker.

  7. You have to think like “Them”

    Solyndra and Fiskar are “setups”

    Their purpose is political — and put out there to say “see, this stuff doesn’t work….it’s a failure….it’s a waste of money”

    Obomber is not supportive of alternative and sustainable energy — it’s the exact opposite

    In fact, Obomber is as supportive of alternative energy in a true sense as he is of banker reform (ha!)

    The whole thing is a political ruse — a few hundred million here and there to achieve the end game is cheap insurance for the oil boys

    As far as what happens when you want to displace or disrupt Big Oil — I have two words

    Stanley Meyer

    • Fer Gawd’s sake, if there were an economically viable alternative to oil, don’t you think the oil companies would be all over it, with their virtually unlimited resources to buy it, develop it and distribute it?
      Finding oil, transporting it, processing it in capital intensive and technologically exotic refineries is difficult, and expensive. Profit finds the most economic and easy path, not the most difficult.
      And thanks to the oil companies for selling us fuel for the same price or less in real terms than it was over 100 years ago.
      Discl: I am not associated in any way with the oil industry, I just appreciate their work despite being demonized by the press for over 100 years. And thanks to Rockefeller, who through his monopolistic business practices reduced the price of oil from 50 dollars a barrel (2000 dollars in real terms) to 2 dollars a barrel, roughly the price it sits at today in real terms.

  8. whos stanly meyer??

    • I didn't know either says:

      what I can gather from a bit of Googling is that Stanley Meyer was a fraud who tried to sell a “run your car on water” electrolysis scam. He got convicted of fraud in ’96, and then died suddenly due to an aneurysm (or poisoned by big oil, if you’re into conspiracies…) a couple years later.

      His device was so “revolutionary” that even though he fully explained it’s construction and operation, no scientists have ever been able to get one to work.

    • Stanley Meyer tired and still professes to run cars on water.

      Free energy devices

  9. You will never see the details on Fisker. Remember, Solyndra was raided on September 8, 2011 by the FBI and their records were seized, Those records will never see the light of day. Solyndra was a money laundering operation of the Democrat party. The money flowed from the taxpayer to Solyndra to the Democrat PACS.



    No hope for Fisker being purchased by a Chinese company in the of the recent bankruptcy of Suntech Power. A lot of bondholders just had their clocks cleaned.


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