I've read the Constitution and the Bill of Rights, have you?
-John
Of course not, as here we are today.
But the intent of the founders, was to leave this shit alone.
-John
No I don't. You are right. The Constitution, Bill of Rights and the Federalist Papers, all allow for this jack-boot Government we have today.
-John
So... we invest money in projects that break even after a 3 year period (and one has to wonder what creative accounting is being applied there), when we could have had a 67% return on that same investment by simply putting it into an index fund. Sounds like the taxpayers got hosed..... and you count that as some sort of great accomplishment??
Lets see if any of those investments actually bare long term fruit that helps the country as a whole, but at this point it's essentially been a waste.
The loan program when passed by Congress and signed into law by Bush43 was assumed to have a 30% risk profile. Which means that Congress assumed a 7.5 Billion dollar loss. It is kind of stupid of Republicans to be bitching about a bill that they helped pass. In your assessment how has the program been a waste? What were you looking for when you mention "bare long term fruit"?
Stop it. Just stop. You do not do it for a living.
If you do, you are either doing it wrong, work for a financial firm (where the rules of the game are much different than for, say, manufacturing or governments), or for a mom and pop shop (which doesn't apply).
You are telling me that your company would kill a project that had a 5 year IRR of 14% and 3 year payback because it doesn't compare to a nearly unprecedented S&P 500 run? You're seriously implying that your company would instead invest that money in the market? How quickly did you guys go bankrupt in 2008? Did you work for Lehman Bros?
Do you even understand risk analysis, market volatility, or fundamentals to project business cases? Any moron knows that it is absurd to use high risk investments as a basis for calculating opportunity cost. A sound financial path is to choose investments that outperform your revenue growth targets, which for any large company are nowhere near 22% YOY, generally closer to 5-10%.
Go away.
Educate yourself.
You can begin with these 2 links
http://en.wikipedia.org/wiki/Federally_funded_research_and_development_centers
http://en.wikipedia.org/wiki/Science_policy_of_the_United_States
http://www.reuters.com/article/2014/11/13/us-doe-loans-idUSKCN0IX0A120141113?irpc=932
Yup,.. another unfulfilled Doomsday prophecy.
Good to see it's back on track - enjoy it haters.
Couple of things:
1) It's not exactly success for a VC fund to break even; in the case of gov't subsidized R&D that's not really the metric either.
2) DoE's cost of capital is higher than zero, 10 year yield is sitting at 2.3%, so at the very least they need to make that much to cover how much they pay for money the lend out
I suppose if you're breaking even on cost of capital and opp cost (NIH, NIS, NASA, DARPA all could use more money), you're can call it "no harm, no fault". I would argue that government is probably not very good at investing in companies with a specific genre, rather than giving more to pure research from which companies are spun out of.
This whole thing really honestly felt like a lefty "omg look what china is doing with solar panels" knee jerk reaction more than anything else; this just doesn't really work in the long run:
http://www.bloomberg.com/news/2014-...maker-suntech-seeks-protection-in-u-s-1-.html
These guys don't care about that. They care about stripping the government down to bare bones and forcing everybody else but the super top into effective indentured servitude with no workers rights, pollution, no social system.
Effectively they want the Industrial Revolution period all over again.
Who cares is *EVERY* other country on the planet has these research systems in place. We should trust in the "free market" to provide for everything, including our space program (which it didn't), the internet (which it didn't), and everything else so that we can compete globally. We should trust the "free market" to not ship jobs overseas, ship engineering overseas, to ship technology overseas, to M&A the shit out of every company to create "synergies" (aka, job losses), and "activist investors" not to strip down companies, load them up with debt, and spin them off into a never-ending cycle of "restructuring" that eventually causes brain drain and bankruptcy.
It is *VERY* ironic that a shithead like Zorkorist uses the internet as a medium to say the government needs to stop funding and researching everything. But he is a brainless twat anyway.
Couple of things:
1) It's not exactly success for a VC fund to break even; in the case of gov't subsidized R&D that's not really the metric either.
2) DoE's cost of capital is higher than zero, 10 year yield is sitting at 2.3%, so at the very least they need to make that much to cover how much they pay for money the lend out
I suppose if you're breaking even on cost of capital and opp cost (NIH, NIS, NASA, DARPA all could use more money), you're can call it "no harm, no fault". I would argue that government is probably not very good at investing in companies with a specific genre, rather than giving more to pure research from which companies are spun out of.
This whole thing really honestly felt like a lefty "omg look what china is doing with solar panels" knee jerk reaction more than anything else; this just doesn't really work in the long run:
http://www.bloomberg.com/news/2014-...maker-suntech-seeks-protection-in-u-s-1-.html
You missed the whole point of the program. It's not designed to maximize profit. Think if it as the 5% speculative part of your portfolio. The payoff will dwarf the s&p if something bears fruit.So... we invest money in projects that break even after a 3 year period (and one has to wonder what creative accounting is being applied there), when we could have had a 67% return on that same investment by simply putting it into an index fund. Sounds like the taxpayers got hosed..... and you count that as some sort of great accomplishment??
Lets see if any of those investments actually bare long term fruit that helps the country as a whole, but at this point it's essentially been a waste.
Even using the DoE's cost of capital is too generous and analytically incorrect. A basic tenant of corporate finance is that you use the cost of capital of the project not the entity. So they should really be discounting at the WACC of typical alternative energy projects which is much higher than the yield on treasuries.
Couple of things:
1) It's not exactly success for a VC fund to break even; in the case of gov't subsidized R&D that's not really the metric either.
2) DoE's cost of capital is higher than zero, 10 year yield is sitting at 2.3%, so at the very least they need to make that much to cover how much they pay for money the lend out
I suppose if you're breaking even on cost of capital and opp cost (NIH, NIS, NASA, DARPA all could use more money), you're can call it "no harm, no fault". I would argue that government is probably not very good at investing in companies with a specific genre, rather than giving more to pure research from which companies are spun out of.
This whole thing really honestly felt like a lefty "omg look what china is doing with solar panels" knee jerk reaction more than anything else; this just doesn't really work in the long run:
http://www.bloomberg.com/news/2014-...maker-suntech-seeks-protection-in-u-s-1-.html
But then you are seeing companies like SunRun, Vivant Solar and SolarCity come out and deploy these systems in a cost-efficient manner to consumers. Granted they are depending on Tax/Equity to do so, but they are doing it. The big game changer will be if the Gigafactory can drop battery prices down then it becomes cost effective to store rather than sell.
I have been looking at a solar deal this week, very interesting numbers.
Back when it was an expensive, unproven technology, solar energy was driven by hippies in sandals rigging up off-the-grid systems. About a decade ago, change-the-world Silicon Valley types hoping to make gazillions of dollars entered the fray, raising venture capital and promoting moonshot projects, like futuristic solar farms in the Southwestern desert.
Now come the financial service professionals. Because when its structured properly, the business of building solar panels and generating carbon-fee electricity can be a solid investment. Not a killer one that will mint billionaires overnight, and not a do-gooder plunge that will pay socially conscious investors below-market returns. But rather a mainstream vehicle that appeals to middle-aged guys in khakis who are more concerned with creating reliable streams of income and beating benchmarks than they are with saving the planet.
Solar, in other words, has become basic. And thats good news for people worried about global warming and emissions.
I saw thi article that said solar deployment was becoming a solid but boring investment vehicle. Which is actually very good for the industry.
http://www.slate.com/articles/business/the_juice/2014/10/altus_power_america_the_company_that_s_spreading_solar_energy_by_making.html
Is that how you see solar evolving?
It's exactly how I see it. SolarCity bonds IIRC are ~6yr bonds that yield ~4-4.5% for a BBB investment. If I look at that what would I rather own? I can buy DominosPizza franchise fee bonds (whole business securitization) or Sonics, both of which I know and like. I can buy container bonds, which yield 3.3-3.4%, granted it is less, but it is a more established market.
I can find one-off ABS bonds, like 2nd tier student loan B-class bonds, which I like a lot.
Other than that you have consumer loans (Springleaf and OneMain) which I wouldn't want to have to buy/hold for 6 years.
Thus, solar bonds become attractive.
My big Qs to the issuers are always.
1. What do you do about movers (new owners might not want the system).
2. What type of inverters do you install, are they cheap and will need frequent replacement (changing the ROI)?
3. What do you think about utilities charging off-grid or higher fees for people who buy solar and aren't contributing as much to the infrastructure? The utilities are lobbying states to allow them to surcharge solar users (and providers since they sell power back). This also changes the ROI.
4. What do you think about the buy (retail) rate vs sell (wholesale) spread? Do you think they'll increase spread to try to strangle solar, make up revenue, or do you think regulators will stop that?
5. How do you plan to stop companies like WMT trying to strangle solar?
6. What happens if you die? Who will take over? What happens if something makes current panels dramatically obsolete?
7. What storage devices do you see on the horizon that'll change the ROI? (Gigafactory is usually the answer).
8. Who maintains, how often, is that under contract?
There are lots more. I've talked to all of the major guys several times. It's a fascinating industry that has come out of the ground and is actually getting a lot of success.
Interesting stuff, Thanks!
While I have a lot of knowledge about solar, my knowledge is very niche. I wasnt aware that this was occurring in the industry.