In a piece devoted to explaining Ener1, another of the idiotic “investments” in green technologies made by the Obama Administration, the Wall Street Journal’s Review and Outlook concludes with this whopper:
There’s no pleasure in Ener1’s troubles, but there is a lesson: Better to leave commercial financing decisions to private investors and bankers who are likely to take more care with their own money. Politicians write the press releases first and worry about the taxpayer losses later.
Whom are these “private investors and bankers who are likely to take more care with their own money”? Certainly, none of the too big to fail banks could even remotely qualify as “private” enterprises, unless by private one means that the profits accrue to private individuals. Their losses are the public’s problem. What other conclusion about the financial system rescue in 2008-09 could one make? There may be some private investors, but it’s not likely any would be so foolish as to have invested in Ener1, just as none were interested in investing in Solyndra, without doing so alongside government money.
What the private investors in Solyndra didn’t understand until it was too late was that the government cared not a whit about turning a profit, but had reached its objective when a splashy new factory was built in a highly visible area of Silicon Valley; the factory stood as a testament to the government’s power and prestige when it dirtied its hands as an entrepreneur. That Solyndra’s business model, even under the most optimistic scenarios, could never have supported the extravagant factory, mattered little to its government backers.
Ener1 is a maker of lithium-ion batteries used by electric cars. So it is a fantasy built on a fantasy. Electric cars, touted as environmentally more friendly than those nasty old diesel and gasoline cars, still have to get power from somewhere. In a car powered by a battery, electric energy is provided by an off-site electric generator (i.e. a power plant), which is itself powered by generally either coal or natural gas, and chemically stored for usage on the road. Just because the pollution doesn’t come out of the tailpipe does not mean there is none. There is no such thing as a free lunch. Little regard is given to the environmental insults caused by the manufacture and disposal of lithium batteries, a testament to the fact that beliefs operate as intellectual blinders. It is a matter of faith, and faith alone, that battery-powered cars have fewer detrimental environmental impacts than gasoline-fueled vehicles.
But for the WSJ to believe that such a thing as a private banker still exists in the US is a consequence of their own belief-borne blinders. There is no such thing as a private banker, and hasn’t been since at least 2008, perhaps not since Alan Greenspan’s first rescue of the stock markets in 1987. In fact, private banking for commercial banks went out with the creation of the FDIC as a result of the Depression. But even before the FDIC, private bankers lent other people’s money, not their own. It is the very premise behind fractional reserve banking. Since the FDIC, any bank lending out borrower’s deposits that are insured by the federal government is a public banker. Since the financial system rescue, even non-commercial, i.e., investment banks, are public bankers. The public bears the risk of loss if the “private” banker squanders their money on ill-advised investments.
It takes a willing disregard for reality to assert that private banking exists in the US today. What Review and Outlook really means is that their capitalist buddies make better public bankers than do the government’s politicians. Perhaps, but in neither case is there a true market-based allocation of capital.