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Senators fear Fiskercould default on giant government loans

The United States government granted a number of loans to different high-tech startups in an attempt to kick start innovation and research into alternative fuel and power. Among the companies that received these loans were Fisker Automotive and Tesla Motors. Tesla Motors has been undeniably successful and recently launched its Model S and made deliveries to the first buyers of the electric vehicle.
 
Fisker Automotive, however, hasn’t been as fruitful. The auto company has experienced issues with battery packs that had to be replaced, and a test vehicle loaned to Consumer Reports “died” with just a few hundred miles on the odometer.
 
As the recipient of a government loan, U.S. Senators Chuck Grassley R-Iowa and Senator John Thune, R-South Dakota are now questioning Energy Secretary Steven Chu about why a loan was made to Fisker Automotive considering it is partly owned by Qatar Investment Authority, a foreign-owned company.
 
The letter to Chu read in part, "Why should the American taxpayer have to accept the credit risk of a company owned by a foreign government?"

 Fisker Karma

The Energy Department loaned Fisker Automotive $529 million and awarded battery supplier A123 $249 million in grants. A Fisker spokesperson responded by stating that the company sold more than 1,000 cars globally and generated more than $100 million in revenue. The spokesman also stated that Fisker was focused on creating American jobs.
 
Fisker has already announced delays in producing its lower-cost family sedan due to setbacks with the battery packs for the plug-in hybrid vehicle. Battery supplier A123 is replacing 600 battery packs in Fisker Karma vehicles at a cost of $55 million after manufacturing flaws were found in the batteries.
 
The letter from the Senators also asked, "Will DOE consider A123's ongoing financial struggles before distributing the rest of the grant?"
 
A123 intends to hire as many as 400 new employees in the coming months, as was a condition of receiving the state and federal money. The company currently has about 780 workers in Michigan. 

Source: Detroit News



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RE: Anyone need an extra billion?
By tayb on 6/27/2012 5:10:54 PM , Rating: 1
And yet that $903 million that has been LOANED (do you know what a loan is?) is roughly 0.13% (that's a fraction of a percent) of the annual "defense" budget. To put it another way... we spend, not loan, 761 TIMES as much per year on "defense" as we loaned out to Fisker TOTAL.

So...

Loaning $903 million to a company that creates products, employs workers, and generates revenue = HORRIBLE.

Spending $687.3 billion ANNUALLY on defense = OKAY.

If I get to pick, which I don't, I would rather fund Fisker.


RE: Anyone need an extra billion?
By JediJeb on 6/27/2012 6:30:38 PM , Rating: 2
Loaning to Fisker only pays off if they remain in business and are able to repay the loan. If not then it becomes no different than the spending on defense, except for the fact that spending on defense does help protect the country while spending on Fisker if it defaults does not.

Is there wasteful defense spending, yes, but there is also necessary and useful defense spending, just as this loan will be useful if Fisker can pay it back, but it will be wasteful if they can not. And as for it creating jobs, between the two that is nullified since spending on both military and Fisker create jobs and feed some of that money back into the economy. The big question is how much (percentage wise) of each goes to domestic versus foreign entities? Also if Fisker is partly owned by Qatar, why would they need a loan in the first place?


RE: Anyone need an extra billion?
By AssBall on 6/27/2012 6:36:28 PM , Rating: 1
So you would rather pay 700 americans $1.2 million each to make a broken piece of shit no one wants than pay $110,000 people (not including contractors and corporations (boeing, ratheon, lockheed, etc also employ thousands of people) around $60,000 to run some of the most sophisticated technology mankind has yet to produce.?

You should be a politician.


RE: Anyone need an extra billion?
By mindless1 on 6/27/2012 9:08:13 PM , Rating: 2
Except you overlooked one crucial detail. We have to have defense funding. This loan is part of a larger problem, the policies of the government to loan not just to this company but it is one of thousands getting hand-outs to build things or provide services that the average american does not benefit from nearly as much as the rich do.

Fisker builds toy cars for the rich. I suspect the rich already have cars, no?


RE: Anyone need an extra billion?
By praktik on 6/28/2012 6:54:13 AM , Rating: 2
Technically correct - defense is a necessity. So some amount of defense spending is necessary... But is defense spending over the combined amount of the next 16 nations in a given year necessary?

These guys offer an interesting perspective on the graft and waste in US defense spending: http://rosecoveredglasses.blogspot.ca/2012/02/pent...


RE: Anyone need an extra billion?
By FITCamaro on 6/28/2012 8:26:43 AM , Rating: 2
Considering we protect over 16 other nations with that military, yes.


RE: Anyone need an extra billion?
By praktik on 6/28/2012 8:55:06 AM , Rating: 2
Right and defense spending is such a paragon of efficiency you couldn't do your World Policing for say, the combined budgets of the next 3 nations??


RE: Anyone need an extra billion?
By FITCamaro on 6/28/2012 8:27:54 AM , Rating: 2
No the crucial detail is that defense is a mandated duty of the federal government per the constitution.

No where though does it say anything about the federal government having the authority to become venture capitalists.


RE: Anyone need an extra billion?
By praktik on 6/28/2012 6:58:09 AM , Rating: 2
OR we could talk about the billions given to very successful companies that don't need it in the form of subsidies and tax breaks to companies with yearly profits in the billions...

Sure let's put scrutiny on spending and all of these types of corporate welfare - but let's not pretend that this particular instance is cherry picked for partisan advantage, and very small potatoes...


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