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Print 68 comment(s) - last by jack daniels e.. on Mar 2 at 2:25 PM

Musk only needs half the time given to pay loan

Electric vehicle maker Tesla received a loan from the U.S. Department of Energy to the tune of $465 million. The automaker has until the end of the decade pay off the loan, but CEO Elon Musk believes that Tesla will be able to pay off the entire loan in half the time.

The loan was granted to Tesla under the Advanced Technology Vehicles Manufacturing loan program and allowed the automaker to retool an automotive manufacturing plant in California. Tesla uses that plant to produce the Model S electric vehicle, and has recently stated that it will be able to produce 20,000 of the sedans during 2013.


President Obama and Elon Musk

Despite seeing a significant increase in revenue, the automaker lost nearly $90 million during the last quarter and lost approximately $400 million during all of 2012. This news sent Tesla shares downward last week.
 
Musk also got personally involved in a dustup with the New York Times over what he saw as an unfair and dishonest review of the Model S. According to Musk, the bad publicity cost the company $100 million.

Source: Technology Review



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RE: Great photo
By Mint on 2/28/2013 12:52:23 PM , Rating: 2
If you end handouts, then everyone receiving one has to reduce the goods/services they buy with them, which means the businesses producing them lose orders and lay off even more people, who in turn reduce their consumption and the cycle viciously repeats.

If we have millions of people of people out of work today that business have shown no need to hire, why on earth would they hire more when they have less stuff to produce in a handout-free world?


RE: Great photo
By RufusM on 2/28/2013 1:11:26 PM , Rating: 2
You're right, what would Elon Musk do without the government loan? He would only have billions to fall back on.

More to your point about handouts for everyone: You're absolutely right in that it's much harder to reverse dependency that it is to create it. Just ask any addict. That's why it should be avoided in the first place.

For your example, there would be a short-term contraction in the economy as people consume a little less. Once equilibrium is reached, expansion will start to occur as money is invested in those areas providing return, creating new jobs and the economy will grow again. As growth happens, people will become employed again and will earn their living. The impact of this can be lessened by reducing handouts bit by bit though so there are ways it can be done less painfully.


RE: Great photo
By Mint on 2/28/2013 6:28:59 PM , Rating: 2
quote:
You're right, what would Elon Musk do without the government loan? He would only have billions to fall back on. - See more at: http://www.dailytech.com/Article.aspx?newsid=30009...
Musk was almost broke in terms of tangible assets, and put everything he had into Tesla. He's a billionaire from his paper wealth, i.e. his stake in SpaceX and Tesla.
quote:
Once equilibrium is reached, expansion will start to occur as money is invested in those areas providing return
No it won't. There is no shortage of such money today with the handouts. We actually have more annual investment in corporate equipment today than we ever have, but that's still not enough investment to use all the money that the debt-free are saving.

There is no limit of available capital today. There's tens of trillions of dollars seeking merely 2% average return to no avail. So tell me, how do you get more business opportunity from an economy that is less capable of purchasing its products?


RE: Great photo
By Reclaimer77 on 2/28/2013 6:35:27 PM , Rating: 2
quote:
Musk was almost broke in terms of tangible assets, and put everything he had into Tesla.


Gee I can't imagine why he would have a hard time finding private investments. Clearly the free market was at fault there. High risk, virtually no payoff. Brilliant!

Hey didn't our economy collapse in 08' partly because of bad lending practices to people who couldn't pay loans back? Hmmmm, perhaps there's some correlation here...


RE: Great photo
By Reclaimer77 on 2/28/2013 4:16:19 PM , Rating: 2
quote:
If you end handouts, then everyone receiving one has to reduce the goods/services they buy with them, which means the businesses producing them lose orders and lay off even more people, who in turn reduce their consumption and the cycle viciously repeats.


Wow...this says SO much about you. And it's not very flattering.

You realize capitalism has a far superior track record compared to any form of wealth-redistribution right? I don't know how old you are, but you need to get a clue.


RE: Great photo
By Mint on 2/28/2013 6:14:20 PM , Rating: 2
Buddy, get out of the past. I don't know how old you are, but you need to get a clue ;)

http://research.stlouisfed.org/fred2/series/EXCRES...

Do you get it? This has never happened before. The track record means nothing. Macroeconomic mechanisms from the past are completely inapplicable today. When you save a dollar, it no longer goes towards a mortgage or business loan that funds something of value. It just sits on a pile of $2 trillion dollars (which actually represents $20T of missing economic activity after money multiplier) doing nothing.

The free market is actively choosing to watch tens of trillions of capital earn negative real interest instead of building or buying anything, and it's done it for over four years. That is indisputable fact, not opinion.

Think about how absurd that is for a moment.

Capitalism is making a cry for something more to build, and nothing in the free market is giving it to them.


RE: Great photo
By Reclaimer77 on 2/28/2013 6:43:46 PM , Rating: 2
quote:
The free market is actively choosing to watch tens of trillions of capital earn negative real interest instead of building or buying anything, and it's done it for over four years. That is indisputable fact, not opinion. Think about how absurd that is for a moment.


It's not absurd at all. That's what happens when consumer confidence bottoms out and you have a Keynesian in the White House running wild.

quote:
Capitalism is making a cry for something more to build, and nothing in the free market is giving it to them.


That's Capitalism self-regulating itself. Perhaps you've seen the workforce participation numbers lately? Not the unemployment number which we all know to be way lower than the actual, I'm talking workforce. Notice something?

This fantasy you've created is just that, a fantasy. Building something when demand is low or nonexistent, just for the sake of it, is crazy.

You are only seeing one half of the equation, your ideology is blocking the obvious conclusion to all this. Even in a great economy, Tesla's market is TINY!


RE: Great photo
By Mint on 2/28/2013 8:10:29 PM , Rating: 2
quote:
Building something when demand is low or nonexistent, just for the sake of it, is crazy.
DING DING DING! Reclaimer FINALLY realizes that the reason businesses aren't hiring is because there is nothing to produce! By your own observation, supply sider policies only help crazy companies.

So now let me help you put two and two together:

- Lower taxes for the rich isn't going to help demand, especially when the wealthy will take the exact same amount out of the private market to buy the extra treasuries needed to pay for the loss of tax revenue.

- Lower taxes on businesses isn't going to give them demand.

- Less redistribution/entitlements is going to LOWER their demand.

- A cheaper and more desperate labor force from a smaller safety net isn't going to create demand

- Cutting the contracts that the gov't gives to businesses isn't going to create demand

Do you get it yet? All the tea party policies make the economy WORSE. None of them address the core problem of demand.
quote:
Even in a great economy, Tesla's market is TINY!
Guess what: The gov't loan to Tesla is correspondingly TINY! The EV subsidy as a percent of the auto industry size is TINY!


RE: Great photo
By RufusM on 3/1/2013 10:53:34 AM , Rating: 2
Reclaimer is stating there is extremely soft demand for EVs, not aggregate demand. Guess what would happen if everyone bought EVs: The demand for electricity would be so high the infrastructure couldn't keep up. It takes years of red-tape to build new electric plants. Plus it's not popular to want coal, natural gas or nuclear, which are the most abundant and inexpensive options for electricity, so the price of it would be high for everyone, not just those with EVs.

To your point on handouts/entitlements:
Expanding handout/entitlements money only increases artificial demand in the very short term. As soon as those payments stop, the short term demand does too so they can NEVER be stopped or reduced once allocated. As I said before, it's easy to create dependency but much harder to stop it. Just ask any addict. Just look at the Cash for Clunkers program. As soon as the money went away, the artificial demand it generated went away too. It creates a mini-boom then crash after.

I understand your point about investing in in new technology for the future. That's the very thing that grows the economy in a long term manner, but the US Government doesn't have a crystal ball. Investors and banks are FAR better equipped to provide capital based on their experience of risk assessment. If they determine it's high-risk, why should the government risk it? Especially the US Government when they are already on the verge of bankruptcy. The US Government is constantly expanding, taxing more money to feed its growth. It's not an efficient entity because it has no competition. If it continues, everyone will eventually be working for the government and we'll have communism or a similar facsimile of it.

The thing is, money will always be spent on something: Money is a bank is loaned and spent, money in someone's pocket is spent on their needs/wants, etc. The key is finding where the money is best spent to provide the biggest boost to the economy. Money will naturally flow to the best investments to grow the economy in a long-term manner (in an economy with reasonable regulation and market forces), not just a short term artificially-stimulating demand manner.

Artificially stimulating demand and re-distributing wealth is much less effective, in the long term, than its natural distribution through regulation and market forces. With proper regulations and healthy competition everyone wins.


RE: Great photo
By Reclaimer77 on 3/1/2013 2:29:44 PM , Rating: 2
Well put but he'll just say you're living in the past too. Money grows from trees and debt doesn't matter. In fact it's good.

His analogy about the man bailing out this sinking boat is very disturbing. He actually believes it's the government keeping us afloat instead of pulling us down.


RE: Great photo
By Pirks on 3/1/2013 4:34:58 PM , Rating: 2
quote:
it's the government keeping us afloat instead of pulling us down
Shhh no one please tell this redneck about 1929 and how nicely government "involvement" kept this country "afloat", or his tiny fox news fed brain will pop


RE: Great photo
By RufusM on 3/1/2013 5:26:43 PM , Rating: 2
I agree that more government regulation was needed in 1929. The 1933 Banking Act was needed for monetary stability. We need to go back to having separate Commercial and Investment banks.

Like I said, it's a balance of regulation and natural market forces. We don't want too much government regulation/taxation stifling the economy or natural supply and demand forces, nor do we want too little regulation/taxation where companies can do whatever they want and not pay their share in.

We've seen what happens in both cases and it's not pretty.


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