The latest taxpayer-funded boondoggle to emerge from the Obama Administration’s infamous Energy Department grant and loan program has cost taxpayers $118.5 million, new bankruptcy filings by electric battery maker Ener1 reveal.

From Bloomberg News:

The company listed assets of $73.9 million and debt of $90.5 million as of Dec. 31 in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan. Ener1 has been affected by competing battery developers in China and South Korea, “which generally have a lower cost manufacturing base” and lower labor and raw material costs, interim Chief Executive Officer Alex Sorokin said in the petition.

Like Solyndra, Ener1 was a company touted by President Obama as being a shining example of his vision for taxpayer-subsidized clean energy.

The day following President Barack Obama’s 2011 State of the Union Address, Vice President Joe Biden toured Ener1’s lithium-ion battery system manufacturing facility in Greenfield, Indiana and said:

As you heard President Obama say last night, this Administration is forging a new path forward by making sure America doesn’t just lead in the 21st Century, but dominates in the 21st Century. We’re not just creating new jobs-but sparking whole new industries that will ensure our competitiveness for decades to come-industries like electric vehicle manufacturing.

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(Reuters) – Solyndra LLC failed to attract any bids on Tuesday from buyers who could have restarted production, brought back some laid off staff and kept the bankrupt solar panel maker operating, according to a company adviser.

Solyndra, which owes more than $500 million to the U.S. government, has said a turnkey buyer is the best hope for getting the most money for the government and other creditors. However, no turnkey bids were submitted by a Tuesday deadline, said company adviser Eric Carlson of Imperial Capital LLC.

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WASHINGTON (AP) - Jon Corzine plans to tell a House committee that he doesn’t know the location of clients’ money that went missing from failed investment firm MF Global.

The former U.S. senator has been subpoenaed to explain how MF Global, which he led for about 20 months, collapsed into the eighth-largest bankruptcy in U.S. history and why an estimated $1.2 billion in client funds is unaccounted for.

In prepared testimony posted Thursday on the House Committee on Agriculture’s website, Corzine apologizes to “all those affected” by MF Global’s failure. The company filed for bankruptcy protection on Oct. 31. Corzine resigned as CEO on Nov. 3 and hasn’t spoken publicly since.

“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine says in the statement. He says he can’t say whether there were “operational errors” at MF Global or whether banks or other companies have held onto funds that should be returned to MF Global.

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BG contributor Charlie Gasparino in The New York Post:

Jon Corzine appears to have committed more than a few sins in the runup to the demise of MF Global, including possibly using client money to pay for the risky trades that forced his brokerage firm into bankruptcy over the weekend. But possibly his biggest sin was his steadfast belief in the power of government.

The former New Jersey governor and Goldman Sachs chief executive went wrong by assuming that a government bailout would somehow turn his firm’s bet on some of the worst investments in the world — the sovereign debt of Italy and Spain — into gold. That absurd faith has doomed many chief executives — Dick Fuld of Lehman Bros. chief among them, just a little more than three years ago.

And, more than any of the other shenanigans that may have taken place during the ill-fated firm’s final hours, it’s what did in Corzine and MF Global.

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The bankruptcy of MF Global demonstrates that the 1% of crony capitalists in America are now subject to the same risks of economic losses as the other 99% of us. Led by former Goldman Sachs Chairman Jon Corzine, MF Global engaged in speculating on the bonds of Portugal, Italy, Greece, and Spain (PIGS) with shareholder money; they then tried to hedge their bets with derivatives called Credit Default Swaps (CDS). The firm relied on Corzine’s inside expectation that crony politicians in Germany and France would stick taxpayers with the cost of bailing-out bondholders, like MF Global. The bet buckled when voters rebelled and demanded bondholders suffer losses. Once subject to capitalist risks, MF Global collapsed.

Jon Corzine made most of his fortune from developing intimate relationships with politicians and government officials. As Chairman of Goldman Sachs, in 1999 he led the effort to convince the Clinton Administration and Congress to repeal the Glass-Steagall Act of 1933. The Act banned commercial banks that receive insurance from the Federal Deposit Insurance Corporation (FDIC) from engaging in speculation and trading in securities. Historians have blamed the start of the Great Depression on massive leveraged speculation by banks in the stock and bond bubbles of the “Roaring Twenties.” Many of the victims of the 1929 crash turned out to be the proverbial “widows and orphans” whose small deposits were wiped-out when trading losses forced their savings institution into bankruptcy.

Goldman Sachs had been a private-partnership for over 100 years when Corzine joined the firm as a bond trader in 1975. Consequently, the capital of partners in Goldman Sachs and the other investment banking firms were at 100% risk for trading losses by their firms. When Jon Corzine became Chairman and CEO of Goldman in 1994, he understood that stocks were legal to leverage by 100%, but U.S. government bonds could be leveraged by 5,000%. Corzine knew his older partners would never be willing to risk their own capital at very high leverage. Corzine set his sights on repeal of Glass-Steagall Act so his partners could get their money out through a public offering and the firm could take advantage of the leverage risk trading on shareholders’ money. (more…)

The collapse of MF Global, the brokerage dealer headed by former New Jersey Governor and Goldman exec Jon Corzine, may seem like just another case of Wall Street fat cats paying the price for their speculation (actually, though Corzine may have run the firm into the ground, he’s reportedly going to receive a $12 million golden parachute).  The MF Global affair, however, signifies something even deeper:  how crony capitalists like Jon Corzine have used state pension funds for their political and financial benefit.

MF Global has declared Chapter 11 bankruptcy after Corzine led the firm to buy big holdings of debt from Spain, Italy, Portugal, Belgium, and Ireland at a discount.  Now federal regulators are investigating how hundreds of millions in customer money has gone missing.  But these were not simply financiers.  Some of Corzine’s biggest clients were pension funds for teachers, public employees, and others.   The fifth largest shareholder was TIAA-CREF, which owned 6% of the stock (MF Global’s Bankruptcy Petition is here).  In 2008,  before Corzine arrived, MF Global was sued by numerous pension funds over losses they had sustained because of MF Global trades, including the Iowa Public Employees’ Retirement System, Policemen’s Annuity Benefit Fund of Chicago, Southeast and Southwest Areas Pension Fund, and the State-Boston Retirement System.  MF Global settled the suit for $90 million.

The MF Global bankruptcy will cost pension funds a lot.  Pension funds around the country will likely take severe hits as their shares in the firm, bonds, or other holdings suffer huge losses.  The Oregon pension fund had a heavy stake MF Global.  Others are likely to follow. (more…)

From NYT’s Dealbook:

The last-ditch rescue effort is a major blow to the reputation of Mr. Corzine, 64, who formerly co-led Goldman Sachs and was also a United States senator. With a sale of MF Global, Mr. Corzine’s role at the firm will almost certainly end, though he is expected to receive a severance payment of nearly $12.1 million.

Still, the departure will be bitter for Mr. Corzine, whose first stint on Wall Street ended with his ouster from Goldman Sachs. Along with Henry M. Paulson, another Goldman co-chief executive, who would later become Treasury secretary, Mr. Corzine, a former trader, led the firm through the Asian financial crisis of 1998. But trading losses in the last quarter of that year, on top of ill will within the firm over the decision to go public, led to Mr. Corzine’s exit in January 1999.

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From The Hill:

A Massachusetts company that received a $43 million Energy Department loan guarantee last year filed for bankruptcy Sunday, a step certain to fuel criticism of federal green energy financing in the wake of the solar company Solyndra’s collapse.

Beacon Power Corp., which develops energy storage systems, filed for bankruptcy protection in the U.S. Bankruptcy Court in Delaware.

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From the invaluable John Kass in The Chicago Tribune:

The Solyndra scandal cost at least a half-billion public dollars. It is plaguing President Barack Obama. And it’s being billed as a Washington story.

But back in Obama’s political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls “optics.” In fact, it’s not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros.

The FBI is investigating what happened with Solyndra, a solar panel company that got a $535 million government-backed loan with the help of the Obama White House over the objections of federal budget analysts.

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From BusinessInsider:

From its inception, Solyndra’s business model was flawed. It’s unique cylindrical, silicon solar cells were innovative, but only made sense when solar panel prices were high. By the time the Energy Department approved Solyndra’s loan — the first granted by the department’s loan guarantee program —Chinese and Canadian manufacturers with low-cost structures had priced Solyndra out of the market.

In March 2009, Solyndra’s loan application, to build an advanced manufacturing facility in California, was fast-tracked through the DOE, despite the fact that the department had not completed its review of the company’s financial viability.

Solyndra was not the only company that was fast-tracked. A 2010 government audit of the DOE program found that the department lacked the ability to adequately evaluate applications to the federal loan program, and often approved loans before completing a full review.

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Solyndra, a San Francisco based solar panel company that received a $535 million loan guarantee from the federal government has declared bankruptcy. Last year President Obama touted the company as “leading the way” in the green jobs future he envisions.

Just a few months ago, ABC News revealed that one of the major financial backers for Solyndra is also a major donor to the Obama campaign.

The donor, Steve Westley, has subsequently been named to the President’s Energy Advisory Board. Solyndra was supposed to have produced 4,000 jobs with the loan guarantee. Now all of the company’s employees have been laid-off. Mr. Westley is still on the advisory board.

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The Mohair subsidy. The AmTrak subsidy. The Ready to Learn TV Program subsidy. What all of these federal subsidies (and scores more) have in common is that they are on the specific list of federal programs that Republicans are proposing to eliminate to cut the debt and preserve America’s fiscal integrity.

Hey, with the U. S. national debt increasing by $4.1 billion each day, we are faced with national bankruptcy—which has aroused the Republicans from their lethargy. They will agree to raise the debt ceiling if the politicians will agree to restrain their spending appetite by making specific cuts.

What specific suggestions for cuts has President Obama made? Almost none. It doesn’t count to talk about future savings from possible cuts in national defense, or alleged savings from Obamacare. It’s all in the future, and we don’t know if any of it will happen.

For the president to make no suggested cuts in our bloated federal budget is astonishing. Let’s take the more than $100,000,000 annual subsidy to Amtrak as one example. Amtrak is expensive and inefficient, which is no surprise. The first transcontinental railroads—the Union Pacific and the Central Pacific—were built in the 1860s and they ran about $60 million (in 1869 dollars) in debt in building costs, and both went bankrupt (the Union Pacific several times) before the end of the 1800s. By contrast, the Great Northern Railroad, which went from St. Paul to Seattle was built with no federal subsidies and never went bankrupt. The subsidies to the Union Pacific and Central Pacific made them dependent on the government, and helped lead to their downfall. Thus, if the federal subsidies to transcontinental railroads failed when first tried in the 1800s, why should we be surprised that AmTrak loses money every year now. And what does this tell us about the huge subsidies President Obama has planned for high-speed rail?

Why is the president failing to join the current debate? Why is he offering almost no specific cuts?

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Our current administration and swarms of socialists for decades before it have repeated the dogma that the rich get rich on the backs of the poor.  This fallacy deserves no place in genuine political discourse.  In fact, the opposite will be true given the policies that come from such a premise – all of society will get poor on the backs of the ‘rich’ chained by government.

First off, if a rich person can only get rich by bilking the poor person, this implies that there is a finite amount of wealth in an economy.  This defies all logic.  There is an infinite amount of wealth because there are an infinite amount of ideas that can be converted into goods and services, the competition of which increases quality, decreases cost and spreads the wealth to all of society.  The imagination of the entrepreneur is boundless, and the transformation of ideas to tangible wealth can only be constrained by taxes, regulations and the economic uncertainty generated by a political class responding to constituents who seek to use the law to benefit themselves at the cost of others.

Taking a step back, when those like Barack Obama speak about the “rich,” they never define who these heartless souls are.  The term ‘rich’ as regards tax policy is a misnomer.  It is the highest earners that are the rich; it is the highest earners in society that provide the disproportionate amount of wealth that the government forcibly takes and redistributes.  This is not a static class.  People can move from high income brackets to low income brackets at any time in a free economy.  Only in a socialist economy do the rich stay rich and the poor stay poor at the whim of the political class, whereas in the free economy it is determined by how much society values one’s services.

Which brings us to the fact that when Obama and his comrades speak of the ‘rich’ in derisive terms, there is never any discussion of how the high earner becomes the high earner.

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To listen to the debates on the deficit and the debt, one would think that wealth emanates from the government. Underlying every argument is the notion that government cuts imply pain and pose a drastic threat to our economy.

But government spending itself is pain because all money spent by the government represents the confiscation of today’s wealth or future wealth, via direct taxation, currency devaluation or debt ad infinitum. By taking current wealth out of private hands, it is allocated not according to a market economy driven by the people but by a political economy in which “investment” yields returns solely for the politicians in the form of votes and favored classes in the form of monetary or regulatory handouts; by devaluation, savers are wiped out and borrowers and spenders are rewarded, a sure-fire way to bankrupt a people, given that economies grow through savings and investment, not consumption; by piling on the debt, the government pushes up interest rates for all of us, leading investment to flow out of the US and crushing corporations and individuals alike.

All government today rests upon a premise that people should be lucky that they get to keep a percentage of the fruits of their labor, with government rightfully conferring benefits on the interests that support it. Which is why it was never intended for government to be in the business of conferring benefits in the first place – and I mean benefits to anyone, be it labor unions, corporations or particular classes of people.

The burden should have always been on the politician to prove to his elector why ANY dollar taken from the individual should be redistributed to someone else. For government’s clearly defined bounds were created to ensure that the usurpation of wealth from private citizens would be minimal, and occur only when it supported a service that all people benefitted equally from, such as our national defense.

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On today’s edition of Coffee and Markets, Brad Jackson is joined by John Ross and Cole Abaius to discuss how movie studios are struggling to survive in a 3D and digital age.

We’re brought to you by Film School Rejects and by BigGovernment. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

How much money does a movie need to make to be profitable?
Six Reasons Why Hollywood Box Office is Dipping, from Avatar vs. Tron to Snow vs. Netflix
Cole at Film School Rejects

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“They put incompetent adults ahead of children,” Richard Riordan says of teachers unions who stand in the way of school reform.

The former mayor of Los Angeles took office shortly after the 1992 riots and shortly before the massive 1994 Northridge earthquake. Today, notes Riordan, the City of Angels faces a slate of different crises, from failing public schools to a fiscal calamity that has put the city on the brink of bankruptcy.

In this wide-ranging extended version of an interview that aired in January (and was shot in December), Riordan sits down with Reason.tv’s Tim Cavanaugh to discuss public-sector unions, privatization, LA’s dysfunctional government, why businesses are leaving the city, and why Arnold Schwarzenegger won’t golf with him.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss Jeffrey Immelt’s new job and the fiscal crisis facing many states.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Jeffrey Immelt To Head President’s Council On Jobs And Competitiveness
Rahm Emanuel Discloses Campaign Funds, Leaving Little Doubt He’s the Frontrunner
Higher Taxes Wouldn’t End Some Deficits
Where the New Jobs Are: In Texas, not California.
Pej: Bankruptcy for the States?
Ben on the Cost of Medicaid to States
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“Throughout the country, 90 percent of cities and states are going to go bankrupt within the next five years, many of them sooner.” So says former Los Angeles Mayor Richard Riordan.

Reason.tv’s Tim Cavanaugh sat down with Riordan to discuss state and local budget crises, public-sector unions, and why Riordan recently became a fan of current LA Mayor Antonio Villaraigosa.

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From Claire Berlinski in City Journal:

You see, about a month ago, I asked my mother to bail me out. I knew she’d do it. She’s done it before. She sent me money she’s been saving toward my retirement. I resolved to stop spending money on stupid things. (There was really no excuse for that lamp, Mom, I know. Sorry! In my defense, I was sure there was a genie in it.)

With my mom paying my rent, I’ve been able to charge less for what I write and stay in the black. Voilà, I’m selling a cheaper product (for now) than Reuters and AP. That will teach them where to stuff their “good investment decisions” and their “economies of scale.” I fired the guy who does my odd jobs—it was painful, but it had to be done. So, congratulations to me! I’m making it in this tough business climate, with a little help from Mom. America’s back! And if I’m broke again in a year, I’ll hit her up again. (Don’t forget, Mom, that you really have no choice: no matter what you do, I’m still going to be a huge financial drag on you. If I fail, I’ll end up coming home with all my cats. You don’t want me sleeping on your couch, do you? And you sure don’t want to see what my cats would do to that couch. Antique, I believe it is?)

All of this is, alas, a perfectly accurate description of my financial life. The reader may wonder about my mom’s wisdom in going along with this plan. That’s between me and her—she loves me, and it’s her money, not yours. The money that went to GM was yours, however. And I suppose you must love GM as if it’s your profligate kid, because surely you could not be so credulous as to believe these reports about the spectacular success of the bailout.

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There is a brief story by Jim Carlton in the weekend edition of The Wall Street Journal entitled “Fiorina Stays Away from Middle Road,” and in the cover story for the latest issue of The Weekly Standard, Fred Barnes describes Carly Fiorina’s campaign against Barbara Boxer as “the most important race of 2010.”

I am not sure that I agree with the extravagant claim advanced by Barnes. But if Fiorina does, in fact, put an end to Boxer’s career, his assertion might well prove to be right – for, as Barnes shows in detail, the title of Carlton’s story is apt.

Carly Fiorina is not a squish. She is anti-abortion, and she makes no bones about the fact that she thinks Roe v. Wade a travesty. She is hostile to Obamacare, and she wants it repealed. She thinks that a tax increase at this time would be counter-productive, and she means to stop it. She thinks the deficit a threat to American prosperity and power, and she intends to see to its reduction. She favors offshore drilling, and she supports Arizona’s attempt to stop illegal immigration. She does not pander; she does not retreat. She makes her case. And if she wins – and she may well win –  in California of all places, it really will be the occasion of a political earthquake. More important, from my perspective, even if she loses, we win.

If our aim were a mere partisan victory, my claim would be ridiculous. A vote in the Senate is, after all, a vote in the Senate. But if there is something more at stake – if a partisan victory predicated on an abandonment of principle is a devastating, demoralizing defeat – then it is far, far better to lose a close race while making a principled argument, as Abraham Lincoln did in his senatorial campaign against Stephen Douglas in Illinois in 1858, than it is to win by way of cowardice, collapse, and compromise.

To grasp what I mean one must look beyond November.

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