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The point is that when someone invests speculative venture capital, which is what the U.S. did when it provided nearly half a billion dollars to a company with
by watchandwait 15y ago
The point is that when someone invests speculative venture capital, which is what the U.S. did when it provided nearly half a billion dollars to a company with almost no revenue and no track record, that investor should get SERIOUS equity. Instead, the cronies at Tesla got a loan at a subsidized interest rate, and taxpayers got no upside and 100% downside in the likely event that Tesla fails.
- sanswork 15y agoThe upside would be as follows 1. Future taxable income 2. Jobs 3. Chance to create a CoE for electric cars domestically(which feeds back into 1 and 2)
- hncommenter13 15y agoChrysler got loan guarantees from the US government back in the 1980s (which may or may not have been a good idea), and the USG got warrants. Those warrants ended up being rather valuable, and the government took in hundreds of millions. Personally, I don't think this is the proper role for government, but at least the lenders (us) should get a good deal. There is no reason the USG couldn't have similarly received warrants as part of the Tesla loan guarantee, or at least a pledge from the insiders not to sell stock until we had been repaid--to better put Musk and his benefactors, you and me, on the same side of the table. Also, what do you think that future taxable income comes to, discounted to the present at a discount rate that reflects the risk/uncertainty of those cash flows? We could pay people $400M to dig ditches or paint each others' portraits if all we want is jobs. If private enterprise can't create and sustain the need for that job over the long term, all we're doing is buying paintings from mechanical engineers.
- OstiaAntica 15y agoThis is always the promise of a state-directed, command economy, and it always fails.