Saturday, March 16, 2013

China’s Solyndras and Insider Trading






First let me wish readers happy Saint Patrick’s Day for tomorrow.  It is traditional to wear green and the Green Machine will adorn himself with many Shamrocks.

The Chinese photovoltaic companies are hurting financially and one in particular SunTech Power is approaching Solyndra status.   They are on the brink of bankruptcy and will need to be bailed out.  Before Dr. Chu gets excited that he has finally defeated a company that clobbered his department of entropy, he should realize that a significant fraction of the over $500 million in bonds that will likely get a haircut when SunTech goes under are held by US based hedge funds.

Yes SunTech Power is traded as an American Depositary Receipt on the NYSE (STP) and many of the stockholders and bondholders are US based.   Other Chinese based and run solar companies are also traded in the USA and some of them are also in dire straits but none are the level of a basket case as SunTech.  In 2010 SunTech was the global market leader in PV systems and in 2007 the company had a market capitalization of over $16 billion.

While it is fine and actually fun to greenwash on St Patrick’s Day the greenwashing going on in the USA has reached epidemic proportions.  The FTC actually does have some rules against false green claims by companies and perhaps the FTC may soon fine the gangrene crowd I have blogged about.

Talking of fines the SEC came down hard on SAC the hedge fund run by Stevie Wonder Cohen.  Yeah $616 million of fines against the large hedge fund for insider trading.   Wow Stevie Wonder Cohen, the billionaire hedgehog may still see the inside of a jail just like Milken and Boesky saw a couple of decades ago.  Greed is timeless, Green is just a passing fad.

If the SEC can get $616 million in fines out of a hedge fund for insider trading, I wonder how much the FTC can get from Bloom Energy for their false claims of over 60% efficiency in generating electricity. Maybe the US can close its budget deficit without raising taxes or cutting spending but simply by imposing fines on those that are gangrene and greedy?

President Obama has a real decision to make on the Keystone Pipeline.  He met with Republicans a couple days back and they report the President will make a decision on Keystone in a couple of weeks.  The Green Machine supports the pipeline and predicts that the President will allow the pipeline to be constructed.

On Monday before the stock markets open KIOR will announce their results.  I anticipate that they will try to hide the fact that they have not really succeeded in making much diesel and gasoline out of pine trees in the Mississippi facility.  This facility is the cornerstone of Dr. Chu’s2013 cellulosic transportation fuels mandate.  Just like almost everything Dr. Chu has touched it is likely KIOR will not succeed.

Congress is investigating the connection between high premium gasoline prices and the ethanol mandate that the DOE and EPA forced upon motorists.   When government imposes mandates that chemistry or the market cannot support one gets a black market not a green market.    China may have some Solyndras but we also have Central Planning by misguided politicians and bureaucrats.  In the end a free market is the best and government should stick to fining and jailing insider traders and greenwashers rather than trying to rewrite the laws of thermodynamics.  

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