David Stockman hates Tesla

The points he makes are correct, though.  Posted at burning platform.

The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla—a crony capitalist con job that has long been insolvent and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino.

That’s some hate!

Here are the points he makes, and why he’s right, and yet, not really all that right:

• Tesla only loses money, and does not make money.  This is technically correct.  However, it is not like a turn of the century dot-com.  It has rapidly expanding revenue, and it has been investing money in R&D, manufacturing facilities, and infrastructure for vehicles on the road.  See the 2014 Annual Report.
• Tesla has gotten a lot of money due to the Wall Street casino environment caused by QE.  Absolutely true.  This is smart on their part, although distasteful.
• Tesla has bullied and begged their way to getting a lot of government money.  Again true, smart, and distasteful.  And they are getting that taxpayer cash in many ways.  Not only do they benefit from solar or alternative energy tax credits, they have really gotten a bonanza of tax benefits at their new manufacturing facilities.  Stockman says they got bailout money, too.
• Tesla has gamed their accounting by opening their own financial arm and valuing the cars they finance at a high (too high?) value.  I would say, again, they have watched and learned.  GM and Chrysler got not only lifted out of bankruptcy but also got financial bailout money in 2008, using that exact scheme.

Stockman is correct about the valuation of Tesla.  The stock price is way, way overvalued.  He may also be correct that the company stands a good chance of imploding.  It’s certainly highly leveraged, and any number of things could cause unrecoverable problems.  But it’s not smoke and mirrors.  They are a real company, making a real product, that clearly has a real market.

 

 

what’s wrong with D vs. R

The biggest problem with D vs. R is that both sides are correct.  And both sides are so, so wrong.

James Howard Kunstler has summed it up nicely at Contracorner:

The tragedy of Barack Obama is that he continued the basic Karl Rove doctrine only without bragging about it. I don’t know whether Mr. Obama was a hostage, an empty suit, or a fool, but he broadened and deepened the acquiescence to lying about just about everything. Did criminal misconduct run rampant in banking for years? Oh, nevermind. Is the US economy actually contracting instead of recovering? We’ll just make up better numbers. Did US officials act like Nazi war criminals in torturing prisoners? Well, yeah, but so what? Did the State Department and the CIA scuttle the elected Ukrainian government in order to start an unnecessary new conflict with Russia? Maybe so, but who cares? Was the Affordable Care Act a swindle in the service of insurance and pharmaceutical racketeering? Oh, we’ll read the bill after we pass it. Shale oil will make us “energy independent.” (Not.)

Has anyone noticed the way these incongruities percolate into the public attention and then get dismissed, like daydreams, with no resolution. I’ve harped on this one before because it was, to my mind, Obama’s greatest failure: When the Supreme Court decided in the Citizens United case that corporations were entitled to express their political convictions by buying off politicians, why didn’t the President join with his then-Democratic majority congress to propose legislation, or a constitutional amendment, more clearly redefining the difference between corporate “personhood” and the condition of citizenship? How could this constitutional lawyer miss the reality that corporations legally and explicitly do not have obligations, duties, and responsibilities to the public interest but only to their shareholders? How was this not obvious? And why was there not a rush to correct it?

And, of course, this is brought to its ultimate culmination with the possibility of Bush vs. Clinton 2016.  Kunstler thinks that this abomination will be rejected by the American electorate, and lead to real change:

I believe that insulting prospect would be the wake-up call that will hit the American people upside the head and wake them out of their zombie rapture. A third party will arise. It may be a good one or a bad one, but it will blow the existing order of things apart, as it should.

I disagree.  As abhorrent as that prospect is to those of us who do not play D vs. R, it is just another chapter for those who do.  In fact, it’s a nearly inevitable outcome for that point of view because the “only” candidate who can run against each of them seems, at this point, to be the other.