Another green government favorite goes belly up.
REVIEW & OUTLOOK SEPTEMBER 1, 2011 WSJ.com
Another day, another stimulus burnout. On Wednesday, solar panel maker and White House favorite Solyndra announced plans to suspend business and file for bankruptcy. Its demise is a reminder of the perils of politically directed investment.
This wasn't supposed to be the storyline. In March 2009, Solyndra was the first company to get an Energy Department loan guarantee, worth $535 million. Vice President Joe Biden spoke via closed circuit TV at the groundbreaking of the company's Fremont, California plant, and President Obama touted the thousands of jobs the stimulus money would create. Such investments were all the better, Mr. Obama said at a visit to the plant last spring, because "The true engine of economic growth will always be companies like Solyndra." You know, "green jobs."
Lots of venture capital companies bought into the hype, investing in green technology to piggyback their own capital on federal favoritism. Solyndra's relationship with the White House came under special scrutiny because of Solyndra backer and Tulsa billionaire George Kaiser's history as an Obama fundraiser. In a letter to Energy Secretary Steven Chu in February, the House Energy and Commerce Committee raised concerns about the loan, noting that the company had suffered "financial setbacks," and asking for information about "whether Solyndra was the right candidate" for the loan guarantee.
The Department of Energy marched on anyway, and yesterday it said it has "always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed." Well, sure, businesses fail, but most failures don't saddle taxpayers with as much as $535 million in potential losses.
Solyndra's story is more evidence that trendy, politically directed investments don't make for efficient allocation of capital. Beyond the immediate losses, they mean the money wasn't available for market-directed investment with a better chance to succeed. This is how you get a 1% recovery.
ScienceDaily (Aug. 20, 2011) — Ancient fossilized clams that lived off the coast of Antarctica some 50 million years ago have a story to tell about El Niño, according to Syracuse University researcher Linda Ivany. Their story calls into question contemporary theories that predict global warming could result in a permanent El Niño state of affairs.
"The clams lived during the early Eocene, a period of time when the planet was as warm as it's been over the last 65 million years," says Ivany, a researcher in the Department of Earth Sciences in SU's College of Arts and Sciences. "We used growth rings in their shells to analyze changes in year-to-year growth rate, and linked that to changes in climate that are characteristic of El Niño today."
The research, "El Niño in the Eocene Greenhouse Recorded by Fossil Bivalves and Wood from Antarctica," is published online in Geophysical Research Letters and is forthcoming in print. Ivany's research team included Thomas Brey of the Alfred Wegener Institute for Polar and Marine Research in Germany as well as researchers from Purdue University, the University of Hawai'i, and the University of Mainz, Germany. The study was funded in part by the National Science Foundation.
The El Niño phenomenon, which occurs every two to seven years, is characterized by unusually warm ocean temperatures in the eastern Equatorial Pacific. El Niño can cause torrential rainfall in Peru, devastating drought in Australia, and generally wreak havoc on global weather. El Niño is the warm phase of a large oscillation in which the surface temperature of the tropical Pacific varies, causing changes in the winds and rainfall patterns. The complete phenomenon is known as the El Niño Southern Oscillation (ENSO). The prevailing theory predicts that rising global temperatures could cause the ENSO to collapse, resulting in permanent El Niño conditions, which could have a major impact on socioeconomic and ecological systems worldwide.
One way to predict the future is to examine past geologic records. The species of clams Ivany's team studied lived to be more than 100 years old during a time when the Antarctic was as warm as modern-day Virginia. Their shells provide a long, continuous record of climate during their lifespan. "Clams, like trees, respond to changes in climate by growing faster or slower," Ivany says. "Therefore, the width of the annual growth rings correlates with environmental variables like temperature or precipitation. We measured the distances between consecutive bands and found two-to-seven-year periodicity in them, which is typically described for El Niño."
The researchers compared the results they obtained from the clams to a similar analysis they did of tree rings from fossilized driftwood they found buried in the same sediments as the clams. "We found the same pattern," Ivany says. "While it might sound counterintuitive, it turns out that the inter-annual climate variations seen in the tropical Pacific today are strongly teleconnected to the Antarctic. This seems to have also been the case 50 million years ago. The good news is that despite the very warm temperatures during the Eocene, the evidence from the clams and tree rings shows that the ENSO system was still active, oscillating between normal and El Niño years. That suggests that the same will be true in our future as the planet warms up again."
The above story is reprinted (with editorial adaptations by ScienceDaily staff) from materials provided by Syracuse University, via EurekAlert!, a service of AAAS.
- Linda C. Ivany, Thomas Brey, Matthew Huber, Devin P. Buick, Bernd R Schöne. El Niño in the Eocene greenhouse recorded by fossil bivalves and wood from Antarctica. Geophysical Research Letters, 2011; DOI: