The nutshell of the story is that the Oregon Energy Department has made bad loans to various "green" businesses that have gone bad and Oregon taxpayers will have to pony up $20 million or so to cover loan guarantees. Sound familiar? The Oregonian reports that:
"The fund loaned $18 million to a Clatskanie ethanol plant that quickly went bankrupt, $12.1 million to a Linn County solar company crippled by plunging global prices, and $1.4 million to a glitzy central Oregon resort plagued by the real estate crash."
The moral of the story is that government is a lousy investor. Venture capitalists have their own money at stake and become adept at vetting good projects from bad or they go broke. They get a premium for assuming this risk. Government, on the other hand, isn't spending its own money and thus often falls for something that looks good on paper but that someone with a little VC expertise could readily see that isn't so hot behind all the bells and whistles. Then, of course, there is political pressure to send money to influential big wigs. Even if a project goes well, government typically only gets repaid at a reduced interest rate. If we want to get a handle on government spending, this is one area that is ripe for change. Quit pushing trendy ideas and let the market decide what works and what doesn't.
www.oregonlive.com/business/index.ssf/2012/01/oregon_taxpayers_must_bail_out.html
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