Must read piece in the WSJ today by TJ Rodgers, outspoken CEO of Cypress Semiconductor.
His Law of Misguided Subsidies:
Whenever Washington disrupts a market by dumping subsidies into it, Wall Street will find a way to pocket a majority of the money while the intended subsidy beneficiaries are harmed by the resulting market turmoil.
When President Obama says that we must subsidize our solar industry to remain competitive with the Chinese, it would be more accurate to say that we subsidize Wall Street to create employee-less corporations that buy and install Chinese solar panels in the U.S.
Illustrative economics:
Consider the current 30% federal solar energy subsidy.
A home solar system with 60 solar panels produces about 15,000 watts of power, enough to completely offset the $6,000 annual electricity bill of a typical upscale California home.
The system costs about $90,000 prior to the 30% federal income-tax credit, which reduces its cost to $63,000.
After a simple payback period of about 10 years, the homeowner literally enjoys free electricity for the remainder of the guaranteed 20-year system life, a very profitable 10 years.
The “gotcha”:
But … that $27,000 tax credit, the associated accelerated-depreciation tax savings, and most of the hefty post-payback profits [go] to Wall Street firms with a “tax appetite,” not the homeowner.
That’s just what happens with the majority of new home solar-system installations today.
Again, it’s worth reading the whole article Subsidizing Wall Street to Buy Chinese Solar Panels …
The Homa Files 