Another thing that I haven’t seen in many press reports, though the Post briefly touches on it: How likely is it that the government will actually lose the entire $535 million it guaranteed for Solyndra? The government has priority on payback according to this Wall Street Journal story. Does the company has some assets worth liquidating or might another firm swoop in and pay something for it? Bankruptcy doesn’t wipe a company’s value out, which is a popular misconception.
Then there’s the idea that the failure of one company proves that the government can’t allocate capital—as if every place it puts money goes bust. That conspicuously neglects the success of the government’s capital-allocation to General Motors and Chrysler.
More problematically, it assumes by implication that the private sector is always great at allocating capital, despite the fact that we’re living through a depression caused by the catastrophic failure of markets during the last decade.
Remember how the government had to allocate capital to folks like Goldman Sachs to save us from an utter meltdown caused by the fact that folks like Goldman Sachs had done such a bad job allocating capital?
*I wrote this thought on Twitter after I published this and thought it made sense to add it here.