To repeat, the Solyndra scandal is not simply a matter of the federal government wasting money on bad business ideas—the government does that all the time. Rather, Solyndra is “special” because the government managed to lose half a billion in taxpayer money even when its own analysts had given clear warnings beforehand. What is being investigated is whether the Department of Energy ignored its own protocols because of the special treatment given to Solyndra (which had made large campaign contributions and visited the White House many times).
So let’s go back to Krugman’s Pets.com analogy: If it turned out that Pets.com officials had raised money from outside investors on false pretenses, and had given sweetheart contracts to (say) suppliers of kitty litter at above-market prices, and then it turned out that Pets.com analysts had warned management that these contracts would blow up the company, yet the executives did it anyway because of kickbacks from the kitty litter vendors…then yes indeed, this would have been grounds for a lawsuit, and the government would start an investigation.
This isn’t a hypothetical supposition on my part. The public was shocked to learn that Goldman Sachs analysts internally referred to mortgage derivative products as “sh*tty” that they were selling to some of their clients, and in fact the government launched an investigation. So Krugman’s flippant analogy is wrong in multiple dimensions.
30 Sep 2011