As readers may know, I’ve been consistently disappointed by the Obama Administration: its faux progressive packaging versus its corporatist posture, its half-hearted, halting reforms which are noisily trumpeted as the real thing, its deep seated belief that public antipathy to its initiatives means it needs to work harder on selling its message, when it really needs a new strategy.
But the escalating disaster of the Gulf oil spill, and the unique constellation it presents, namely, a big, rich, isolated, foreign perp, which is largely if not solely responsible for the mess, in close proximity to contested mid-term elections, might actually rouse Obama to do something uncharacteristic, namely get tough.
This is by no means a likely outcome, but we are seeing some novel behaviors. First is that Obama finally may have succeeded in getting someone important afraid of him. This is a critically important lesson; Machiavelli told his prince it was much more important to be feared than loved. Mere anger is often negotiation posturing or a manifestation of CEO Derangement Syndrome; fear is much harder to fake. And BP is finally starting to get rattled. Per the Wall Street Journal:
Mr. Hayward immediately canceled an employee town hall meeting and a trip to review clean-up on the Louisiana coast, and gathered his visibly shaken executives at the crisis center in Houston. At a top management call between Houston and London to review its “Sub-sea and Surface” agenda, the top item on “Surface” issues suddenly became “Washington politics.”
“This demand is chilling,” said one executive in the meeting. “The administration keeps pushing the boundaries on what we are responsible for.”
Yves here. Why has the mood changed at the formerly self assured BP? First, it seemed to believe its ridiculous cover-up strategy would work: that by shooing people away from beaches, putting gag orders on clean-up workers, and preventing scientists from estimating the size of the leak, it could somehow reduce the bad PR and damages. Since there weren’t any other monster leaks in the vicinity of the Deepwater Horizon blowout, it’s hard to fathom how they thought they could escape having the resulting damage pinned on them. And as they always do, the cover-up simply made BP look even worse.
Second (perhaps taking a page from the financial services playbook), BP clearly thought it could negotiate with the US as at worst an equal partner. After all, not only is BP teh biggest oil and gas company in the US, but it also has knowledge of deepwater drilling that would make it hard (as in impossible) to displace in the rescue operation. Recall this brazen remark from BP’s chairman:
The US is a big and important market for BP, and BP is also a big and important company for the US, with its contribution to drilling and oil and gas production. So the position goes both ways.
This is not the first time something has gone wrong in this industry, but the industry has moved on.
Yves here. If the leak had been a mere 5,000 barrels a day as BP claimed, this would have offensive but not untrue. But the latest estimate of the daily output is 25,000 to 30,000 barrels. The damage, both hard and soft along the coast (damage to fragile ecosystems, loss of income, loss of access to fishing and recreation, cleanup costs) is going to be far higher than initially thought. Recent tallies were at $20 billion gross, but given how long things would play out in the court system, and per Exxon, conceivably be cut back, had mainstream tallies putting the net present value at $10 billion.
But this is a vastly bigger leak, and most important, the Gulf is not Alaska. The visibility is vastly higher, more people are affected, as are more governors, senators, and representatives. And Obama appears to be laying the groundwork to demand that BP pay not just cleanup costs, but the full cost of the damage wrought. From an economic standpoint, this is sound: the problem with “externalities” or costs of a product that are foisted on innocent bystanders is that the people who suffer seldom can recover their losses. So the parties to the product sale get an artificial subsidy (the product is provided for a cost lower than its true, fully loaded cost to society) which they somehow divide up between them.
BP seems stunned that it might be on the hook for lost income to shrimp fishermen, or hotels on the Gulf. Again from the Journal:
Tensions escalated sharply on Wednesday when the U.S. Interior Secretary, Ken Salazar, said he would demand that BP pay the lost wages of oil workers in the Gulf region idled because of the administration’s order to halt new deepwater drilling for six months. That demand could add hundreds of millions of dollars to BP’s obligations….
In Washington, White House officials Thursday said they believe they have the legal authority to demand that BP subsidize the wages of U.S. workers idled because of the administration’s moratorium on deepwater oil drilling in the Gulf. If not, Mr. Obama said, Congress should give it to him.
Congress must “update the laws to make sure that the people in the Gulf, the fishermen, the hotel owners, families who are dependent for their livelihoods in the Gulf, that they are all made whole,” he said at a meeting with Congressional leadership.
Yves here. Imposing retroactive punishments isn’t exactly a great way to square this circle, and this is more likely a negotiating posture. But my impression is that this is a novel stance, to try to make a corporate bad actor make its victims whole for all the losses suffered in an industrial disaster, not merely the ones that fall in conventional categories (readers may correct me if I am wrong, but my impression is often collateral damage takes place where the losses are not subject to restitution).
But if I am not mistaken (and reader input would be very much appreciated), the criminal investigation against BP is an even more blunt weapon. If BP were found guilty (and the continued bad press of a protracted trial would be terribly damaging to its public image and its share price), I believe it would allow the US to cancel all its oil and gas leases.
Admittedly, it isn’t clear that an investigation will lead to charges, but BP seems rather slow to have realized who hold the whip hand if things get ugly. Not surprising, since contingency planning is not the oil producer’s strong suit.
I wouldn’t be optimistic; Team Obama has yet to rough up anyone. But this particular set of circumstances – a monstrous disaster that is not going to be resolved anytime soon and a rich, unpopular, and relatively isolated target – will show whether Obama’s survival instincts will overcome his deep seated deference to corporate chieftans.
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Strategy teams at all ‘Big Oils’ working overtime at present:
http://www.smh.com.au/business/timings-perfect-for-bhp-to-take-over-bp-20100610-y0jn.html
Well my only hope is that people won’t simply be satisfied with contrition.
BP should pay (as should other responsible parties: Haliburton) and if that means BP is no longer viable, well that’s unfortunate– but if you take the risk and it goes sour, well you need to accept the consequences, aka. “if you’re not prepared to do the time, don’t do the crime.”
(And while we’re at it can we throw Dick Fuld, Hank Greenberg, J Paulson et al into jail, the cells next to Bernie Madoff would be fine.)
Rolling Stone explodes the cap shielding the guilty parties in this tale of cowardice, lies, and corruption.
Read the whole thing…
Sorry to sneak to the top of the thread, but I have to second the rec of the Rolling Stone article.
The next thing Obama needs to do is FIRE his ‘good friend’ from the Senate KEN SALAZAR. Key excerpts:
“… instead of putting the brakes on new offshore drilling, Salazar immediately throttled it up to record levels.”
” “Employees describe being in Interior – not just MMS, but the other agencies – as the third Bush term,” says Jeff Ruch, executive director of Public Employees for Environmental Responsibility, which represents federal whistle-blowers.”
be careful what you wish for.
1. BP is more than likely to go bankrupt. It has total asset around $230B. Current market cap about $100B. Reported net income about $16B. and $10B cash. It cannot handle a $60B damage.
2. BP is one of those too big to fail for UK. Pension, national income, energy supply. And some of US pension 35% of it is in BP stock.
3. Relationship with UK. Unfortunately we owe them BIG TIME in Iraq and UK. Far more than entire gulf of mexico covered in oil. Tho’ really, they are pretty stupid went along in Bush folly.
4. More importantly. the well is still leaking! It hasn’t been fully capped yet. (all that top hat nonsense is only small damage control and largely PR. huge amount of oil is still going into the gulf.) The balance of power is still in BP hand as long as the well is not capped. they can hand over the well and blow it all up for all they care. Transfering liability cost to government.
“3. Relationship with UK”
How do you figure the US “owes” the UK?? They were in it for the oil just as Cheney was. And BP used to be called the Anglo-IRANIAN Oil Co. The US installed the Shah of Iran to protect British oil interests from being nationalized.. if anything British involvement in the Iraq war was the returning of that favor.
Sure. it’s partner in crime. However, you don’t dis your partner in crime. SPECIALLY your partner in crime…!!
If the UK is pissed, trust me. The true magnitude of Iraq crime will down on everybody. (war crimes, war reparation, global sanction, middle east politics, etc.)
Not to mention afghanistan. They are the second largest and most capable people left. Entire southern region (eg. the messiest. is in their hand.)
No amount of coastal damage is equal to british troops that has died for our mis-adventure in Iraq/afghanistan. As far as I am concern, the UK get a free pass. (it’s painful to admit. but that’s reality.)
You don’t take for granted people’s sacrifice in war.
The Obama administration needs to be careful here. They can easily overplay their hand. If the U.K. decides to nationalize BP, then we have a whole different liability issue on our hands, as treaty prevents us from extracting payments from another sovereign. If your people’s pensions are at risk of annilhilation you would consider the same. what is Obama going to do next, nationalize another nation’s assets, nope, not allowed. Then we are paying for the cleanup while we negotiate for payment.
also, Britain simply leaves the field of battle in Iraq and Afganistan, how many NATO countries will follow? All, I suspect.
finally, every U.S. asset anywhere in the world is now subject to the same approach as BP is here.
This can become the Obama depression in a heart beat.
I am not defending BP, but there are realpoliticks at work here.
‘xactly. It’s simply amazing how people never stop and thinks…shsss..
my take.
1. cap safely that well ASAP.
2. immediately protect the most important coastal area. Properly this time.
3. long term plan to clean up the huge amount of oil underwater. (You can’t hire bunch of incompetent people here. really need to build ships and heavy equipments. consider it good investment for next spill.)
4. what to do with people who lost their job from fishing/farming. (making BP cough up some dough, is not going to actually create job and solve problem. Resist the temptation of dumbass keynesian economy for everything. Make BP to actually create long term job solution. And everybody help too.)
5. Stop the opportunistic political PR show. It’s dumb. On BP side and democrat, obama and repugs side. It’s going to create worst economic problem due to market gyration, regional employment/coastal damage, international relationship, etc.
cap clean up, reduce the economic impact, calculate and soften long term ecological damage. After that consider it square.
Gotta STOP ACTING like bunch of trailer park trash… A lot of people going to get hurt. Print more of those funny money. This is the time to do it IMO. It has no value anymore anyway. might as well.
Bummer, I’m sure if BP can be somehow linked to AIG that Geithner will provide the 140 billion taxpayer dollars require for a cleanup. After all, that’s chump change compared to what Obama’s given to Wall St.
BP just needs to get neck deep in derivatives deals that would bust the world’s economy, and buy a couple of Senators, a basket of Congresspeople, and the WH.
ha! ditto.
“BP is one of those too big to fail for UK. Pension, national income, energy supply. And some of US pension 35% of it is in BP stock.”
I’ve started seeing this bullshit meme the last couple of days, pretty obviously a corporate false flag.
Yes, it sucks for the pensioners. They are captives. The blame here has nothing to do with Obama, but with the pension fund managers themselves. The questions I’d immediately ask are:
– Who twisted their arm to own this specific stock? It wasn’t like this disastrous negligence was an isolated incident. Rather, it was a pattern of behavior. The fund managers just believed that pattern of behavior would continue to go unpunished.
– How was their risk control so poor that they allowed their BP position to be a threat to their entire portfolio? If so, then why do they lack any concept of hedging? One of the first rules of investing: discipline must always trump conviction.
– Did they have no sell discipline, on the way up or the way down?
– They woke up every morning from April 20th (and, hell, for years before) with the opportunity to sell this position. They chose to sit tight and they lost. They can make the pain stop any instant. It’s completely in their hands.
– Let’s go back to 1999, the time when Microsoft was 10% of the S&P. How much bullshit would we have called if, say, CALPERS with its $600b and 55% stock investment, would’ve pointed to its $30+ billion exposure to this stock as a reason not to pursue antitrust action? And they didn’t come close to destroying an ocean.
Hey. I didn’t say I like it. But as I say, BP is one of those too big to fail corporation for UK. Bringing down BP has huge impact to UK economy. (You think Iceland can’t pay UK depositors created a spread spike in UK, try BP going down.)
It’s too big to fail for UK economy. And you can bet they are going to play this angle, because it’s real and their last bet! You don’t want it to end that way.
ZA: I agree
Of course Pensioners own BA Stock! Surpriesed? Should we be surprised that US pensioners owned Citibank Stock? Which now trade below 4?
BP is part of the FTSE 100. Everyone and their grandmother owns this stock in some percentage.
Pension Funds that invest in equity should be tracking stock indicies and should there for own shares of the major corporates. Its natural.
SO this is just the usual scare tactic by the rich/important. If we (the rich) suffer, so will the little person and his savings/costs structure. Well folks, you know this is just the usual faulty logic that the media are paid to peddle.
Folks, its better to suffer pain now and cure the disease than to be on pain killers while allowing the disease to spread and consume its victim.
How about this one?
If BP is not severely punished (major huge fines, no more government contracts, erasure from the market place,time in the yard for PB execs,) the US government will go down.
BP is still greedy , they are not going to let go of this new find unless forced to . It will pay all the lawsuits and damages , plus bonuses to upper management TBTF style .
A concern , and possible investment thought . Some 30% of US produced natural gas comes from the Gulf . LNG shipping is certainly not a large part . Expect NG prices to rise on fears of shortage of supply . A certainty if ban is placed on offshore new wells . Watch the IEA reports on NG in storage and predictions of winter 2010 -2011 temps . Hurricane season another factor .
With respect to accepting the risk, that cuts both ways.
The liability cap that the US government legislatively enacted is, in fact, an acceptance of risk by the American people. To try and retroactively and unilaterally alter that acceptance of risk is immoral, if not unlawful.
Society/civilization alllows big oil companies to explore because it wants and needs the oil. The companies do so because they are allowed to profit from it. Change the risk, change the profit, change the incentives, and you change what society will get. We’ll see how the fickle ignorant public behaves when the price of gasoline and heating oil skyrockets.
Respectfully disagree. BP has offered to spend the money for the clean up and they are. They’ve hired the fisherman at a rate that replaces their lost income.How can threatening BP with criminal charges, when they are in the middle of trying straighten out this ACCIDENT, be helpful.
The moratorium was not a good idea nor was it sanctioned by the engineers asked to review the Dept of Interior report to the president. A document signed by them was presented in congressional hearings this week.
The president looking for ass to kick is unpresidential. I voted for him and hoped he would show courage to do the right thing. In this instance he has shown no courage. Instead of focusing on doing the right thing and trying to sort out this mess he has postured for the media and caved to pressure to look tough. Remember Roosevelt “Speak softly and carry a big stick.”
That’s what I’d rather see from the president.
“How can threatening BP with criminal charges, when they are in the middle of trying straighten out this ACCIDENT, be helpful”
What accident? If BP committed a crime, then it should be investigated like any other crime. As simple as that. And, judging by the stream of lies and deceit spewed forth by this FOREIGN company’s CEO, one must assume he has been a liar and a criminal all along, right? It’s a pattern with this guy. Thus, he and his company must be investigated on criminal grounds.
Vinny
They got the permit didn’t they? Whose fault is it stamping the approval and not doing inspection?
then BP can play the court game. Wanna guess who will win that round? (Nobody has deep water robot, they can make stuff up as they wish. Godzilla bite the pipe. We got the tape.) This if they don’t simply scheme to unload the well responsibility directly to gov. (help, help, we don’t know what to do anymore… You do it…)
guess what the outcome will be?
BP wins. US gov. = the loser. Everybody in the gulf: go drink some oil water for next 10 years.
Accident? Did Deepwater Horizon get hit by a meteor from space? Did a whale come along and unplug their rig? Was there an earthquake that jostled them loose?
Or, uh, did they cut corners and suffer a known and foreseeable consequence of cutting corners?
Some things are accidents. Some things are not.
“How can threatening BP with criminal charges, when they are in the middle of trying straighten out this ACCIDENT, be helpful.”
How can it help to threaten criminal charges against a drunk who was texting while driving — and who has just killed an innocent bystander? After all that drunk is now “trying to straighten out the accident”.
Nobody knows if BP did anything the equivalent of “texting while driving drunk.”
If so, then fine. But if not, and if it turns out to have been government approved, or just an equipment malfunction, then your argument is blown out of the water.
But that investigation is best held for after the “crash”, and not while the driver is still in a moving vehicle.
Oh yeah forgot. The president orders a moratorium to check government regs for drillers. This causes tens of thousands oil workers and related service workers to be laid off. He comments that they will get unemployment insurance, a fraction of their income. Then orders BP to pay their salary.
Totally ridiculous. Who is advising him? What happened to the well oiled (pardon pun) machine that ran his campaign.
I got a feeling he is being advised by feedback received from blogs such as this one, where the American PEOPLE still have a voice… at least they still have a voice against greedy, criminal, FOREIGN companies led by psychopathic CEOs.
Vinny
“What happened to the well oiled (pardon pun) machine that ran his campaign.” – 2010 elections
If Obama has an internal conflict between gaining political points or offending one oil company, that’s an easy call for him – his career does matter more than anything else to him. BP will be the sacrificial lamb, in the name of the Bigger Gods he serves – Goldman, BofA, Wells, Citi, JPM…..
I’m just surprised that it took him 50 days to figure out this calculus, and finally send out press releases that he was “furious” and declare that he is “looking for whose ass to kick” (when he finally figures it out, I hope he sends Michelle – I think she has a stronger kick). I thought he was sharper than that.
The oil industry is guilty of poor management. Whereas the banksters are smart enough to pay large regular bribes (campaign contributions, cushy highly remunerative jobs) to both parties, the oil industry has put too many of their eggs in one basket (I believe it’s marked with an ‘R’).
Part of this may be geography, as the oil industry is concentrated in red states, whereas banking and ‘hi-tech’ are more in blue states. Nonetheless there’s no excuse for geographic parochialism in good company management.
Very true. The Red states fix our cars. The Blue states fix our markets.
I just wish they had gone for a full externalities precedent with regard to the banks too.
Yes, exactly. That’s the point!
So long as the “consequences” can be treated as “externalities” and passed on to the consumer/taxpayer, the privatization of profit and socialization of the costs will remain SNOP for corporations and their stockholders.
The true costs of production and ownership must become transparent before the rewards are distributed. Human beings and the environment can no longer be treated as externallites. The time is long past for such irresponsible behavior.
Obama can press this issue with BP to make a larger point that less government and less regulation are precipitants of this environmental disaster. Now whether he and his admin have the testicular fortitude to cross this bridge is another matter.
It would appear so, but it’s still an appearance rather than reality, threats rather than actual punishment. The director’s called for more heat and the lead man’s tearing up the scenery.
So far, we have mostly expressions of personal feelings. Talk about emotions rather than personal or property rights. The way’s open to say, “Well, we have strong feelings but be must be practical…” Money talks and Team Obama walks.
For example, Greg Palast is following another huge BP spill, this one in Alaska, also caused by cheaping out on the technology. This one, not even political Kubuki.
http://www.gregpalast.com/
“The director’s called for more heat and the lead man’s tearing up the scenery.” :-)
Brilliant.
Yves Smith calls BP “…a rich, unpopular, and relatively isolated target…”. She might have expanded into “a rich, unpopular, relatively isolated and foreign target”. I wonder whether the US will seek UN sanctions against the UK for owning BP. Maybe the UK’s best response to that would be just to give BP to Barack Obama (or possibly to Benjamin Netanyahu).
It’s heartening to see some commenters noting the difference between the treatment of BP and the treatment of Wall St banks. Sort of revealing.
“It’s heartening to see some commenters noting the difference between the treatment of BP and the treatment of Wall St banks.”
Why shouldn’t British Petroleum be treated differently? It is a foreign company destroying US waters and land. How do you think the EU would react if a US company did this in the Mediterranean?
I hope Obama whips this crooked company until it goes out of business. Only then will I consider voting for Obama again. Is anybody in the White House reading this? If so, remember this: if you want my vote, I want to see you destroy British Petroleum. I have enough “bread”, but lacking sorely in “circus”, so please, Mr. Obama, provide us with a good show.
Vinny
My comment was not limited to U.S. banks, it covers banks in general………..
Vinny,
We need something of true Imperial Coliseum quality. I propose shutting down all Gulf oil and gas production, and also 10% per year of all US domestic onshore oil and gas production and 20% of US coal production.
Then Al Gore can pull up in his limo to a gas station with $20/gal gas. He’ll get out – with his young tootsie on his arm – and excoriate the proletarians for being evil tea partying global warmers. Then he’ll say he paid (himself) for his carbon offsets and zip off in Warren Buffett’s Gulfstream V for Davos.
I’m sorry. I forgot most of that would constitute a “re-run”. Oh well. It’s why I don’t belong in network TV management.
Charcad
Charcad,
Indeed, indeed, we lack true, quality savage entertainment these days. If you’re not into Dancing with the Stars or this World Cup thing, you’re liable to be bored to death. I long for the days of Desert Storm, or Shock and Awe.
I think I heard Gore and his tootsie split up recently. Allegedly Mr. Gore prefers younger and much slimmer ladies (i.e., those with a lower body mass… err… “carbon footprint”)…LOL
Vinny
“Team Obama has yet to rough up anyone”
Except for the progressives that got him elected, of course.
Excellent observation!
For those progressives who would still harbor some hope, please have a look at this:
http://www.salon.com/news/opinion/glenn_greenwald/2010/06/10/lincoln
The rest of the article gets better. Well worth a read.
On Tues night I was surfing the various news channels to see what the pundits/reporters had to say about the primaries. I happened to catch Dana Perino on Fox talking about the Halter-Lincoln primary and about how the “far left” was supporting Halter. WOW, after gagging and quickly changing the channel again, her comments struck me about just how far right the left has moved in the past few years. In case some folks here are not aware of this, both Markos Moulitsas and Arianna Huffington are ex-Republicans (spec. Reagan Republicans) who only later became Democrats… as is David Brock of Media Matters. Given how fondly Obama spoke of Reagan (while disparaging the 60’s and “extreme liberalism”) it is not surprising that those folks went for him in such a big way.
Along with most of the left blogosphere Glenn Greenwald was also an active Obama supporter at one point. Now they whine about him and how he didn’t live up to his campaign rhetoric… how pathetic (think Lucy, football, Charlie Brown… do smart people really believe what politicians say?) When those of us who saw through Obama tried to explain to Glenn and the other so-called progressives, we were called “racists” or otherwise attacked. While I was smart enough not to vote for Obama (he was too obviously the front man for the oligarchy for my tastes) I was still stupid enough to believe that electing more progressive Dems to the Congress (believing the fauxgessive meme about “more and better Democrats”) would help to counteract the rightward/plutarchic direction of our gov’t… well the joke was on me and on anyone who doesn’t understand how firm the grip of “the establishment” or power elites is. Now I look back at all the $$ I spent to elect “more and better Dems” and I realize that it was a big waste of money. My husband and I could have gone on a really grand European vacation with all the bucks we spent helping to elect yet more power seeking toadies in 2006, 2006, and 2008. No more! When Obama got elected and there was great excitement about this by the fauxgressives I had an important realization of politics, money, power and reality… and have detached from the left-center-right political bullshit PR/propaganda paradigm and will send no more money to any politicians. Most likely I will vote less often or vote “none of the above” a lot of the time.
ooops… should read 2004, 2006, 2008… soooo easy to have typos with this type of comment system.
The US in the 3rd millenium is now officially an Empire and Pax American the preferred myth of all the power elite. Just as the Roman Republic became the Roman Empire in 27BC (according to Wikipedia, though surely it was a longer transition than that) the US likewise transitioning today.
Valissa,
You are right that you need to be careful where you spend your time and money. I cope with this by looking for the ‘left margin’ of the Congressional party and making small donations in spots where a centrist (eg Blanche Lincoln) might be taken down, or a creative new-comer might sneak past the corporate sentries at the gates of Congress. Obviously, no big bucks for the big corporate subsidiaries who so plainly don’t need or want my contributions.
Anybody who votes for either branch of the Republicrat Party is a dumbass. And anybody that thinks one politician can change anything is delusional (which, is (at least one of) the strongest forces in the universe).
The Pepublicrat Party is corrupt and the process corrupts; and – really – if you are involved at all with local politics the vetting process is a scumbag selection process. The only thing that can “save” the US is a collapse of its currency which then has a very very very low chance of bringing about change. But, the reality is we’ve gotten the system of government that matches the people of the country.
I’ve always called myself one of the few true free marketeers and libertarians because I would actually enforce the lies of their textbooks, about how the market has only voluntary and compensated participants, and how you have a right to do what you want as long as you don’t harm others.
Thus the two basic complementary laws:
1. The voluntary participants in an exchange must may 100% of the costs of that exchange and assume 100% of the risks.
2. All externalities must be fully compensated.
But of course the ideology and the textbooks were always lies. “Free” markets were always intended to really mean “force your costs and risks onto weaker, involuntary parties while you pocket the profits”.
(I recently read an inadvertent case study in the real mindset. I’m sorry I can’t link to the e-mail since I didn’t save it, but it was a Stratfor essay by Geroge Friedman on precisely this, how corporate executives externalize costs while looting “bonuses”.
He decried how they externalize the costs – but only where it’s onto the shareholders and creditors. That’s where his critique began.
In other words, even where criticizing Akerloff looting Friedman implicitly took it for granted that corporations should externalize on the poor, on outsiders in general, and on the environment. His only objection was where management couldn’t externalize enough on nonparticipants and therefore had to move on to looting weaker corporate participants as well.
So only if you’re a player in the first place do you even exist for the likes of him. Otherwise you’re an unperson and fair prey. I guess Friedman’s solicitude for the shareholders is what passes for liberalism among hard-core corporatists.)
Meanwhile “do what you want as long as you don’t harm others”, or to put it another way “you have a right to swing your fist except where somebody else’s face starts” really means and was always meant to mean (for the “property owner”): “I have a right to swing the fist of my property anywhere I want, and if your face gets in the way, tough.”
That’s what this lying, barbaric vermin always really meant, as is proven by their actions. And even at this magnitude of crime, we’ll still see the same scum trotting out the same defenses of pure crime.
All morality has been drained or purged from the world. All that’s left is the cesspool.
“…about how the market has only voluntary and compensated participants, and how you have a right to do what you want as long as you don’t harm others….”
Agreed. But that’s not the only thing missing from the libertarian textbook, as it were. Just as important is that private agents should not be able to capture rents, in particular land rent. Note that this is fundamentally an issue of fairness: the ability to capture a rent is predicated on an infringement of liberty.
Yes, I agree. I wasn’t trying to be exhaustive, but just focusing on the externality aspect.
Fair enough.
I’m fully in accord with you, attempter. If I had my druthers — beyond the classical liberal basics of currency, defense, interstate commerce, foreign affairs, and enforcing equitable laws — the ONE additional responsibility of gov’t would be regulating impacts (pollution, extraction) on “the commons” (sea, air, water, timber, oil, fishing grounds, taxpayers, etc.)
To me, what we’re debating on this post is a clear sign that WE have got it wrong.
That this is a SOCIAL problem that we won’t be able to pin on BP, on Barack Obama, or any one INDIVIDUAL, or what even remotely looks like an individual. (Not if we want to solve this problem, that is.)
I’m willing to voice that I’m afraid that THIS disaster… COULD take.. not BP, not Barack Obama, but.. the U.S. down. The American economy. How about we go up a little further ? To the industrial paradigm itself ?
How many oil spills does it take to kill the Gulf of Mexico ?
Thinking in terms of statistics manages to dull our perception of the fact that… ONE SPILL IS ENOUGH.
ONE BOMB is enough.
We have been playing this little game for a long time with our blinders on.
And… we have not been aware of just exactly WHERE the blinders were.
And, as on parr for the course, we always see everybody else’s blinders before we see our own.
That’s psychological modus operandi.
Now… maybe debating about the particulars helps us deal with the feelings of helplessness that we have (somewhere…) while watching this play out.
Maybe that’s better than nothing.
Maybe not.
I’m not an apocalypse person, by the way.
But… I DO realize that once is enough, sometimes…
I keep hammering away at the fact that we build democracy from the bottom up, and NOT the top down.
In our daily lives, and our relations with each other.
In the little details.
After all, my Grandma used to say.. take care of the pennies, and the dollars will take care of themselves.
“Take care of the pennies, and the dollars will take care of themselves.”
BP’s corporate philosophy recently in action in the now shattered Gulf of Mexico.
ONE raindrop in 10 olympic sized swimming pools.
(based on estimated volume of 643 quadrillion gallons of water in the Gulf of Mexico) and 50/60 million gallons of oil spilled so far)
Sufficiently toxic to kill everything in the shallow end. Hey, it’s your metaphor, or whoever you’re shilling for . . . . Drink up, pal.
If evenly distributed but, that not the case, concentrations are manifestly powers above that.
Do you mean like quality Russian vodka versus that cheap Mexican beer you get down in Tihuana for 2 pesos a bottle?… :)
Vinny
how much water is in the top 5 inches, the oil is floating to the top. All scum floats to the top.
The Obama admin. has Rahm!!!
Everybody is scared of this foul-mouthed midget, right?
or is Rahm just the former ballet dancer that’s every corporation’s Ho?
as for Obama, we always had very pleasant “boys” to shine our shoes on wall street…
that’s BO…
he shines Lloyd’s and Jamie’s shoes.
This racism inside is killing me.
http://www.youtube.com/watch?v=oKd35EmCIx8&feature=related
BP is getting the hard line because they have pissed off a lot of other businessmen, both along the Gulf Coast and in the oil industry. If this was only about the workers who died, little would happen given that labor is expendable in Washington politics.
But if ChinaPetrol makes noises about a takeover, I suspect BP will get a lighter touch.
For instance, Joe Scarborough sounds like hard-line Leftist talking about BP; Why ? Because his business friends in Pensacola are getting hammered.
Like the Good Book says, “Pride cometh before fall”. Translated to contemporary language: “The arrogance of Tony Hayward preceded liquidation of British Petroleum”…LOL
Vinny
We need a new term for Obama and his crowd: fauxgressives. I don’t think for a second he’s going to lean hard on any one. But I doubt that’s what’s got BP’s top types in a tizzy. All Obama has to do is remove the shield he has thrown over BP from the get-go and say “I think they’re liable.” Because this leak is going to go on for a loooooonng time, so the stack of _private_ and public claimants is going to be high, wide, and irate, and BP is going to have to go down to their courts in their states and tell them to their faces that they don’t deserve recompense, drop dead and don’t even think about escrowing our bonuses and dividends. BP has realized that their share price has a significant probability of going to zero. What I’m waiting for is when they try to sell their assets out from under their liabilities; that’s when this odium really begins to combust in a short time frame.
Obama did nothing but run interference for BP and Big oil for the first month of this thing; a shameful performance from which he will not be able to extricate his nimbus. He might as well have said “They’re doing a heckuva job.” I don’t think Bushbama is worried about the midterms’ he’s worried about the second term. He is not going to be able to walk away from his ‘all drilling, all the time’ comments of a few weeks before and a few weeks into the Year of the Blob. When _he_ runs again, not somebody else, him, he will be on continuous split stream playback of those remarks, with the fade out block quote reading ” . . . lacks the judgment to lead the country.” And frankly if the Blob that Seepeth destroys him so completely that he’s greased in the Demo primaries in 12 or better still declines to run, the country will be far better for it. Because fauxgressives, we don’t need them.
Richard Kline, as a retiree and lifelong Dem, who voted for BO and bought into the hope/change thing, I agree with everything you’ve said ….
If you want to get Tony hayward’s attention, a little detention without charge would go a long way. Would be an effective way to consolidate those dictatorial executive powers.
In England, they actually can hold you without charge. Do you want to start that fight?
Naked Capitalism is still missing the biggest news story on Crony Capitalism. Just Google Jones Ace + Gulf Oil Spill
Sorry for the typo.
Google Jones Act + Gulf Oil Spill
Yves said; “And Obama appears to be laying the groundwork to demand that BP pay not just cleanup costs, but the full cost of the damage wrought. From an economic standpoint, this is sound: the problem with “externalities” or costs of a product that are foisted on innocent bystanders is that the people who suffer seldom can recover their losses. So the parties to the product sale get an artificial subsidy (the product is provided for a cost lower than its true, fully loaded cost to society) which they somehow divide up between them.”
The real problem with “externalities” is the word itself which only serves to mask the damage done by the BP gangsters. By reducing the very real; concrete pain, damage, and suffering, of all of the victims, to one simple abstract deflective word – a word that is inclusive of inanimate damage and lumps that human suffering with the inanimate damage thereby diluting and in effect diminishing that human suffering (think collateral damage here) — you unwittingly aid and abet the ‘artificial subsidy’. It is one of many reasons why people who suffer seldom can recover their losses. Their losses are deflected away in gangster favoring bullshit doublespeak.
So let’s get real with the language.
BP Gangster damage. Cost to innocent victims.
It is simple burden shifting.
Having said that, the painful irony is that few are innocent here.
The crooked scamerican government, bought and paid for by the crooked scam corporations, which heretofore have BOTH lavished a good share of their world raping plunder on their knowingly complicit citizens (giving them an unfair share of the world’s pie), now, while being covertly (and not so covertly) engaged in a program of decimating that same favored population by pitting them one against the other in a perpetual conflict, find themselves with a sweet little disaster. A serendipitous Katrina on roids that will serve the powers that be to play a highly entertaining — its always entertaining — good cop bad cop game as they continue the take down of the global middle class (let’s not forget, a lot of that BP money Snowbama is claiming is in UK retirement funds) and elimination of the masses.
Deception is the strongest political force on the planet.
Thanks, patriot. You took the words right out of my mouth.
Vinny
And don’t forget the peasants working for these corporations. I work for a Zombie bank pushing Student Loans to the dumbasses.
Personally, I’d help a company sell plutonium fertilizer if I knew the fertilizer wasn’t going to be bought by my neighbors.
As somebody said: deception is the strongest force on the planet. We’ve got the country we deserve.
When this crisis abates, and that has occured, are you ready for the consequence of obsenely high gas prices do to the insurance rates and cancelled supply this will cause. We don’t live in a one dimensional world here people.
Vital points here Patriot. As Debra notes too, the “externalities” are simply off the scale; practically infinite; not enough money in the world to make the world whole again. As Pandora’s bowels are involuntarily evacuated, the impact on marine life has barely begun: ‘just’ thousands of birds so far convulsing, shivering and gasping or dead-still, and we have no idea of the underwater toll. The pain, sorrow and death will go on for years, may be decades. You may tell your grandkids, “I remember when the GOM used to be blue. It’s suitable for McCormack’s post-apocalyptic “The Road”. It is a black pelican event in Earh’s history.
This is why economists must be toppled from Saruman’s ivory tower and chained in the underworld to do pennance. In serving an amoral and immoral kleptocracy, they presume to know the price of everything but haven’t a clue of the real value of anything. It is time that economics become and socio-behavioural science, not a pseudo-science of number-crunchers.
“The second angel sounded his trumpet, and something like a huge mountain, all ablaze, was thrown into the sea. A third of the sea turned into blood, a third of the living creatures in the sea died, and a third of the ships were destroyed.” (Rev 8:8-9)
Two words: Obama’s Katrina.
It’s he kind of problem that he finds boring and distasteful. Outside the beltway. No opportunities to look good emitting conciliatory vapor. Geeky science details about pressures and flow rates. Bleeding heart enviro stuff. Downscale nascar people.
So he ignored it at first. Then made a perfunctory visit. When it didn’t go away he made a patronizing little fly-in and touched a tar ball on a beach. (The other end of
the island looked like a horror movie, a poor backdrop would for political theater.) On the third visit (three weeks late), he found time to meet a fisherman. On day 52, he got around to having the families of the victims visit the White House.
His nightmare is two more months of spewcams and photos of dying pelicans. The American populance is not noted for patience, and they expect him to Do Something. So he and
his managers decided to cast it as a morality play, with BP as the villain. They threw in the moratorium on drilling to look Prudent and Tough. This also has the advantage of distracting from the fact that his regulators were enablers of BP’s recklessness. A side effect is that it screws the economies of the Gulf states. So now he’s going to make BP pay for that too. Yesterday he said that it was because
the laws were written when no one could conceive of drilling in deep water, an obvious lie.
The irony is that BP has done a good job in trying to stop the flow, according to the experts on TheOilDrum. Their incentive is totally aligned with everyone else’s. They’ve made sound decisions under extreme stress. It’s inappropriate to be “enraged” when one of their efforts fails. Indeed, it’s lacking in class. The analogy would be Presidential rage because one of the ideas of the Apollo 13 crew didn’t work. It’s also not constructive. If a surgeon screws up, you don’t file the malpractice suit while the patient is still on the operating table. If you don’t trust the surgeon to finish, you replace him. And
Obama has had the power to take over from BP from the first day. The Feds would be in charge and able to give orders to BP or another company. If BP were doing a bad job, it would certainly be appropriate for the Feds to take over, of course.
The problem here is that BP had a risk-taking corporate culture. On one category of OSHA violations, they accounted for 97% of the cases. On DWH, there are several
instances of violating industry standards if not regs, especially regarding the cement job that looks to have failed. There are 3-4,000 producing wells in the Gulf, supporting an argument that the standards are sufficient if people bother to follow them. And there was lax regulation, which Obama was fine with until things blew up.
The policy problem is how to change the rules, procedures and staffing patterns to avoid incentives to risk-taking. (Sound like any businesses discussed on this blog?) This is difficult enough without throwing in distractions like the moratorium, which looks like a campaign stunt. Not as egregious as starting a war as a campaign stunt, but one that oilfield workers shouldn’t have to pay for.
BP has done a good job in trying to stop the flow, according to the experts on TheOilDrum?????
I follow the theoildrum.com quite closely and the only contributors to that blog who agree with you are the shills for BP (It’s a free speech blog so the shills get their point across.)
The oil drum blog has the best explanations of what happened and the decision to remove the mud and replace it with seawater seems to be the final mistake in a whole sequence of bad decisions. The top kill fiasco was doomed to failure. All the relief pipes to the surface are far too small to handle the grossly under estimated flow rates, and so on
I am not a petroleum engineer, just a retired professor of fluid mechanics which seems to be a college course mostly forgotten by BP managers, assuming they took such a course.
Perhaps I should have spelled out “stop the flow after the blowout”. There’s general agreement that they cut many corners earlier.
I don’t think people were sure the top kill would fail before it was tried. It probably yielded useful information about flow rates. And the capacity of the relief pipes may be the best they could come up with, given logistical limitations.
The contrary position is that they’re deliberately choosing ineffective procedures and pinching pennies, ignoring the amount it’s costing them for every day the spill continues. It seems moree sensible to conclude that they’re following clear financial incentives.
I have to go with the general opinion on The Oil Drum as well; BP desperately wants this blowout to stop and is doing everything they can to accomplish that. However, every oil drilling expert agrees that, once the top kill attempt failed, only the relief wells will stop it now.
Everything since then has been an attempt to minimize how much oil escapes into the Gulf; the initial suction pipe, the first large containment device, and now the smaller cap. They know that BP will be fined an enormous, historic amount for this disaster, and are doing everything they can now to show good faith and effort. It probably won’t help them in the end, but that’s what they’re doing, and why.
Fair enough – I guess the Iraqis can look forward to the US assuming responsibility for what was done to their country and will compensate everybody for the deaths, lost income, ruined cities. In this case the US is the big, rich isolated perp which meant well, but “Hey, Stuff happens!”
Difference being, Bush waited a few days, while Obama waited almost 2 months.
Vinny
Here is an example of BP not doing everything possible… and it’s not the only one.
U.S. and BP slow to accept Dutch expertise http://www.chron.com/disp/story.mpl/business/steffy/7043272.html
Three days after the explosion of the Deepwater Horizon in the Gulf of Mexico, the Dutch government offered to help. It was willing to provide ships outfitted with oil-skimming booms, and it proposed a plan for building sand barriers to protect sensitive marshlands. The response from the Obama administration and BP, which are coordinating the cleanup: “The embassy got a nice letter from the administration that said, ‘Thanks, but no thanks,’” said Geert Visser, consul general for the Netherlands in Houston.
Now, almost seven weeks later, as the oil spewing from the battered well spreads across the Gulf and soils pristine beaches and coastline, BP and our government have reconsidered. U.S. ships are being outfitted this week with four pairs of the skimming booms airlifted from the Netherlands and should be deployed within days. Each pair can process 5 million gallons of water a day, removing 20,000 tons of oil and sludge. At that rate, how much more oil could have been removed from the Gulf during the past month? … Many in the U.S., including the president, have expressed frustration with the handling of the cleanup.
In the Netherlands, the response would have been different, Visser said. There, the government owns the cleanup equipment, including the skimmers now being deployed in the Gulf. “If there’s a spill in the Netherlands, we give the oil companies 12 hours to react,” he said. If the response is inadequate or the companies are unprepared, the government takes over and sends the companies the bill.
It’s not only the Dutch offers that have been refused.
Google “Jones Act + Gulf Oil Spill” and follow this inexcusable application of the requirements of the Jones Act to a national disaster.
I’d be absolutely astonished if there’s a law that allows the US to cancel all BP oil and gas leases on the basis of a single, or even multiple incident. If the DWH had, for example, been served a series of injunctions for violating federal regulations rather than receiving the ‘safe rig’ award for 2009 from Obama’s federal regulators, there might be some plausible argument that BP willfully and knowingly ignored standard safe practices and warnings from the federal government to clean-up its act.
This is pure bluster, IMHO, Obama has mastered the Republican art of holding the football, he’s not remotely interested in the Gulf spill or BP. He is, however, deeply concerned about winning a second-term and if he can bring his poll standings up a few notches by ‘taking on’ big oil, well, that’s exactly what he’s going to do.
I was initially hostile to the Republican argument that environmentalists are to blame for the disaster. No longer. The US is the only major industrialized nation without a working nuclear power program. Environmentalists have been willing dupes of the fossil-fuel companies, who stand to lose big if the US turns to a clean, affordable source of power. BP, Dems, and the WH were quite comfortable spinning that cap and trade nonsense because the legislation would have permitted BP to continue raking in the cash. As one of my Australian friends remarked this evening: what else is Obama screwing-up that hasn’t blown-up on the news?
The US government is as much to blame for waiving safety standards as BP. Drilling a mile below the surface without relief wells or remote shut-off valves tested and approved at depth received the Obama WH seal of safety and approval.
Fifty percent of the blame goes to the people who elected this nitwit. Are they about to shoulder their share of the costs along with BP shareholders? I doubt it.
I wouldn’t speculate in the absence of specific knowledge. All sorts of government related bodies (for certain government pension funds) are forbidden to do business with a corporation convicted of a felony. That’s why a mere criminal indictment is a death knell for a financial firm. That may not be as hard coded in the case of industrial accidents (where this would fall legally) but there may be sanctions that are routinely overlooked that the Feds may threaten to use (threaten, mind you, I don’t see Obama having the guts to pull the trigger) to bring BP to heel.
Agreed, to a point and thanks for the reply. First, BP isn’t a financial firm, as you clearly know, so I’m not sure that even criminal prosecution is going to do much to long-term values. You get to the central issue in your original, cogent post: the cancellation of oil and natural gas leases. The reply below makes clear that BP is clearly liable for direct damage, but I’m not sure how the safety award plays out in court.
Another major factor will be the administration’s decision to allow the Atlantis rig, also operated by BP (see the Rolling Stone article) to continue drilling after the Deepwater explosion. If I remember the article correctly, the Atlantis is drilling at a depths much deeper than the Deepwater Horizon within 150 miles of the coast line.
An internal BP investigation confirms that drilling at this depth compels rigs to employ practices that violate 90 per cent of existing standards. They’ve got no clear idea what is happening at that depth.
The core issue for me in 2008 was nuclear energy. I’m convinced that this sort of robust, clear break from past traditions is precisely the real change America needs. The US gets abundant, safe, clean energy that generates jobs and revitalizes state economies that choose to build plants and containment facilities.
I know people in the oil industry. They are no more amoral than any other group I can think of and I see no reason to single them out for special opprobrium. The same folks hurling rocks often walk to the end of their driveways and step into one of these polluting tin-cans, fully expecting to pull into the service station of their choice and consume huge quantities of fossil fuel which I can only assume they believe comes from oil-cows.
Don’t want nuclear? There’s a price to be paid for the choice. Americans don’t want to pay it. What else is new.
Canceling BP leases isn’t going to make the Atlantis rig one bit safer.
Rumor has it, the Queen of England, who has recently been diagnosed as severely demented, is sending this new pussy, David Cameron, or whatever his FOREIGN name may be, to the White House with an ultimatum and surrender plan.
This old hag… err… “Queen”, allegedly demands, in a very impertinent, typically British (and thus Tony Haywardish) style, that the US immediately return all Gulf States to the UK. My source provided this quote from her ultimatum: “I, the exalted Queen of the great and mighty Great Britain demand that the nation of disobedient peasants known as the United States of America promptly return all Gulf of Mexico states to the great and mighty Great Britain, thus restoring the my Empire to its former glory in order to lift it and my people out of the current absolute depravity, degeneration, and dishonor we have to deal with on a daily basis. Failing to show absolute obedience to my demands will force me into a temper tantrum in front of my unelected House of Lords, thus exhibiting my and my empire’s utter impotence on the world stage.”
Vinny
This is a particularly churlish piece. The queen is probably in better shape than her son and doesn’t actually opine on much of anything.
Cameron is coming over here to lick some balls, baseball, basketball, who knows what.
Try to imagine a world wherein the US invaded Iraq without political cover from Britain.
Imagine Britain pulling out of Afghanistan. Because a number of key US allies aren’t feeling much love from this administration. like so many other ostensible US allies. Democrats are alienating US allies at a pace that would give Bush wood. You may figure that the US is better trying to make Hamas and Russia happy. I’d suggest that maintaining strong alliances with the world’s few functioning democracies is a better approach.
Are you suggesting that invading Iraq, partly on faulty British intelligence, has been good for the US?…
Vinny
PS — the Queen happens to be a particularly easy target, a mere caricature, if you will…
What I’m suggesting is that Tony Blair understood the US was going to invade Iraq. Looked hard at the costs and decided that keeping the US from making itself a complete outlaw pariah was in the best national interest of Britain. Yes, Blair and Bush cooked the intelligence together after the decision was made.
One of the side benefits for Britain was a firm commitment from Bush to end cut off all US funds for Catholic terrorists/’freedom fighters’ who, among other terrorist acts, blew-up the queen’s uncle, planted bombs in pubs, across the UK, and tried to blow-up a political convention in the UK.
I agree, she’s an easy target. Britain breeds as many idiots per square inch as any nation on earth, perhaps more. I’m sure you can find several more deserving.
On the larger issue, I’m not joking. Most allies kind of hoped the arrogant lectures from the Oval office would end in 2008. The ‘you’d all be better off doing as I say’ stuff from Uncle Sam is wearing extremely thin.
Just ask Turkey and Brazil, who have clearly found some new friends. Several South American countries are about, I believe, to give Obama’s USAID the boot. Can’t imagine why.
Yeah, but the wars have been profitable for the UK arms industry too. Of course, it is very unfortunate that a few hundred heroic scousers lost their lives, but I understand that also led to an overall improvement of most Liverpool’s neighborhoods…
Vinny
If it hasn’t been, then why are Americans yet there?
Some war news, from unpaid people, in general doing a better job than say Fox or CNN or even BBC:
http://warnewstoday.blogspot.com/
PS Please leave Our Gracious Sovereign out of this.
Elizabeth has done an ok job, considering the clay with which she has had to work.
Just saw this!
Great:
http://www.youtube.com/watch?v=2AAa0gd7ClM&feature=related
Thanks I needed a laugh.
To answer Yves’ legal question.
The usual common law tort rule is that tortfeasors — companies that did not take reasonable care to prevent accidents — are liable for ALL foreseeable economic damage they cause. This would unquestionably include shrimp farmers who can’t work because an oil blowout destroyed the Gulf ecosystem: that is precisely the type of damage that any reasonable person would expect from a massive oil leak.
The basic tort rule is that people (and companies) are responsible for the consequences of their actions EVEN WHEN it is legal to act irresponsibly. So, ordinarily, it is not a defense that the government didn’t ban the careless action in question, nor does governmental action or inaction make the government jointly liable. The government has no legal obligation to prevent companies from behaving in an anti-social way; tort law makes all anti-social actors liable for the consequences of their actions.
The only serious legal issue in ordinary tort law would be whether BP took reasonable care to prevent the accident. If it did, it is liable for NONE of the consequences, regardless of how much damage it caused. If it didn’t, it is liable for ALL foreseeable consequences.
Ordinary tort law, however, does not seem to apply in this case, because the oil industry won a special statutory exemption allowing them to impose their costs on others, following the popular political principle of “Welfare for the rich; responsibility and self-reliance for the rest.”
Whether such forcible transfers of wealth to actors with influential lobbyists and large campaign chests ought to be Constitutional is a separate question. But the Supreme Court of Citizens United surely would find this well within the Congressional power to regulate interstate commerce.
I’d call such Statutory exemptions from liability an unconstitutional taking away by Statute of the rights of people damaged by the oil co’s cactions to seek redress in the Courts….and why should Courts acquiesce to the removal of people’s rights?
On second thought, I suppose that the People may through Congress extinguish prospective causes of action: but retrospective nullification (by Congress) is a problem.
(for the Courts).
Well, I guess the lesson is , as always, to be careful whom you vote for, lest they represent interests at variance with one’s own.
Oooooh…those rotten tortfeasors!
There ought to be a law!
And they are one class of people I think the Courts ought to discriminate against.
Still, I wouldn’t call them criminals….
Not going to happen man,
1. You may call it reasonable, then all BP has to show is how this is truly a freak accident. (they will go on deep into technical minutea and citing all those corrupt government report, studies, including bunch of political speeches.)
In other word, they can convincingly say… this is a freak accident and most of it has never been calculated, modeled or predicted.
2. Or worst, since this an unfolding event. BP can simply say…we give up. Since you know so much about oil drilling safety… you do it. (If government refuse. it is an explicit proof they agree with BP competency. If government agree to take over… guess what happen to the blown up well?)
so, I don’t see legal/technical way at this moment that BP won’t come up on top.
Like I say from the VERY beginning, gotta protect the engineer from lawyers and politicians until the well is capped. Otherwise a sound engineering solution but legally damaging will be over ruled. The lawyer and PR crew will take over the show, then the politicians and scam artists too.
It is the ultimate short selling system. The more harm you fail to prevent, the more MONEY you create for yourself and your shareholders.
Economics is about incentives. That is its raison d’être.
Institutional fraud at the university level is responsible for the creation and perpetration of arcane language such as that referenced by i on the ball patriot: externalities. If intentions are the main determination of fraud, I am 100% correct about that.
It is the intention of university teaching on the subject of economics to convince undergraduates that only exceptional math skills will open the door to the CLUB. And I do not mean to denigrate the importance of decent math skills. No one with a healthy interest in how the world works could endure higher economics teaching. It is only for believers and those with a drive to belong to an exclusive club and/or make money.
If economics were being taught legitimately, undergraduate level courses would emphasize the history of economics. The subject is PEOPLE; their personal and group incentives.
Thank God for behavioral economics –as least it sounds good.
So, sliming this one and sliming that one although its sometimes fun or a release for one’s own feelings is no solution to problems like British Petroleum externalities which is a behavioral problem as is Obama.
British Petroleum and the regulation structure overseeing them committed ongoing repeated fraud as surely as Bernie Madoff did; lifestyle and all. It is a fraudulent enterprise. Could a pool maintenance crew come in and dump their chemicals into my pool legally and answer to no one because there’s a lot of water there?
Feelings are not laws. We have Goebbel’s style propagandists running all communication from every level of society to the public.
Paulson ‘is working hard’ –not nearly as hard as he travels to China for his IB cronies. Obama wants to kick ass -oh, PLEASE!!!! or he’s angry -give me a break. Or we hate BP on and on and on.
While debate on the ‘fiat’ money system are all the rage, nothing is said about the wrong incentives creating ‘winner take all’ effects. It is our Wall Street/shareholder/corporate money printing stock offering/ stock option incentives that are the systemic problem.
Because its been exported to the rest of the world does not make it right. As I recall, the emphasis on reform after the crash of ’29 was reform of the manner in which corporate shares were created; how they were offered, regulated and monitored. We’ve had 80 years of experience since then to show us how to improve on those reforms so that British Petroleum and GMAC and GS can’t just change their name or their regulator or location, print their own money by changing a few lines on the balance sheet or change their projections, avoid providing real goods and services to society, etc.
BP’s liability is roughly proportional to the volume of the spill.
Once that riser was cut, determining the volume became ridiculously easy, administration foot dragging to the contrary.
Calculating the flow from a 21 inch vertical pipe is as simple as determining the velocity of the flow and that released HD video of that cut pipe flow forced out of BP is the smoking gun.
Simple arithmetic says a 21″ pipe flows 35,000 bbls a day per ft/second of velocity.
http://www.youtube.com/watch?v=Z1rMaILCg7o
can that possibly be less than 3 feet a second? … of 100,000+ bbls a day.
there’s probably not a university in the country that couldn’t accurately calculate the velocity of that flow within a day from that high def video.
35k barrels/day of what? Did you take into account the weight of 5000′ of water sitting on top of the open pipe, or that there is probably a restriction on flow in the damaged BOP, or that most of the flow is coming up through the smaller drill pipe, or that the oil is under incredible pressure and contains oil, natural gas and other gases in solution?
It’s not as easy to determine under those conditions as it is to do in a college lab. That’s why no one was giving out an upper flow limit until just recently, and even that estimate had a huge variance in it.
Also — on the question of whether leases can be canceled. Many Federal anti-corruption statutes bar US government from hiring or doing business with felons. I don’t know whether any would apply in this situation, but it certainly is not implausible that a single felony conviction could put BP out of the leasing business.
sorry about not closing the italics -there are no quotes in my comment other than i on the ball patriot: externalities.
I think BP should also compensate the poor suckers who own homes and summer rentals along all coasts affected. F BP.
“Imposing retroactive punishments isn’t exactly a great way to square this circle, and this is more likely a negotiating posture.”
Retroactive? The oil is still spewing out, the crime is continuing. The workers are still idle, the damage is still being done. Anyway, if we can have retroactive immunity (telecoms), why can’t we have retroactive punishment?
Retroactive Legislation.
Making illegal by passing fresh new laws, what was not illegal when it was done, and then punishing the party for doing what it was at the time legal for it to do.
Seems unjust, and it is.
Why doesn’t the government just extend the moratorium indefinitely and get (British) BP to pay all the profit/pay lost by the rest of the (largely American) oil industry working in the Gulf? That way they can ensure that American companies/oil workers don’t lose anything and ensure no future environmental problems. This will cause the price of oil to rise, which must also be BP’s fault so BP should pay subsidies to all American companies/people for the increase in the price of oil.
Some days ago this might have been a sarcastic joke. Today it seems like you have caught Obamas view of the world.
Sounds like a plan to me.
Can we extend that to he auto industry as well? Let’s send those inferior BMWs and Mercedeses back to Mexico where they are manufactured, and let’s all cruise around in convertible V12 Cadillacs, Lincolns, and Corvettes. :)
Vinny
BP: has legal cross-claims against US Corps Halliburton, Trans-Ocean.
It won’t be going down alone, if it goes dowmn.
Nice! I hope they take Halliburton down, at least. And I hope Dick Chaney gets another heart attack as a result… Hopefully the last one…:)
Vinny
this is going to be obama’s katrina.
what he failed to grasp early on is how this differed from his usual reflexive deference to big corporations in that the political COST of that deference couldn’t be minimized by keeping it behind closed doors, spinning the complexities or pushing the consequences into the future.
The administration is, of course, still lowballing the real numbers, and by a fair margin, but the real world physical effects of the spill aren’t amenable to spin and lowballing AND those effects will continue to grow and grow and grow right thru to the midterm elections. I consider Obama is already a failed presidency, but novembers election results are likely to drive the nauils home.
One more thing about that election, those corporations Obama’s so assidulously deferred to know their TRUE safety lies in republican hands and the new reality of unlimited corporate spending is unlikely to bode well for the democratic party … and then there’s that ability of Wall Street to ENSURE another economic downturn happens before november. The party in power would not weather that well.
It is actually quite absurd to blame BP for this spill. The risk of a spill was always there in the GOM but the great American public was happy to enjoy their cheap gas and not think about it. Now they suddenly act as though this event (the spill) was totally unexpected and want someone else has to take the blame.
You want the oil, you take the risk. You take the risk, you take the consequences. Grow up, America.
Guaranteed in the end that much of BP’s loss will be socialized due to “plausible deniability” and other legal ploys that give a pusillanimous and corporate-leaning administration cover for a bailout.
Socializing loss is a subsidy, and when it is a subsidy available for all entities that are “to big to fail,” then it create enormous systemic dead weight, incentivizes imprudent risk-taking, results in risk being underpriced, and deepens moral hazard. This is not free-market capitalism, and it will end badly.
Of course, but by all means, let’s try to “socialize” that on the backs of British retirees as much as possible…
Vinny
What the hell is this “free-market capitalism” you’re talking about? Any historical examples?
Is it like “heaven” for Christians?
Simply an ideal?
Then in what way should this concept, and for what reason, ought this to effect our actions?
Obama isn’t gonna do anything be give whatever speech Rahmbo Emmanuel tells him to give, fire some 3rd level staffer from the Office of Mineral Management and then campaign for 2010 midterms and 2012 potus.
You know it, I know it, and the American public knows it.
So now that that’s out of the way.
Truth is, actions have consequences and we have just seen the “feedlot” of our energy consumption. Hate BP all ya want, but hold up a friggin mirror while ya do it.
This case, like Exxon will likely see the Supreme Court.
Oh you didn’t hear what happened on that case? The “monster” verdict of 5 billion for the 1990 spill, was just reduced to 500 million in 2008.
Its been 20 years. What??? yup.
http://www.nytimes.com/2008/06/26/world/americas/26iht-alaska.4.14027236.html
sorry bout link
http://www.wsws.org/articles/2008/jul2008/vald-j02.shtml
John Smith says:
June 11, 2010 at 11:28 am
“It is actually quite absurd to blame BP for this spill. The risk of a spill was always there in the GOM but the great American public was happy to enjoy their cheap gas and not think about it. Now they suddenly act as though this event (the spill) was totally unexpected and want someone else has to take the blame.
You want the oil, you take the risk. You take the risk, you take the consequences. Grow up, America.”
Anyone get the feeling this dope works in PR at BP or at the very least, is a typical condescending Brit?
Yves, have you tried transposing the situation to another country, say Indonesia? Remember these corporations have fought strongly to be above the local laws of gov’ts because they are “multinational”. Try to say ‘what would the situation be like if this occurred off the coast of Indonesia? Would the people there get everything they deserved to compensate for the destruction?’
Indonesia: The government tells the people to go fuck themselves while telling the “international community” everything they like to hear.
USA: Dozens of Lawyers spend 2-3 decades whittling the first, emotionally derived and very generous, settlement down to a pittance. The lawyers retire rich and become politicians.
… Thus Indonesia is more efficient.
Simon Sez: “Anyone get the feeling this dope works in PR at BP or at the very least, is a typical condescending Brit?”
Definitely. Typical British. Sarcasm and irony is a way of life there. However, one must understand that this is merely a psychological defense mechanism against what is a very harsh British life.
I lived in the UK briefly, but only could take it for a few months. It’s a terrible, terrible place, where people have been kicked around for so long, they resort to very high rates or alcoholism, sarcasm, isolation (in tiny, decrepit, dark apartments), as well as covert discrimination and condescension against anybody “not British enough”. All this is done in order to just survive the miserable British daily life, which could easily be classified as psychological abuse.
One must also be able to separate reality from fiction. The movie industry in particular has, unfortunately, created a very distorted picture of British reality, London in particular. London remains a decrepit, overcrowded, city with very little to offer to anybody coming from continental Europe or the US. Unless you’re into excessive drinking and drugging, and you really like to see the whole nation of Great Britain turn into little more than a bordello every weekend, the UK is not for you.
It is a terrible place to raise a kid, by the way, which is one of the reasons I took my family out of that place so quickly, despite the nice job my wife had there as a dentist. Raising a kid in England is certain to destroy his or her life. While many nations such as the US, Spain, Italy, and even Japan have a certain percentage of their young generation (adolescents to perhaps late 20s) turn to drugs, gangs, teen pregnancy, and other social ills leading to largely ruining their lives, most young people in the countries I mentioned here avoid that type of behavior, thus these nations are likely to have the ability to move forward at least one more generation. However, this is not the case in the UK, where virtually all young people have a drinking problem, and have lost all sexual mores. The current young generation of Brits is virtually a lost generation.
To compound the problem described in the previous paragraph (the current lost generation), discrimination against anybody perceived as “not British enough” (and that includes white, English-speaking Irish who immigrated to the UK 300 years ago), is extreme. Britain is one of the most racist nations on the planet. The only difference is that British discrimination is rooted into logic (yes, the Brits do have logical minds), thus most “true” Brits have a well-constructed and logical explanation for why they must continue to condescend and discriminate against anybody different from them. Obviously, as a psychoanalyst I have analyzed this to death. Because British racism is rooted into logic, it is virtually impossible to change, and it also makes it impossible to befriend a Brit. However, don’t get me wrong — most Brits are very well mannered, and will never tell you they despise you, thus, at least initially, you won’t feel discriminated against. It takes time to read past that phony, schizoid British polite smile. Contrast that to Greeks or people in Southern or Eastern Europe, who may tell you to your face they hate you because you’re a certain race or nationality, but once they get to know you (and it usually takes only a few minutes for that), they become your friend for life. Unlike the Brits, people in these countries base their discrimination on emotions, which is so easy to change. Of course, the US is rapidly becoming a Latino nation, so if one lives in any big US city is unlikely to feel discriminated at all. Just avoid small towns in the Bible Belt, where many still reenact the Civil War on the weekend, and trace their origin some King or Lord from England (which is ridiculous, since most whites in the US are actually not of British ancestry, rather of German ancestry, and Germany is not nearly as racist as the UK).
Britain, by the way, is a country with one of the highest emigration rates in the world (that is, a lot of British people just permanently leave the UK, heading either for former colonies like Australia, Canada, New Zealand, or for the US). I know many British who have moved to Greece or Florida, and have not even visited the UK in many years, and cringe at the thought of ever setting foot in Britain again.
Anyway, this is my lecture for today. It is from my own experience and that of many American or Continental European friends who have lived in the UK (most of whom have ditched Britain long ago). But this may help some put into perspective the condescension and bitterness that Tony Hayward and others can’t help but spew forth. It really is their nature.
And yes, I truly believe Obama does not understand how the British mind works. While Obama is undoubtedly a very logical man, he is also black, and the fact is, blacks are much more in touch with their emotions than any Brit can ever hope to be. Which is probably why he will continue to kick British Petroleum’s ass, that to my great delight.
Vinny
Britain, by the way, is a country with one of the highest emigration rates in the world …
Yep – To get away from the consequences of mass immigration turning every city into slum and the country itself into a police state; as is *every* multicultural society (that is not a dictatorship or a tribal society).
The do-goody politicians fooked it up – but we don’t have to stay and pay for it.
when obama threatens to kick ass
cameron bitches, because in the etonian s&m tradition of caning
he would rather his national champion be given six of the best in its fanny
Sorry Vinny, but I can’t resist… as one psychoanalyst to another, but you will probably never read this anyway, Yves’ posts never hang around long enough..
Has it ever occurred to you that the cold shoulder you were getting is part of the expat problem ?
Every country has its… “people”, to use an expression that is really not very popular, but that I find rather convincing.
Of course, we are all individuals (in theory at least…) but since the nation state came around, we have a collective identity for the time being that is structured around a national belonging.
In order for there to be a belonging inside… there has to be an exclusion OUTSIDE. (Dixit Sigmund, and until I find evidence to the contrary, and by God, I have been looking frantically, but have not found any yet, I am going to have to agree with him..)
And you… living in the U.K. were part of the outside.
If you didn’t see it in the other countries, it’s because, well maybe.. you had some blinders on, for example, or were not looking for it in the same places.
Because… it was there.
You had no SHARED history with those places.
On the record… as an American, my very best friend is English.
NOT American.
The new generation is NOT a lost generation, any more than the upcoming generation in the U.S., and France (and what about Greece, Vinny, those kids are burning cars in the streets… don’t get me wrong, if i were in Greece, and i were their age, i would be burning cars too…).
Maybe the kids are a little less in denial than their American counterparts, too, who knows ? A little less sheltered from the political and economic realities with techno toys ??
My friend’s 19 year old kid is doing just fine. He parties, and drinks, but he hasn’t been brought home in an ethylic coma yet either.
Too bad you remain so… AMERICAN in your appreciations of elsewhere, Vinny. (Being outside looking in, when not inside looking out.)
That’s truly a sign of empire thinking, in my book. It’s an unfortunate truth that empire has some definite disadvantages, along with its MANY advantages. Like… its citizens are generally not loved by the conquered. The facts of life, right ??.
Sorry…
Actually, I spend about half year in the US and the other half in Greece. I’m not a great fan of the US, but it has its advantages… especially if you compare it to what Greece has become these past few months… :)
As far as England goes, it’s true I only spent a few months there, that against advice from friends who lived there much longer than that and who were appalled when they heard I was planning to move there. I have Canadian, Spanish, and American friends who spent many years in the UK and hate it.
But it is possible your British friend is different. Many “different” ones eventually leave, often for other EU nations or the former British colonies.
By the way, Freud didn’t particularly care about England, just that it was one of the few places in Europe not conquered by the Nazis where he could hide.
But anyway, if you’re not into drunkenness, the UK is not for you. Everything (except pubs) closing at 6 pm is just not compatible with my lifestyle.
Oh, one more thing. In addition to all the discrimination, isolation, shitty weather, small apartments, the stress of driving on the wrong side, high taxes, and low mores of the Brits, what I found absolutely impossible to take was the food. As Groucho Marx would put it, “The food was terrible and the portions were small”. We almost starved there. We ended up eating at a Mickey D, something we never did in the US because that was better than your regular British restaurant food. Then we found a TGI Fridays, and thought their stuff was going to be like in the US. Wrong! It was one third the size and twice the price. So we returned to McDonald’s…:)
That’s when we understood why England is willing to pay foreign dentists such as my wife so much money to work there. Of course, it wasn’t worth it, so we ditched the place in a hurry.
Tough place, that United Kingdom. Very tough. I’ll never set foot there that’s for sure :)
Vinny
Vinny, Debra has a point, you are applying empire thinking but it is more in the vein of beating up on the victim rather than being seen as an expat, and you come off as being cold, heartless and lacking perception.
You over do the railing at and denigration of the people and their shitty lifestyles trapped within that nation state, but say less about the causitive oppressive empire controlled government — that is linked so closely with scamerica’s scum empire government — that has created the conditions that shape and form the offensive lifestyle.
British racism is NOT “rooted into logic”, and it is NOT “virtually impossible to change”, and it is NOT “impossible to befriend a Brit”.
British racism is a construct of propaganda (like the nation state construct), fed from womb to tomb into the citizens psyche. I am surprised that you so simply write of an entire grouping of victimized human beings, It has an odor of elite thinking to it.
This is like going into a ghetto in any big scamerican city (an artificial mini nation state created by again the wealthy elite scum bags) and pissing and moaning about the people and the depressed culture there. It too is an artificial culture created by the greedy machinations of the wealthy elite.
I think you owe the Brits an apology.
Deception is the strongest political force on the planet.
In the spirit of Rahn Emmanuel, of never letting a good crisis go wasted, I offer to the put upon British posts here, today, especially in honor of all of their war dead in Iraq and where ever else they may have given their all for King and Country, GET OUT OF IRELAND AND GIVE IRELAND BACK TO THE IRISH. Yes, you have so many fans here across the pond, worrying about your pension funds, your lives, your fortunes and your sacred honor. Just a small proposal for geopolitical balance in your time of need.
The world at large would be better off if BP went under.
Just watching the stream and it seem to be gushing more then other days…I am an engineer and I would say they are capturing maybe 30% while 70% i leaking…let’s face it…UK will have to bailout BP to pay for the cleanup…this is how we operate in today’s “capitalist” society….nothing changed from the past? Probably administration needs to get Hands-on with this rather then being in mere observation and commentary position..PR can only go so far!!
Chairman of Goldman Sachs International Was – Until Last Year – Also Chairman of BP http://www.washingtonsblog.com/2010/06/chairman-of-goldman-sachs-international.html
We need to return to basics. We need to pay attention not to what Obama says but what he does. Because there is almost always a huge discrepancy between the two.
The White House suppressed video of the spill for 3 weeks. It has backed BP efforts to ban media access to the spill and damaged wetlands and beaches. Every agency and department in federal government with any involvement has played handmaiden to BP: the MMS, the Department of the Interior, the Department of Homeland Security, OSHA, NOAA, the Coast Guard, even the FAA.
So what if Obama is talking tough now? Not until real money (billions) exchanges hands between BP and those it has damaged and injured will we know if this promised accounting is anything more than words.
BP has not been a very good energy company for quite some time. Instead of concentrating on what it did best it tried to mutate into a rent-seeking ‘alternate energy’ company that would benefit from new rules and regulations. Its lobbyists gave a great deal of money to politicians and bought access that allowed them to have major input into legislation and access to regulators. The access, and regulations that limited liabilities, gave BP the confidence to cut corners and ignore the advice of its own engineers and contractors.
The big problem is not the spill but the effects that the Obama response will have on the economies on the Gulf states that depend on oil revenues. With the rigs going to other places thousands of lucrative jobs will be lost and the economy will contract. Other companies will see the legal response and will not risk by investing as much in drilling activity in American waters. The reduced supply of oil and gas will cause prices to increase and their other projects will become much more profitable. The event may actually become a tipping point that makes companies realize the advantages of reducing production when the world is on the back end of Hubbert’s curve. As prices keep rising companies will find that the value of their reserves in the ground has gone up substantially and that cash flows can increase even if production does not.
Someone referenced the Oil Drum website. This disaster looks different if you think world oil production has peaked.
If the peak oilers are correct (I think the evidence is very strong, again the Oil Drum website is a good introduction), then the world will increasingly rely on oil pumped from hard to access places. The projected remaining unexploited oil fields are all deep under the ocean, in places like off Iceland and off the Brazilian coast. The only way to extract this oil is through deepwater rigs serviced by undersea robots.
If you are getting your oil from deepwater rigs serviced by undersea robots, chances are you will have the sort of accident or spill we are getting in the Gulf. But we need the oil. Or at least modern industrial society is configured to make oil extraction absolutely necessary. Lord knows what happens when the deep underwater fields are depleted.
So I’m inclined to give BP a break on this. Modern industrial society is a voracious consumer of oil. The remaining large fields to be extracted are deep underwater, where there is a high risk of a spill, almost certainty if you exploit enough of them. A high residual risk is left even after implementing safety controls. BP is in the oil extraction business. It extracted the oil, exactly its function in society. Whether it “cut corners” on safety is relevant only to the extent you think there is a safe way you can perform these operations, and there probably isn’t.
Now for optics if nothing else, the US Navy should have been in charge of stopping the spill from the first day, with the ability to commandeer BP and other oil company employees and assets as needed, for example I find it hard to believe the US Navy has no underwater robots, but if only BP is the only organization that has these robots they could have been commandeered for the cleanup, and returned later if in comparable condition. In return for their not objecting, you assure BP that their civil and criminal liability is limited, while quietly informing them that they probably want to start selling off their US operations.
This approach seems to be the exact opposite of the approach Obama has taken (and “fauxgressive” is a great term). Now I don’t think there is much Obama could have done to manage this crisis, in fact in an earlier thread I compared it to the Iranian hostage crisis as the sort of crisis that can’t be managed. But his administration has somehow screwed up the little they could do.
Ed, your argument holds water, except all the major oil companies drill in deep water, and there’s been no blowout like this anywhere before. BP hasn’t just made a few mistakes; they have the absolute worst record on cutting corners and safety violations of any oil company, by a huge margin. Norway allows deep water drilling and has a very stringent set of regulations, and the companies apparently have no problem following them. The problem here was created by a lax regulatory environment and a company inclined to cut corners to maximize their profits. Both need to be fixed.
I read the other day that BP has had 760 violation citations (don’t know the time frame) and the next two oil companies are tied with 8 violations apiece.
If true, that is an official “WTF?!” factoid.
Robin,
It is absolutely true, and these violations weren’t of the minor or easily correctable type; they were what OSHA called “willful and egregious”, the highest level of violation they have. When their refinery exploded several years ago, OSHA found numerous blatant violations, and when the refinery was rebuilt, OSHA found the same violations were still in place, at which time they levied a multi million dollar fine on BP.
If you compare the other oil companies’ violation record, the next highest # of violations was TWO.
Hi Vinny, I’m a Brit, who lives in Spain and interesting though your last post is, it is full of stereotypes. Are all British people the same? Are the Scots and Welsh the same as the English. Are Northerners the same as the Southerners, are all Londoners the same? Of course not. If you are a psychologist you must be aware that everyone is different.Of course it’s difficult to make friends with people from another culture, but I would say where you have gone wrong is that you have made no analysis of the role class has to play in British society. Hayward is a member of the upper classes and frankly the majority of the the British upper classes are scum. I would be happy for Obama to put every single member of BP on trial. However Obama has let BP get away with a pathetic response up to now. One other thing. I personally believe that the Deepwater Horizon disaster is a crime against humanity. The Gulf of Mexico does not belong to BP or the USA, it is partof the our common environmental heritage.
“And as they always do, the cover-up simply made BP look even worse.”
Didn’t Obama say that he was responsible and that the Feds were calling all the shots? If that is true there was no way for BP to engage in any cover-up without Obama’s knowledge.
The pea and shell games BP is starting to play with their tarballs and their crude sludge damage — is a game that was not played, before their oil started washing ashore after their explosion!
Not that funny, but, it’s a ……………. shitoad better than looking at BP’s bullshit
http://www.youtube.com/watch?v=zt617zYAbng