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Is BP Too Big To Fail?

Tyler Durden's picture


Dylan Ratigan draws some rather obvious parallels between AIG and the recent TBTF banking episode, and the possible fate of BP, whose failure would doom, among others, the retirement funds of Scottish widows, as we noted previously in disclosing the key holders of BP stock. Will the US president be willing to push BP to the point where a bankruptcy of BP results in international diplomatic outcry over what could be the next TBTF precedent? Surely BP is aware of this catch 22, and is thus willing to apply the modern version of American capitalism: "the risk taker uses the leverage of their size and importance to so many people to transfer the risk they've created to the government and future generations, while keeping the rewards of all the risks that they've taken, negligent repair, you pick the thing - they keep the money, you keep the problem. This seems to have become the new version of American capitalism: extortion and bribery." In this clip, in which Ratigan tears apart BP's Darryl Willis (worth watching in itself to see how TV anchors don't always have to bow down to their guests, David Faber feel free to take notice), BP seems to have painted itself in a diplomatic corner: "We will pay claims until we are done paying claims... We are going to pay the damages caused by this spill to every person who has been hurt, harmed and damaged." Alas, this does not leave much maneuvering room for the former oil giant. As for the question of how BP can afford to pay a $10 billion dividend in light of what seems to be a tide of approaching claims payments, Willis does not provide an answer. BP's CDS spread, however, does.

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Fri, 06/11/2010 - 00:56 | 407599 Nihilarian
Nihilarian's picture

 Yeah, BP, instead of filing for bankruptcy, will be forced by Obama to buy a local bank, and then Bernanke will Fed-fund the "BP-funded" cleanup program. 

Fri, 06/11/2010 - 07:29 | 407802 The Rock
The Rock's picture

Obama has nothing to do with this. He just sits there and tries to look serious. Bennie, on the other hand, is the BOMC and can "pull a GS" by waving his "magic stick" and claim BP is now a bank. Next!!

Fri, 06/11/2010 - 08:20 | 407851 FreddyInBangkok
FreddyInBangkok's picture

British Overseas Mortgage Company?

Fri, 06/11/2010 - 01:03 | 407611 wagefreedom
wagefreedom's picture

Why is this not on page 1 of the NYT? Along with a fat pipe Zero Hedge mainline, displacing the irrelevancies?


...the modern version of American capitalism: "the risk taker uses the leverage of their size and importance to so many people to transfer the risk they've created to the government and future generations, while keeping the rewards of all the risks that they've taken, negligent repair, you pick the thing - they keep the money, you keep the problem. This seems to have become the new version of American capitalism: extortion and bribery."

Fri, 06/11/2010 - 05:24 | 407749 Noah Vail
Noah Vail's picture

I see quite a few others engaging in extorion here as well. Take Florida for example which has demanded $2.5 billion escrow fund from BP when almost no oil has reached Florida. I live in the panhandle and was in Pensacola yesterday and can attest that the oil on their beach is insignificant. Normal Gulf winds and currents tend to keep oil away from Florida so that any major oil washing up on its beaches is unlikely. So where the hell does the governor of Florida come up with billion dollar demand? Politics maybe?

Fri, 06/11/2010 - 06:36 | 407776 Ned Zeppelin
Ned Zeppelin's picture

Open your window late today and breathe in the fumes. The slick is 5 miles off your shore and will make landfall later today.

Fri, 06/11/2010 - 07:32 | 407805 The Rock
The Rock's picture

Patience, my priteee!

Fri, 06/11/2010 - 07:36 | 407808 The Rock
The Rock's picture

Btw, if you're so confident that everything is hunky-dory, why don't you go out for a nice little swim, hmm?

Fri, 06/11/2010 - 08:45 | 407883 moneymutt
moneymutt's picture

Distributing booms, setting up and deploying networks of people/boats to lay boom, collect oil, getting trained leadership in place to direct people to properly place booms, getting onshore clean-up workforce ready, monitoring underwater oil plumes and oil slick locations...yeah these are things that should wait til the oil is on the beach, let it lap up on the beach a few weeks while you get your act together, that seems like a good idea...and all these preparations, they wouldn't cost a cash strapped state any cash flow, people will just give the state their boats, fuel, equipment, booms for free.

The well has been spewing oil for 50 days, and will go another 50 days easy, oil is 5 miles off your are such a marine scientist, you can say for sure, oil is not going to effect your cost at all, ever in the next 100 days?

So here are the alternatives, which one seems more rational:

1)Cash-strapped FL which has little of no emergency money a just hopes 100 days of the worse oil spill ever does not make it to shore, and if oil hits beach and then says, gee, this is going to be expensive, and asks for money from BP and takes weeks to get things in order as a natural resource that is key to their economy is trashed in meanwhile

2) Florida prepares for worst and asks party responsible for oil doom just offshore to pay now so they can have some chance of being ready when oil reaches extremely precious natural and economic resource. And just maybe everyone gets lucky, and not a lick of at least 100 days of oil touches the beaches of FL.

Yea, that option 2 is so stupid and its JUST like the TARP bank extortion, FL has done all the wrong here and made all the money over the years but FL is asking other to pay for their mess, others who never profited from their activity and are already downtrodden folks with little income prospects: BP.

For once, someone turns around our fascist corporate, crony govt that represent only special, connected big businesses, and not regular people, or the small business that could be wiped out by an extended oil spill, and for once someone tries to privatize losses to the responsible party, not just as punishment or just desserts, but to actually try to partly ameliorate the harm the private party has created, and you scream extortion.

Brilliant, if you represent the majority of us in the US, we are hopeless politically.

Fri, 06/11/2010 - 09:37 | 407981 downrodeo
downrodeo's picture

This is far from over.

Fri, 06/11/2010 - 11:24 | 408197 JW n FL
JW n FL's picture
by Noah Vail
on Fri, 06/11/2010 - 04:24


I see quite a few others engaging in extorion here as well. Take Florida for example which has demanded $2.5 billion escrow fund from BP when almost no oil has reached Florida. I live in the panhandle and was in Pensacola yesterday and can attest that the oil on their beach is insignificant. Normal Gulf winds and currents tend to keep oil away from Florida so that any major oil washing up on its beaches is unlikely. So where the hell does the governor of Florida come up with billion dollar demand? Politics maybe?


Noah Vail,
               To be clear... BP will pay and as far as where did Florida come up with the arbitrary number? here ya go stupid!

As the BP oil spill continues, the Gulf Coast’s fishermen, tourism industries, small businesses, and local governments are being threatened with serious economic costs.   While the total economic impact of the spill remains to be seen, it is clear that the damages will be significant, given that the tourism and fishing industries alone generate billions of dollars each year.


Here are just a few examples of the value of the industries to the Gulf Coast.


Tourism—Gulf Coast


1.      The value of the Gulf Coast’s tourism industry [EPA; Last Accessed 5.18.10]:

$20 billion




2.     The value of Florida’s tourism industry [Miami Herald; Last Accessed 5.18.10]:

$60 Billion


3.     The percentage reductions in hotel occupancy rates between Pensacola and Panama City [Wall Street Journal; Last Accessed 5.18.10]:

30 Percent


4.     The estimated percentage reductions in hotel occupancy rates during Memorial Day along the Florida panhandle[1] [Wall Street Journal; Last Accessed 5.18.10]:

70 Percent



5.      The amount of money spent by tourists on Alabama’s beaches in 2008 [Reuters; Last Accessed 5.18.08]

$2.3 Billion


6.     The number of workers supported by tourists on Alabama’s beaches in 2008 [Reuters; Last Accessed 5.18.08]



7.     Percentage of cancellations already being recorded on Dauphin Island where the first tar balls came ashore [Wall Street Journal; Last Accessed 5.18.08]:

50 Percent



8.     The amount of money domestic travelers spent in Louisiana in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:

$9.3 Billion


9.      The amount of tax revenue for generated by domestic travel in Louisiana for federal, state, and local governments in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:

$1.1 Billion


10.  Number of Louisiana’s 64 parishes that received over $100 million in travel expenditures in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:


Commercial Fishing—Louisiana


11.  The value of the commercial seafood industry in Louisiana [The Economist; Last Accessed 5.18.08]:

$2.4 Billion


12.  The percentage amount of seafood that Louisiana catches in the continental U.S. [Wall Street Journal; Last Accessed 5.18.08]:

40 Percent

Commercial Fishing—Gulf Coast


13. The size of the area in the Gulf of Mexico currently closed to fishing [Joint Information Center; Last Accessed 5.28.10]:

75,920 square miles


14.  The value of the commercial seafood harvest that was to begin on May 15th [Wall Street Journal; Last Accessed 5.18.10]:

$21 Billion


15.  The percentage amount of total U.S. seafood production coming from the Gulf Coast [Wall Street Journal; Last Accessed 5.18.10]:

20 Percent


Recreational Fishing—Louisiana


16. The value of the recreational fishing industry in Louisiana [The Economist; Last Accessed 5.18.08]:

$1 Billion

Double numbers with the new redfined spill estimates!


As for you Noah Vail I hope that someone takes your children from you and mails them back to you one knuckle at a time... not one finger, one fucking knuckle at a time. Fuck You!  

Fri, 06/11/2010 - 08:04 | 407828 ToNYC
ToNYC's picture

Godfather I meets the Stockholm Syndrome. The new Road to Serfdom for the entitled ones. P.T. Barnum and W.C. Fiels are large and in charge.

Fri, 06/11/2010 - 08:08 | 407831 ToNYC
ToNYC's picture


Fri, 06/11/2010 - 11:00 | 408141 JW n FL
JW n FL's picture


*****This seems to have become the new version of American capitalism: extortion and bribery."*****

Bullshit, Extortion would imply that someone is being compeled against thier will to provide monies... so that a secret can be kept...

We the People are sooooooooo Fucking! Stupid! that this is just completely inaccurate...

Bribery ='s Lobby... spot fucking on!


***** "

1 Introduction





The debate about the impact of market structure, and thus competition policy on innovation is still vigorous. The classic opposition is between Schumpeter (1942), Arrow (1962), Dasgupta and Stiglitz (1980),


etc. Schumpeter (1942) argues that a rm in a monopoly position has an incentive to innovate to prevent entry; a monopoly position may also ensure long-term objectives and can prompt making some risky investments in R&D. Some empirical evidence seems to support the Schumpeterian view. For example, recently, Blundell et al. (1999) have found a positive correlation between individual ex ante market share and innovation.However, following Arrow (1962), under perfect ex post appropriation, the pro t margins may be larger in an ex ante competitive industry than under monopoly. Aghion et al. (2002, 2005) attempt to reconcile the two approaches in a model that captures both mechanisms. Their model exhibits an inverted U-shape relationship between innovation and competition. In this model, competition may increase the innovation pro t margin for rms close to the technological frontier (since they escape competition) but strong competition could also reduce incentives to innovate for laggards (disincentive e ect). The goal of our paper is to extend this combined approach by studying the magnitude of the impact of competition on innovation behavior. We propose a model that takes into account rm size and/or the size of the innovation in the sector. Intuitively, if innovations are large-scale and costly in the rm's sector, competitive shocks have to be large to change its innovation choices. Therefore, the inverted U-shape is atter and competition policy is therefore less relevant for innovation when innovations are costly (or rm size is small). Empirical investigations using a unique panel dataset from the Banque de France con rm a clear inverted U-shaped relationship for the largest French rms. This result is consistent with Aghion et al. (2005)'s ndings on UK listed rms. But the curve attens when the relative cost of R&D increases: when the sectoral cost of innovation relative to the rm's size is large, changes in the competitive position of the rm does not seem robustly associated with changes in R&D intensity. For large costs, the relationship even vanishes: competition does not seem to impact rm R&D behavior. These results are also related to the literature on innovation decisions that stresses the role of rm size (e.g. Cohen and Klepper, 1996). It may be easier to nance R&D in large rms because they may have a reputation and enjoy deeper relations with external investors or bank lenders. They may also gain through a \too big to fail" mechanism. Finally, because of sunk costs associated with innovation investment, large rms have more incentive to engage in innovative activities. Empirical evidence seems to support this view. For example, Savignac (2006) shows that French rms with plans to innovate face nancial constraints that reduce the likelihood of their embarking on such projects, and that these constraints decrease with rm size. The paper is organized as follows. Section 2 is devoted to detail the model and the theoretical predictions. Econometric strategies and data are presented in section 3, that also provides the key empirical findings. Some perspectives are given in a last section.

" *****


Legislating for growth or maintaining market share, is still less expensive than any form of R&D... thusly our Corporate Culture is not one of innovation...

It is cheaper to bribe / lobby the whores inside the beltway..


It is too innovate, come up with new products to be manufactured... here at home... General Electric bringing good ideas to life? with thier 0% Fed window? Fed / Treasury backed Bonds? G.E. the great innovator? who grows market share thru legislation?

Not only do you have to be right, you have to be able to convince everyone else who will be losing market share... that its in thier best interests, too lose money.

There is no free market, it is long dead.


Fri, 06/11/2010 - 01:18 | 407621 Careless Whisper
Careless Whisper's picture

Who is monitoring the air quality from the oil spill? Does the oil contain toxic elements that are getting in to the air (mercury, arsenic, venadium)? How many clean-up workers have been treated for illnesses?

BP and U.S. Coast Guard officials have said dehydration, heat, food poisoning or other unrelated factors may have caused the workers' symptoms.

Oh really.




Fri, 06/11/2010 - 01:31 | 407630 mcguire
mcguire's picture

please... the goverment would never lie about the toxicity of a clean up environment that would endanger health of non-bildebergers...


oh wait... there was that one time...

Fri, 06/11/2010 - 05:46 | 407753 plongka10
plongka10's picture

I thought you were linking to a story about Union Carbide in Bhopal.

Fri, 06/11/2010 - 01:46 | 407643 whatsinaname
whatsinaname's picture

Stench in new orleans ?

Fri, 06/11/2010 - 03:51 | 407716 kingwallop
kingwallop's picture


EPA leaked

Gulf test reveals Volatile  organic compounds

Hydrogen sulfide

Safe Levels Allowed

5 to 10 parts per billion


1200 parts per billion


Safe Levels Allowed

0 to 4 parts per billion


3000 parts per billion

Methylene chloride

Safe Levels Allowed

61 parts per billion


3400 parts per billion




Fri, 06/11/2010 - 01:21 | 407625 BlackBeard
BlackBeard's picture

Go Ratigan!

Fri, 06/11/2010 - 01:24 | 407627 Cactus Rocky
Cactus Rocky's picture

BP doesn't care whom they hurt.  They need to slow down on the paying of claims in order to give the trial lawyers a chance to horn in on their 40%. 

Fri, 06/11/2010 - 04:24 | 407733 Spitzer
Spitzer's picture

The government and the enviro freaks should share some clean up costs too. If it was not for them, BP would have been in 200 feet of water.


Fri, 06/11/2010 - 07:37 | 407811 Observer
Observer's picture

another very good point

Fri, 06/11/2010 - 08:13 | 407839 ZackAttack
ZackAttack's picture

A faulty cement job and shoddy QA could have occurred in 200' feet of water. Yes, the cleanup might be easier, but the negligence is independent of the depth of the water.

Also, I wonder if it's

a) more, or

b) less

likely that the rig would've collapsed directly on top of the wellhead in 200' of water, so that the infrastructure would have to be cut away first before any of these palliative measures could've been attempted.


Fri, 06/11/2010 - 10:44 | 408113 Village Idiot
Village Idiot's picture

@ spitzer,

I have heard you mention that the our government is complicit by way of some pressure put on BP to "drill deeper". I don't doubt you, but curious as to where you are getting this info - I haven't seen it.  Thanks.

Fri, 06/11/2010 - 13:15 | 408444 Spitzer
Spitzer's picture

 I heard through the grape vine that they could not get permits to drill the formation in shallower water because the enviro's didn't want to see the rigs there. Neither did people living close to the shore.

Fri, 06/11/2010 - 13:55 | 408532 Village Idiot
Village Idiot's picture


Fri, 06/11/2010 - 18:08 | 409022 ZackAttack
ZackAttack's picture

Yes, because there are billion barrel wells everywhere, you know.

I think we should look for them under suburban swimming pools where the cleanup would be ever so much cheaper.


Fri, 06/11/2010 - 07:36 | 407809 Observer
Observer's picture

neither do big oil in the US or big Chemicals. think Union Carbide in Bhopal, India for one. or Exxon Valdez the effects still felt after all these years in those waters. 'Holier than thou' doesn't cut it

Fri, 06/11/2010 - 01:30 | 407629 Jeff Lebowski
Jeff Lebowski's picture

From a simple calculation and based upon what BP is admittedly collecting:

Total fines could be:

51 days x 28,000bpd x $4,300/barrel = $6,140,400,000

Add in the claims, include the interest bearing accounts of $2.5b for Florida..  

Doable, but the person who stated that there isn't enough money in the world to clean up the GOM, had it exactly right.

Fri, 06/11/2010 - 06:38 | 407777 Ned Zeppelin
Ned Zeppelin's picture

The endgame is that the claims will grow to monstrous proportions, as will the spill itself, and BP will go under, its assets stripped out and sold to the highest bidder - same fate for the owners of the rig, etc. So invest accordingly.  This is where this is headed.  They've been lying from day 1 and the guesstimates of the extent of the spill are now approaching 50% of the truth. The GOM is history for a decade - put a price tag on that.

Fri, 06/11/2010 - 01:35 | 407633 RobotTrader
RobotTrader's picture

If it were Petrochina instead of BP, the CEO would tell Obama to take a hike...


Fri, 06/11/2010 - 03:54 | 407717 AnAnonymous
AnAnonymous's picture

If it was Petrochina?

Nukes would be on way for  Beijing.

I cant even imagine the hysteria that would rapture the US. Demonstrations,  round the clock TV shows bashing China, the Internet saturated with hate messages.

BP has it easy compared to what China would endure.

Fri, 06/11/2010 - 07:14 | 407788 Mercury
Mercury's picture

BP will be Petrochina. BP's US-based operations are done for as, fairly or unfairly, BP will be bled dry by lawsuits, clean-up costs and political intolerance for their ever making another penny of profit in the US. However...BP throws off a lot of cash around the world and they are good at what they do.

So BP sells itself to the Chinese who then have a shiny new integrated giant just as oil shoots past $100. The Obama administration, having fucked this thing up at every single turn by this point will leave the US with crippling new regulations, a massive environmental disaster, ruined equity and debt holders and little recourse because China will tell us to go fuck ourselves if we try and lay claim to any of BP's (legacy) assets not within our physical grasp.  Because Obama long a go made it clear that there is nothing "special" about the US/UK relationship, the Brits will facilitate the BP/China deal while running interference against the US in an effort to salvage some value for their own domestic share and debt holders.

Fri, 06/11/2010 - 08:23 | 407821 FreddyInBangkok
FreddyInBangkok's picture

you mean the Pilgrim Soc & Kts of M handing a prize asset over to the Chins. don't think so. &, Lizzy's emissaries no doubt promised Mandingo a knighthood if he's a good boy, which requires tacit genuflexing on his part for the remainder of his tenure.


Fri, 06/11/2010 - 09:37 | 407983 Common_Cents22
Common_Cents22's picture

But dear leader obama will rescue us with wind and solar !

Fri, 06/11/2010 - 05:00 | 407742 anony
anony's picture

if it were Petro, the CEO would be dead by now. 

Fri, 06/11/2010 - 07:24 | 407800 Sudden Debt
Sudden Debt's picture

They would just call google to delete all the content and forget all about it.

Fri, 06/11/2010 - 07:39 | 407812 Observer
Observer's picture

indeed..or else 'you buy your own debt'

Fri, 06/11/2010 - 08:20 | 407850 Rider
Rider's picture

After that he would face the firing squad.

I do think Chinise know how to motivate people to avoid corruption.

We might need A COUPLE OF CORPORATE CAPITAL PENALTIES and we assure no double dip, no TBTF etc. in one easy step , Should they start with the squid??


Fri, 06/11/2010 - 01:36 | 407634 mcguire
mcguire's picture

if it makes toxic rain, the game is over... it rains on the rich and the poor alike.  it will be humans vs. evil at that point. 

Fri, 06/11/2010 - 03:42 | 407710 Pondmaster
Pondmaster's picture

Toxicity -

The heavy metals mentioned aforehand do not evaporate into the air . Only the aromatics of the crude spill . I recently saw  , can't pinpoint , the "evaporation rate of different hydrocarbons on water . Gasoline was the fastest . That said , my main concern is not what evaporates from the oil spew , but what does not evaporate . H20 !! Water covered with oil does not evaporate , it does not enter the atmosphere . Will a large enough area covered in oil effect rainfall amounts? Maybe not , maybe so . Also in point , crude oil,on water raises water temps just beneath the oil ( it also "cooks" the birds thus encapsulated ) What could effects of altered evaporation rates , and higher water temps be. WHERE IS THE CLIMATE CHANGE CROWD ON THIS ISSUE?????? Silent of course , its not part of their agenda . In the end which is far out from where we are today , BP will never be able to shoulder the damage done to us all . No money will . No price has been placed on the environment itself , just economic losses . Sad       

Fri, 06/11/2010 - 04:21 | 407731 saulysw
saulysw's picture

My thoughts on reading the article were along the lines of -- well, who is going to pay all those dead fish, dolphins, pelicans etc etc? It is very sad if the only thing of concern is renumeration of humans who have had their plunder of the environment taken away.

Fri, 06/11/2010 - 08:02 | 407827 Pants McPants
Pants McPants's picture

Are you serious?

Fri, 06/11/2010 - 09:13 | 407931 mcguire
mcguire's picture

symptathy with the eugenicists will not get you a spot in the bunkers...

Fri, 06/11/2010 - 09:46 | 407992 downrodeo
downrodeo's picture

+1000   Right on!

Fri, 06/11/2010 - 01:37 | 407638 Professordoomfinger
Professordoomfinger's picture

Didn't the double top of 2007 - 2008 get anybody's attention?


Fri, 06/11/2010 - 01:42 | 407640 Caviar Emptor
Caviar Emptor's picture

BP will let the oil spill on, even if it takes 2 years to fix, for these reasons:

-They're sitting pretty, on a gusher of a productive well that could produce big volume for over a decade. They know it. It's a black gold mine. They'll never relinquish or destroy it even though Plug and Abandon (P&A) is a standard practice in the oil industry without the need for nuclear material.

-Total liabilities for a mega spill are negligeable. Total costs for the Exxon Valdez spill were $3 billion over 20 years, including all civil suits. They kept big cases tied up for 20 years until the Supreme Court reduced punitive damages in 2007 to under $100 million. They fully expect that taxpayers will directly and indirectly foot the bill for damages. 

-Britain will defend BP to the death to protect millions of pension funds tied to the stock.

-They have no affirmative duty to the environment, citizens, states, or US government. 

Fri, 06/11/2010 - 03:51 | 407714 Escapeclaws
Escapeclaws's picture


The fact that Obama's on the case assures that nothing will be done.

Fri, 06/11/2010 - 09:27 | 407906 wyosteven
wyosteven's picture

Don't be silly, Obama absolutely assures that failure will ONLY be rewarded, criminality swept under the rug (complimentary of TBTF), lies will make the spill go away, and bonuses will set new records as the US taxpayer pays for it all.  This is a slam dunk for BP, just like the fags of finance and the so called financial "crisis".

Silly Brits think that pensions matter to big business and the rich.  Welcome to the back of the line, suckers.

Remember:  TBTF = heads they win, tails you lose.  Cheerio.

Fri, 06/11/2010 - 01:46 | 407642 wooderson
wooderson's picture

All right, all right, all right.

These earth-destroying problems keep getting younger, but I just stay the same.

Fri, 06/11/2010 - 01:48 | 407645 Apostate
Apostate's picture

Can anyone say "tragedy of the commons?"

If the gulf was privately owned, fishermen and property owners could own shares of the ocean and be properly compensated.

The government is chaos masquerading as order. 

Fri, 06/11/2010 - 09:29 | 407967 Pants McPants
Pants McPants's picture

Agree 100%, private property would make this problem a whole lot simpler.


Government has no skin the game; thus, we can expect two things: poorly handled cleanup...and increased regulation/increased prices.


(But Gov will get all the credit, of course.)

Fri, 06/11/2010 - 01:57 | 407655 palmereldritch
palmereldritch's picture

Remember The Gilded Age?...IMO we're living in The Grifted Age?...

Goddamnit! do I get outta of here and escape to El Rey?!!

Fri, 06/11/2010 - 02:02 | 407657 Equity Research Rex
Equity Research Rex's picture

Picked up lots of puts on BP today, this mini rally is going to be meet with more bad news soon.  Obama summit with BP "leaders" will result in deadline at which time assets will be marshalled.  

Fri, 06/11/2010 - 07:56 | 407822 The Rock
The Rock's picture

I prefer higher viscosity during the summer months.

Fri, 06/11/2010 - 02:25 | 407667 Rusty Shorts
Rusty Shorts's picture

The ENTIRE PLANET will be damaged by this disaster, to many feedback loops on this one, sorry, BP cannot begin to cover the damages, period.

Fri, 06/11/2010 - 08:00 | 407824 The Rock
The Rock's picture

This is the Earth's way of getting back at us. Let's hope Katla doesn't decide to rip anytime soon.

Fri, 06/11/2010 - 02:33 | 407673 AnAnonymous
AnAnonymous's picture

New version of capitalism? Where does this come from?

Capitalism being such a tedious thing to discuss as capitalists themselves cannot define it, why bring it?

Needless to say that nothing new is here. The only difference is that some US citizens are feeling the aspect sharplier. But extortion and bribery a novelty in the US way of doing business? How can somebody half serious suggest this  to be new?

This Ratigan guy is totally unphased. How was the largest majority of the land that is now the US acquired?  Ratigan's  vocal diarrhea has zero value.

Save for his bank account as the guy is fishing (fishing, gulf he he) for viewers.


BP paying damages to people who were fouled by the spill? Funny. Better to look for good US business like opportunities. If the spill is enough to damage the food stock, it will affect fishers in many parts of the world.  As certain of those fishers still fish with little impact on the environment, they are going to feel the pang heavily. Probably starvation. So they are going to have to go into debt to buy food. The US will jump on the opportunity to provide both the loans and the food.The consequence will be to speed up the extraction rate of the natural resources of the fishers' countries.



Fri, 06/11/2010 - 02:38 | 407677 Rusty Shorts
Rusty Shorts's picture

ah yeah, those damned feedback loops.

Fri, 06/11/2010 - 02:34 | 407675 Canoe Driver
Canoe Driver's picture

It's been obvious for a while that the costs of this massive oil release would have to be socialized in one way or another.  That's why its such a joke when Obama blabs about making BP pay.

This is 4 million gallons a day, folks.  The biggest in history.  Believe none of them.


Fri, 06/11/2010 - 03:37 | 407708 w
w's picture

For information, 'Scottish Widows' is just a fund management brand and has no specific link to actual Scottish windows.

Fri, 06/11/2010 - 04:05 | 407727 mcguire
mcguire's picture

scottish widows have been proposed as an eco-friendly alternative to dispersant...

Fri, 06/11/2010 - 03:57 | 407720 emsolý
emsolý's picture

We are going to pay the damages caused by this spill to every person who has been hurt, harmed and damaged.

how about also throwing in a couple dozen million dollars for some wildlife and environmental charities in deference to those creatures of the earth devastated most by this desaster and who cannot file suits or make claims against this despicable oil firm.

Fri, 06/11/2010 - 04:02 | 407724 yabs
yabs's picture

just wondering

if you hire A BOAT and collect said oil can one then claim ownership and sell it?

this might be good compensation for fishermen etc

and help the clean up effort

Fri, 06/11/2010 - 07:33 | 407806 FreddyInBangkok
FreddyInBangkok's picture

both boat & yrslf would be confiscated never to be heard from again.

Sun, 06/13/2010 - 14:29 | 410692 LiquidBrick
LiquidBrick's picture

Exactly, where are the Somali pirates when you need them?


Fri, 06/11/2010 - 04:16 | 407730 Manipulism
Manipulism's picture


Ilargi: Matt Simmons knows oil. His "Twilight in the Desert" is one of the best books on the topic, highly recommended. Simmons also knows finance; he’s, after all, an oil banker. And he insists that both the Gulf spill is in fact much worse than BP and the White House are willing to admit, and that BP's liability commitments will bankrupt it within weeks. While there will always be the notion that Simmons says what he does in order to turn a profit, I personally lend quite a bit of weight to what he's been saying since the spill started. SImmons is one of the few voices left in the drama worth listening to.

BP has now officially, as I've said was likely to happen, seamlessly moved from "just" an environmental disaster into an economic calamity as well. Don’t underestimate the impact of this. BP is the planet's fourth largest enterprise. For one thing, this means the company has vast political influence, especially in the US and UK. I saw a line today I had been waiting for for some time, in this Reuters article:

Under pressure over BP, PM Cameron says UK ready to help

Britain stands ready to help BP with its clean-up efforts following the Gulf of Mexico oil spill, Prime Minister David Cameron said on Thursday as he came under intense pressure at home to stand up for the oil giant. In his first public comments about the crisis, Cameron said he would raise it with U.S. President Obama when they next spoke. That will be a delicate balancing act between upholding British interests and nurturing a key diplomatic relationship.

BP [..] accounts for 12-13 percent of dividend payouts in Britain. Pension funds and other investors are heavily reliant on it.

The BBC has this:

Why is BP important to the UK economy?

"The government must put down a marker with the US administration that the survival and long-term prosperity of BP is a vital British interest," the former British ambassador to the US, Sir Christopher Meyer, has told the BBC. He urged Prime Minister David Cameron to raise the issue in his scheduled conversation with US President Barack Obama over the weekend.[..]

"When you consider the huge exposure of British pension funds to BP it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves," [London Mayor] Boris Johnson said.

UK pension funds do indeed have big holdings of BP shares and the company says that £1 of every £7 paid in dividends to pension funds by FTSE 100 companies last year came from BP. It is estimated that about 18 million people in the UK either own BP shares or pay into a pension fund that holds BP shares.

That should put you right in line with what will be playing out now. BP's bankruptcy looks like a foregone conclusion. That is, unless the US and UK governments step in, and do so broadly and very loudly. With both money and legal changes. The former, because BP faces far more in lawsuits and damage claims than it has in liquidity (its shares are now worth less than its assets, always an alarming sign). The latter, well, for more or less the same reason.

One party you don’t want to be when BP's bankruptcy lands square squash on the table is a Louisiana fisherman or a Florida tourist operator. British pensioners first! Sure, Obama has declared that BP is liable for all damages yada yada, but there’s a long list as we speak of Gulf Coast residents who can’t hardly squeeze a penny out of the company even now, and that’s before any serious litigation has started.

It’s all just posturing. By the time the real claims arrive, BP will likely be very deeply mired in interminable Chapter 11 and/or subsequent proceedings, and the little man will be dead broke and waiting for years to see if he may ever get a single penny for what he worked long and hard to build up, whether he’s Forrest Gump in Terrebonne Parish or Mr. Bean in Coventry.

Don’t help the little man, help BP, says the British government. And that will be the political stance, though certainly not the public message, going forward, on both sides of the pond. Nothing has changed as of yet and nothing will until Gump and Bean reach for their pitchforks.

Goldman Sachs or BP, the politicians’ reaction remains the same. Screw whoever’s not in your circle, and use (your power over) their money to pay off who is. Corporations rule this planet, not the people that live on it.

BP will be a showcase for several nations at once, a shining example for how much of the political power really is in the hands of the people. I for one hold out very little hope, as long as the present corporate political systems remain in place. Britain, I bet you, will use its pensioners’ tax money to "save" BP in order to save its pensioners. And so forth. And then somewhere down the road that money will get lost. Think AIG.

All we're left with to live in is a hologram. And we can just wait and see, because the time will come, till all we’ve left to spend, grow and eat also exists only in a parallel universe.

Unless and until we find ourselves some sand, oil-stained or not, to draw a line in.

And don’t kid yourselves, it’s not about BP, one single oil company, and it’s not about Obama or Cameron, about single politicians. With perhaps slight differences, Shell and Exxon perform within the same dismal agenda's BP does, and there's no politician left in our Western hemishpere who rises to true power and has not been pre-empted by the system he or she voluntarily chooses to function in, and who doesn't voluntarily participate in perpetuating the hologram their voters long for in order to continue their feeling of comfort, so they can sit in their oversized homes and watch pictures of dying birds on oversized plasma TV's.

And please don’t be too eager to proclaim you're different, or better than that. That’s nothing but the easy way out.

Remember, you’re not watching real life with real people, you’re watching a 24/7 theater play that has no other reason to be than to provide you with what it knows beforehand you will respond positively to. Remember that, and then look at the dying pelicans. You may be running out of chances to make it right. Is that the way you want your life to be?

Fri, 06/11/2010 - 08:26 | 407861 ZackAttack
ZackAttack's picture

ZOMG! Widows and orphans! Every time you bash BP, a kitten dies!

I've been hearing this bullshit meme for the last couple of days now. My immediate reaction is that BP owns both governments and this lame-ass sympathy ploy is a corporate plant. Isn't it ironic that here in the US, we see Obama as their lapdog, actively collusive in the coverup and control of this story.

Yes, it sucks for the pensioners. They are captives. The blame here rests not with Obama, but with the pension fund managers themselves. The questions I'd immediately ask are:

- Who twisted their arm to participate in the equity markets at all, and specifically this stock? It wasn't like this disastrous negligence was an isolated incident. Rather, it was a pattern of behavior.

- 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. The world is not made out of nerf; there is no virtue to being a blind buy-and-hold-forever bull (or bear).  

Let's go back to 1999, the time when Microsoft was 10% of the S&P. How much bullshit would you 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 killing a fucking ocean.


Fri, 06/11/2010 - 05:02 | 407734 Miles Kendig
Miles Kendig's picture

With respect to BP it is one step beyond TBTF.  It has become Too Essential To Fail..  TETF  The sublime epitome of kleptocratic corporatism.

Fri, 06/11/2010 - 05:57 | 407758 AnAnonymous
AnAnonymous's picture

They state the same.

Too big to fail refers to the importance one element can take in a system.

It is not a reference with the size of the said element. A single person can be too big to fail in the surrounding system.

Fri, 06/11/2010 - 04:33 | 407736 Equity Research Rex
Equity Research Rex's picture

Breaking --- on Bloomberg TV  -- CEO quoted as saying "if dividend is cut then they will issue new shares in its place"



can you say DILUTION?????   


BP to 20 in 2 weeks

Fri, 06/11/2010 - 06:52 | 407783 rawsienna
rawsienna's picture

The total cost of clean up is around 50 bb payable over 3 years is not a problem for BP.  The dictator in the White House needs to start working with the company to make sure the clean up happens and people get compensated. Killing BP today only hurts that effort -BP will need access to capital markets to make this work.  Having the President looking to kick some ass is moronic.  

Fri, 06/11/2010 - 07:58 | 407823 Observer
Observer's picture

good point.. except for the the 'dictator' bit.. he is actually being 'dictated to' by the people(special interests) behind the Presidency

Fri, 06/11/2010 - 07:40 | 407814 Thoreau
Thoreau's picture

"We are going to pay the damages caused by this spill to every person who has been hurt, harmed and damaged."

Impossible to quantify, as this will be multi-generational and multifaceted.

Fri, 06/11/2010 - 08:15 | 407842 The Rock
The Rock's picture

More like:

"We are going to pay the damages caused by this spill to me, me, and me"


Fri, 06/11/2010 - 07:46 | 407815 FreddyInBangkok
FreddyInBangkok's picture

more of a curiosity than anything else but like PM miners ($HUI:$GOLD 62 to 38) BP:WTIC ratio dropped almost straight from a high of 30 in 1999 to 4 today. BP:$GOLD: 17% to 3%.


Fri, 06/11/2010 - 07:50 | 407817 monkeyfaction
monkeyfaction's picture

The absolute worst case for BP is that it's US operations are seized and sold off or put into adminstration and all profits go towards the clean-up and compensation.

Do you really think, for example, that the US could seize oil rigs in the North Sea off the cost of the UK that belong to BP?

This still leaves the majority of BP outside the US still making money. These assets would either continue as BPnotUSA or be sold off and the profits given back to the shareholders.

BP shares are not going to become worthless like some of the banks. They have real tangible assets, not some imaginary loan book that nobody can value. The downside risk at the current share price is overstated.

Fri, 06/11/2010 - 08:01 | 407825 Observer
Observer's picture

yeah.. and if their US assets are seized, they can conceivably claim to have fulfilled their obligations by letting their US assets be taken over. that leaves the North Sea...and the make money(or not). The US support of Argentina over the 'Malvinas' should be seen in this light

Sat, 06/12/2010 - 03:11 | 409459 Pinefox
Pinefox's picture

So who is responsible for turning down the 17 countries who offered expertise and equipment to stop the flow. The Feds are. They were not willing to suspend the provisions of the 1929 Jones Act, originally passed to protect our national maritime industry. Under the circumstances, I think we could make an exception here, don't you? If I were BP and defending against liability, I would quite readily point out to the court and the world, that the US refused help, prolonging the spill and accelerating the magnitude of the spill because prompt action could not be taken with out these other countries skill and equipment. The sad thing is that this is true.

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