Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Why BP Should Just Deny Everything and Brace for Impact

Companies / Oil Companies Jun 05, 2010 - 05:26 PM GMT

By: Bill_Bonner

Companies

Best Financial Markets Analysis ArticleSittin’ on the dock of the bay…
Watchin’ the tide roll away…

~ “(Sittin’ On) The Dock of the Bay,” Otis Reading


We’re glad we’re not sitting on the dock of the bay in Biloxi or St. Petersburg. There’s oil coming that way…and it’s not the kind you can burn in your lamp.

The newspapers say there are huge globs of oil beneath the surface…or floating on the top. You’d think you could just pump it up. At $70 a barrel, you’d think you could make money scooping up the “sea oil” in the gulf. Probably better than shrimping.

Instead, everyone is complaining about it…and threatening to put BP executives in jail. Yesterday’s cover story in The Financial Times told us that the head man at BP has admitted error.

“BP ‘not prepared’ for spill”

We hope he had a good talk with his lawyers. “Not prepared” sounds like an admission of negligence. Maybe criminal negligence.

There are billions in lawsuits coming up…and the attorneys around the Gulf are slicker than an oil spill. The English don’t realize what they’re up against…an Alabama lawyer in a seersucker suit…talking to an Alabama jury…about how a British billion-dollar company destroyed their lives and livelihood.

They’re going to use every word Tony Hayward says against him.

Nobody is going to thank him for keeping his auto running. No one is going to think about where the oil comes from that he uses to heat his house…or how he draws electricity from an oil-fired power plant. No one in the entire state of Alabama is going to stand up for BP…certainly not an elected official.

“You have no idea how this works,” said a Washington friend. “The shyster lawyers are all in tight with the lawmakers. Many of them are shysters too. That’s why Obamacare is so tilted towards the lawyers and the pharmaceutical companies. They’re all in cahoots.

“And now this oil spill is going to set off a feeding frenzy on BP. The shyster lawyers are drawing up their class action strategies now. And you’ll see public interest groups get into the action. These guys are smart. And they’re very well funded. They’re going to short BP shares…and then announce a $20 billion lawsuit. And every pseudo environmental group…and trade organization…and labor union…and city council…and cracker-jack collection of meddlers anywhere within 100 miles of the coast…they’re all going to be looking at that pay day…when BP settles for…what?…$100 million…$1 billion…who knows. But they can invest millions in the case, because they know the payoff will be huge. They’re just fighting for position now…seeing who can put together the winning jackpot case… It’s sickening.”

Legal advice to BP: deny everything. You weren’t there. Deepwater what? Then, tell litigants that you will never settle any case, no matter how big or how rich. That will vastly increase the investment capital the shysters need to raise.

BP’s share price has plummeted. Some people think it is time to buy. Might be a little too soon. Our guess is that estimates of the damage are going to balloon even higher as more and more lawyers begin to see that thanks to BP they can win the lottery without buying a ticket.

Also, we suspect that a downturn is coming in the entire energy sector. Why? Because energy use grows with GDP growth. And we suspect we’re in Deep Doo-Doo there too.

Savings rates are rising all over the world – in developed economies and in emerging economies. That means GDP growth should turn down.

From Yahoo Finance:

Americans pulled back on their spending in May after a tepid April, underscoring how fragile the consumer spending recovery remains, new data released Thursday show.

Cool weather and a quirk in the calendar – a late Memorial Day weekend that hurt May’s business but should boost June’s figures – dampened spending on almost everything from clothing to major appliances. The figures, from MasterCard Advisors’ SpendingPulse, include spending in all forms including cash from May 2 through Saturday.

But weakness in the past six weeks is due to more than thermostat and calendar flukes, analysts said. They cited unemployment, stock market jitters and the end of government funded rebates on energy-efficient appliances.

“I don’t think you can explain away all the weakness just based on the calendar shift,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

People are reluctant to spend for all the usual reasons…and some new ones. In the past, people have feared losing jobs. Never before in recent history have they feared that the government would go broke.

Just ask young people what they expect to get from Social Security or the new Medicare program. They know the score. The old folks stacked the deck against them. All the aces come up first – while the boomers are still in the game. Then, nothing but low cards.

“‘Sittin’ on the dock of the bay’ was a protest song,” a communist friend once explained. “It’s about blacks who came to look for work in San Francisco and then couldn’t find a job.”

Maybe so.

Another report tells us that the corporate bond market is practically dead. Corporations can’t raise money for expansion…and don’t seem to want to. They’re being shut out of the credit market by government – particularly the US government. Bond rates are so low buyers don’t have much to look forward to – whether they buy the corporates or the Treasuries. They figure they might as well go for Treasuries. At least they’ll be sure to get paid back.

This year, the US government is expected to borrow an additional $3 trillion. That doesn’t leave much money for the private sector. Which is why The Wall Street Journal report is surely correct; more and more people are going to be sitting on the dock of the bay…or watching TV. Unemployment is still increasing in most cities.

China Daily seemed to capture the underlying trend better than anyone. It’s headline:

“West moving towards deeper financial abyss.”

Into the Deep Doo Doo, in other words.

Bill Bonner
The Daily Reckoning

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007).

    © 2010 Copyright The Daily Reckoning, Bill Bonner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules