Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2022 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