BP Doesn't Stand For "Bottomless Pit"

After one of my own oil spills, a kind reader remarked, "my heart breaks for your obvious distress" or words to that effect. At the time, it seemed a tad dramatic.
Now? Not so much.
This disaster is truly too huge to fathom. Every oil-laden wave strikes a blow to our country's psyche.
So to get a handle on how big this really is, let's gently put the oil-drenched pelicans aside for a moment, and follow the money.
Moody's Investor Service says the oil catastrophe could be worse than the global recession. Chew on that for a while.
In another onerous development, the prices for credit-default swap contracts for BP (how much it costs a BP creditor to insure against BP's default on a loan) have skyrocketed.
Now it will cost BP a pile of pounds to borrow money. The headlines say it all: "Credit Markets Treat BP as if it were Rated Junk." Sickening news indeed.
Credit Suisse is a shade more optimistic, tagging BP's exposure at $37 billion. It arrived at this number based on ultra-conservative estimates of exactly how many barrels of oil are gushing into the gulf each day.
Matt Simmons (who, you should know, has a dog in this hunt) says there is a lake of oil sitting on the sea bed. This "lake," he claims, is over 100 miles wide, and 400 to 500 feet in depth.
You can paint the coastal towns black, he says, if a hurricane picks up this under-water plume.
One recent news report lends anecdotal support to Simmons's claim that our long national nightmare has yet to be realized, while the oil lurks and lingers beneath the gulf's surface.

On a brighter note, the delta dawned on Obama. His administration announced Sunday that the President understands we have an immense, immeasurable crisis on our hands.
Phew!
The crisis is so dire in fact, that Obama will be addressing our nation in a few short days, live from his Churchill-shorn Oval Office.
Downplaying Explaining the President's upcoming address, David Axelrod said the oil "saga" has reached "an inflection point." (Which is better than a "tipping" one, don't you think?)
Now then. Let us raise our voices in perfect pitch, shall we?
But never genuflecting, Axe continued on in his unaffected baritone, seeking to reassure: BP has "the prospect of continuing."
Oh, David! Think again.
Obama wants BP to escrow billions to cover estimated damages. But this cannot be done.
With $12 billion in cash on hand and about $236 billion in total assets, BP is inarguably big. Still, "BP" does not stand for "bottomless pit."
So look for Obama -- as he's done with everything else -- to call BP's escrow a "down payment." This disingenuous wiggle-room phrase must poll well, given its ubiquity.
Where the rest of the money will come from is anyone's guess.
As is how much will be the grand total, or the time it will take to tally. Because it will take years to assess the damage. Years.
The fines imposed by the Clear Clean Water Act are but one example. Under this act, BP will owe the U.S. government more than $9 billion -- assuming 40,000 barrels are spilling into the gulf every day, as many experts believe.
In a related note, government-assembled experts want to send equipment down to better measure the flow, when BP switches the "caps" yet again. To date, BP hasn't responded to this request.
Small wonder BP keeps stalling and low-balling the barrels-per-day estimates.
No less comforting, BP estimates its clean-up costs at around $6 billion.
So now then. What might be the losses to Floridians? Early estimates predict the state will lose 195,000 jobs and $11 billion dollars in tourism income.
In northern Florida, at least one legislator is considering an immediate lowering of property values to give affected owners instant relief.
But such a measure would dramatically lower tax receipts, leading to drastic cuts in city services, "tax seepage" into inland counties, decapitating muni-bond ratings.
Tourism between Mississippi and the Florida panhandle accounts for nearly 4 billion dollars annually. Some estimates show tourism revenue in this area is already down some fifty percent. Hotel cancellations are at a fever pitch and extend well into the foreseeable future.
Who will get paid and when? By the time Captiva is inked in black oil, I'm afraid BP will be long gone.
The real estate horror in Florida was already hemorrhaging red; foreclosures before this crisis were unthinkably bad. But now? The state we call Florida will soon be Floriclosure.
Throw Louisiana, Alabama, and Mississippi into the mix, and short-sighted calls for BP boycotts (which only hurt American franchisees), coupled with Obama's crisp and grammatical, "whose-ass-to-kick"?
Shhhhh (whisper, whisper) but bankruptcy may be the only viable option for this self-insured company.
Indeed, Texaco v. Pennzoil provides an awfully enticing model for BP. Cast off the offending limb and proceed anew in a different body, is basically how it works.
So, President Obama? Could you please dial down the down-with-BP, I'd-have-already-fired-Hayward nonsense?
Why cut off our noses to spite our fate? Like Chris Matthews said, "This is more important than a presidency."
But oh, gentle readers, lest you truly despair, fret not. Admiral Watson is from the government and he's here to help.
On Friday, he boldly wrote BP, to wit:
"I am concerned that your current plans do not provide for maximum mobilization of resources to provide the needed collection capacity consistent with the revised flow estimates. Recognizing the complexity of the challenge, every effort must be expended to speed up the process."Even I was moved by his direct and to the pointedness.
Now, the press is calling the admiral's missive an ultimatum. Umm, okay. Whatever it is, it has no teeth. "BP, you've got until Sunday to come up with a better plan or . . . or . . . "
If I were Obama, I'd take "incompetent" over "impotent" any minute of the day, any day of the week.

Say, ever wonder how our government can claim BP is sucking up half of the leaking oil when it has no idea whatsoever what the total amount leaking is? I have to ask, are we just throwing darts here?
Alrighty then.
Is there a silver lining to be found in all of this? Any good news to report at all?
Well, err, yes, actually. Coastal properties in Spain are getting a nice little bump.

Labels: Axelrod, Bankkruptcy, Bp, Down Payment, Florida, Foreclosure, Inflection Point, MoodyS, Obama, Oil Spill, Pennzoil, Texaco