Thursday, June 17, 2010

I've tried to post something about the pummeling of BP that's going on, but I can't quite decide what I think. One thing is that I don't see how the company is going to be able to pay damages if we drive it into bankruptcy. I keep seeing the conclusion that the company was "reckless." Does that include all the shareholders? And isn't it kind of unfair to change the rules after the disaster happens? Does BP have a bank account somewhere with $20 billion in it that it can dump into escrow? That doesn't seem like the best way to manage your business. The idea is to make more than you'd get from a bank account, no?

On the other hand, while this was an accident, it was a foreseeable one, and BP was apparently counting on the $75 million damages limit. A law changing that retroactively would seem to be unconstitutional, or at least prevented by estoppel, but I would have said that about the Superfund law, too.

I guess what this all comes down to is that Obama is just a bungler and BP doesn't look much better, although it has had a crisis team working on it from the beginning, while it took him six weeks to really start doing anything. It's certain that BP didn't expect this blowout, nor has it disclaimed responsibility. On the other hand, while it has been trying to stop this gusher, the government hasn't done its job of containing and cleaning up the oil. Maybe it can't be cleaned up and just has to run its course, but for the government to essentially do nothing for six weeks and then blame its lousy performance on BP kind of rankles. Demanding a $20 billion payment before the damages have been proven or properly apportioned strikes me as high-handed, too. Since when do we start demanding bail for civil suits?

Basically this is a case of soaking the party with the deep pockets, and the federal government doesn't have those anymore, since we've run the deficits into the trillions and the President is still asking for more. BP will have to pay, one way or another, but anybody who's done collections knows it doesn't work to drive debtors into bankruptcy or drive down their ability to pay.

We have natural catastrophes all the time, floods, hurricanes, tornadoes and even volcanic eruptions. All are unforeseen, even though we know most of them have happened and will happen again. What I can't understand is why we never seem to be prepared when they happen.

UPDATE: As if to accentuate my doubts about the governments' performance, it now comes out that barges ordered by Governor Jindal to help suck up spilled oil have been shut down by the feds, demanding proof that they have fire extinguishers and life jackets. If you're sucking up crude oil from the waters you're floating on and a fire starts, how big of an extinguisher do you need.

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