Safety
by digby
“The recent tragedy in the Gulf Coast shows how dangerous and toxic the practice of offshore drilling is and how it has no place in America’s future,” said Justin Ruben, Executive Director of MoveOn.org. “The only thing that benefits from offshore drilling are oil company profits and today, we’re urging President Obama to finally give Americans what we deserve–an energy policy that puts our safety above oil company interests.”
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The Little People Don’t Understand
by digby
This is damning stuff:
As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn’t lose control of the debate to people less well-informed than themselves. “We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said, according to the transcripts of a March 2004 meeting.
Only he now says that he was the one who didn’t fully understand:
“I have found a flaw” in free market theory, Greenspan said under intense questioning by Representative Henry Waxman, the Democratic chairman of the Government Oversight Committee of the House of Representatives. “I don’t know how significant or permanent it is,” Greenspan added. “But I have been very distressed by that fact.””I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said.Waxman pushed the former Fed chief, who left office in 2006, to clarify his explanation.”In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said.”Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
After listening to the BP executives pretty much say the same thing, can we now see the pattern of elite corruption and malfeasance? How about the Catholic Church? Or the CIA? It’s not like there aren’t, in every case, people who dissent:
At the same meeting, a Federal Reserve bank president from Atlanta, Jack Guynn, warned that “a number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida. Entire condo projects and upscale residential lots are being pre-sold before any construction, with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on ‘flipping’ the properties–selling them quickly at higher prices.” Had Guynn’s warning been heeded and the housing market cooled, the financial collapse of 2008 could have been avoided. But his comment was kept secret until Friday, when the central bank released the transcripts of Federal Open Market Committee meetings for 2004 and CalculatedRisk spotted it. The transcripts for 2005 to the present are still secret.
They didn’t want to spoil the party. After all a lot of people were making a lot of money. And nobody wanted the “little people” who don’t understand how the world works interference. Like the congress:
In little-noticed statements to reporters over the last few weeks, Pelosi has alleged that the Bush administration knew well in advance of its intervention that the financial crisis would hit, and that Congress would need to authorize a historic and unpopular bailout – but that top officials, including then-Treasury Secretary Henry Paulson, told her that they had been barred from briefing Congress about true extent of the crisis. If accurate, the allegation could constitute a major indictment of the Bush administration, which may have worsened the crisis and resulting economic fallout by delaying the call for congressional action. Pelosi says the admissions from Bush administration officials that they had kept Congress in the dark came in private conversations between her and those officials in person and by phone. None of the other parties to those conversations would comment for this story. Nor is it clear if the Administration’s alleged decision not to brief Congress earlier was a calculated strategy to avoid spooking the already shaky financial markets thus hastening the crisis or, as Pelosi suggests, a political calculation in advance of the 2008 presidential elections, or a combination of the two.
But whatever we do, let’s not look in the rearview mirror and hold anyone responsible for anything. That would be counterproductive. Accountability is for the little people.
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Who’s Picking Up The Tab Again?
by digby
President Obama visited Louisiana yesterday afternoon to observe the response effort to the BP oil spill, which he called a “potentially unprecedented environmental disaster.” “Your government will do whatever it takes, for as long as it takes, to stop this crisis,” he pledged. But Obama said taxpayers would not be on the hook for the cleanup, saying “BP is responsible for this leak — BP will be paying the bill.”
The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.
Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats.
Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.
That fund is a drop in the bucket. The lost revenue and damages are going to add up to much more than a billion. And the fishermen and other actual humans (as opposed to “corporate persons”) are not going to be able to sue BP for much (75 million is chump change) — that drop in the bucket fund is supposed to cover all those costs and more. And when it’s gone, either the taxpayers pick up the rest of the tab or that’s it.
Once more with feeling. Quoting from the financial advisory I blogged about below:
This will be a financial calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
Wrong. The law caps BPs liability at 75 million (plus costs of clean-up, which will be substantial.) Everyone else is going to have to line up for that paltry 1 billion, which nobody thinks is going to be enough.
This sheds some light on just how efficacious that 50 billion dollar bank fund they are all so havey-cavey on will actually be, doesn’t it? TBTF is always TBTF.
BTW: BP made $163 billion in profits from 2001-2009. It made $5.6 billion in the first quarter of this year alone.
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Political Geniuses
by digby
The predictable and understandable backlash from Latinos is quickly emerging:
Adam Bustos, a third-generation Mexican-American, has voted Republican since Ronald Reagan ran for president. But he has been reconsidering his party affiliation since Arizona State Gov. Jan Brewer signed the nation’s toughest immigration law last month.
“I’ve been thinking I might leave the party,” said Mr. Bustos, a 58-year-old Arizona native. “A lot of my Latino Republican friends have been talking about it after this law.”
But the Republicans don’t have to fret too much. The Democrats, with their usual perspicacity and impeccable sense of political timing, have decided to chase teabaggers and do the GOP’s work for them:
The Democrats’ legislative “framework” includes a slew of new immigration enforcement measures aimed at U.S. borders and workplaces. It would further expand the 20,000-member Border Patrol; triple fines against U.S. employers that hire illegal immigrants; and, most controversially, require all American workers — citizens and non-citizens alike — to get new Social Security cards linked to their fingerprints to ease work eligibility checks.
The plan’s emphasis on “securing the border first” before taking steps to allow many of an estimated 11 million illegal immigrants living in the United States to pay fines and apply for legal status was plainly a gesture to Republicans. Even so, no Republican is supporting it, not even Sen. Lindsey O. Graham (R-S.C.), who has been working with Sen. Charles E. Schumer (D-N.Y.) in bipartisan talks over the issue for months.
The Democrats’ shift underscores how, in the struggle between enforcement advocates and legalization backers, the former seem to be gaining, experts said.
Ideas that were hotly contested in ill-fated Senate debates in 2006 and 2007 seem now to be taken for granted, said Edward Alden, a senior fellow at the Council on Foreign Relations. “You’ve seen a lot of movement, and in partisan terms mostly movement on the Democratic side toward Republican positions,” he said.
Even the conservadem corporatists have no good reason to do this. They can serve their Galtish masters freely by demanding comprehensive reform that ensures undocumented workers are treated humanely. And any Democrats who likes to think he or she has a conscience can certainly hold the line. There is only one reason to do this and it’s purely political and it’s even wrong on that basis: if the Democrats actually think they are going to be able to compete for the nativist/racist vote with this kind of thing they are very sadly mistaken. The teabaggers aren’t ever going to vote for the party with the Kenyan Muslim president and the San Francisco feminazi speaker of the House.
On the other hand, they might have been able to make a case to Republican Latinos that their interests are better served by a party that doesn’t think it’s a good idea to stop every dark skinned person on the street to determine whether or not they are Real Americans. Unfortunately, Democrats are running like rats deserting a sinking ship on this issue, so the fastest growing demographic in the country doesn’t have any obvious place to go. Well played.
Update: Did I say that Democrats had bad timing?
New Jersey Would Gain $2 Billion From Offshore Drilling
From Chris Prandoni on Friday, April 30, 2010 9:30 AM“All of the benefits associated with offshore drilling, increased economic output, well-paying jobs, new tax revenue, remain locked up in America’s oil reserves. Although a majority of Americans support offshore development, the Obama administration has put forth a plan that inhibits New Jersey’s economic recovery and ability to grow over the coming years,” said Grover Norquist, President Americans for Tax Reform.
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Last Call For Barenaked Ladies
by digby
May is a big month for primaries and this week is the kick-off with two tomorrow, one in North Carolina and one in Ohio. (Blue America has endorsed Elaine Marshall in the first and Jennifer Brunner in the second.)
Howie gives the lowdown these two races on the eve of the elections:
North Carolina is likely to result in a runoff, although Elaine Marshall, despite Menendez’s attempt to decide this race for North Carolina voters, is ahead. National Democrats have starved Jennifer Brunner’s campaign of cash. She’s getting huge grassroots support, but Menendez has managed to shut off all institutional money from her campaign, making it very difficult to get out her inspiring message. In North Carolina grassroots organizations like DFA and local bloggers like Pam Spaulding have endorsed Marshall. Meanwhile the clueless and divisive Menendez couldn’t be doing a better job at re-electing Burr if he were on the GOP payroll. Last Sunday, despite the noises from Inside the Beltway, the Charlotte Observer also endorsed Marshall...
The Ohio blogosphere has largely gotten behind Jennifer Brunner both because she is more progressive on the issues and because she is far more electable in a general. And women’s organizations feel very strongly about this race and about the DSCC’s very strange positioning.
Here’s Brunner:
Howie also issued a last call for our Blue America May primary contest
Blue America is running a kind of contest around the five May Senate primaries by which we’re giving away an RIAA-certfied multi-platinum Barenaked Ladies award disc to the campaign that gets the most votes on this page, a vote being defined as a campaign contribution of at least one dollar. Front-runners have been Jack Conway of Kentucky and Bill Halter of Arkansas. The contest ends at midnight today, so there’s still an opportunity to vote. Please do.
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Two Simple Answers To Two Simple Questions
by tristero
…I’d like to end with the rhetorical question of whether, given the extent to which the US rightwing movement relies on the deliberate promotion of ignorance, anyone, regardless of their philosophical views on conservatism, libertarianism and so on, can associate with this movement and maintain any intellectual integrity.
No.
The converse question for the left, is whether there is any benefit in engaging intellectually with anyone who is, in the end, promoting ignorance and dishonesty by virtue of their affiliations.
No.
The Bad, The Worst And The Ugliest
by digby
Cumberland Advisors
Oil Slickonomics
May 2, 2010
“At its current leak rate of 5,000 barrels of oil per day, the spill could surpass the size of the 1969 Santa Barbara spill by next week. If the leak cannot be contained, it could exceed the size of the 1989 Exxon Valdez oil spill off Alaska by mid June.” Paul Harrison, Environmental Defense FundThree scenarios lie ahead. They rank as bad, worse, and ugliest (the latter being catastrophic and unprecedented). There is no “good” here.
The Bad.
Containment chambers are put in place and they catch the outflow from the three ruptures that are currently pouring 200,000 gallons of oil into the Gulf every day. If this works, it will take until June to complete. The chambers are 30-foot-high steel configurations that must be placed on the ocean floor at a depth of one mile. This has never been done before. If early containment is successful, the damages from this accident will be in the tens of billions. The cleanup will take years. The economic impact will be in the five states that have frontal coastline on the Gulf of Mexico: Texas, Louisiana, Mississippi, Alabama, and Florida.
The Worse.
The containment attempts fail and oil spews for months, until a new well can successfully be drilled to a depth of 13000 feet below the 5000-foot-deep ocean floor, and then concrete and mud are injected into the existing ruptured well until it is successfully closed and sealed. Work on this approach is already commencing. Timeframe for success is at least three months. Note the new well will have to come within about 20 feet of the existing point where the original well enters the reservoir at a distance of 3.5 miles from the surface drilling rig. Damages by this time may be measured in the hundreds of billions. Cleanup will take many, many years. Tourism, fishing, all related industries may be fundamentally changed for as much as a generation. Spread to Mexico and other Gulf geography is possible.
The Ugliest.
This spew stoppage takes longer to reach a full closure; the subsequent cleanup may take a decade. The Gulf becomes a damaged sea for a generation. The oil slick leaks beyond the western Florida coast, enters the Gulfstream and reaches the eastern coast of the United States and beyond. Use your imagination for the rest of the damage. Monetary cost is now measured in the many hundreds of billions of dollars.
Some thoughts about markets and impacts.
Usually, the first estimates in any crises are too low. That is true here. 1000 barrels a day is now 5000, and some estimates of spillage are trending higher. No one knows exactly. The containment and boom mechanism is subject to weather cooperation as we can see this weekend. Soon we are entering the hurricane season. The thoughts of a storm stirring up the Gulf, hampering any cleanup or remediation drilling effort and creating a huge 10,000 square mile black stew is frightening to every professional in the business.
This will be a financial calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
Thousands of small and independent businesses as well as larger public companies in tourism are hurt here. This is not just about the source of half the nation’s shrimp. That is already a casualty. It’s also about the bank loans for the $200,000 shrimp boat and the house the boat owner and/or his employees live in and the fact that this shock piles on a fragile financial system that is trying to recover from a three-year financial crisis. Case study, my fishing guide in the Everglades splits his time between Florida and Louisiana. His May bookings in LA have cancelled. His colleagues lost theirs and their lodge will be empty. They are busy trying to find work in the clean up. For him, his wife and eleven year old daughter, his $600 a day guide fees just went “poof”. When I asked him if he thought he had a legal claim on BP, he said he hadn’t thought about it yet but it gave him pause. As we suggested above, the $12.5 billion loss estimate is only a starter.
Federal deficit spending will certainly rise by tens, and maybe hundreds, of billions as emergency appropriations are directed at larger and larger efforts to clean up this mess. At the same time, federal and state revenues tied to Gulf-region businesses will fall. My colleague John Mousseau will be discussing the impact on state and local government debt in a separate research commentary.
We expect that the Federal Reserve will extend the timeframe that we have come to know as the “extended period” in the making of its monetary policy. We do not expect the Fed to raise interest rates at all for the rest of this year, and maybe well into next year. We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A “double-dip” recession probably has been made more likely by this tragedy.
We are at the highest level of cash in our US stock accounts that we have seen in over a year and a half. We expect a market correction will present entry points at lower stock prices. We have exited the financial sectors, including the insurance ETF. We now worry about the banks that are exposed. We do not own the major oil stocks now. Some of them face enormous liability payments.
There is a silver lining, although the fellow who wrote this doesn’t see it that way:
In addition, the offshore-drilling energy sector will face much-increased and more costly regulation. Deepwater and all offshore drilling in the US has been set back for a generation, just as Three Mile Island set back nuclear power development for decades. No politician can win an election now with a permissive view on drilling. Sarah Palin’s “Drill, baby, drill” now condemns her to political marginalization. Off shore drilling has lurched to the top of the political agenda in this November’s election cycle.
The funny thing is that they weren’t winning elections with a permissive view on drilling before this. It’s just that every 20 years or so, the president proclaims that some genius has invented technology that makes oil unspillable, opens up drilling somewhere and then a huge accident happens. In 1969 it was Santa Barbara, 1989 it was Valdez and now this. And in between accidents everyone forgets and decides that driving anything less than a behemoth gashog is unAmerican.
So my financial advice is to wait a couple of weeks and then buy BP. If history is any guide it’s going to make a very smart comeback in no time.
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Taking Care Of Them
by digby
Ron Kirkland, George Flinn and Randy Smith criticized President Obama for trying to lift the ban, arguing that it would add “unnecessary” stress the military. Then, Kirkland re-called how gay servicemembers were treated during his time in the military:
Kirkland, a Vietnam veteran, said of his time in the military: “I can tell you if there were any homosexuals in that group, they were taken care of in ways I can’t describe to you.” Smith, who served in the first Iraqi war, added: “I definitely wouldn’t want to share a shower with a homosexual. We took care of that kind of stuff, just like (Kirkland) said.”
It sounds to me like this sadistic creep wishes someone would “take care of him” like he “took care of” others.
When asked about his comments later, he said he was just joking and that he was really worried that a “bad element” was going to come into the military if don’t ask don’t tell is lifted which will make the poor gays very vulnerable.
Did I mention that both of the men who said this crap aren’t old Birchers remembering their glory days in WWII? They’re running for congress. And they made these remarks to the allegedly socially tolerant tea party.
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The Most Memorable Nerdprom Moment
by digby
… sure didn’t happen last night. It was this:
From what I saw of the highlights today, last night was a low point. But I can’t let the event pass without mentioning that the google search that most often leads to my blog is for this post about the White House Correspondents dinner in 2005. If you click through you’ll understand why.
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Times Square
by digby
I wonder if anyone other than I flashed on the Rachel Maddow documentary about Tim McVeigh and Oklahoma City the other night when they read about this bomb? Obviously this couldn’t have done the same kind of damage, but the thing about smoke filling up the cab is right out of McVeigh’s rather unbelievable story of what happened when he drove up to the Murrah Federal Building with his truck full of fertilizer and explosives. It’s probably a total coincidence, but the first thing I thought of when I heard it described was that strange story.
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