Obama spins BP spill, and we get to pay

Below is a crosspost from my health and environmental blog, where I post infrequently.

I did see Obama's speech last night, and found it wholly inadequate. He failed to mention that BP was denying responders the use of respirators. Apparently people along the coast are experience dizziness, headaches, and other issues from the leak and, quite possibly, the toxic dispersants as well.

Last night, Obama said nothing of BP's chronic understatement of the size of the leak. The number I've been able to translate from gallons (yes, the size of the leak is being obfuscated by the use of barrels instead of gallons) is about 50,000 barrels a day (calculated from 42 gallons/barrel and an estimated 2 million gallons/day.) A far cry from the 5,000 we were told were leaking by BP for months. The discrepancy speaks legions about BP's credibility, and Obama's as well.

As I say in the article below, I guess it was the size of BP's surface tankers collecting the oil that gave away the true size of the spill. Nothing was volunteered. And now we can only guess at the size of undersea plumes, whose existence BP has denied.

Now today, after negotiating with BP for four hours, Obama said a $20 billion fund will be set up. He neglected to mention when. It was only by digging through the details later that I saw this in an AP article:

"Svanberg announced the company would not pay dividends to shareholders for the rest of the year, including one scheduled for June 21 totaling about $2.6 billion. The company will make initial payments into the escrow fund of $3 billion this summer and $2 billion in the fall, followed by $1.25 billion per quarter until the $20 billion figure is reached."

Excuse me? Where's the beef? The first installment hasn't yet arrived. And what are the poor people on the Gulf going to do should BP go bankrupt? With government serving the corporate interest (above even its own?) we really are on our own.

Begin post:

I'm writing this before President Obama goes before a nationwide audience this evening. I'm not sure if he'll characterize the response to the Deepwater spill as "his own." No one, it would seem, wants to take ownership of the response. The spill is an economic, environmental, and political liability. It may now be such a huge political problem, now that it hasn't been dealt with in a forthright manner.

BP has been actively trying to cover up the disaster. Obviously, they have the most to lose by admitting that the spill is out of control. For weeks, they refused to consider that the leak was anything more than 5,000 barrels. Fedgov has--and is, depending on what Obama will actually do differently--demurred control over the clean-up to BP, a questionable act considering how BP's failure to follow safety rules and regulations led to the crisis.

We've only recently been able to guess at the size of the leak. BP's damage control efforts have been more about controlling public relations and the release of negative information than stopping the leak. The FAA has obliged by preventing overflights of the spill area by media personnel. Just as perception management overshadows the political leadership, so too does BP try and obfuscate damaging press and deflect criticism to prop up its sagging public image (limiting lawsuits is another goal.)

As hard as Obama might try to sound tonight, it's a safe bet what he does won't be anywhere as aggressive. It's a recurring theme: talk tough and do little to nothing. How much more bad leadership can America take? As a defender of the environment, I guess I might take some consolidation in the carbon taxes he'll likely try to sell. In my opinion, trying to take advantage of the spill is grossly immoral, even if it points the country in a different direction.

Fact is, the buck stops at the President's desk. If for whatever reason he can't get BP to stop the leak(s ?), he needs to do it himself. Yet he's said he lacks the resources to stop it. Can we honestly believe that? With all those trillions spent on our war machine, I can't believe we can't put anything out there on the water. During an oil spill off Saudi Arabia, huge tankers vacuumed up the oily water. Why can't we at least try to do something like that? Deepwater will likely do more damage to the US--economically--than any terror strike could have. Yet we haven't anticipated it, and now must depend on the polluter's capability to respond, which so far now eight weeks later, has been...surprise...inadequate.

We could talk forever about how the spill could have been better dealt with. We could also talk in volumes about how the spill could have been avoided. I'm sure the mainstream media will cover these valuable issues, judging from the scale of the disaster. So in this respect, don't expect me to repeat what's regurgitated but rather spotlight the less published secrets and schemes meant to mislead the public and cover up the extensive relationship between policymakers and Washington and BP.

Now Obama might say anything tonight. And some people will believe him, no matter what he says. It's often easier to believe that something will be done than see it done. Obama's time in office can be characterized as lip service to the ideal, and doing the complete opposite.

I could list many examples of what Obama said on the campaign trail he didn't do in office. The glowing one, of course, is the failure to draw down U.S. forces in Iraq according to the promised timeframe. Escalating the Afghan war is something Obama never said he would not do, however.

As a side note, I found it amusing that a report just came out indicating Afghanistan had $1 trillion in minerals and natural resources. Of course, this bounty is the reason our occupation has lasted so long--a point I made on my blog years ago. If we won, we'd get to go home. A trillion dollars is a pretty good motive to find terrorists behind every bush, and press an unworkable plan into an unwinnable occupation. And meanwhile the Military Security Complex fattens itself on the blood of innocents and young Americans caste into the fray.

* * *

According to the Los Angeles Times, Rahm Emmanuel, Obama's chief of staff, was staying for five years in a Washington, D.C. townhouse owned by a BP adviser. Emmanuel has been known to say that no disaster should go to waste. This fits exactly with Naomi's Klein's concept of disaster capitalism, where corporation profit from inadequate enforcement except, of course, instead of greedy corporations it's crass political opportunism.

Money rules the Washington establishment, and the consensus in Washington is that corporations pay better than serving the public interest, at least as long as illusion that the public is being represented can be preserved. This is why the art form of perception management has latched onto the Washington establishment--feeding the myth that politicians are still serving their constituencies.

Maybe the unholy alliance between the corporate and political worlds has been at work for longer than we've realized. Wherever we now stand in the historical cycle--whether at some new low point or somewhere along a slippery, downward slope--it's obvious deft management of the media is seen as more than valuable than actual leadership. Preserving the impression that something is being done ameliorates the public's rightful skepticism. Meanwhile, deals in the back rooms and corridors of power allow the wealthy and corporations to avoid accountability.

Regulations are much criticized despite the fact they were greatly eviscerated prior to the financial crisis (see the testimony of Texas professor James Galbraith here.) Rather than presenting an obstacle to growth, regulations--if enforced--protect the markets. The trillions of equity (I've heard $10 trillion real estate and another $10 trillion in equity values) that disappeared didn't have to vanish. Yet the companies who kept pushing risky bets in the Wall Street casino gained the most from short-sighted speculation, exactly the thing Glass-Steagal tried to prevent prior to its dismantling by Congress.

So now, with all that oil bursting from the busted, under-maintained well in the Gulf, it's clear that a lack of enforcement is to blame. Self-regulation, a term that came into existence during the get-rich 1980s, simply doesn't work. The forces of greed are simply too strong in the corporate enterprise. Profit-taking is simply too short-term an approach to consider longer term consequences, even if they include self-destruction. British Petroleum stands now on that precipice. And if it'd go under, many investors and stakeholders would pay the price.

Those that profit the most in the short-term aren't likely to hang around once their mistakes impact the companies they once led. The executives who should have monitored the company's compliance will jet away and land in exclusive retirement retreats on golden parachutes.

We could blame greed for this--or the structure of corporate governance. All too often corporate boards rubber stamp the decisions of upper management. Shareholders rarely question the ethics or morality of board decisions, especially in regard to compensation committees. All too easy it is for board members to consent to huge stock options packages for executives, based on quarterly performance, rather than measure performance against longer term objectives.

The environment is a stakeholder in all corporations. Rather than look at the earth as a passive backdrop, a source of raw materials, to be plundered 'til exhaustion, all corporations must look at sustainability. Implementing sustainable practices requires full commitment by shareholders and corporate Board members who perform the invaluable function of holding executive management to account.

Like auditors, independent outsiders need to observe corporate practices and report on them. Most importantly, regulatory lapses must be corrected. If government regulators have recurring issues with a company, or its methods, the shareholders and directors need to take action. The BP case clearly shows the consequences of non-monitoring. And preventable are the effects if the causes are obvious for all to see (except perhaps the executives who are trying to squeeze maximum profit out of their operations by undercutting safety.)

Well, if BP should go under, I think the environment will have its say. Again, BP's misconduct wasn't isolated or random but rather sustained and serious. The company had been put on probation--which I said in my last post is an utterly meaningless proposition that obviously did nothing to push the company in to compliance.

Another huge lesson is for government. When regulators fail their job--as Galbraith's testimony linked above explains--everyone loses. Not only the offending company--the Enron, the Worldcomm, the BP--but so many people who had done nothing wrong. The lesson lies in government doing its job, and walls being put between the regulators and regulated.

Enough said. At this time we don't need lessons, we need to prevent the tragedy from worsening. Now isn't the time for opportunism, or even recriminations. It's time to stop the spill. If Obama can't do that, he'll almost certainly be tossed aside in 2012.

Obama appears to be having a hard time getting BP to pay all its claims. This shouldn't be a surprise. If you read my post on blogspot last month, you'd have been reminded of how long it took Exxon to pay the fisherman in Prince William Sound, and how inadequate their compensatory damages had been as awarded by a corporate-friendly Supreme Court some twenty years later.

Now if Obama can only spend our money--or our children's children's to be more accurate, as it's all borrowed--to clean up the spill, I'd say fedgov has become utterly toothless or so wholly beholden to BP that it socializes the costs of the companies pollution. Either alternative is unacceptable. We do know the taxes on oil drilling will go up, presumably to pay for future spills. Guess who gets to pay for the taxes? You. So because fedgov (especially the notorious M.M.S.) failed to regulate, and BP didn't self-regulate, you pay.

Unless of course you live on the Gulf, the largest impact will be higher energy costs. If Obama chooses to exploit the disaster by urging a carbon tax scheme, it'll provide a dark motive for not handling the response, or letting BP bungle it. Another impact: shipping into and out of the Port of New Orleans will be more expensive, and delayed, resulting in higher prices for some kinds of imports throughout the country, and lower prices for exports like grains from the Midwest which go through New Orleans, typically via barge down the Mississippi.

Under-regulated, BP pollutes. The corporate state capitalizes on the failure. And we get to pay, higher prices for gas and energy, as well as some imports. The scheme encourages wrong-doing and punishes the innocent unless of course BP really does go under, or the Supreme Court reverses its corporate-friendly bias and uncaps damage limits. Neither scenario--really the same issue, liability--is likely to occur. BP will be allowed to go on, and the costs in some way limited in order to protect the corporation.

~End post

Gulf spill shows scope of corporate control

BP manages its own leak with minimal interference from Washington. In a strained news conference--his first in 10 months--Obama did assert control but it just made the disaster seem to be less under control. The lack of an assertive federal response has really exposed just how much control corporations have over our government. Conspiracy theories will abound, as they have since 9/11.

The money connection is at the root of our government's subservience to industry. The corruption floats to the top. As we saw in the mortgage crisis, the worst culprit in the Deepwater fiasco is the company with the most influence in the White House. BP gave more money to Barry Soetoro--now known as Mr. President--than any other oil concern. Goldman Sachs was the biggest donor among financial entities--look at the preferential treatment they received.

And now with the Gulf spill, we see the payback, just like the response to the mortgage crisis.

As I've been saying for years, campaign contributions yield reciprocal benefits, a quid pro quo in which corporations influence and even set policy. This special treatment is most evident in times of crisis, which seem these days to regularly emerge from a lack of enforcement.

We're starting to see inconsistencies in the way the Deepwater spill is being managed. In Washington, the head of a government agency a thousand miles from the disaster recently claimed, alongside BP executives, that there were no plumes of oil beneath the surface. Evidence of a cover-up? Perhaps. See this ABC News video on a visit to a federal research boat that exposed the oil plumes here.

There's more to plume denial than trying to massage public perception about the scale of the disaster. There's the very strong motive of minimizing the scale of the disaster in an effort to protect the President's inadequate response. The agenda--make the response seem less bungled if the unfixed problems are...well...disappeared.

Then there's use of the toxic dispersants. Apparently huge quantities of less toxic dispersants were waiting dockside, ready to be used weeks ago. One possible motive for the dispersants is to mask the size of the spill by keeping it beneath the surface. Apparently the dispersants do keep the oil from rising to the top. In a technical process I can't fully explain, dispersants reduce the size of oil globs to tiny proportions, almost atomizing them. Unable to combine with gases, they tend to float suspended below the surface until, slowly, very slowly they eventually come up.

The whole bungling of the choice of dispersants sends echoes of Katrina, in which the government's response was too late and mismanaged. Rather than facilitate the best possible deployment of relief and rescue resources, FEMA charged in and assumed control. Boats and rescue teams like that sent from the State of Florida were forced to wait hours before getting the go-ahead. Salvation Army trucks were stopped. The list of mistakes seems so vast and incompetent that conspiracy theories about FEMA's real intentions can't help but arise. If we really in an age of conspiracies, the Deepwater leak will undoubtedly spawn endless theories about why our government did--or didn't do--what it should have.

I guess if the oil doesn't come up as quickly, the American people will be less concerned about the failure to more aggressively interdict the spill. If on the other hand, all the oil were to gush into the gulf current, then go up the Keys and east coast of Florida, we'll then there'd be a panicked call for stopping all drilling. Instead we saw approval for a new well head coming this week, despite Obama's hollow moratorium on new drilling. It's like a Bush-era redux: say one thing in public and do the exact opposite in private.

Another serious complication in the effort to stop the gusher is BP's likely intent to continue to extract oil from the well. This is a goal that the mainstream media hasn't advanced; re-starting the well, or at least drawing as much oil from the leak is likely seen as a small win for the company's bottom line, especially if there are millions of barrels still down there. Sure, BP would just as well have the leak stop, if for no other reason than the clean-up costs (delayed and minimized by the legal process as they likely will be.) Then again, a company that's participated in criminal behaviors will likely see the environmental cost as part of doing business.

At this time, BP was actually on probation for its failure to maintain a Texas refinery where numerous safety violations were reported prior to an explosion in 2005 that killed fifteen. It's also responsible for numerous violations and leaks at its Prudhoe Bay operations in Alaska. [Sorry Supreme Court, I guess the concept of putting a corporate person on probation doesn't quite work out here, unless of course the probation will land the poor corporate person in bigger trouble for Deepwater than they would have otherwise faced, an unlikely event.]

Now as for the Obama regime, the goal is to Cover-Its-Ass. I think passing the buck like it did is only a signal of weakness, and subservience to the corporate interest. The inadequate response speaks legions to the millions of people who trusted Obama to run government more efficiently. In addition to being a disappointment, I'm thinking the regime will be gone in 2012. Republicans might win big, but in our duopoly, this means that rather than bring change, the Republicans will screw things up, albeit in a different way.

Fertile ground for conspiracy theories

In my conspiratorial mindset, who benefits (qui bono) is a powerful means of connecting the motive with the end result. Like the Exxon Valdez, it's likely that BP will delay and fiddle on paying claims (of course they say that all claims will be honored etc. but nothing is in writing.) Good luck getting those years of wages back like the fisherman in Prince William Sound. So BP wants to reduce the perception that the disaster is as big as it really is, a point echoed in the somewhat dismissive comments about the leak by BP CEO Tony Hayward early on.

Obama's administration has responded poorly to the crisis. Not one to pass up the chance at a conspiracy behind the ineptitude, I'll venture that the inadequate response is somehow designed to achieve some policy goal for the administration. With cap and trade legislation before Congress, one can't help but wonder if the globs of oil which will be washing up are simply the product of error. Just like 9-11, we're caught guessing at motives behind the inadequate response.

The animated series South Park explained the conspiratorial inclinations of Americans quite well in an episode several years back. The idea that 9-11 occurred as an intentional plan makes the shock and horror of the incident easier to understand, the story line went. So stunned we're we the American public, that we had to believe that our government must have known. So self-confident are we that our government can prevent an attack of that magnitude, that we collectively assume our government must have known, as it surely could have stopped it.

As much as I like the reasoning, and as reasonable as the logic behind dismissing 9-11 conspiracy theories might sound, I'm simply not convinced. Maybe I'm too confident in our government's ability to sniff out the terror plot. Or maybe there are facts which I can't dismiss, and that lingering doubts about the Official Explanation make me prone to conspiracy theories.

Role of a corporate media

Without the oil spill, or mortgage crisis, the public is less aware of how tightly government and corporate interests are intertwined, due largely to a corporatized media. It takes a Deepwater, or a coal mine disaster, to prove just how total this corruption is, and how absolute.

The masses are also conditioned by the feeble corporate media establishment. BP advertises on many of these networks. We know media consolation brought down many investigatory responsibilities traditionally assigned to media companies. As Rupert Murdoch bought network after network, independent journalism declined and has been replaced by a heavily commercialized, bland, celebrity-centric version with dumbed-down content.

Newspapers and magazines are more about selling books and promoting movies than challenging prevailing assumptions. Without a diligent media devoted to unbiased coverage, we've actually lost the ability to monitor the actions of corporations. No where was the message elevated over content more than during Barack Obama's presidential campaign. The people were sold on hope and possibility. The reality was different. The night after his election, before even assuming office, Barack Obama instructed then-Secretary of the Treasury Hank Paulson to give Citigroup a $308 billion loan, according to Matt Taibbi.

Gullible people are prone to be surprised when the truth gets out--if it gets out. Most of the time, Americans are too distracted and consumed by the rigors of everyday life to devout much time to news, and the invariably dull but precious process of guarding our democracy. Our corporate media spares them the inconvenience. Easy it is for most people to assume there's nothing they can do, that they must accept what their government tells them to accept. As we saw in Hitler's Germany, even reasonable and generally good-natured peoples can be easily manipulated.

In the Nazi regime, there was this important tool devised to manage the masses. Hitler said that if people were inclined to disbelieve that their government would do something so obviously against the people, they'd disbelieve anything, so the more outlandish the conduct, the better the disguise. In proud nations, no one wants to think that their sense of nationalism is misplaced. So in some form of mass hypnosis we simply deprogram our minds to the possibility that our government could be behind something truly evil.

I've commented that the US is lucky no Hitler has risen to exploit the ignorance of the masses. Hitler used blind faith in nationalism and militarism to convince Germans of the dangers posed by internal and external enemies. With our military overcommitted in two open-ended wars, and our budget bursting with tax receipts dropping, the low road to stirring nationalist ideals is a bust, a weed-covered, muddy morass.

So the next trigger that the government will turn to will likely be the need to protect our shores, not from corporation who pose great danger, but from dissidents and anti-government types--whoever poses a threat not to Amerika but the Establishment.

Public fatigue in the terror war has already set in. Perhaps the fear button won't be enough to induce the public into a frenzy. Just like the boy who called wolf, our anti-terror policies have devolved to the point we call any of our enemies al Qaeda. Our drones rain down missiles on Pakistanis.

I've been hammering on the government's propaganda in Iraq and Afghanistan and I won't stop now. As long as the corporate news is content to regurgitate official news releases as original reporting, the quality of the content will be abysmal. I guess we can't blame the American public, as so few have the time or energy to do research on the war, or see if the government's previous goals were reached.

Can our current military achieve the goals set by the politicians? One of the biggest blame-getters for the Vietnam failure were the politicians. Nixon shouldn't have been selecting bombing targets. One important lesson Vietnam gave, and has been forgotten, is that war's are ultimately political exercises. The North Vietnamese may have lost virtually all its engagements against American firepower, but the impact of the perpetual stream of casualties on the domestic population kept growing. After a certain point, no one wanted it to be their child sacrificed in a war without end.

Afghanistan is heating up. We're facing a determined foe in the "graveyard of empires." Fighting an insurgency is a time-consuming and expensive endeavor. As long as we can avoid a draft, and casualties come from volunteers alone, the domestic political impact might be minimized. Still, in time, we'll see stiffening antiwar resistance.

It's just that the impact--especially the fiscal one--is severely delayed. It wasn't until 1971 or so that Nixon abandoned the gold standard. Any student of economic history knows what happened in the Seventies.

Tough sailing ahead

We'll people, that's where we're headed: back to the 70's and stagflation. Slow growth (once inflation is factored out) is a certainty. We're seeing declining tax receipts, which means government spending will become increasingly monetized--printed out of thin air. The Federal Reserve banks are destined to profit as the interest on the national debt--which the Treasury must market through the Fed--grows. Interest rates will rise into the double digits.

Our nation's economy is in a state of decline. The only way we can recuperate appears to be by our government's borrowing money, then spending it on census workers. As people like Peter Schiff have been saying, the government's spending has supplanted private sector growth, and is in fact delaying and weakening a potential recovery.

Our problems are also demographic. Baby Boomers dominate the agenda. Aging, they're inclined to amass as much personal wealth as possible in the time they have left. This doesn't bode well for future government outlays on medical care and social security.

As much respect I have for Baby Boomer's devotion to work, I believe the time has come to replace them yet they are obviously irreplaceable. Still, to build an economy beyond the Boomer years, we'll need to invest massively into younger people, something that really isn't happening as education spending falls. With there vast skills, Baby Boomers mentoring younger people in the workforce is not only crucial, but increasingly urgent.

Down on dollar

As you can suspect, all this doesn't bode well for the value of the dollar. I've been watching the increasingly propagandized, Larry Kudlow-dominated CNBC rant on about "troubles in Europe." What a crock! Greece compromises a tiny portion of the European economy. The Euro is down somewhat but this is hardly a contagion. And of course American traders love to introduce the idea that the US dollar is the safer bet.

I'm not predicting that Europe will be a haven of fiscal discipline, or that their currency will maintain its value-after all it's a fiat currency like the dollar. the whole point of the whole dollar vs. Euro exercise is to obfuscate the face that our spending is completely out of control. And the biggest reason for overspending--and the easiest way to rectify the fiscal deficit--is to stop spending on senseless wars. Yet we can't and won't. And I think the Afghans, like the Vietnamese, have something to do with that. Better that we leave now than blow our wad. If we are in fact competing with Europe...and Asia for that matter...we need to realize that those governments don't have such a unnecessary burden of military spending to deal with. So if any currency is destined to collapse, it'll be the dollar first.

I'm not an investment adviser. I have nothing invested in dollars at the present. I like the Norwegian krone, and Singapore dollar. Swiss francs interest me as well--I know there's an ETF called FXF tracking that currency and it's down.

I wouldn't expect these foreign markets to do especially well if our economy tanks. Nor would Europe's. However, it's my opinion that the relative strengths of those currencies, and their sounder fiscal practices, will make them attractive compared to the over-militarized policies which will invariably drain the value of the dollar.

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