Deepwater disaster could have been prevented

As I write a river of oil blows towards the Gulf coast. Details of the precipitating event have emerged. Blame is squarely on BP, British Petroleum.

Victims of the tragedy include fisherman--recreational and commercial. I'm sure the economic impact of the Deepwater Horizon oil rig-turned gusher will be far worse than predicted.

The worst part of this tragedy is that the well continues to leak. Huge amounts of oil remain unseen, under the surface. Considering the well's depth, at some 5,000 feet, an emergency operation remains challenging and an easy fix elusive. The wellhead is on the ocean's floor and spewing out an indeterminate amount of oil.

Part of the crisis response effort has been to bring as many parties as possible on board. BP's chief of operations said any help from anyone would be accepted. This methodology leaves me wondering if the response has been as dynamic and robust as needed--shouldn't BP be more specific than accepting all help? I mean, I would hope BP has a planned response more detailed than just throwing more resources at it, like the miles of boon that have been laid in a feeble attempt to stem the tide.

Looking back at Katrina, the Deepwater disaster sends echoes of government inaction. All the parties involved in the response undoubtedly don't want to appear to be doing nothing. So official news briefings and perception management try to appear responsive and robust, whether or not they actually are. The result is that the parties responsible for the response try to offer counter-directional spin in the mainstream media--that they're doing something, which is evidence of an agenda other than to tell the public the unbiased, whole truth, no matter how ugly.

Oddly, many news networks devoted constant air time to a serious but failed car bomb attack at Time Square. Conspiracists will no doubt be quickly guessing that the one had something to do with the other. In this sense the Internet hosts in hyper-time huge numbers of doubters of the Official Explanation: a growing crowd of wired non-conformists eager to confront media myths, spin, and blackouts.

Coordination between the Coast Guard, Department of Homeland Security, and Department of the Interior involves massive layers of government bureaucracy. All three organs have their own heads, and while interagency communication protocols may make coordination easier, there are simply too many decision-makers to react quickly enough to a tragedy of this size.

We don't know if a single head of the operation would be better or not. Right now a Coast Guard admiral is at the head of a multi-pronged response that also includes BP and Transocean, the rig operator.

Issues of whether or not the response is adequate or expeditious can certainly wait. In the meantime we have a New Orleans Katrina-type environment evolving. The poor, mostly black people stuck in the Superdome and New Orleans Convention Center have been caught on television, demanding rescue. Expect this time instead of people, there are birds who stand to be coated in oil--an event which will certainly remind Americans of the Exxon Valdez tragedy in 1989.

In that episode, thousands of Alaskan salmon fisherman were made unemployed for years. The case reached the Supreme Court only a few years ago. Over the years, the Court had turned largely sympathetic to the interests of Big Oil and ruled against any punitive damages. The legal case did foretell a sequence of what might be called "pro-business" rulings, the latest of which has been to give corporations legal standing as corporations--a completely ridiculous notion that I attack on the second page of my last article at OpEdNews.com.

However unsatisfying the final ruling on the Exxon Valdez judgement, the Courts also took too long to resolve the case. The delay came as a direct result of Exxon's massive legal effort to delay a settlement, based on the premise that the interest on the settlement was more valuable to the company than a final adjudication. So the case went on, with no side but rather the lawyers winning.

I pity the poor fisherman and their families in the Gulf who rely on clean waters for their livelihood. The tragedy will expand geometrically if the oil flow isn't curtailed, which appears to be a difficult and time-consuming task. Estimates for the size of the oil deposit vary. If something isn't done to stop the flow, we could be facing one of the worst environmental tragedies to hit our country.

The emerging economic impact will be two-fold. First, there will be the loss of jobs in fisheries, and other professions dependent on the seas. And the loss of income will reverberate through the communities that live the Gulf. We might see a wave of environmental refugees forced northward, unemployed and miserable, bearing little money and down on their luck. This would be like the days after Katrina, where an exodus out of the city left natives of New Orleans marooned far from their city.

Then there will be a drop in tourism due to the fouled beaches. The tourist impact will be the largest fiscal cost. I heard on CNN that Walton County, Florida is projecting to experience as much as a $1 billion loss in economic activity. If one county faces that kind of loss, the entire region--which compromises some of the nicest beaches in America, could face economic devastation.

The impact of this tragedy will last for years. For as long as oil plagues the water, the ecosystem will suffer and the business that depend on it, too. Despite modern technology, and frequent urging to "drill, baby, drill", the economic benefits of domestic drilling will be overshadowed by the consequences of potential spills.

If domestic drilling were a solution to our energy dependency--a notion with which I disagree--then the Deepwater incident should be cause for real alarm. Incidentally, it's not the blow to oil production that a moratorium on drilling presents, but rather the potential impact of spills on affected businesses and consumers. Calculated into the drill-at-all cost "solution" must be the direct costs of pollution and spills, which will easily eclipse the value of the oil itself.

For BP, the cleanup appears to be at this point simply be the "cost of doing business." This sounds a lot like Massey's energy recent mine explosion, which came as the result of numerous safety violations.

If BP, like Massey, was simply ignoring the infractions to save money on correcting the underlying problems, then this tragedy could have been prevented. If regulations were not enforced, then our government bears much responsibility.

No matter what the eventual court settlement, or how long it takes, BP will likely avoid many of the damages due to sympathetic judges on the Supreme Court. As long as rulings like that which granted corporate personage continue to emanate forth from On High, it's unlikely that polluters will face the full fiscal ramifications of their regulatory non-compliance.

You can see a clear pattern developing where the government fails to enforce regulations, which may in the short term benefit corporate constituents. The Massey and BP incidents show--alongside the far-bigger financial bailout--just how close government and the corporate interest have conjoined. Ironically, the Deepwater incident will reveal the real economic cost of not complying with safety standards and regulatory compliance.

Without a viable third estate--an unbiased and unafraid media--it's unlikely corporations will be held accountable. Worse, the lack of investigative journalism--for fear of alienating advertisers--will cultivate an attitude of defiance among the regulated. The lack of negative consequences will encourage potential polluters and companies intent on exploiting their influence and the lack of regulatory enforcement. Maybe the hot to BP's stock price will be sufficient incentive to avoid safety errors of this magnitude. Or perhaps not, particularly if BP has the benefit of sympathetic courts.

In its Texas refinery fire a few months back, BP showed itself to be the kind of company that shirks its regulatory responsibilities. In the Deepwater incident, it's joined by Transocean, a company about which I know little, and the infamous Halliburton, a company formerly led by Dick Cheney, who held approximately two million shares of company stock while serving as Vice President. Halliburton, by the way, had its stock price climb over 200% as a result of the decision to invade and occupy Iraq. It's been accused of shoddy construction, illicit deals, and a myriad of other ethical violations in Iraq.

So should we be surprised that a corruption of the public interest precedes a environmental catastrophe? Of course not. As much as the Republicans bang away against regulation, a major cause for the worst economic events of the recent past can be directly traced to inadequate enforcement by federal agencies.

The Minerals Mining Services is a branch of the Department of the Interior that was caught accepting hookers and drugs in exchange for favorable treatment of businesses signing leases with the federal government. M.M.S. has offered bargain-basement leasing terms in sweetheart deals to extractive industries. So bad were some of these contracts that they were actually renegotiated after the scandal broke. See this article at propublica.org for more.

All this collusion between big business and the federal government really does show how badly corrupt both have become. The businesses spend to wine and dine in Washington through trade associations and industry groups. Meanwhile, politicians eagerly dispense reciprocal favors, resulting in a perversion of the enforcement scheme, not too unlike the Madoff case. Madoff's daughter actually married a SEC auditor!

One common hallmark of manmade disasters is that the corruption and regulatory breakdown lead to even bigger disasters. Without enforcing the rules on the books--a task which can only fall to government--scandals and disasters will be both worse and more frequent, as were seeing in our society today.

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Beware the Ides of March

The ancient Roman holiday marked the spring equinox, "Ides" means the 15th day. In numerous societies, the spring equinox was an astrological event time known as a time of change, and often brought foreboding.

In the Shakespeare play, Caesar was told to beware the Ides of March. Wikipedia explains:

"On his way to the Theatre of Pompey (where he would be assassinated) Caesar saw the seer and joked 'Well, the Ides of March have come,' to which the seer replied 'Ay, they have come, but they are not gone.'[2]"

This Ides of March have found our country at the cusp of change, and change can bring danger. We have two major initiatives on the verge of approval: health care and financial industry reform. At stake is the solvency of the banks and Wall Street, some would argue, who stand to implode if given to their unrestrained greed. Meanwhile, change in health care could burden every American with rising health care costs, in a system that's twice as expensive as other industrialized democracies, and only ranked 37th.

Yes, change is needed but the questions remain: is the federal government bringing changes that will help the people (and not corporations), and who is deciding the agenda? We can surmise that change will come, but the federal government can't reign in the culture of greed that dominates our financial system. Likewise, any proposed remedies will only be as effective as the intent of their designers, who we must consider highly biased on the side of industry.

Some might say we should abandon regulation, and let the too big to fail to fail, like giant Mastodon too big and slow to last in an age of smaller, more nimble beasts. This is the way of nature after all, so--the economic libertarians might argue--so too should the market be allowed to punish the weaker companies, who are less attractive to investors. Instead, we had an Obama administrations whose first act was to give Citigroup over $300 billion, and GM/GMAC continues to get periodic help.

Yet when our government tries to meddle, it does screw things up. It swings from one end of the regulatory spectrum to the other, from unregulated free market to socialism for the rich. The root of these inadequate solutions springs not from the notion of trying to regulate, but rather not doing it well, or too invasively, too often or not at all. We should strive for moderation in all things, as the Roman dramatist Terence said, and the effectiveness of regulation would be well served by moderation. Moderation, in turn, requires disaffected observers without bias, a condition that modern Washington hardly inspires, and a good dose of enforcement, which entails a willingness to punish.

I read a piece in the New York Times today about the proposed financial industry reforms spearheaded by outgoing Senator Dodd (D-Conn.). You may have heard about Elizabeth Warren's efforts to establish a department of consumer regulation to prevent the kind of abuses that led to the banking crisis of 2008-__. The regulatory body would oversee lenders and financial entities from what I consider "being too greedy."

We've all seen the payday lenders and other bottom-dwellers as we drive through some of the seedier sides of town. It's easy to imagine some loan sharks operating out of those dingy storefronts. We can easily picture some poor sob having to borrow at some usurious rates, to feed his family, being that he has no bank account or credit card and no way to cash his paycheck save at some high cost.

Now the financial services reform bill is a giveaway to industry. It rewards the Fed with control over the new department. The Federal Reserve, by the way, is the same Fed that is widely blamed for creating the conditions that led to the banking crisis in the first place. The Fed is a private entity which serves the wealthiest banks, although the President of the United States does select the Federal Reserve Board President.

Senator Dodd from Connecticut--which not so incidentally happens to be located in one of the nation's wealthiest states where numerous financial companies are headquartered--is retiring. Dodd's departure should herald a split from with the landed elite who get politicians to pass laws or weaken regulation, depending on the status quo or political sentiment in Washington.

We imagine how politicians would act if freed from the chains of serving their richest campaign contributors, like what we often see with lame duck presidents who, for instance, might be prone to go after Israel, a virtually unheard of (until the recent spat) occurrence. But with Dodd, we'll see nothing of the sort. Instead, Dodd is using his disconnection from the electorate to spearhead a flurry of giveaways to the financial industry, chief among them the purported "reform" package he claims to offer. Without any voters to face, he's used his lame duck status not to do his job for voters, but to screw them on behalf of his corporate patrons and the lucrative opportunities awaiting him after his "service."

Naomi Klein's labelled it disaster capitalism, and the practice is now in vogue in Washington. Rather than correct a fundamental wrong--in this case the circumstances identified by Elizabeth Warren as prone to causing systemic risk--the disaster capitalists blame the failure on government regulation. They would say that government has failed fundamentally to protect the citizens and therefore it's the private sector's turn (to screw things up.)

Disaster capitalism works so well in Washington for two reasons. First, Washington is a town that loves its myths. Myths are created for any number of purposes, but first and foremost they are meant to maintain the facade that Washington is still in control over the economy and country.

Once the capitol culture surrounds an issue, and defines it one particular way, no matter what common sense may say, it becomes what is known as the Washington consensus. For what the Washington consensus lacks in truth and justified cause, it makes up for in sheer repetitiveness and dumb loyalty. Nowhere is the evidence of Washington consensus clearer than our Middle East policy, created by and for the benefit of another country, a policy based entirely on the myth that Afghans (none of which were on the planes) should be killed for supporting al Qaeda, when in fact the Taliban offered up OBL twice to us.

I stray, but I do hope you get the point, which is that logic and reason don't mean much to Washington. Once our government gets it in their head to do something, the reasons don't matter. So when a crisis comes, Washington can't help but design some "solution" which they presume will rectify the problem, but we all know just tends to makes things worse.

This takes me to the second reason why disaster capitalism works so well in Washington: the people's representatives no longer represent the people! This acknowledgement may not be news, but it is a central fact that allows our elected representatives to go about rewarding industry for regulatory failure, never mind that it was the elimination of Glass-Steagall, combined with weakened regulatory standards, that led to the spike in systemic risk. As I've written about here before, commodities speculation provided perhaps the best example of what can happen when fractional reserve banking and free money meet, sanctioned by loose (35-to-1) margin requirements.

Back to the political side. Why? Because as you've noticed, no matter how far we get economically, these days prospects for the economy increasingly lie in what the government says we can do, or can't do. It's called the political economy, and it shapes more and more of the real economy.

The broader economy is increasingly subordinate to the political economy. Government is effective in implementing its policies, which when it comes to giveaways to the rich, sweetheart deals with industry, and maintaining the status quo, is miraculously efficient. When it comes to serving the people, however, corruption and ineptitude abound, as Katrina attested to. The people are always the last in line at the trough, and Washington runs quite a trough. To make matters worse, corporations now control a gravy train that covers the entire political lifecycle, including even golden parachutes for Washington has-beens who launch second careers based on their skill at pandering to various lobbies.

Like Dodd, my Senator Bayh intends to quit. Or he has quit. Let me be clear--his staffers who are supposed to answer the phones don't. So when I tried to reach his office, I couldn't. What does this say about the Senator? His last e-mail to his constituents--who elected Bayh for six years, not 5 years and 3 months--thanked them for electing him. Well, I guess Bayh's riding off into the sunset is just too momentous an occasion for him to get off his high horse and actually serve the people of Indiana to whom he seems so ingratiated (or is it prone to patronize?)

Despite all Bayh's croonings about the state of affairs in Washington, I hardly think he'll come riding (or is it limping?) back to Indiana any time soon, with his wife so well entrenched at the Wellpoint Board of Directors and all, kids in the finest schools, etc.. (God forbid they have to go back to Indiana.)

Time to make the Senate pay off, gdi! (Although Bayh's got the third-largest campaign war chest in the Senate.) And no more accountability, so we're turning off the phones, or at least going to message-only, screening all constituents unlucky enough (or is it unwealthy enough) not to have his ear or share his bed.

Don't assume Bayh won't make the Senate floor to vote on behalf of his wife's health care insurer, who may not like the bill but certainly doesn't want major change to the status quo either. After all the so-called reform trumpets health care for all regardless of pre-conditions--a euphemism for making everyone buy overpriced health care insurance whose premiums are rising at 10%/year. With no public option offered by the Democratic leadership (though it's supported by over 40 senators and a large majority of the public), there's no reason for the insurers to reduce costs or limit their profits, so it's clear that the whole bill means to raise insurance company revenues.

Already the state of Virginia has passed a law that would exempt residents of that state from having to buy health insurance. Forcing all Americans to buy insurance exceeds all precedents in our nation's history-does the Constitution say that all Americans have to buy anything? Don't think so. Let me remind you: any powers not specifically assigned to the Federal government in the Constitution are the domain of the states. In other words, Mr. Fed, you don't have the right to make us engage in a commercial transaction on behalf of a private company.

Recapping the general trend, it's obvious to see that the federal government is abusing its power. The restraints on power were finally surmounted in 2001 with the passage of the Patriot Act, which purported to make us safer but essentially eliminated any legal control over the Executive branch. Cheney's persistent teasing about torture illustrates the illegality of his actions and his imperviousness to prosecution. Obama's defense of Bush-era torture stains his administration and makes mockery of his promises.

The rise of corporate influence may be the most far-reaching consequence as the interests of corporations and the federal government align. In most other nations, this alignment is called fascism. Here in America we call is socialism-for-the-rich, a perverse redefinition of true socialism, which is defined as ownership of corporations by their workers--quite the opposite of what most Americans consider socialism: control over their lives by government (confused with what is technically a central command economy.)

We're seeing legal cover being created on behalf of corporate personhood as corporations--foreign and domestic--were given the right to make advertisements on behalf of favored candidates.

The concept of the corporate person is simply ridiculous. Now when my business faltered, I couldn't just walk away and leave it to my alter-ego, the corporate person. Though my business was in fact incorporated, it was my credit and money it used, my social security number, my signature. What the laws really mean is that, as a single owner without a lot of money invested in the business, I couldn't invoke personage to protect my assets from creditors. If I'd been part of a corporate racket, a simple employee, well then I could ascribe wrongdoing to that corporate person, who somehow appears only when a corporation that can afford enough attorneys to invoke its personhood gets in trouble.

I think we can see where the Supreme Court is going with its rulings. It's truly dangerous for learned men to judge matters so poorly, as that's evidence that they're serving not the public interest but specific corporate constituencies. How will they come down on rulings in the future? Safe to say they'll side with corporations, with the rich over the poor, with the gilded class rather than the downtrodden.

I guess I've reached the point where I've lost faith in all three branches of my government. I'm not alone, millions of Americans agree that our government and country have lost direction. The next question is what will happen as a result of that collective loss of faith. Yes, the Washington monolith can roll ahead for some time, based purely on momentum. There may even be times when the pendulum seems to be shifting, towards the empowerment of the individuals and the States, and the decline of corporate and state power. But the trend is obvious for anyone to see, and it can hardly end well.

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