Why BP should deny everything and brace for impact(Read article summary)
There's little BP can do to stop the onslaught of lawsuits heading its way.
Tony Avelar / The Christian Science Monitor
Baltimore, Maryland â Sittinâ on the dock of the bayâŚ
Watchinâ the tide roll awayâŚ
â â(Sittinâ On) The Dock of the Bayâ, Otis Reading
The newspapers say there are huge globs of oil beneath the surfaceâŚor floating on the top. Youâd think you could just pump it up. At $70 a barrel, youâd think you could make money scooping up the âsea oilâ in the gulf. Probably better than shrimping.
âBP ânot preparedâ for spillâ
We hope he had a good talk with his lawyers. âNot preparedâ sounds like an admission of negligence. Maybe criminal negligence.
There are billions in lawsuits coming upâŚand the attorneys around the Gulf are slicker than an oil spill. The English donât realize what theyâre up againstâŚan Alabama lawyer in a seersucker suitâŚtalking to an Alabama juryâŚabout how a British billion-dollar company destroyed their lives and livelihood.
Theyâre going to use every word Tony Hayward says against him.
Nobody is going to thank him for keeping his auto running. No one is going to think about where the oil comes from that he uses to heat his houseâŚor how he draws electricity from an oil-fired power plant. No one in the entire state of Alabama is going to stand up for BPâŚcertainly not an elected official.
âYou have no idea how this works,â said a Washington friend. âThe shyster lawyers are all in tight with the lawmakers. Many of them are shysters too. Thatâs why Obamacare is so tilted towards the lawyers and the pharmaceutical companies. Theyâre all in cahoots.
âAnd now this oil spill is going to set off a feeding frenzy on BP. The shyster lawyers are drawing up their class action strategies now. And youâll see public interest groups get into the action. These guys are smart. And theyâre very well funded. Theyâre going to short BP sharesâŚand then announce a $20 billion lawsuit. And every pseudo environmental groupâŚand trade organizationâŚand labor unionâŚand city councilâŚand cracker-jack collection of meddlers anywhere within 100 miles of the coastâŚtheyâre all going to be looking at that pay dayâŚwhen BP settles forâŚwhat?âŚ$100 millionâŚ$1 billionâŚwho knows. But they can invest millions in the case, because they know the payoff will be huge. Theyâre just fighting for position nowâŚseeing who can put together the winning jackpot caseâŚ Itâs sickening.â
Legal advice to BP: deny everything. You werenât there. Deepwater what? Then, tell litigants that you will never settle any case, no matter how big or how rich. That will vastly increase the investment capital the shysters need to raise.
BPâs share price has plummeted. Some people think it is time to buy. Might be a little too soon. Our guess is that estimates of the damage are going to balloon even higher as more and more lawyers begin to see that thanks to BP they can win the lottery without buying a ticket.
Also, we suspect that a downturn is coming in the entire energy sector. Why? Because energy use grows with GDP growth. And we suspect weâre in Deep Doo-Doo there too.
Savings rates are rising all over the world â in developed economies and in emerging economies. That means GDP growth should turn down.
From Yahoo Finance:
Americans pulled back on their spending in May after a tepid April, underscoring how fragile the consumer spending recovery remains, new data released Thursday show.
Cool weather and a quirk in the calendar â a late Memorial Day weekend that hurt Mayâs business but should boost Juneâs figures â dampened spending on almost everything from clothing to major appliances. The figures, from MasterCard Advisorsâ SpendingPulse, include spending in all forms including cash from May 2 through Saturday.
But weakness in the past six weeks is due to more than thermostat and calendar flukes, analysts said. They cited unemployment, stock market jitters and the end of government funded rebates on energy-efficient appliances.
âI donât think you can explain away all the weakness just based on the calendar shift,â said Michael McNamara, vice president of research and analysis for SpendingPulse.
People are reluctant to spend for all the usual reasonsâŚand some new ones. In the past, people have feared losing jobs. Never before in recent history have they feared that the government would go broke.
Just ask young people what they expect to get from Social Security or the new Medicare program. They know the score. The old folks stacked the deck against them. All the aces come up first â while the boomers are still in the game. Then, nothing but low cards.
ââSittinâ on the dock of the bayâ was a protest song,â a communist friend once explained. âItâs about blacks who came to look for work in San Francisco and then couldnât find a job.â
Another report tells us that the corporate bond market is practically dead. Corporations canât raise money for expansionâŚand donât seem to want to. Theyâre being shut out of the credit market by government â particularly the US government. Bond rates are so low buyers donât have much to look forward to â whether they buy the corporates or the Treasuries. They figure they might as well go for Treasuries. At least theyâll be sure to get paid back.
This year, the US government is expected to borrow an additional $3 trillion. That doesnât leave much money for the private sector. Which is why The Wall Street Journal report is surely correct; more and more people are going to be sitting on the dock of the bayâŚor watching TV. Unemployment is still increasing in most cities.
China Daily seemed to capture the underlying trend better than anyone. Itâs headline:
âWest moving towards deeper financial abyss.â
Into the Deep Doo Doo, in other words.
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