I’ve been feeling like I should say something about the failed terrorist attack this weekend in New York but can’t come up with much beyond the observation that I don’t quite get why this is prompting so much less freaking-out than the Christmas underpants bomber did. Both seem on a par to me — amateurish failures that seem to indicate that whichever people might be inclined to kill American civilians don’t have much in the way of capacity. Is the country learning? Maturing? Or is it just that airplane-related incidents have some special grasp on the public imagination?
Is BP the Goldman Sachs of Big Oil? CEO Hayward says to fellow executives: “What the hell did we do to deserve this?”
Let’s see: How about a spotty safety record, insistence on voluntary ‘trust me’ self-regulation, a drilling plan that ignored key risks, and failure to use best shut-off technology to save a few bucks?
Limit government, we’re told. Big companies will police themselves because the potential loss in revenue and reputation is motivation enough, we’re told. The predictable result is Goldman Sachs, Massey Energy, and BP.
If you Google ‘British Petroleum cited violations‘ you get 192,000 hits. One of the most revealing is “MMS Records Show BP Has Previous Deepwater Violations” (excerpted below).
CBS and the AP report “BP Didn’t Plan for Major Oil Spill: Company Suggests in Documents that Likelihood of Accident Happening was Virtually Impossible.”
Planning drives response, and no doubt BP’s delusional worst-case scenario drove them to keep assuring the government and the nation they could handle this.
Greece vs California
Jacques Melitz considers the comparison:
In June 2009, the state of California handed employees IOU’s, so-called vouchers, for payment. The incident has not been recognized as a default only because banks have honoured the vouchers thus far; but costlier and incontestable default still lies ahead as a significant probability.
This is reflected in the spreads on the credit default swaps on state bonds and the credit ratings of the bonds. The Californian economy is four times larger relative to the US than the Greek one is relative to the Eurozone. Yet nothing remotely resembling the concern and turmoil in Europe about Greece has occurred in the US regarding California.
Neither California’s recent or prospective future breaches of contract have caused a ripple in the US financial sector, not even the part of it heavily implanted in California. Upon examination, it is difficult to explain this difference without invoking the self-inflicted damage of the doctrine that any default would be anathema for Eurozone.
Melitz suggests that the European Union and the European Central Bank need to change the ways in which they define themselves to make the currency and the union more robust against financial problems in relatively small sub-units like Greece.
The Sweet Stuff
Melanie Warner takes a look at growing consumer wariness of high-fructose corn syrup and how many firms are now moving back to making some products with real sugar to appeal to them even though it “costs some 40 percent more.”
Warner notes that scientific evidence that there are special HFCS-related health problems is actually a bit hard to come by, but from a policy point of view I think the key point is that the relative prices for these commodities are substantially impacted by hard-to-justify policy interventions. First off, there are severe restrictions on the ability of Latin American farmers to export sugar to the United States. Second, there are substantial monetary payments to encourage high levels of domestic corn production. The economic and foreign policy case for doing away with this business is extremely compelling, so unless there’s some overwhelming public health reason to prefer corn then the case for changing things up is solid irrespective of these health disputes.
Corporate Front Group Runs Racial Ad Portraying Indians Thanking Bill Halter For Offshoring Jobs
With the help of the U.S. Chamber of Commerce, Americans for Job Security is airing a new ad featuring actors portraying Indians thanking Arkansas Senate Democratic primary candidate Bill Halter for supposedly offshoring jobs. Americans for Job Security is a “sham front group that would be better called Corporations Influencing Elections” that has run multi-million dollar advertising campaigns for repealing the estate tax and against the Employee Free Choice Act.
In the ad, as traditional Indian music plays in the background, actors posing as Indian citizens stand in front of blue screens that depict the crowded streets of Bangalore, India, and “thank” Halter for his alleged role as a “highly-paid director of a U.S. company” outsourcing jobs to the South Asian country. Meanwhile, a voice-over says, “With almost 65,000 Arkansans out of work, we need jobs too. Bangalore says, ‘Thanks, Bill Halter.’ Arkansas, tell Bill Halter, ‘Thanks for nothing.’” Watch it:
The ad is as misleading as it is offensive. As a fact check from Arkansasbusiness.com reveals, “it’s a stretch to say the firm [Halter worked for] shipped American jobs overseas.” While the company whose board of directors Halter served on, WebMethods Inc., did open an office in Bangalore, India, the company’s filings with the Security and Exchange Commission “do not refer to the loss of any American jobs in connection with opening the Bangalore office.”
Ironically, while Americans for Job Security and the Chamber of Commerce are falsely alleging that Halter is responsible for the outsourcing of American jobs, both are active supporters of unfair free trade policies. Americans for Jobs Security brags on its website that it will continue to “fight to open new markets for American entrepreneurs,” and the Chamber has a history of supporting every anti-worker free trade agreement that Congress has ever ratified or is planning to possibly ratify.
As Blue Arkansas writes, “Not only is this claim about Bill Halter patently false…but the ad is stocked with racist dog whistles. This is the Arkansas equivalent of the “Harold, call me!” ad the GOP ran back in 2006. By running this ad, the Chamber of Commerce is targeting white Arkansans with stereotypical south Asians, the threatening brown people taking their jobs, and they can’t even get a decent Indian accent while playing to this racist characture. Talk about sickening.”
Ratings Agencies Without Regulatory Mandates
I liked this NYT masthead overview of the need for ratings agency reform and some options for doing it, but I thought their discussion of the deregulatory option went a little bit astray:
If there is no way to improve raters’ track record, a more drastic step would be to eliminate them, or at least eliminate the legal requirement that some insurance companies, pension funds and other entities hold assets with high ratings, a rule that gives the raters enormous quasi-regulatory power.
This is not a perfect solution. A world with no rating agencies would leave many investors at sea. But it is not much of a life raft if agencies cannot do better than they did during the housing bubble.
It seems to me to be a misunderstanding to think that loosening the regulatory mandates around holding high-rated securities would create “a world with no rating agencies.” As the editorial indicates these agencies exist because there’s legitimately demand for information about the riskiness of investment opportunities. And as I tried to highlight in my primer on the subject if “information about the riskiness of investment opportunities” was your main interest in a ratings agency, then these conflicts-of-interest shouldn’t be a huge problem. The conflicts, after all, are actually pretty well-known and obvious and there are smaller raters out there who don’t have them. But in many cases consumers of high-rated investments aren’t actually especially interested in information, they’re just interested in complying with a regulation that says they need to hold such-and-such quantity of AAA-rated stuff which totally breaks down the market discipline.
That’s not to say totally deregulating this field is necessarily the way to go, but the proposal should be understood correctly one way or the other. The idea isn’t to do away with rating, or with firms in the business of doing ratings, it’s to eliminate the demand for inaccurately rated investment opportunities.
Hayworth Dismisses Arizona Boycott Concerns, Instead Pushes for A ‘BUYcott’
This morning on Face the Nation, host Bob Schieffer pointed out that Arizona didn’t anticipate the economic effects of a boycott against the state when it passed its new immigration law. Arizona senatorial candidate and immigration hardliner J.D. Hayworth (R) mostly dismissed concerns over the boycott. Instead, Hayworth pointed out that “friends in California” are pushing for an economic “BUYcott” of Arizona in support of the recently approved legislation:
You spoke of a boycott, what I heard from friends in California the other day is that they want to start a buycott. Actually come to Arizona to reaffirm the fact that Arizona — all we’re doing — is enforcing federal law.
Watch it:
What Hayworth is referring to is a “National Arizona BUYcott” campaign that was reportedly set to be announced yesterday at the Winning Back America Conference, which was headlined by Liz Cheney, Fred Thompson, and Sarah Palin. The effort has already launched a website and a Facebook group with 1,075 members. Tennessee radio host Steve Gill is personally encouraging people to buy from the Arizona-based Cold Stone Creamery ice cream shop. “We’re going to go out to Cold Stone Creamery and dish out some free samples to local listeners and let them buy some Arizona ice cream as part of our ‘buycott’ to support Arizona,” he told KTAR.
However, ice cream purchases alone may not be enough to save Arizona from the potential economic effects of a large-scale boycott of Arizona. The largest Spanish-language newspaper, La Opinion, and the popular news website Hispanic News, have each called for general boycotts of all Arizona goods and services. The American Immigration Lawyers Association moved its upcoming conference from Arizona to another state. The city councils of Washington, D.C., Oakland, and Los Angeles are considering city government boycotts of the state. In San Francisco, the city council is likely to pass a government boycott, while Mayor Gavin Newsom (D) (and St. Paul Mayor Chris Coleman) has temporarily barred city workers from traveling to Arizona on official business.
Tourism is one of Arizona’s biggest industries and the national “buycott” is encouraging supporters to travel to Arizona. Nonetheless, a growing number of travelers — including famed travel book author Arthur Frommer — have pledged to avoid the state. Rep. Jose Serrano (D-NY) has asked Major League Baseball (MLB) to revoke the awarding of the 2011 All-Star Game from Phoenix, and it appears MLB is taking such demands seriously. The All-Star Game would bring in an estimated $40 million of revenue into the region.
The Old Line on Offshore Drilling
This was good stuff:
What a time it was.
20-year veteran of the Coast Guard: “With a spill of this magnitude and complexity, there is no such thing as an effective response.”
There are, and will continue to be, heroic efforts by a wide variety of individuals, including members of the Coast Guard, NOAA, and state, local, and volunteer organizations. I wish them the best of luck, and wish I could be back in uniform helping out. But with a spill of this magnitude and complexity, there is no such thing as an effective response. The Obama administration has clearly mobilized all of the Federal government’s capabilities. But time and time again, we have learned that our efforts will not measure up to the task at hand.
Today’s guest blogger is Dr. Robert J. Brulle of Drexel University. I’ve interviewed him many times, and so Climate Progress readers mainly know him as Professor of Sociology & Environmental Science and Affiliate Professor of Public Health, Drexel University.
But before that second career, he was a Commissioned Officer in the Coast Guard for two decades. Indeed, he has a Bachelor of Science degree from the U.S. Coast Guard Academy in Marine Engineering.
So when he talks about the BP-Halliburton oil disaster, people should listen. Here’s his entire post:
Hume Acknowledges Oil Spill Disaster ‘Verifies’ The Concern Of Environmentalists
Today’s Sunday morning news shows were dedicated, in large part, to the unfolding oil spill disaster in the Gulf Coast, as efforts continue to contain the 210,000 gallons of oil a day that are still leaking. The leak has reignited debate over offshore oil drilling, with the Obama administration saying that “further commitments for offshore drilling must await an investigation of the causes of the rig explosion and leak.” Even conservative darling and drilling proponent Marco Rubio said that the spill should make us “rethink” our drilling technologies.
Today, on Fox News Sunday, Fox’s Brit Hume said that, while his pro-drilling stance has not been changed by the disaster, the spill validates the concern of environmentalists who warned that such a disaster was inevitable:
Think about what the environmentalists have always said about this. Is it’s not a matter of if there’ll be a disaster of this kind resulting in this kind of offshore drilling, it’s only a matter of when. This verifies that argument, and becomes a powerful factor in the debate over what to do next. I don’t see any way around the political reality that this will set back the cause of offshore drilling in the United States.
Watch it:
The Weekly Standard’s Bill Kristol, though, showed no hesitation about continuing offshore drilling efforts, saying “I’m a drill, baby, drill person.” He made the case that we should actually undertake more drilling closer to the shore, because it’s “less dangerous, less treacherous than trying to drill fifty miles out from the coast.”
Admiral Thad Allen, Commandant of the U.S. Coast Guard, who is now in charge of the federal response to the disaster, said yesterday that “it’s logical to assume” that the coasts of Louisiana, Alabama, Mississippi, and Florida will be hit by the oil spill. As The Wonk Room’s Brad Johnson pointed out, if estimates about the flow of oil are accurate, this spill will be “on the scale of the largest oil spills in history.”
