Gov't hypocrites a CAUSE of oil spill

[caesar novus]

Originally the temperate US government response to the oil spill gave hope that due process could identify the root of the problem, and that innovation could march on using those lessons. But now the populist mob has forced them into a frenzy of duplicitous self righteous rhetoric and threats of irrational damaging legislation.

 

Is it any surprise that the high risk drilling was promoted by subsidies? The Clinton administration passed the "Deep Water Royalty Relief Act" and failed to deactivate it when scheduled. Congress sweetened it up during Bush administration according to http://finance.yahoo.com/news/Why-Was-BP-D...813326.html?x=0 .

 

How does the mainstream press let the lawmakers get away with this hypocrisy, even back on the financial crisis? The Clinton administration decided that gov't backed mortgages were being refused due to predjuice rather than the facts that show individuals had hopeless credit histories. So they force loans to be made to every victimology category that predictably blow up en mass later. http://finance.yahoo.com/tech-ticker/fanni...ftt_503592.html

 

Same case internationally. Germany gov't wears the mask of regulated responsibility, but their overregulation of landesbanks (sp?) left them suicidally unprofitable. For survival they tapped into looney schemes from US AIG, which blew up with the US mortgage market (caused by not only US but Chinese gov't which flooded US with lending rather than spending). What bugs me is the US gov't bailed out AIG and thus Germany (85 billiion IIRC) rather than a scheme already on the table that shared the pain at least a bit with the greedy customers (like German banks). Lost the link on this, but the hypocrisy just goes on and voters and press let gov't get away with it.

[Viggen]

...not sure why you single out germany regarding the AIG, there are plenty of other countries too, and i mean it was AIG that created and sold those gambling papers in the first place....

 

here the list;

 

Country AIG-related payments

billions of dollars

US 43.5

France 19.1

Germany 16.7

UK 12.7

Switzerland 5.4

Netherlands 2.3

Canada 1.1

Spain 0.3

Denmark 0.2

101.3

 

 

 

AIG-Related Payments

Country

Bank Amount Total Country

billions of dollars

Bank of Montreal 1.1 1.1 Canada

Danske 0.2 0.2 Denmark

Soci

[caesar novus]

...not sure why you single out germany regarding the AIG, there are plenty of other countries too, and i mean it was AIG that created and sold those gambling papers in the first place....

Germany was highlighted to support my theme of OVER regulation as a cause of the crises as opposed to just UNDER regulation, if I remember an article of Economist magazine correctly. They said the Landesbanks (a special kind of German bank) profits and thus survival were in a death grip from over conservative regulations well before the crisis. They went to AIG out of desperation to survive supposedly, whereas the other banks went to them out of greed.

 

Well I thank you for being supportive in general, but I should admit I pushed the theme a bit far and folks are probably being too polite to point out a few holes in it. Interesting to consider the less reported angles anyway.

[The Roadie]

...not sure why you single out germany regarding the AIG, there are plenty of other countries too, and i mean it was AIG that created and sold those gambling papers in the first place....

Germany was highlighted to support my theme of OVER regulation as a cause of the crises as opposed to just UNDER regulation, if I remember an article of Economist magazine correctly. They said the Landesbanks (a special kind of German bank) profits and thus survival were in a death grip from over conservative regulations well before the crisis. They went to AIG out of desperation to survive supposedly, whereas the other banks went to them out of greed.

 

Well I thank you for being supportive in general, but I should admit I pushed the theme a bit far and folks are probably being too polite to point out a few holes in it. Interesting to consider the less reported angles anyway.

 

It seems far-fetched to blame regulation or government intervention, especially as the United States government hardly "forced" poor poor Beyond Petroleum to drill out there. Rather, they lobbied quite intensely to make it a reality. If the US government had refused, you as well as other critics of regulation would instead have complained about them preventing growth, meaning that the government no matter what it does is the bad guy.

 

In this case, the responsibility rests on the shoulder of BP. There's this 150 000 $ switch which could have prevented the leak after the explosion on the oil rig. It was too expensive for BP so they ignored acquiring such switches for their rigs.

 

No matter where you stand ideologically or what solutions you advocate to solve a problem, no one is better off by just blaming everything on the government for ideological reasons and to uphold this false dichotomy between government and corporations. The governments exist in order to enable corporations to increase their profit margins - primarily, as well as to ensure that there is a system which could educate the workforce of the corporations so they have a sufficient pool for manpower.

[caesar novus]

no one is better off by just blaming everything on the government for ideological reasons and to uphold this false dichotomy between government and corporations. The governments exist in order to enable corporations to increase their profit margins - primarily, as well as to ensure that there is a system which could educate the workforce of the corporations so they have a sufficient pool for manpower.

First of all, it's the hypocrisy by gov't I point to - switching their story in order to ride the coattails of dufus populism and further inflame the mob. I wasn't promoting de-regulation as an ideology; note I pointed to over regulation as "A" cause. as well as under regulation.

 

As for the oil spill, I haven't followed details too closely since I've been on the road a lot with spotty access to media. So I'll address your bigger picture allusion. Yes, there is dysfunction based on the need for politicians to fund really expensive campaigns. Corporations cynically threw money primarily at their ideological enemies in 2008 because they were ahead in the polls. So now they have leverage over their paid-for politicians. Granted this is way out of control, but it isn't entirely evil. Corporations can be the only advocates for consumer issues that are too small or technical for particular individuals to get excited about, but are important en masse when it can make a wide customer base happier.

 

Under ideal competition corporations bring some balance of power as intermediaries between consumers and suppliers of labor/capital/material. An exception to this is powerful labor unions, which answer to no consumer or provider of capital or managers. The fact that their political contributions could leverage gov't to subvert GM bondholders and centuries of contract law about bondholder rights shows the severe dysfunction and will dampen needed lending going forward. Where I live this is taken even further where management (school principals) are forced to be members of teacher unions, so there is no balance of power or intermediary covering parent requirements at all. The schools are run purely to please complacent workers and are among the worst in the developed world. Unlike corporations, those teacher unions are unaccountable to any consumer of their service since their political contribution power mostly trumps diffuse voter dissatisfication.

 

Now to circle back to my original theme of 2 faced populism, the reason this dysfunction works in the face of supposed democracy isn't entirely the misuse of money... but of the voters letting themselves be taken in by opportunistic populist demogoguery. And that is most notable when politicians switch sides on an issue and feign outrage at what they have supported on record. I guess this thread was meant to alert people to not be taken in, or else the next regulation will be based on the exaggerated populist perception rather than addressing real problems with balance.

 

It was apparent in a small way with the oil spill, but in a huge way with the mortgage crises. All stripes of politicians used to be wildly pushing regulations promoting gov't approved house loans for deadbeats - I think the normally very responsible Barney Frank was the most recent caught pretending he wasn't on the wrong side of the issue http://www.zerohedge.com/article/barney-fr...rrassed-about-f . Also might make a similar case about of the whys of Iraq invasion. All sort of invasion critic politicians voted FOR a multi point reasons for invasion http://en.wikipedia.org/wiki/Joint_Resolut...t_Iraq#Contents but later pretended only the troubled "weapons of mass destruction" one really counted.

Edited June 16, 2010 by caesar novus