The BP-Induced Economic Hangover

June 16, 2010 by  
Filed under Economics

President Obama made promises last night on behalf of the federal government for which there is no present money to fulfill. Millions of gulf coast residents will be expecting billions of dollars to flow their way and not just from BP. Indeed, I will not be surprised if BP is forced into bankruptcy and/or becomes a takeover target.

This means that the principle of not letting a serious crisis go to waste will come into full play. For the President to do what he has promised in the gulf, new programs must be created and new taxes imposed to pay for them. Oil and gas energy companies will be the first targets. We will be the next.

One message from the President that I wholeheartedly agree with is making a full-bore assault on our oil dependence. We cannot call the shots on our own foreign policy because of where we must obtain our oil.

At a minimum, the BP disaster may induce and sustain a hangover for our economy. Our recovery will continue to be painful if not delayed.

More economic shoes have yet to fall,  unrelated to BP. Major municipalities are considering bankruptcy to shed themselves of underfunded promises made to retirees. San Diego May Use Bankruptcy to Roll Back Benefits This could create a domino effect, with local government pension failures becoming a federal pension guarantee problem. At the state level, California and New York are still struggling to find a path to solvency, a path from which their stupid politicians deviated years ago.

Random Mr. ToughMoneyLove advice to readers: (1) Start your tax planning now; (2) Downsize your personal economy to build reserves; (3) Sell your BP stock for whatever you can get for it, before news of today’s BP-White House summit is released; (4) Vote with your personal economic future in mind; (5) If (4) doesn’t succeed, vote with a moving van and find a state and city where government finances are managed responsibly.

I’m determined to not let these continued events disrupt our family’s economic future. What about you?


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17 Responses to “The BP-Induced Economic Hangover”
  1. morrison says:

    I believe in downsizing (did it already in 2001) but not so much as moving to another state (or country, even). For there is no guarantee that your new place of residence will meet with the same discord your previous address did. So, stand tough, is my advice. Stand tough and hunker down.

    Obama will not get any new laws passed till that oil spill is stopped. And then, even after that, his days are numbered. No one believes a single thing that comes out of his mouth and everyone now knows the words of Rohm Emanuel: “never let a good crisis go to waste’ so, people aren’t going to be fooled into any more rules & regulations.

    I do believe, though, that new forms of energy will now come in to play. Whether USA will benefit (China makes 98% of solar panels) still needs to be reviewed. The quest for foreign oil is a myth. The oil spill happened, here, on American soil. Not in Saudia Arabia or anywhere else. Our quest to get off of foreign oil, and the pressure to get it done, quicker, faster, etc. got us into this mess. Plus the environmentalists forcing oil drilling to be done so far offshore. If the drilling happened closer and nearer to shore, rather than a mile down in the sea, it could have been capped much sooner. Plus the environmentalists fought against nuclear energy and other alternatives. I blame the eco-maniacs for this oil spill. Not ourselves.

    I compare this oil spill to the “Great Dust Bowl” of the 1930’s. Where are all these out of work fishermen going to go to find work? The gulf is lost for at least 10 to 20 years? Where will all the home owners, business people, tourists and whomever else earns a living from the gulf going to go? There is no way on earth that BP can pick up the tab for all of this. I also predict that BP will file bankruptcy. The US gov can’t pick up the tab either. Technically, they’re broke. So, what’s the outcome? What will happen? Use your brain. There will be a complete migration of thousands and thousands of people who have no money, no jobs, no home and they will travel across America in search of work. A modern day ‘Grapes of Wrath’.

    We ain’t seen nothing yet!

  2. Rick Beagle says:

    Sigh.

    Honestly, you folks have been looking for the quick buck for thirty years, and here we are. And what do you suggest for the next vote, vote with your wallet. The only analogy that I can give you is that college degree. You passed up on minimum wage for a chance to put yourselves through school for a better life afterwards.

    After thirty years of excessive spending at the cost of our infrastructure, our regulations and regulatory agencies… here we are.

    Quick history lesson, the oft maligned President Jimmy Carter put us on the path to energy independence. It was the much vaunted President Reagan who introduced us to deficit spending, repealed all spending on energy independence, and created, through his tax policies, the largest gap between the haves and the have nots. Of course his record was broken by junior, but (gasp) what happened to the middle class? Which side of that gap do you guys really think you fall? How about your children and grandchildren?

    Here is a thought for you greedy Baby Boomers suck it up, and vote with your brains, and a long term vision?

    Peace.
    Rick Beagle

  3. MasterPo says:

    Morrison is right in that moving won’t help much. 46 out of 50 states (92%!) have 2010 and projected 2011 budget shortfalls. And you can’t escape Federal regulations and taxation.

    But REALITY CHECK!

    I love the idea of “alternative energy”. But we just are NOT there yet!

    Not today.
    Not tomorrow.
    Not next Thursday.

    Maybe 30-40 *YEARS* from now the technology will have advanced to be useful. But for now it’s a white elephant at best. The cost per megawatt for wind and solar is 2x-4x that of oil, coal or nuclear.

    And even when an alternate energy source is developed I highly doubt it will be wind or solar. Probably fussion power. Maybe even anti-matter (yes it’s very real! Just immensely expensive to produce just a few atoms of it.)

    But all this technology is purely embrionic now. And like an advanced life form it will take DECADES to mature and come into it’s own.

    We simply can NOT throw away oil or gas or coal today in the hope that maybe, someday, some new technology will come along and save the day. Even Obama said he didn’t have any idea how we’d get there. Great leadership!

    ps- If “green” energy is so great how come the words “cheap”, “abundant”, and “efficient” are *NEVER* used to describe it?

    pps- Ricky- Tell us aaaaallll about your fundimental transformation to “green” energy and how wonderful it has been on your life and wallet. We’re eager to learn!

    • LL says:

      “If “green” energy is so great how come the words “cheap”, “abundant”, and “efficient” are *NEVER* used to describe it?”

      I hear it described as abundant and efficient all the time.

      We’ve not yet reached the point where alternative energy is as cheap as fossil energy, but consider…
      1. fossil production and delivery is subsidized in the US
      2. oil is getting more expensive all the time
      3. even major oil companies admit that declining supplies, some not as easily tapped, are a substantial risk
      4. fossil use is accelerating as countries like China, India increase industrialization
      5. Will increased demand and reduced supply make prices come down or up?
      6. Much of the cost of fossils is externalized – you don’t pay at the pump for it, but as the burning of fossils pollutes the air you breathe, you might pay for it in medical bills later.

      I think a tipping point of 30-40 years is pretty pessimistic. I’d like to believe we could get there in 5 years, especially if people would stop denying common sense because they’re afraid it will lead to some far off scary state. Like refusing to consider alternative energy as viable, because that must mean you support carbon caps and trades and credits. Personally, I support the former, but not the latter.

      Even acknowledging the externalized costs of burning fossil fuel would be a HUGE step in the right direction. Forget global warming…just consider the tiny admission that burning fossil fuels is not good for the health of humans, or the resources they need to survive. In my opinion, that point should be pretty obvious to everyone.

  4. Rick Beagle says:

    Ricky- Tell us aaaaallll about your fundimental transformation to “green” energy and how wonderful it has been on your life and wallet. We’re eager to learn!

    How has that drill baby drill been working out for you? And what makes you think gas isn’t going to spike again at say $5/gallon? Since it is universally expected that prices will continue to go up for gas, how do you think that is going to affect our economy?

    Alternative energy isn’t an option any longer, it is a necessity. Get your head around that. Thirty years of sitting on our collective arses, and now the biggest ecological disaster (man made) in our American collective memories, and still buffoons like you cling to the same old failed talking points.

    Which brings me to a thought, I think Obama had it sort of right, but honestly, Republicans cling to their Bibles, guns, wallets, and moronic belief system of failed policies (need a helmet to go with that stupidity Gump?).

    So um MasterPo, has it trickled down enough for you yet?

    Peace.
    Rick

    • Rick Beagle says:

      “Republican Rep. Joe Barton had some harsh words for the White House at a key hearing Thursday on the Gulf of Mexico oil disaster: “I am ashamed of what happened at the White House yesterday. I think it is a tragedy of the first proportion that a private corporation would be subjected to what I would characterize as a shakedown – in this case a $20 billion dollar shakedown.” Barton was referring to BP’s establishment – at the behest of the administration – of an escrow account to pay for claims.”

      I guess he thinks we, the taxpayers, should pay for this ecological and economic blow to the region? President Obama may not be the “magic bullet of change” we progressive/liberals wanted, but honestly, at least he is blatantly paid for by Big Oil.

      Please note that the Heritage Foundation agreed with his sentiment. I have no delusions that there are many Democrats who are as corrupt (especially in the Senate (ie Lincoln)), but what I can’t understand is why people keep lapping up the talking points of these clowns in light of such obvious and blatant lack of empathy for you, I and our progeny?

      Nope, we ignore the corrupt Elephant in the room and listen for… wait for it… TAX CUTS!!!! Especially tax cuts for the wealthiest because fifty percent don’t even pay taxes. Never occurs to you that the fifty percent would like to make enough to actually pay taxes, but that little tidbit seems to escape you? How about we invest from the bottom up (since trickle down is an obvious and measurable failure)? Invest in our future in an attempt to broaden our tax base? Combine these efforts with spending cuts, reigning in expenditures (two wars), and tada, we start paying down our debt.

      But every time we move in that direction, you “fiscal conservatives” scream “socialism” or some other asinine comment without even an alternative solution other than cling to your guns, invest in gold, and head for your reinforced bunkers.

      How about some ideas? How about something that is tangible, and work with that idea so that we can make it happen (a positive contribution)? How about if you are going to vote for someone, that you insure that they have a strong commitment to solving our country’s/state’s/city’s problems rather than another partisan windbag or dangerous anarchist?

      Peace.
      Rick Beagle

      • Rick Beagle says:

        “The judge that BP wants to hear an estimated 200 lawsuits over the Gulf of Mexico oil disaster gets tens of thousands of dollars a year in oil royalties and is paid travel expenses to industry conferences, financial disclosure forms show.”

        Is it so wrong to want to see a few of these folks lynched (legally)? I really am soooo tired of Big Business getting a free pass.

        Peace.
        Rick Beagle

  5. David says:

    While whatever BP winds up paying out to clean up the mess in the Gulf will be quite significant, I rather doubt that it will bankrupt the company. Information from MSNBC indicates that BP has plenty of cash reserves, including an average of $20 billion in profits annually, $6 billion in cash and some some 18 billion barrels of oil reserves worth $1.2 trillion at current prices. BP will likely survive this catastrophe, however, the clean up costs certainly will be a financial hurt nonetheless.

    David

  6. MasterPo says:

    Been working very nice for me.

    Gas is come down much in my area. I can now afford to take several car trips I couldn’t last 2 years.

    Heating oil is cheaper. Just called my oil company to top-off for the summer. Going to lock in a lower price contract for next winter.

    Yea, been doing real well for me. Thanks for asking.

    ps- How do you feel about $8/gal milk and $5 Wonder Bread?

    But you still didn’t answer my question: What have YOU done these past years to get yourself and your family on to “green” energy? How much has it cost you? How effective has it been?

    Put your money where your politics are.

    • Rick Beagle says:

      MasterPo,

      I realize that your memory isn’t what it used to be, but we already talked about this. Since our last conversation, I have further insulated and weatherproofed the house, and helped my brother put up a small wind powered generator on his ranch. I still don’t have my electric car yet, but its a process.

      Now that we have that out of the way, could you possibly be any more short sighted? Five dollar bread is coming whether we stay on oil or not. You seem to keep failing to grasp that.

      Peace.
      Rick

  7. MasterPo says:

    Still dodging the question:

    You ready for 3x or 4x for food? Clothes? Medicine?

    That stuff doesn’t walk to the store on its own!

    • Rick Beagle says:

      I don’t answer questions that have no basis in reality. The truth is much simpler and cheaper than you and your Republican talking points. So go crawl back under that rock of ignorance and flip on Fox, and let the grownups keep working on solving the big issues (you can chant “no” with the rest of the Republican caucus if it makes you feel better).

      So, just because I’m on an ideological rant, is ninety percent of your income from oil companies as well? You seem to have a soft spot for them, always wanting us to libs to quit picking on them, and encouraging tax payers to pick up the tab for their malfeasance (while encouraging us to cut taxes for the wealthy!!!)….

      Peace.
      Rick

  8. MasterPo says:

    Ricky – Guess all those years drinking the Kool-Aid has taken it’s toll.

    How do you *think* food makes it from the producer to the distributor to the store? Walks there on it’s own?!

    And once at the store how do you *think* it stays cold to be fresh?!

    And that doesn’t even address the energy use to produce the food. I’ve been inside MAJOR food company’s plants. The machinary is awe inspiring. And HEAVILY energy dependent.

    Plus, let’s not even go into “carbon tax”! Just *think* of all the carbon a Wonder Bread or Thomas English Muffins plant puts out every day!!!

    ps- Glad you at least acknowldege you’re on a rant. 😉

    • Rick Beagle says:

      Hmm, sounds like you need to take a trip to the local farmers’ market and support your local green businesses. Let those big energy guzzling companies either adapt or go the way of the dinosaurs (oh, the irony).

      You still don’t get it, we don’t have a choice, but you keep regurgitating those Tea Party talking points.

      Going to a Tea Party cross burning party tonight? I hear BP is funding some live music for you loons….

      Peace.
      Rick Beagle

      • kitty says:

        I love local farms – good fresh veggies and fruit in season. No bread though, as they don’t grow wheat or rye locally. And no fruit or veggies in winter. Also, I suspect they don’t have enough production capacity to feed all of Westchester, Long Island and NYC. I’d love to grow my own tomatoes, but my condo complex doesn’t allow it. Assuming they would allow it and we turn all grassy areas kids use for play to produce food, I doubt there’ll still be enough even for our little complex. And what about winter?

        Meat and milk? I suppose there are some larger farms farther North, but they aren’t exactly in a walking distance from here. I suppose they may use horse-driven carriages to bring it to us.

        Also, even local farms aren’t exactly in walking or biking distance around here. And what about NYC? Where would NYC people farm to get food?

        Oh, and while I am no expert in farming, I heard they do use some machinery now and then in food production.

        Now, once upon a time people did live without oil and gas. Life wasn’t exactly easy then for majority of people, was it? Lots of starvation.

        I am all for alternative energy, hey I might even work to help with IT infrastructure for it soon. But one still needs transportation to get anywhere or to get food. It’s not realistic to think we’ll be able to only rely on alternative energy any time soon. Maybe eventually somebody would figure out how to replace oil, I hope they’ll do, but it’ll be quite a while.

        • Rick Beagle says:

          I never said that products shouldn’t be transported to market, that was MasterPo’s circular insanity at work – congrats on being sucked into a non-existent talking point. Seems to be a common practice amongst Rethugs nowadays.

          When I look at the fruits in my local Walmart, they all bear stickers that say “product of Costa Rica”. Now, I am not the mathematician you are, but that seems as if it would consume far more oil than farms in upper state NY. Plus, you put a dollar in an American’s pocket, get a better product, and help encourage small businesses in your area.

          Local butchers and bakers can provide you with similar products that are locally and organically grown (kosher is considered organic). Again, not a math genius but that seems to have a smaller carbon footprint than say importing from South America.

          As for the winter issue, hydroponics. And where on earth is one of world’s leading hydroponic sites? NYC. Feel free to encourage an expansion of this through frequent visits throughout the year and loud praising of the technology.

          Finally, what is with you folks that it has to be an all or nothing proposition? Simple changes in your purchasing behavior and tada you become a proponent for carbon emissions reduction. Don’t worry, only the crazies on Fox will refer to you as socialists.

          Oh, and they have hanging tomato plants now. if you have room for a hanging plant and a bit of sun, you can have cherry tomatoes (as an example) all year round. Check out Burpees.

          Peace.
          Rick Beagle

  9. MasterPo says:

    Yea, lots of farms around LI growing oranges, bananas, lemons…

    ps- You think all that “local” farmer’s produce is planeted, harvested and transported by hand too?!

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