Merle Hazard is the one and only country-music singer writing songs about the Financial Crisis. He’s been on PBS NewsHour with Jim Lehrer; he’s been the subject of articles by The Economist, London’s Financial Times, The New York Times, and Der Spiegel. And by gum, the man can carry a tune! Here’s Merle Hazard performing “Double Dippin'”!
According to The New York Times today ––
On Dec. 10, one of the lawmakers under investigation, Representative Joseph Crowley, a New York Democrat who sits on the Ways and Means Committee, left the Capitol during the House debate to attend a fund-raising event for him hosted by a lobbyist at her nearby Capitol Hill town house that featured financial firms, along with other donors. After collecting thousands of dollars in checks, Mr. Crowley returned to the floor of the House just in time to vote against a series of amendments that would have imposed tougher restrictions on Wall Street.
He’s just one of our national legislators under investigation by Congress to determine exactly how money flows in Washington, and how it directly influences inhibits reform. Here’s another:
The right honorable Tom Price just happened to schedule a “Financial Services Luncheon” on December 10, the same day as Rep. Crowley’s fundraising event and the exact same day that the first full House vote on the financial reform bill was held. During a two-month period around the vote, he scored $23,000.
Now, old hands around D.C. like Tom DeLay might call this “business as usual in Washington.” Any sane person, however, would rather be inclined to call this bribery. No, I’m not suggesting that you members of the governmental elite will ever actually be convicted of such a crime. Just know that we know exactly what you’re doing, and how you’re doing it. You are colluding with business interests to keep yourselves employed, to the detriment of the future of the United States of America. You are the epitome of the fault Tocqueville foresaw in the American system –– to wit, that people would be more inclined to vote their immediate self-interest than have the education and wisdom to consider long-term ramifications. Crowley and Price, and all others –– we’ll be seeing you.
Read to your heart’s content at The New York Times.
Okay, it’s like this. The main reason we’re in a Great Recession is that, back in 1999, the U.S. government compromised itself to death. Bill Clinton wanted to increase lending to minorities. The Republican-controlled Congress (swept into office by Newt Gingrich’s “Contract with America”) said, “Only if you decrease regulation at the same time,” and so Phil Gramm (appointed senior economic adviser to McCain’s presidential campaign) drew up a bill that gutted Glass-Steagall, the 1933 act that prevented the Depression from happening again. President Clinton, weakened by the Monica Lewinsky scandal, didn’t have much wiggle-room in the Oval Office any more, and signed the legislation.
So, naturally, you get a huge housing boom totally based upon dodgy accounting and ludicrous credit standards which blows up in the world’s face.
You can’t make this stuff up, right?
Guess what. The BP oil spill is a result of exactly the same legislative deathmatch. The New York Times has a superb piece this morning by David S. Abraham declaring, this is a disaster that Congress voted for. In a highly balanced and nuanced argument, Abraham details how Congress really and truly has been addicted to providing the oil industry with economic incentives beyond all reason:
In a 1995 attempt to encourage more exploration, Congress agreed to reduce the cut of the proceeds the government could collect on oil and gas drilling in deep waters. Ten years later, despite higher oil prices and declarations from President George W. Bush that more incentives were not needed, a Republican-led Congress reduced royalties yet again.
It’s madness, of course – especially when
at the same time that Congress called for new drilling incentives, it also gutted oversight. From 2002 to 2008, legislators approved budgets reducing regulatory staffing levels by more than 15 percent… A 2004 Coast Guard study found that its “oil spill response personnel did not appear to have even a basic knowledge of the equipment required to support salvage or spill clean-up operations.”
When Bobby Jindal calls for more offshore drilling in order to help pay for coastal damage inflicted by offshore oil-and-gas operations (yeah, you read that right), then we have truly entered a land of the comedic insane, where the Mad Hatter starts writing Catch-22 contracts. The astounding thing is that, at base, it’s an exquisitely simple recipe for disaster: radically lower the barriers to enter the market, while radically de-regulating (by which we mean: knocking down the laws and rules that govern participation in this country’s economy) and what you get are toxic assets. That’s what we call a house, these days: a toxic asset, destroying the person who possesses it (for D&D fans, that’s kind of like a poisoned amulet, except with lots of bricks and mortar and wiring and plumbing).
But we should be calling the oil spill a toxic asset too. The definition’s more apt; no metaphors needed here. It’s a natural resource that’s killing our economy and destroying the ecosystems of our oceans. It’s a substance that, for decades now, has powered our economy; now it’s bringing the Gulf to a standstill. It’s the toxic asset, our home mortgage that’s underwater. The rich will probably walk away from it, their dirty souls skimming the tops of the oily waves in that Gulf between them and us.
David Harvey, Distinguished Professor at the City University of New York, gives the world’s most pithy and complete explanation of the cumulative financial crises over the last 80 years to show us what’s happened. It’s an 11-minute showstopper of a lecture, and it is the only coherent 360-degree view of the crisis I’ve ever seen. I can’t emphasize how brilliant this is. Harvey is having an open online course reading Book I of Marx’s Capital. Watch this, and it’ll all make sense. Plus, it’s cartoony!
With all this oil in the Gulf, all the terrifying pictures, footage, and reports its easy to forget the real victim here. That’s right, I’m talking about a sensitive affluent little business with a previously bright future, British Petr- I mean Beyond Petrolium. Once the most profitable company in the entire history of the world, BP now faces stock slides, falling credit and bond ratings, and a possible death by cannibalism.
The downturn began on Tuesday, after BP’s “top kill” plan failed to block a massive leak in the Gulf of Mexico by pumping mud into the well.
But BP’s bonds continued to fall even as its shares recovered on Wednesday.
Meanwhile, rating agency Fitch has cut the firm’s credit rating marginally, and threatens further downgrades if the cost of the oil leak rises further.
Fitch cut BP’s rating by one notch, from AA+ to AA, although this is still one of its highest investment grade credit ratings.
The other two main rating agencies – Moody’s and Standard & Poor’s – also still rate BP’s creditworthiness highly, at Aa1 and AA respectively.
Yet bond markets are now pricing BP’s debts at levels comparable with much riskier “junk” rated companies.
The oil company’s main five-year dollar bond was trading on Thursday at a yield of 5.5% – some 3.25% more expensive than the interest rate that the US government would have to borrow at.
Yet before the weekend, the same BP bond was trading at a yield of 3.5%, meaning its borrowing cost has jumped by 2% as a result of the failure to plug the oil leak.
One City analyst told the BBC that the bond markets’ fears made no sense, because BP has so little debt.
BP owes £14bn in total debts, whereas stock markets currently value the company at £84bn.
read more at the BBC
With a looming bills, suits, and fines to stack on the one billion dollars the company hs already spent on the disaster, and a 1-5 thousand dollar fine per barrel, one has to wonder how this company could fend off its competitors who would like nothing more to consume their business. Check out their new ad, and take a good look at it’s narratar, BP CEO Tony Hayward, because he might not be the face of the company for long.