Sunday, May 30, 2010

Good Question, Captain

"Why is that when BP screws up we make sure they pay every dime in damages, but if a bank (MP: or automobile company like GM, or insurance company like AIG, or GSE like Fannie and Freddie) screws up, we bail them out with taxpayer money?

HT: Captain Capitalism

18 Comments:

At 5/30/2010 10:32 PM, Anonymous Lyle said...

I would point out as one of the loosers GM stockholders took a total bath on the deal, its just the execs and workers that did not. Likewise with Citi a 90%+ loss in stock value is not a no loss situation. We need to distinguish between the stockholder who gets the shaft and the board and management who party on. We need at a minimum the rules on say on pay and stockholder rights to nominate directors. Essentially corporate elections are run in the style of the Former Soviet Union, until recently you did not even need a majority of the votes cast to win, i.e. abstaining did not really count and you could not even vote no.

 
At 5/30/2010 10:45 PM, Anonymous Anonymous said...

Why is it that homeowners who screwed up are bailed out with taxpayer money?

There was no corresponding bailout for stock owners, yet they used their own money versus borrowing someone else's money. (Not that there should be a bailout for stockholders, but there shouldn't be for homeowners who took out too much loan either.)

And how pointless is it to worry about recovering every single dime from BP when the Congress throws billions out the window every month? Cash for clunkers alone cost more than the oil spill, and BP is already covering most of the cost up front.

 
At 5/31/2010 12:05 AM, Anonymous grant said...

This is not the first oil well drilling operation to suffer high pressure blowout and explosion so you would think that BP would be fully insured to cover such an event happening.So are they?
The Horizon semi submersible drilling rig has successfully drilled deeper wells elsewhere than the one in G of Mexico.
You would think that the owner of the rig would also have such an expensive rig insured for damage and total loss.
You would also think that environmental damage would also be insured at least to a maximum amount.
The true story will eventually emerge but will you ever be told it.
There is an application in in another part of the world to drill a well in 10,000 of water and then 10,000 ft below the sea floor.
Oil and gas seem harder to get so maybe these deep wells will be more common and larger insurance cover made mandatory.
Either way BP should shut up and PAY UP.

 
At 5/31/2010 12:14 AM, Blogger bobble said...

"amen" to the prior 3 posters; lyle, anon, and grant

 
At 5/31/2010 9:55 AM, Blogger Walt G. said...

Lyle, are you assuming GM workers and executives were not also stockholders? I know that's not the case. Many people lost more than I did, but many employees had stock in the old GM.

BPs customers are the ones who will eventually pay (the same people who pay the corporate income tax and whatever bailout may exist).

We can try to fool ourselves all we want; however, customers and taxes are the only revenue sources for corporations or public entities. Any argument about who should pay exists only because of political correctness and a lack of that transparency.

 
At 5/31/2010 10:26 AM, Blogger juandos said...

"We can try to fool ourselves all we want; however, customers and taxes are the only revenue sources for corporations or public entities"...

Amen Walter G!

How come when the state government screws up the taxpayers aren't reimbursed?

From the New York Post: Two years after a gleaming, $421 million state court building opened on East 161st Street, glass walls have been boarded up with wooden planks, courtroom doors are broken, stairways are cordoned off with yellow police tape, and sewer flies are infesting the lower levels of the 11-story edifice...

 
At 5/31/2010 10:50 AM, Blogger -Danny said...

Answer: Because we don't have a treasury secretary and Fed chairman who are predicting the demise of the world if we don't give their homies in the oil business $700B immediately.

 
At 5/31/2010 11:53 AM, Anonymous gettingrational said...

The key concept is damage. Damage to the environment as a result of negligence is not the same as reputational damage done to a going concern. The taxpayers can theoretically recover funds loaned to GM or AIG. The funds for damages done by the oil disater "clean-up" are expenses and not loans. GSEs such as Fannie and Freddie are in a separate category of limitless U.S. budget damage.

 
At 5/31/2010 11:56 AM, Blogger sethstorm said...


From the New York Post: Two years after a gleaming, $421 million state court building opened on East 161st Street, glass walls have been boarded up with wooden planks, courtroom doors are broken, stairways are cordoned off with yellow police tape, and sewer flies are infesting the lower levels of the 11-story edifice...

That link somehow removed by the filter.

You meant this: http://www.nypost.com/p/news/local/bronx/bronx_court_fester_WPy3X1sVpgQ3hTDPukqOkI

 
At 5/31/2010 1:02 PM, Blogger Ron H. said...

juandos, your link is incorrect.

Oops! Never mind, I see that Sethstorm has corrected it.

>"How come when the state government screws up the taxpayers aren't reimbursed?"

What do you mean? I always get reimbursed. I take $20 from my left pocket, put $10 in my right pocket and walk away happy.

As Walt G. said, it is all of us as consumers, taxpayers, and stockholders who ultimately pay for everything.

 
At 5/31/2010 1:32 PM, Anonymous Lyle said...

Walt I was mainly looking at who did not get bailed out. The stockholders did not get bailed out. That some who where stockholders got other bailouts does not make the point that the stockholders got wiped out less true. Given that the stockholders did not have much say in what happend except to sell their stock, due to the soviet style directors elections is the big point. The companies were not run for the stockholders just for the top management.

 
At 5/31/2010 6:15 PM, Anonymous grant said...

Lyle!
Thats because you are a filthy capitalists and you don't deserve to be bailed out because you don't think Socialist and you are not one of them.You don't live on handouts and you don't expect to. You are a rare person and one of the minority who think that way. This is a cradle to the grave society. The brave new world. ENJOY!!

 
At 5/31/2010 6:26 PM, Anonymous grant said...

"We have already seen some of the ways that the Washington consensus policies contributed to the failures: privatization done the wrong way had not led to increased efficiency or growth but to asset stripping and decline". JOSEPH STIGLITZ

 
At 5/31/2010 7:45 PM, Blogger W.E. Heasley said...

Captain:

“I'll send somebody a shinny new nickel if they can explain to me that when BP screws up we make sure they pay every dime in damages, but if a bank screws up we bail them out with taxpayer money.”

That is a most excellent question. Would that be crony capitalism or special socialism. Or, alternatively, special crony social capitalism.

 
At 5/31/2010 7:46 PM, Anonymous grant said...

Wikipedia Blowout Preventer
scroll down to
Deepwater Horizon Blowout.

 
At 6/01/2010 8:33 AM, Blogger juandos said...

Very odd...

When I click on the NY Post link the page comes up but when I look at the 'source' I get some scrambled collection of alphanumerics...

Thanks for that sethstorm...

My apologies folks...

 
At 6/05/2010 12:50 PM, Anonymous Gary said...

The "bailout" is turning out not to be a bailout but a short term loan. The banks all paid pack, AIG is starting to and even GM. TARP is running positive now with more coming in that going out. Lastest figure is that of the 700bn all but 115bn will all come back to taxpayers. And they are still working on it. In the end we might make a profit on it. Its far more bridge loan than bailout at this point but that mean less fun for conservatives who would rather we be in a depression than see their dead Herbert Hoover ideology not followed to the letter.

 
At 6/18/2010 12:07 AM, Anonymous Anonymous said...

Because there aren't enough US stock holders of BP, particularly there aren't enough senators and representatives in Washington DC who own BP stock.


"Should Lawmakers Be Allowed To Invest In The Industries They Regulate?"

http://washingtonindependent.com/49451/senators-hold-personal-stake-in-bailed-out-banks

 

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