A Drop in the Bucket Could've Prevented Oil Spill?

The BP oil well "accident" that has evolved into one of the largest oil spills ever in US water continues to spew crude into the Gulf of Mexico. 11 lives have already been lost, and countless other lives, shattered. 

Here's the thing. This "accident" could've been avoided if BP Oil  had shelled out $500,000 (pocket change)  for a remote-control shut-off valve, called an acoustic switch - an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated - that is normally used as a last-resort protection against underwater spills.  However, unlike most of the  oil producing countries of the world,  "U.S. regulators don't mandate use of the remote-control device on offshore rigs, and the Deepwater Horizon, hired by oil giant BP PLC, didn't have one."

Several years ago, the U.S. considered requiring a remote-controlled shut-off mechanism, but drilling companies questioned its cost and effectiveness, and the Minerals Management Service (MMS), part of the Interior Department responsible for regulating both offshore wind development and oil and gas drilling, decided the remote device wasn't needed because rigs had other back-up plans to cut off a well.

Really?

Well, I guess, amidst “a culture of substance abuse and promiscuity” MMS officials had better things to do than regulate oil drilling. After all, when you're "responsible" for collecting approximately $10 billion in royalties annually and you're one of the government’s largest sources of  income, it's easy to understand how hubris and greed could've created the "free-for-all" atmosphere that developed and prevailed for much of the Bush administration’s watch and how that might obscure one's thinking. Thus,  making it probable that the first priority became maintaining that coke-sniffing, porn surfing, golf playing, orgasmic kind of climate. And how do you ensure its continuance? Profit, profit, and more profit.

Now, after this horrific event, BP says it is spending $6 million a day to battle the oil spill. Clearly, the sense of power and greed that inspired these officials to shun the vagaries of self-control and instead fully embrace monumental hedonistic debauchery, complete with the senseless and random act of taking "tickets to a Toby Keith concert", did, in fact, render these "officials" dumb as...well, dumb as a BP oil executive.

Granted, much is still unknown about what caused the problems in Deepwater Horizon's well, however, because of the greedy oil executives and the immoral, compliant, greedy MMS officials, who seem to predominate today, in this culture of deregulation that was so heavily advocated for during the Bush Administration - or really, since the inception of Reaganomics - we'll never know if the decision to make the infinitesimally small purchase, relatively speaking, of a football-sized acoustic remote-control may have been able to stop the oil well disaster.

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Devout Laissez-Faire Reagan Appointee Declares Failure of Capitlism.

Aside from greed, stupidity, and corruption, it's clear that today's economic meltdown has much to do with a general lack of transparency, deregulation of the financial system, excessive leverage, the financial engineering of overly complicated and opaque securities, compensation mechanisms that in the words of James Surowiecki, "even when people recognized the possibility of dragons, they decided it was in their short-term interests (even if it wasn't in their company's interests) to run the risk of getting incinerated anyway", and a blindly or naively optimistic view of free market capitalism that ignores the inevitability of market imperfections.

Despite all the evidence, many of the conservatives are trying to market their own version of why our financial system crashed, and that is that the crash is actually the fault of government regulation. However, there are a few "free market" cheerleaders who have reversed their Panglossian ideas about laissez-faire economics. One of those men is Ronald Reagan appointed, Judge Richard Posner, author of A Failure of Capitalism The Crisis of '08 and the Descent into Depression

The conservatives believe the depression is the result of unwise government policies. I believe it is a market failure...Without any government regulation of the financial industry, the economy, would in all likelihood, be in a depression. We are learning from it that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the resilience—the self-healing powers—of laissez-faire capitalism.

The depression has hit economic libertarians in the solar plexus because it is largely a consequence not of the government’s overregulating the economy, by doing so fettering free enterprise, rather innate limitations of the free market.” -- Judge Richard Posner, appointed to the US Court of Appeals for the Seventh Circuit by President Ronald Reagan in 1981, and one of the nation’s most prolific legal defenders of free-market economics.

I greatly admire Judge Posner's willingness to rethink some of his fundamental beliefs about free market capitalism, however, after listening to Robert Reich, who I respect immensely, and the Judge discuss it on Tom Ashbrook's On Point radio show, I'm not sure he (Judge Posner) is fully convinced.

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Phil Graham's House of Cards Economy and an Over Qualified John McCain.

The Complex Derivatives system, a huge shadowy segment of our financial markets system, that employs complicated sounding financial instruments such as Credit Default Swaps, OTC Derivatives, Mortgage Backed Securities... just fancy words for betting on whether something will profit or not, is the primarily reason our economy is falling apart.

The current sub-prime mortgage crisis is the most recent and obvious example of what can result from this unregulated segment of our financial system. Banks placed bets on whether sub-prime mortgages would pay off or not. The banks opted for pay off and lost causing the housing industry bubble to burst.

The derivatives market is twice the size of the more transparent market of stocks and bonds, since 2000, this "dark market" has ballooned from $900 billion to more than $45.5 trillion.

"Derivative financial instruments are, are those that gain or lose value as some underlying rate, price, or other economic variable changes. Derivatives traders can speculate on future trends in financial assets (such as stocks or currencies) or commodities (oil, metals, pork bellies) without actually owning the underlying items."

Former Texas Senator Phil Graham, chiefly responsible for getting Congress to pass the Commodity Futures Modernization Act (CFMA), a 262 page bill, added as a rider to the Omnibus appropriation bill, as congress was recessing for Christmas in 2000 - a popular time of year to sneak in corrupt legislation - completely deregulated these "hidden" markets not only at the federal level but at the state level as well, is also currently the chief economic advisor to John McCain.

Credit Default Swaps are insurance policies designed to cover losses banks and bondholders may incur due to the possibility that the value of the bets they made may decline, however the word insurance does not appear as the insurance industry is state regulated and the whole idea behind this "criminal" market is deregulation.

Should we have an economy based on whether people make good or bad bets - or should we have an economy where people build companies, create manufacturing interests, do inventions, advance the American society, make it more productive? This economy is based on people sitting at their computers making bets all day long... We are rewarding people for sitting at their computers and punching in bets. That's not the way this economy is going to be built. India and China, with their focus on science and industry and building real businesses, are going to eat our lunch unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators. -- Michael Greenberger,

The federal government permitted these institutions to engage in this betting not through the banks themselves or hedgefunds but through, Structured Investment Vehicles,” which enabled the banks to exclude these transactions from their books. To this day, we still have no idea how far this problem goes because we don't know how much of this information was intentionally excluded. Not only that, the information the banks did include were listed as valuable assets and therefore must be unraveled to redetermine the accuracy of all of these financial institution's financial statements.

Until yesterday, I was undecided about Senator John McCain. Unlike President Bush, Senator McCain personally endured the evil, injury, and pain that are synonymous with war. Serving as combat pilot, he was shot down on a mission over North Vietnam. He spent many years in a Hanoi prison with untreated injuries and he suffered through torture without yielding. Even after his captors, learning that he was an admiral's son, offered to release him, McCain refused. He would not leave his fellow soldiers.

There is no doubt that John McCain is a man of integrity and has gained wisdom from what he has observed and encountered as a prisoner of war, however; in some ways, John McCain's "super-human" qualities...qualities that the average American does not have often times, may "over qualify" him to be President, if that's possible.

Yes, courage and integrity make for a great leader and God only knows we need one right now, but is John McCain that man? Can he really empathize with the average person? Can he put himself in the shoes of someone who may not be as strong as he is? (Keep in mind these questions come from a person who just might scream like a little girl at a snake convention at the first sign of dental instruments, if captured by the enemy.)

After listening to Michael Greeberger, Law School Professor and Director, Center for Health and Homeland Security, on Fresh Air (every citizen should listen)explain that the CFMA is nothing more than an amendment that removes all regulation from this market, and is therefore nothing more than an attempt to further enable this market's "criminal activity" basically making it lawful to destroy our economy, it became clear to me John McCain should not be President.

Although, John McCain admitted he did not know all that much about economics and his association with Phil Graham is probably ignorant of Mr. Graham's contribution to our current "house of cards" economy, a Presidential candidate cannot be afforded the luxury of economic ignorance, especially now.

John McCain's acceptance of Greenspanian economics clearly demonstrates that he does have trouble putting himself in the shoes of the average American who may not have the innate strength that he was obviously endowed, leading me to conclude the answers to the aforementioned questions are no and no.

Whereas President George W. Bush was unqualified and lacked the moral courage necessary to be elected President, John McCain's strong character and courageous outlook, not to mention his weakness, lack of economic insight, may paradoxically limit his vision and scope to include all segments of the melting pot we call America.

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The Price of Liberty is Eternal Vigilance.

As usual, Thomas Jefferson hit the nail on the head. If "We the People" are guilty of anything, it's taking our eyes off the cookie jar at the "Cookie Monster" convention. That's just plain stupid, but I guess that's why we're the "peasants".

The "corporate class" or the "Cookie Monster" convention assert that the markets discipline themselves and interference will only keep the markets from "working properly" or more precisely, working for those who can afford to take advantage of and gain at the expense of the ordinary taxpayer. At the same time, when the market starts to melt due to corruption, greed and lack of standards, requirements, and rules, the same free market fundamentalists who denounced regulation earlier, now want to be bailed out, once again, at "We the People's" expense.

In return, for paying the price of their sins, "We the People" should, at the very least, demand regulation so that this does not happen again. The guilty parties deserve to bail themselves out and most deserve a jail sentence as their depraved behavior "trickled down" to the "least of their brother", yet that will never happen because the cost to all of us would be far too much.

So it goes, all those responsible for nearly collapsing our economy will get away with reaping the benefits from the very institution they fought so hard and succeeded to make impotent - our government - while we lose jobs, retirement savings, and in general, our quality of life or in other words, we're left with the crumbs, and that's if you are lucky. Let's not forget that this corporate class of people will have to endure watching their bank accounts drop from $100 million to $50 million dollars and most of us can honestly say we will never know what that feels like.

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The Hypocricy of Laissez-Faire and the "Utopia of Greed"

Robert Kuttner , author of "The Squandering of America: How Our Politics Undermines Our Prosperity", is convinced we are heading for a recession.

"The recent subprime mortgage collapse, and the hedgefunds that have contributed to the somewhat volatile stock market we see today have one thing in common. They have exploited loopholes in what remains of federal regulation."

Many Americans probably assume subprime lenders are put in business by some sleazy establishment, when the truth is, it's the bluest chip names on Wall Street including Citigroup, who can take credit for empowering this group. It's not the individual corruption that is the root cause of the numerous scandals, and the subprime fiasco we see today. Individual corruption is only the result of too much temptation created by the gradual process of deregulating the American economy that started in the 1960s and really took off once Alan Greenspan's "cheap money" policy and Ronald Reagan's "trickle- down" economics combined to create a "utopia of greed" giving birth to the mirror-image of the 1920s, the 1990s.

"‘Atlas Shrugged’ is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should.” -- Alan Greenspan in 1957 responding to a critic of Atlas Shrugged

Even in an ideal world, where everyone starts out on equal footing, Alan Greenspan's thinking is a little harsh, but considering the inequality and injustice that exist, he is either blind as a bat or ruthless as a rat. Alan Greenspan's strong belief in Laissez-Faire...that the government should not intervene to maintain a desired wealth distribution and that it should not protect people from poverty is steeped in hypocrisy considering he made sure the wealthiest citizens were insulated from the harsh mechanisms of the unfettered market.

"What she (Ayn Rand) did…was to make me think why capitalism is not only efficient and practical, but also moral," -- Alan Greenspan in 1974

Ayn Rand basically gave him the permission to blind himself to the ruthless effect "Laissez-Faire" could have on the *"parasites" he speaks of especially when he does not apply it to those who started life at the finish line...but has no problem reserving this sometimes brutal economic doctrine of opposing governmental regulation in commerce for the many people who cannot even begin to find the starting line.

The bottom line is deregulating our economy entirely, requires the regulation of unbridled greed, which requires reducing temptation in the market place which can only be accomplished through edict. Greed is here to stay because it is hardwired into human beings therefore cannot be eliminated, only regulated.

* In all fairness, Alan Greenspan was only 25-years old when he wrote that piece and should be given the benefit of the doubt. I know I have changed my views considerably since I was 25 and hopefully he has too. However, I do think that type of thinking influenced the decisions he made or neglected to make during the time he was Chairman.

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