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No idea if this is credible (writer is a goldbug), but it gives an interesting twist on the BP disaster:

The BP crisis in the Gulf of Mexico has rightfully been analysed (mostly) from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.

People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of.

Although never really discussed, the world is highly reliant on BPs provision of long-term credit to many core industries. Who makes good on all the outstanding paper that so many smaller oil, gas and electricity companies, airlines, shipping companies, local bus, railway and transportation networks that rely on BPs creditworthiness and performance for? It doesn’t take a genius to figure out how this could all unwind. If BP has to be bailed-out, like a bank, the system will have to print even more unimaginable amounts of money.

http://oilprice.com/Energy/Energy-General/A-Bankrupt-BP-Worse-For-The-Financial-World-Than-Lehman-Brothers.html

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Interesting, no-one is thinking about BP's treasury operations at the moment... ;)

Apart from the effect on the FTSE 100 and the fact that most pension funds are knee deep in BP equity.

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I predict that BP will get mostly let off.

This is why:

http://www.guardian.co.uk/environment/2010/jun/23/india-barack-obama-bhopal

US companies have been gallivanting all over the world for many decades causing leaving catastrophes in their wake, at the moment the US is creating retroactive laws to punish BP with no thought of the consequences.

"It looks like Indian children's lives are cheaper than [those of] fish," Chetan Bhagat, the country's best-selling writer, said. "Obama should bang his fist on the table. If he can do that for fish, how about our kids? Or are they only Indians?"

That angry sentiment is being expressed by quite a few third world and developing countries in Africa, Asia and South America. If the US goes ahead and properly does over BP they will face a shitstorm of retroactive claims against their companies for past (accidents/crimes/fillintheblank).

11 people dead, a load of oily fish and birds = £20 billion and counting

How much for 15,000 people dead in Bhopal and a vast inhabitated area left with highly toxic waste contaminating it?

How much for the many thousands of tons of DU (half life 3.5 billion years...) left in Yugoslavia, Afghanistan and Iraq?

How much for Piper Alpha, 167 died on an American rig in the North Sea?

Etc

Etc

Etc

The bill would get very big, very fast...

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it's not Obama's job to bang the table over Indian deaths, that's the job of the Indian Prime Minister. Obama is rightly only concerned about Americans; that's his job.

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BP have many assets and a strong cashflow; with oil price around $77/bbl and likely to rise further due to increased demand in China etc it would be possible for BP to raise very substantial sums via asset disposals. Furthermore the costs of the clean-up will not all be up-front i.e. some will be incurred in year 2, year 3 etc thus, for example, next year's dividend could be cancelled thus raising well over $10bn.

Imo of more concern than the OP's quote from financial analysts is the impact this incident will have on future oil prices. Regulatory authorities in US and other oil producing countries are exercising much more caution re deepwater oil projects; several already have imposed moritoria on deepwater drilling. A number of energy analysts have estimated oil output by 2015 will fall by between 400k and 900k bbls/day as a result. Quite a small amount relative to global demand of 85m bbls/day but price is extremely sensitive to small changes in supply / demand balance.

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it's not Obama's job to bang the table over Indian deaths, that's the job of the Indian Prime Minister. Obama is rightly only concerned about Americans; that's his job.

True.

But they are making RETROACTIVE laws to punish BP.

That is huge, massive. A basic principle of law and order in a democratic society.

It means that no company can do business anymore in the US based on current laws and agreements as the government can just change their mind after the fact, hold you liable for things you weren't legally liable for before, seize your assets and put you in prison on whim.

They are behaving like despots and communists not democrats.

Nasty can of worms they are opening...

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True.

But they are making RETROACTIVE laws to punish BP.

That is huge, massive. A basic principle of law and order in a democratic society.

It means that no company can do business anymore in the US based on current laws and agreements as the government can just change their mind after the fact, hold you liable for things you weren't legally liable for before, seize your assets and put you in prison on whim.

They are behaving like despots and communists not democrats.

Nasty can of worms they are opening...

Dangerous precedent to set.

More Pandora's box I think than a nasty can of worms.

Obama looks like he's making some really big mistakes that will ultimately undermine him.

However the financial fallout from this disaster is going to be huge unless they get the well plugged providing it isn't fatally compromised.

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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