Thursday, June 17, 2010

SAR #10168

Managerial incentive bonuses lead to managerial fraud.

After the Fall:   The GOP, with the help of a few loopy Dems, has decided that saving the bankers is more important than feeding the families of the unemployed.  So screw 'em.  No more long term unemployment benefits. Besides, by election day most of them will be too busy standing in soup lines to bother to vote.

Sputtering:  May's housing starts were but 593,000, not the 659,000 expected.  That's down 10% from the already downwardly revised April numbers.  Hard to get excited about an economic recovery when the economy isn't recovering.

Fig Leaf:   Is it possible that BP's leak estimates - from 1,000 barrels a day to 5,000 bbl to 25,000 bbl to 60,000 bbl – have all been relatively accurate and that the increase in the leakage rate is real and caused by the oil, gas and trash rushing out of the hole, constantly eroding it and making it bigger?  Yeah, erosion is quite possible . So is BP lying.  The one doesn't preclude the other.

Logic Has Noting To Do With It:  The same folks who don't want the government to mess with social security or medicare insist that they want cleaner fuels and less global warming, as long as it won't raise the price of gasoline.

Rebuttal:  As expected, Obama called for federal programs that would encourage a transition from fossil fuel to cleaner energy.  Predictably, the GOP agreed we need to do these things, as long as it doesn't cost anyone a job or a penny a gallon at the pump, and does not harm industry profits.

Poor Performers:  “Despite the current economic rebound”, consumers are not consuming the way they should be at this point in the recovery. They must have missed the rehearsal.

Ignorance is Bliss:  Most Americans know little about what the US government does in its name, and what it thinks it knows it learned from the MSM's distortions and pandering.   And most Americans are clever enough to know they don't want to know.  All they want is to continue to live in the fantasy.

In Character:  The headline said  “Senator aims to force unemployed to take drug tests.”  Without reading any further, why do you suspect it was a Republican?  Usual prize if you can, without reading any further, name the Senator who hatched this scheme and feels that poverty is “a way to help people get off of drugs to become productive and healthy members of society.”

Apples and Oranges:  US industrial production was up 1.2% in May – a third consecutive monthly gain.  Capacity utilization is a puny 73.7%. Nearly all of the increase was in “defense and space equipment”.   Industrial activity is booming, plowshares into swords.

Aw, Ain't It Cute?  A new Louisianan law mandates that a woman must have, and view, an ultrasound, before an abortion can be performed.  Man-date is a precisely accurate term.

Do the Math:  The UN is scaring the women and children and pointing out that food prices will rise by “up to 40% over the next decade!”  Scary, until you do the math and realize that that is 3.75% a year.

Simmons Says:  Matt Simmons, who for many years was one of the most respected commentators on the global oil industry and author of the much respected Twilight in the Desert,  has been a pariah of late. Because he sees BP going to $0 a share, says nukes are the only way to seal the leaking well, that there is a serious down-hole leak, from a well-bore rupture, that leaked oil covers 40% of the subsurface Gulf, and that BP has pretty much done everything wrong. I hope Matt's wrong, but wouldn't wager against him.

Moby Dick:  Japan is resorting to cash and call girls to break the 24-year moratorium on the slaughter of whales.  Well, Melville did write a couple of books on the attractions of South Seas ladies...


Dink said...

"says nukes are the only way to seal the leaking well, that there is a serious down-hole leak, from a well-bore rupture, that leaked oil covers 40% of the subsurface Gulf"

Its 6:30 am here in Seattle. Still, after reading this, hooch seems like a reasonable breakfast.

mistah charley, ph.d. said...

Last night one of the cable channels was showing a repeat of Earth 2100, originally produced by ABC. It was a "worst case scenario" - and it didn't mention the gulf oil geyser at all, of course.

Laugh or cry? Well, laughing takes less time to clean up from.

Eric Hacker said...

re: Do the Math.

Actually a 40% price increase for food is scary if one considers that wages in the US have been stagnant for a long while. Sure there will be global pockets of growth. The report also says that they adjusted for inflation.

re: Simmons says.

There is a really good comment on TOD ( that basically says that the things BP have done are only wrong based on what they have been telling us. Looking at what they are actually doing and determining why one might do that leads one to the same disastrous conclusion that Simmons comes to.

All I know is that we've already polluted the entire ocean with oil derivatives (, this is just upping the ante.

Charles Kingsley Michaelson, III said...

Eric - The increase in food prices has so many variables and unanswered questions. Nominal or real prices? What level diet/foodstuffs How was potential population arrived at? Does this include the cost of energy in an over-the-peak era?

The editorial review board told me I was going to get in trouble with this one, and she was right.

The observation about BP - watch what they do, not what they say - boy it hurts when you get blindsided by one of your own cautions.

Thanks. ckm

Charles Kingsley Michaelson, III said...

One more thing: Do you suspect that BP traded 20 billion in escrow for immunity from criminal prosecution?


Rumor said...

I think it's most likely BP is just buying time and favour with the escrow account. If I'm right, it indicates just how bad they think the situation may be / will get.

Eric Hacker said...


The big thing I think people should keep in mind about BP, is that most other large corporations and governments are just as bad. I think you do a great job of providing details on that time and time again.

BP got caught with their pants down. That doesn't mean everyone else isn't screwing with us. Hell, just look at Ecuador and Nigeria to see how oil other companies have handled things. Look at Iraq, Pakistan and Afghanistan to see how our own government handles itself.

BP found that putting up the escrow was in their best interest. Whether it bought political favor, or is paying interest, or helps tax accounting, who knows. I don't think they are foolish enough to think that anything will buy immunity, except maybe that if one kills the company, then how will it pay for this mess.