June 21, 2010
WORKS IN PROGRESS: The Economy & EDA
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“Taking 11 lives among the 126 crew members, the
British Petroleum (BP) Deepwater Horizon offshore oil drilling platform in the Gulf of Mexico exploded on April 20, 2010.
More than three frustrating weeks after the explosion, millions of barrels of oil were still gushing into the Gulf's seawater 5000 feet below the surface:
Even the somewhat-rusty mechanical/electronics engineering skills buried deep within this writer's background were appalled when the history of dubious design, poor maintenance, and cavalier attitude emerged about the
single emergency blowout prevention device that BP had relied upon. Once this one device failed, what followed was inevitable.
Already deemed the worst man-made environmental disaster in history, the Gulf of Mexico
leak to recover some of the gushing oil, yet not surprisingly found itself without sufficient surface vessels to carry away the siphoned oil.”
Meanwhile, the country's spirits and equity markets continued to decline:
Rather than repeat here the overwhelming and heartbreaking documentation of the BP Deepwater Horizon Oil Spill disaster already available to everyone on the planet, the writer will summarize the situation with the following personal refection from April 21, 2010:
When the news of the Deepwater Horizon disaster first broke on April 20, 2010, this writer was moved the very next day to pen the following brief 4-part narrative about how surprising it was that the explosion and loss of life occurred at all, given the following initial assumptions:
As the horrible events, repeated disappointments and devastating oil spillage in the Gulf have continued over the last seven-plus weeks,
we find that none of the four (4) naïve assumptions listed above was true in the Deepwater Horizon disaster, or if any part of any such assumption might be true or advisable, it was not acted upon in advance or even since the disaster occurred.
Media coverage of every daily set of disappointments resulting from the Gulf Oil Spill has been extensive,
but short on insight.
This writer will not attempt the former here, but he has evolved a personal theory regarding the latter:
“Stated simply, the Gulf Oil Spill has crept both directly and insidiously into the collective psyche of the American people, and this disaster is itself chiefly responsible for slowing the emerging US economic recovery in its tracks, as it has shaken our traditional confidence that was just beginning to be restored. Likewise, its spin-off effects are felt worldwide.
US stock markets are retreating, private US hiring in May took a real hit compared to April, thousands of unemployed people have stopped looking for work, state and local budget woes seem intractable, pension programs are hurting, consumer confidence is edgy, foreign issues suddenly loom larger (European debt, decline of the euro), and so on.
Moreover, this oil spill disaster has temporarily diluted public and private confidence in President Obama, since the US Government has also appeared to date to have been partially stymied by the inability of BP or any others to stem the flow of oil into the Gulf resulting from this disaster.
The good news is that America will eventually overcome this local blow to our collective psyche (over time and at a dear price) and get us all back on the path of consistent economic recovery from these temporary woes.
If this is what happened, BP's carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig,"said Democratic Reps. Henry A. Waxman and Bart Stupak.
At press time for this issue of EDA WEEKLY, the New York Times reported that
President Obama would use his first Oval Office speech on the evening of June 15, 2010 to outline a plan to legally compel BP to create an escrow account to compensate US businesses and individuals for their losses from the oil spill in the Gulf of Mexico. Mr. Obama would press for the escrow account if BP does not establish one voluntarily. The board of the London-based company was planning to discuss the idea and other spill-related issues — including the controversy over a big dividend for shareholders coming due this summer — at an emergency board session on June 13, 2010.
Simultaneously, the Wall Street Journal reported that recent stock turmoil is generating unease among market analysts.
Noting that the Dow fell 12.4% between April 26 and June 7, the Journal says that the only precedent for such a decline in the last 80 years at this point in an economic recovery is 1950, when the Korean War broke.
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-- Russ Henke, EDACafe.com Contributing Editor.
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