09 June 2010

Rumour: BP To Cut Its Dividend Next Week, and Yet Another Goldman Sachs Stock Scandal

This is making the rounds as a rumour, but it has some credibility, and I have been expecting it as they need to set aside serious reserves for litigation and for the clean up of damages caused.

The company is in deep trouble, and the CEO is making all the classic errors we learned not to do in the crisis management courses in business school. Its shocking really at how badly he has performed.

The rumour is so widespread that I am sure it will make the wires in some form, if only a denial, and I will look for it. I do not expect BP to declare bankruptcy as this other story suggests, although it would be an interestingly foul gambit to try and avoid its liabilities.

British Petroleum had been at the heart of darkness many years ago, as in the example of the Iranian coup d'etat of 1953 and imprisonment of Iran's democratically elected leader Mohammad Mosaddegh, followed by over twenty years of tyranny and torture. Some think this is what had inspired Eisenhower's parting words about the Anglo-American military-industrial complex.

Although through aggressive use of public relations had improved their image, BP have long been noted by investigative reporters and environmentalists as a bad boy among the corporate multinationals, preferring to spend money on PR, politicians, and regulators rather than planning and safety. BP: Slick Operator and BP's Other Spill by Greg Palast for example, and those radicals at the Seattle Times: BP's Trail of Accidents and Scandals Lead to Alaska. When Sarah Palin, former governor of Alaska winks and says "I'm your gal," she just might not be winking at you, chump change.

And let us not forget the BP Texas City Refinery Explosion of 2005 and the urgent calls for more oversight and attention to safety.

I thought it was interesting that BP bought the search term "oil spill" from Google to better direct the flow of information from the public.

And then of course there is the issue of insider selling that occurred prior to the more complete release of the extent of the Gulf oil leak disaster involving BP executives and former executives, and of course Goldman Sachs. Gulf Oil Spill to Drag Goldman Sachs into Trading Scandal?

This is not to say that all corporations are corrupt all the time, not at all. But neither are they naturally good, all the time. It underscores the need for regulation, and investigations into the type of corruption which was apparently widespread in the agencies that regulated the banks, the oil drilling industry, and the stock markets. Maintaining a system of justice, the rule of law, is not something you do once and then sit back and then trust to the natural goodness of men and women to limit their profits and do the right thing when no one is watching. Especially when you permit corruption to create enormous temptations and opportunities in the spirit of 'greed is good.'

"How are the mighty fallen, and the weapons of their warfare perished." Slowly but surely.

And I see that the utterly discredited econo-propagandist Art Laffer is now on Bloomberg television being prompted with softballs from the corporatist spokesmodels Matt Miller and Carol Massar.

"O Rose thou art sick.
The invisible worm,
That flies in the night
In the howling storm:

Has found out thy bed
Of crimson joy:
And his dark secret love
Does thy life destroy."

William Blake, Songs of Experience
Postscript: In case you are interested here is a brief, simple, but decent analysis of Blake's poem, The Sick Rose. The first twenty or so analyses that Google recommended would set my old teachers turning in their graves.