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Fun with "libertarian" caricatures

June 30th, 2010 No comments

I ran into a blog post by biologist PZ Myers, consisting mainly of a cartoon presenting a “taxonomy” lampooning “libertarians“. Some of the funning might hit close to home, but it is apparent that libertarians are more than a little misunerstood.

I left the following comment, and am cross-posting here because I fear the number of links may trigger a spam filter:

PZ, what’s a libertarian? One might say they are are guys like Glenn Greenwald, not always self-identified as libertarian but fighting to keep both so-called “conservatives” and “liberals” honest.

But they are still an inconsistent bunch – as the range of caricatures illustrates but fails to wholly capture – and are as prone to stereotyping and tribal perceptions/reactions as you and others here are.

I now consider myself libertarian, but have been butting heads with libertarians (and conservatives/liberals) for years, particularly over environmental issues and the negative roles played by corporations and government.

Here’s a taste of what is still libertarian, but rather rare:

 Maybe that’s too much of a taste for most of you, but since there is some obvious curiosity I thought I offer an introduction.

Sincerely, TT

http://twitter.com/Tokyo_Tom

Posted by: TokyoTomSr | June 30, 2010 3:09 AM

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Limited liability & financial crisis (& BP): someone else sees the obvious "black swan" of executive/trader moral hazard after investment banks went corporate

June 29th, 2010 No comments

A libertarian analysis of the corporate form, particularly the state grant of limited liability to shareholders, does not begin and end with the question of whether such a government intervention has any libertarian justification (it clearly does not), or even – as Stephan Kinsella continually suggests – with the narrow question of whether, in hie case of a particular “corporate tort,” it is fair to impose liability broadly on shareholders who had no personal role in a tort. Rather, as I have have long argued in my posts on limited liability, one must also examine the systemic consequences of the grant.

It is my own humble view that limited liability of shareholders, when combined with other corporate attributes like unlimited life and  purposes and an ability to further ring-fence risky activities in separate subsidiary entities, has had profound and pervasive consequences: relative anonymity of ownership, remoteness of owners from communities in which the firms operate, an explosion of powerful firms and wealthy investors and their ability to influence judges, legislators, bureaucrats, the press and mass media, and a steady erosion of common law and growth in the centralized regulatory state – as citizens fight to limit the risks and costs that corporations impose on individuals and communities. The growth of corporations is accompanied by growing moral hazard, not simply because dividends paid to an anonymous and morally blind shareholder class  cannot be clawed back when risks are materialized, but shareholders find it increasingly difficult to rein in a self-interested class of executives and employees.

The toxic combination of statism and limited-liability moral hazard -and the steady shifting of risks to society that both entail – can be clearly seen in both the BP Gulf oil disaster (see my BP posts) and in the financial crisis.

I recently ran across a post by an informed observer of the financial crisis that pointed to these problems; The Ten Trillion Dollar Black Swan in the January 26, 2009 online edition of American Thinker by Mike Razar, who describes himself as a “Phd in math from Harvard, a math professor, independent option floor trader, sr. vp swiss bank corp, 9 years on board of directors of the CBOE (options exchange), chairman of product development cmte., financial software development”; some excerpts follow (emphasis added):

As a poor taxpayer, I am at least entitled some entertainment for my money.  Fire all the top executives and sue them for every penny they have on the grounds that they totally abandoned even a fig leaf of fiduciary responsibility to their share holders and bond holders. I bet we can get some lawyers to do that pro bono! But no, instead we have to vomit every time one of those self-serving empty suits who run the banking industry appears on TV telling us that we are too dumb to understand the intricacies of modern finance. Then he shakes his head solemnly, while proclaiming to us how unlucky they were.

It is unfair to blame every bank CEO. Just to name one, (I know there are others) Wells Fargo Bank share holders were sent a note of apology because earnings were off by 7% from the previous year because of bad mortgage loans. Gee whiz! They took what was believed to be a prudent risk and it didn’t work out. So the shareholders took a tiny hit, not in value, but in potential increased value. That is true capitalism. But small risk equates to small bonuses. How could you have expected  the heads of Bear Stearns, Lehman Brothers, AIG, Morgan Stanley, Goldman Sachs, etc. to disappoint their employees with mere 6 or 7 figure bonuses?
And oh yeah. The aforementioned CEO of Wells Fargo was summoned to Washington by the Treasury Department’s secret police and water-boarded for 48 hours until he agreed to accept $25 billion or so, in order to save his badly managed competitors any embarrassment.

Am I being too harsh? After all we are repeatedly assured (as if we were the morons) that it was a perfect storm. No, worse than that. A black swan!  Sure, hindsight is 20/20, but who could have anticipated it?  Let’s see. You leverage your firm 30 or 40 to 1. That means (public school graduates) that you have a billion dollars of your own money. Then you use your “strong” balance sheet (no silly marking to market) to borrow another $39 billion. You loan out $35 billion of it and pay the other $4 billion to yourself or other co-conspirators. Your risk managers fire off e-mails telling you that if housing prices decline by as little as 5% to 10%, the entire firm is lost. What a bunch of academic worry-warts! Everyone knows that housing prices can never go down. Maybe one intrepid risk analyst (who earns less that 1% of your well deserved compensation) has the temerity to remind you that the latest reports show an excess supply of more than 2 million homes nationwide as compared to people who need a home to live in. After firing her, you console yourself with some caviar and truffles washed down with a $10,000 bottle of wine.

There was a time when the greed factor cited above was balanced by its equally famous sibling, the fear factor. Before 1970, investment banks and other NYSE members had to be individuals or general partnerships. When they converted to publicly traded corporations the risk was transferred to the shareholders but the rewards still went disproportionately to the senior managers. Why is that important? When that e-mail warning of the risk hit the CEO’s computer, he could ignore it, knowing that he had accumulated tens or even hundreds of million dollars in prior years. At worst, he could retire comfortably. Had he been the managing partner, the firm’s creditors could go after every penny he had to his name. Say goodbye to Mister [Fear] and hello to Mister [Greed]! …

This rant would be incomplete without a nice metaphor to take home. It was not a black swan that caused this crisis. It was a whole flying wedge of white swans flying over Wall Street marking the market in their own charming way.

One commenter left the following note:

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Posted by: bob bradley <!–
–><!– Comment: #33 –> 
Jan 26, 06:43 PM

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Reply


the key point hear is the move from partnerships to public companies by the investment houses while still operating their compensation systems(at least on the bonus side) like they wre still partnerships. in this assymetrical, i win but cannot lose structure, traders used the firms(now shareholders) capital as their own personal gambling pot.this was an inevitable train wreck for us poor shareholders who did not get it .talk about the proverbial “other people’s money”!

Razar refers implicitly to successful lobbying by the investment banks to expand their permissible leverage, but fails to note that the moral hazard was further enabled by government bailouts. This combination of corporate risk shifting and rampant, government-fuelled moral hazard is also present in the case of the BP disaster.

Would we have healthier offshore oil and gas development and oversight if government did not license and pretend to regulate it, but rather those whose livelihoods are put at risk by spills? And if those engaged in it did not act through corporations, but partnerships with unlimited liability and without liability caps and royalty incentives set by government?

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Four-minute Cliff Notes of Hayward's "truth-telling"; Or, corporations are victims, too

June 21st, 2010 No comments

We obviously need real frankness and anger, but incentives of Congresscritters and lawsuit defendants lead us into confused farces: 

[View:http://www.huffingtonpost.com/2010/06/17/tony-hayward-testimony-video_n_616690.html:550:0]

 

More here: http://www.huffingtonpost.com/2010/06/17/tony-hayward-testimony-video_n_616690.html

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Satire on the Oil Spill at the Australian Broadcasting Corp. by Clarke and Dawe

June 21st, 2010 No comments

“The first thing to do is to underestimate the problem ….”

“Regulations? I never heard of it either, but keep bloody looking.”

Satire on the Oil Spill at the Australian Broadcasting Corp. by Clarke and Dawe

http://youtu.be/WrL2Zg1fPP0

Transcript here: http://www.abc.net.au/7.30/content/2010/s2917782.htm

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Reality and duelling parodies: Israel caves to YouTube Hitler rant about Israel's botched raid on Turkish aid ship, calls off blockade

June 21st, 2010 No comments

 Well of course the lifting of the blockade was only partial, but I still found the following Hitler parody video (I noted this interesting genre earlier) both rather prescient and notable because of its unusual slant, placing Hitler as a parody spokesman for Israel:

[View:http://www.youtube.com/watch?v=YzUDLF7L22U:550:0]

This looks like just another parody that someone posted two weeks ago, and only has 900 viewers or so. 

In a similar vein, there was a Hitler parody up that complained about the unavailability of parking in Tel Aviv; due to complaints YouTube took the English sub-titled version down (and cited a copyright violation complaint), but the Hebrew version remains up. A brief discussion of the parodies – and a copy of one in which Hitler despairs at being mocked by the parodies – is here. Apparently videos that have been removed for copyright reasons are backed up at www.youtomb.com.

There is a duelling parody that gained much more prominence than the one above; an editor from the Jerusalem Post arranged “We Con the World” – a full-blown parody of “We Are the World” that mocks the flotilla and gained attention after it was sent by members of the Israeli government press office to journalists; the government has since apologized. It was removed by YouTube, but is available here.

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WSJ provides great coverage of big jump in BP lobbying focussed on Obama, Dems, but uninterested in Cheney's secret meetings

June 20th, 2010 No comments

1.  The Wall Street Journal published an interesting piece on May 27 by Elizabeth Williamson on BP’s pro-drilling/damage control lobbying: BP Aims to Avoid Fresh Restrictions on Drilling, but it seemed to me that it too quickly skated past the eight years of the Bush/Cheney administration, which undeniably had an impact on our regulatory structure and ethos.

Curious, I queried the reporter, and we had the following exchange:

from TokyoTom
to [email protected]
date Thu, May 27, 2010 at 4:51 PM
subject BP lobbying
mailed-by gmail.com

 
Thanks for this excellent reporting. When will we finally get coverage of Cheney’s secret meetings?

Tom

 

Williamson, Elizabeth [email protected]
to tokyotom
date Thu, May 27, 2010 at 7:15 PM
subject Re: BP lobbying
mailed-by wsj.com

 

Hi Tom, Thanks for writing. Cheney’s secret meeting–is there another one scheduled? Or you don’t think there’s enough to cover in the current presidency?

Elizabeth Williamson
Reporter
The Wall Street Journal
202 862 6667
Cell: 202 674 2463

from TokyoTom
to “Williamson, Elizabeth” <[email protected]>
date Thu, Jun 3, 2010 at 6:44 PM
subject Re: BP lobbying
mailed-by gmail.com

 
Elizabeth, many thanks for your reply.

Surely you’re not uninterested energy policy prior to Obama? That would be like a financial reporter now being uninterested in figuring out why there was a bubble, what went wrong with financial regulation, why even Goldman Sachs needed a bailout, simply because it happened before Obama.

Does superficiality really rule, and is the WSJ simply uninterested in how one White House completely blocked out the press and public from a serious of meetings on energy/climate policy? Say it ain’t so, Elizabeth.

Tom

2.  Not much came of that, besides a few idle suspicions that the Wall Street Journal’s reporting might  and lack thereof might reflect a political and/or statist agenda of one sort or another.  But idle speculation not being my purpose, I noted recently some coverage of the secret Cheney meetings (so secret that the Bush adminstration went to all the way to the Supreme Court) to protect the “Executive Privilege” to hide imoprtant activities from the American people) that I thought I would bring you readers’ attnetion.

I encourage people to take a look at Kate Sheppard’s June 10 article at Mother Jones, Dick Cheney’s Last Laugh; The Deepwater Horizon disaster raises new questions about the Bush administration’s secret energy task force. It looks like the secret task force had a direct impact in regulatroy and legislative actions that affected, among others, approval procedures for offshore drilling activities. But much remains unknown:

Open government advocates say this might be the appropriate time to push for more information about his task force. Mandy Smithberger, an investigator at the Project on Government Oversight, says that it’s “definitely a ripe time” to find out more about what went on in the meetings. “I don’t think you can understand how we got to where we are without looking back,” she says.

“When you have a disaster of this magnitude, it raises the question, if in this whole secretive process, what was discussed, how much did the Bush administration ignore, how much did they allow the oil and gas industry to basically do what they wanted,” says AnneWeismann, chief counsel at Citizens for Ethics and Responsibility in Washington. “Secrecy is so pernicious that it can continue to damage even when the administration is not in power.”

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More about “the biggest victim,” BP, and how we can help it end its “victimization”

June 20th, 2010 No comments

Is it too much to ask to have a little more light of Austrian analysis thrown on BP? I’ve asked Lew Rockwell and Stephan Kinsella not simply about the moral calculus that leads them to assert that BP is the biggest victim of its own decisions that produced the Gulf oil gusher, but also whether it makes sense to speak of a massive corporation as if it is in any way a “person” similar to those living breathing individuals its action have harmed and continue to harm.

Where, in a week when BP CEO Tony Hayward (after Senator Joe Barton first apologizes to him for a “shakedown” of BP by President Obama) is off watching a yacht race, is the focus of Austrians on real people – and how the state-given corporate entity status affects human behavior WITHIN the corporation, as well as the behavior of the “corporation” to others? Maybe the issues raised are just too insignificant or mundane? But hey, as Stephan has just noted to me in a dull, cursory comment:

“what do you expect us to say? this is just a tort. Torts happen”!

Confused nonsense, I say. “Torts “happen”? Balderdash – PEOPLE violate the rights of others (commit torts).  Did this tort  “happen” to our chief victim, BP, too?

It is one of the salient features of corporations that they confuse themselves and everyone else as to WHO, precisely, is responsible for their actions and the harms they cause others, and it is time for Austrians to examine such features closely.

All of this is prelude to the following by Jim Hightower that highlights the behavior of BP and its CEO:

Jim Hightower,  BP Is a Corporate Criminal; BP has been implicated in bribery, overthrowing governments, plunder and money laundering, plus having established one of the worst safety records in the industry.  (AlterNet, June  17):

Gosh, how quickly things turn. One day, you’re a strutting peacock — the next day, you’re just another gasping, oil-covered bird.

In early April, BP was strutting about in full corporate splendor, showing off the $9 billion in profits that it had soaked up in just the first three months of this year. It was also basking in a corporate re-imaging campaign, depicting itself as a clean-energy pioneer and declaring that BP now stood for “Beyond Petroleum.”

Since its Gulf of Mexico well blew out on April 20, however, BP has proven to be beyond belief. The wider and deeper that this catastrophe spreads, the more we discover just how oily this giant is.

From the time it was known as the Anglo-Persian Oil Company and set out to grab and control the rich petroleum reserves owned by what is now Iran, BP has been a recidivist global criminal. In the past three decades, it grew huge by swallowing such competitors as Standard Oil of Ohio, Amoco and Arco. Along the way, it has been implicated in bribery, overthrowing governments, plunder and money laundering, plus having established one of the worst safety and environmental records in an industry that is notoriously reckless on both counts.

And now, its rap sheet grows almost daily. In fact, the Center for Public Integrity has revealed that the oil giant’s current catastrophic mess should come as no surprise, for it has a long and sorry record of causing calamities. In the last three years, the center says, an astonishing “97 percent of all flagrant violations found in the refining industry by government safety inspectors” came at BP facilities. These included 760 violations rated as “egregious” and “willful.” In contrast, the oil company with the second-worst record had only eight such citations.

While its CEO, Tony Hayward, claims that its gulf blowout was simply a tragic accident that no one could’ve foreseen, internal corporate documents reveal that BP itself had been struggling for nearly a year with its inability to get this well under control. Also, it had been willfully violating its own safety policies and had flat out lied to regulators about its ability to cope with what’s delicately called a major “petroleum release” in the Gulf of Mexico.

“What the hell did we do to deserve this?” Hayward asked shortly after his faulty well exploded. Excuse us, Tony, but you’re not the victim here — and this disaster is not the work of fate. Rather, the deadly gusher in the gulf is a direct product of BP’s reckless pursuit of profits. You waltzed around environmental protections, deliberately avoided installing relatively cheap safety equipment, and cavalierly lied about the likelihood of disaster and your ability to cope with it.

“It wasn’t our accident,” the CEO later declared, as oil was spreading. Wow, Tony, in one four-word sentence, you told two lies. First, BP owns the well, and it is your mess. Second, the mess was not an “accident,” but the inevitable result of hubris and greed flowing straight from BP’s executive suite.

“The Gulf of Mexico is a very big ocean,” Hayward told the media, trying to sidestep the fact that BP’s mess was fast becoming America’s worst oil calamity. Indeed, Tony coolly explained that the amount of oil spewing from the well “is tiny in relation to the total water volume.” This flabbergasting comment came only two weeks before it was revealed that the amount of gushing oil was 19 times more than BP had been claiming.

Eleven oil workers are dead, thousands of Gulf Coast people have had their livelihoods devastated and unfathomable damage is being done to the gulf ecology. Imagine how the authorities would be treating the offender if BP were a person. It would’ve been put behind bars long ago — if not on death row.

Jim Hightower is a national radio commentator, writer, public speaker, and author of the new book, “Swim Against the Current: Even a Dead Fish Can Go With the Flow.” (Wiley, March 2008) He publishes the monthly “Hightower Lowdown,” co-edited by Phillip Frazer.

These observations are similar to those of Bruce Dixon, who noted:

Ultimately, people woke up, rose up, and revoked those privileges. How long will it be before we revoke the lawless privileges of corporations, before we limit their immunity, curtail their immortality, and rein in their immorality?. How long can we, and the planet on which we depend for life itself, wait? Is there every a line that cannot be crossed? Where is it? What will it take?When it suits their purposes, employees and mouthpieces of various transnational firms hasten to assure us that “corporations are people too.” In a sense this is certainly true. Despite what some bible thumping fundamentalists will tell you, corporations were not ordained by the Almighty. Corporations are legal fictions. They are artificial shields under which we agree to allow a handful of extremely wealthy people to rule over the rest us, and plunder the planet and its people at will, just as centuries ago most of the humans who mattered agreed that kings, queens and nobly born, the “people of quality” had the god given right to ride roughshod over humanity.

The gaps between (i) Austrian insistence that we focus on individual rights and plan formation, (ii) the penchant of some (many!) libertarians to support corporations while bashing citizens groups which are unhappy with the impacts of corporate actions on others, and (iii) the real world where corporate misbehavior is large and spinning out of control (in banking as well as in the Gulf and elsewhere where governments ”protect” their citizens by turning community resources into a government commons, are growing and cannot be ignored.

One must ask – does it make any difference, either to the broader statist environment that we find ourselves, or to the behavior of BP, that BP is a corporation that is granted unlimited life and whose shareholders are excluded from any personal liability for corporate acts? I think that it undeniably matters, and quite deeply.

Just as libertarian and other commentators have suggested that we need to insist that firms that engage in the banking business be partnerships with unlimited liability in order to control the moral hazard engendered by the current system, so too should libertarians insist on restoring personal responsibility and ending both corporate limited liability and the government management of commons. If we do so, we will certainly see much greater efforts by those who own and/or manage business enterprises to control risks and behave responsibly – which will take pressure off of spiralling calls for corrupt and inept governments to “do something!”

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Eve of Destruction: As a result of conservatives' quasi-religious love of corporations and statist capitalism, Al Franken's comments about the Supreme Court actually seem perceptive

June 20th, 2010 No comments

1.  As prologue, I refer to my earlier posts on (1) corporate “free speech”, campaign contributions and the recent Citizens United decision, and (2) grants by states of corporate status, especially so-called “limited liability” (zero liability, in fact) to shareholders. The latter has fuelled the growth of powerful corporations and of the growth of a powerful central federal government that purports to rein them in, and has led not only the predominance of corporations and the state, but to rampant manipulation, corruption, moral hazard and mismanagement on a scale that, on the heels of massive bailouts to our elites in the financial sector, now with BP’s so far unstoppable Gulf gusher, appears to have taken on Biblical proportions.

Quite obviously, the government cannot effectively manage common resources, but has itself – by unleashing limited liability machines that owe duties only to a weak shareholder class, and by disenfranchising fishermen and others who depend on such resources – encouraged the destruction of such resources and of local, vital communities of mutually responsible individuals. Our inept, grasping and feckless Government itself is not simply a massive “tragedy of the commons”, but the vehicle for massive Avatar-style theft.

2. Enough of the pitch; now for the wind-up.  Senator Al Franken spoke last week at  the liberal-leaning American Constitution Society’s annual convention in DC. While I generally disagree with Dem’s legislative and judicial policy agenda, I think he had a few fair points. I excerpt from a June 18 report in Mother Jones: Al Franken Takes On The Supreme Court (my emphasis):

Franken offered up his unique blend of political criticism and comic delivery in a speech that sounded an awful lot like a rallying cry for Congress to push back against the Supreme Court’s pro-business decisionmaking. He honed in on the conservative Federalist Society and bashed the Roberts court for its overreach in cases like Citizens United, where the court answered questions it wasn’t even asked. “I mean, I don’t speak Latin. But unless stare decisis means ‘overturn stuff,’ then maybe it’s time for conservatives to stop calling other people ‘dangerous radicals,'” he said.

Conservatives, Franken said, have “distorted our constitutional discourse to make it sound like the Court’s rulings don’t matter to ordinary people, but only to the undeserving riff-raff at the margins of society. So unless you want to get a late-term abortion, burn a flag in the town square, or get federal funding for your pornographic artwork, you really don’t need to worry about what the Supreme Court is up to.” Much of Franken’s speech concerned the real people whose lives are indeed affected by the court’s decisions, including Jaime Leigh Jones, the KBR employee who was allegedly gang-raped by her co-workers in Iraq and whose case Franken has championed.

One of the themes of Franken’s speech was the way conservative legal activists have changed the way they talk about the law to disguise what their real agenda is. “Do they want to undercut abortion and immigration and Miranda rights? Sure. But those are just cherries on the sundae. What conservative legal activists are really interested in is this question: What individual rights are so basic and so important that they should be protected above a corporation’s right to profit? And their preferred answer is: None of them. Zero.”

3.  Franken naturally overlooks how destructive the liberal, big government agenda has been and continues to be. But I think he has put his finger on something important here.

If libertarians truly love freedom, it is time for them to start thinking about the frequently negative role that large corporations play, and to start voicing criticisms and suggesting effective ways to check abuses and to re-empower local communities. 

Or have libertarians, like Lew Rockwell, already exhausted up their ration of moral opprobrium, outrage and good ideas in condemning those stupid mankind-hating enviro-fascists who are fighting a losing battle with corporations and elites over the wheel of government?

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Erosion: More on why efforts to stop the oil gusher failed and the likelihood of catastrophic well failure/completely open hole

June 20th, 2010 No comments

Yes, another BP post!

I excerpt below comments by an apparently very knowledgable “dougr” that I saw at The Oil Drum, and which have subsequently been given prominence – and extensively quoted – by Sharon Astyk at ScienceBlogs (Worst Case Scenario on Gulf Spill?) and at Mother Jones (Is the BP Gusher Unstoppable?). The post is extensively footnoted and contains many links to relevant background.

As Sharon Astyk noted: “TOD attracts many, many petroleum geologists and other professionals, and while sometimes the comments are the same “pulled it out of my ass” as on every other website, often, the technical knowledge on offer is pretty astounding. This one passes my smell test, which is usually pretty good – that doesn’t mean I claim commenter Doug R is right – it means I think his information is interesting enough to be worth exposing to a wider audience for clarification or correction.”  Editors at TOD further note at the head of the comment: “Were the US government and BP more forthcoming with information and details, the situation would not be giving rise to so much speculation about what is actually going on in the Gulf. This should be run more like Mission Control at NASA than an exclusive country club function–it is a public matter–transparency, now!)”

From The Oil Drum:.

First of all…set aside all your thoughts of plugging the well and stopping it from blowing out oil using any method from the top down. Plugs, big valves to just shut it off, pinching the pipe closed, installing a new bop or lmrp, shooting any epoxy in it, top kills with mud etc etc etc….forget that, it won’t be happening..it’s done and over. In fact actually opening up the well at the subsea source and allowing it to gush more is not only exactly what has happened, it was probably necessary, or so they think anyway.

So you have to ask WHY? Why make it worse?…there really can only be one answer and that answer does not bode well for all of us. It’s really an inescapable conclusion at this point, unless you want to believe that every Oil and Gas professional involved suddenly just forgot everything they know or woke up one morning and drank a few big cups of stupid and got assigned to directing the response to this catastrophe. Nothing makes sense unless you take this into account, but after you do…you will see the “sense” behind what has happened and what is happening. That conclusion is this:

The well bore structure is compromised “Down hole”.

That is something which is a “Worst nightmare” conclusion to reach.

So what we had was BP running out of 50,000 barrels of mud in a very short period of time. An amount far and above what they deemed necessary to kill the well. Shutting down pumping 16 hours before telling anyone, including the president. We were never really given a clear reason why “Top Kill” failed, just that it couldn’t overcome the well.

There is only one article anywhere that says anything else about it at this time of writing…and it’s a relatively obscure article from the wall street journal “online” citing an unnamed source.

“WASHINGTON—BP PLC has concluded that its “top-kill” attempt last week to seal its broken well in the Gulf of
Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor.

The disk, part of the subsea safety infrastructure, may have ruptured during the surge of oil and gas up the well on April 20 that led to the explosion aboard the Deepwater Horizon rig, BP officials said. The rig sank two days later, triggering a leak that has since become the worst in U.S. history.

The broken disk may have prevented the heavy drilling mud injected into the well last week from getting far enough down the well to overcome the pressure from the escaping oil and gas, people familiar with BP’s findings said. They said much of the drilling mud may also have escaped from the well into the rock formation outside the wellbore.

As a result, BP wasn’t able to get sufficient pressure to keep the oil and gas at bay. If they had been able to build up sufficient pressure, the company had hoped to pump in cement and seal off the well. The effort was deemed a failure on Saturday.

BP started the top-kill effort Wednesday afternoon, shooting heavy drilling fluids into the broken valve known as a blowout preventer. The mud was driven by a 30,000 horsepower pump installed on a ship at the surface. But it was clear from the start that a lot of the “kill mud” was leaking out instead of going down into the well.”
http://online.wsj.com/article/SB1000142405274870487560457528013357716426…

There are some inconsistencies with this article.
There are no “Disks” or “Subsea safety structure” 1,000 feet below the sea floor, all that is there is well bore. There is nothing that can allow the mud or oil to “escape” into the rock formation outside the well bore except the well, because it is the only thing there.

All the actions and few tid bits of information all lead to one inescapable conclusion. The well pipes below the sea floor are broken and leaking. Now you have some real data of how BP’s actions are evidence of that, as well as some murky statement from “BP officials” confirming the same.

I took some time to go into a bit of detail concerning the failure of Top Kill because this was a significant event. To those of us outside the real inside loop, yet still fairly knowledgeable, it was a major confirmation of what many feared. That the system below the sea floor has serious failures of varying magnitude in the complicated chain, and it is breaking down and it will continue to.

What does this mean?

It means they will never cap the gusher after the wellhead. They cannot…the more they try and restrict the oil gushing out the bop?…the more it will transfer to the leaks below. Just like a leaky garden hose with a nozzle on it. When you open up the nozzle?…it doesn’t leak so bad, you close the nozzle?…it leaks real bad,
same dynamics. It is why they sawed the riser off…or tried to anyway…but they clipped it off, to relieve pressure on the leaks “down hole”. I’m sure there was a bit of panic time after they crimp/pinched off the large riser pipe and the Diamond wire saw got stuck and failed…because that crimp diverted pressure and flow to the rupture down below.

Contrary to what most of us would think as logical to stop the oil mess, actually opening up the gushing well and making it gush more became direction BP took after confirming that there was a leak. In fact if you note their actions, that should become clear. They have shifted from stopping or restricting the gusher to opening it up and catching it. This only makes sense if they want to relieve pressure at the leak hidden down below the seabed…..and that sort of leak is one of the most dangerous and potentially damaging kind of leak there could be. It is also inaccessible which compounds our problems. There is no way to stop that leak from above, all they can do is relieve the pressure on it and the only way to do that right now is to open up the nozzle above and gush more oil into the gulf and hopefully catch it, which they have done, they just neglected to tell us why, gee thanks.

A down hole leak is dangerous and damaging for several reasons.
There will be erosion throughout the entire beat up, beat on and beat down remainder of the “system” including that inaccessible leak. The same erosion I spoke about in the first post is still present and has never stopped, cannot be stopped, is impossible to stop and will always be present in and acting on anything that is left which has [sandy, abrasive] crude oil “Product” rushing through it.
There are abrasives still present, swirling flow will create hot spots of wear and this erosion is relentless and will always be present until eventually it wears away enough material to break it’s way out. It will slowly eat the bop away especially at the now pinched off riser head and it will flow more and more. Perhaps BP can outrun or keep up with that out flow with various suckage methods for a period of time, but eventually the well will win that race, just how long that race will be?…no one really knows….However now?…there are other problems that a down hole leak will and must produce that will compound this already bad situation.

This down hole leak will undermine the foundation of the seabed in and around the well area. It also weakens the only thing holding up the massive Blow Out Preventer’s immense bulk of 450 tons. In fact?…we are beginning to the results of the well’s total integrity beginning to fail due to the undermining being caused by the leaking well bore.  ….

If you have been watching the live feed cams you may have noticed that some of the ROVs are using an inclinometer…and inclinometer is an instrument that measures “Incline” or tilt. The BOP is not supposed to be tilting…and after the riser clip off operation it has begun to…

This is not the only problem that occurs due to erosion of the outer area of the well casings. The way a well casing assembly functions it that it is an assembly of different sized “tubes” that decrease in size as they go down. These tubes have a connection to each other that is not unlike a click or snap together locking action. After a certain length is assembled they are cemented around the ouside to the earth that the more rough drill hole is bored through in the well making process. … The well bore casings rely on the support that is created by the cementing phase of well construction. …. The series of connections between the sections of casings are not designed to hold up the immense weight of the BOP without all the “hands” that the cementing provides and they will eventually buckle and fail when stressed beyond their design limits.

These are clear and present dangers to the battered subsea safety structure (bop and lmrp) which is the only loose cork on this well we have left. The immediate (first 1,000 feet) of well structure that remains is now also undoubtedly compromised. However…..as bad as that is?…it is far from the only possible problems with this very problematic well. There were ongoing troubles with the entire process during the drilling of this well. There were also many comprises made by BP IMO which may have resulted in an overall weakened structure of the entire well system all the way to the bottom plug which is over 12,000 feet deep.

What is likely to happen now?  Well…none of what is likely to happen is good, in fact…it’s about as bad as it gets. I am convinced the erosion and compromising of the entire system is accelerating and attacking more key structural areas of the well, the blow out preventer and surrounding strata holding it all up and together. This is evidenced by the tilt of the blow out preventer and the erosion which has exposed the well head connection. What eventually will happen is that the blow out preventer will literally tip over if they do not run supports to it as the currents push on it. I suspect they will run those supports as cables tied to anchors very soon, if they don’t, they are inviting disaster that much sooner.

Eventually even that will be futile as the well casings cannot support the weight of the massive system above with out the cement bond to the earth and that bond is being eroded away. When enough is eroded away the casings will buckle and the BOP will collapse the well. If and when you begin to see oil and gas coming up around the well area from under the BOP? or the area around the well head connection and casing sinking more and more rapidly? …it won’t be too long after that the entire system fails. BP must be aware of this, they are mapping the sea floor sonically and that is not a mere exercise. Our Gov’t must be well aware too, they just are not telling us.

All of these things lead to only one place, a fully wide open well bore directly to the oil deposit…after that, it goes into the realm of “the worst things you can think of” The well may come completely apart as the inner liners fail. There is still a very long drill string in the well, that could literally come flying out…as I said…all the worst things you can think of are a possibility, but the very least damaging outcome as bad as it is, is that we are stuck with a wide open gusher blowing out 150,000 barrels a day of raw oil or more. There isn’t any “cap dome” or any other suck fixer device on earth that exists or could be built that will stop it from gushing out and doing more and more damage to the gulf. While at the same time also doing more damage to the well, making the chance of halting it with a kill from the bottom up less and less likely to work, which as it stands now?….is the only real chance we have left to stop it all.

It’s a race now…a race to drill the relief wells and take our last chance at killing this monster before the whole weakened, wore out, blown out, leaking and failing system gives up it’s last gasp in a horrific crescendo.

We are not even 2 months into it, barely half way by even optimistic estimates. The damage done by the leaked oil now is virtually immeasurable already and it will not get better, it can only get worse. No matter how much they can collect, there will still be thousands and thousands of gallons leaking out every minute, every hour of every day. We have 2 months left before the relief wells are even near in position and set up to take a kill shot and that is being optimistic as I said.

Over the next 2 months the mechanical situation also cannot improve, it can only get worse, getting better is an impossibility. While they may make some gains on collecting the leaked oil, the structural situation cannot heal itself. It will continue to erode and flow out more oil and eventually the inevitable collapse which cannot be stopped will happen. It is only a simple matter of who can “get there first”…us or the well.

We can only hope the race against that eventuality is one we can win, but my assessment I am sad to say is that we will not.

The system will collapse or fail substantially before we reach the finish line ahead of the well and the worst is yet to come.

Sorry to bring you that news, I know it is grim, but that is the way I see it….I sincerely hope I am wrong.

We need to prepare for the possibility of this blow out sending more oil into the gulf per week then what we already have now, because that is what a collapse of the system will cause. All the collection efforts that have captured oil will be erased in short order. The magnitude of this disaster will increase exponentially by the time we can do anything to halt it and our odds of actually even being able to halt it will go down.

The magnitude and impact of this disaster will eclipse anything we have known in our life times if the worst or even near worst happens

We are seeing the puny forces of man vs the awesome forces of nature

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Disturbing news/views on the manageability of the BP gusher

June 18th, 2010 No comments

[I’ve switched this around to reverse chronological order; most recent first.]

I  note that some of the scariest views come from Matt Simmons, someone who has long experience with and good contacts in the oil industry, though conversant is not a technical expert. His surmises so far have all proven more accurate than the nonsense coming from BP and the Obama administratrion. He also apparently is now shorting BP, so has an incentive to talk them down. But we have obviously been deliberately getting the opposite of honesty and transparency from BP or the administration, so what do we have left but speculation?

June 17: http://www.floridaoilspilllaw.com/wolf-blitzer-theyre-sitting-what-on-a-billion-potential-barrels-of-oil-this-thing-could-really-explode-expert-says

June 15 Lori Rothman

 [View:http://www.youtube.com/watch?v=XFdTOXHrUHU&feature=player_embedded:550:0]

http://www.urantiansojourn.com/2010/06/nuke-it-closed-ii/

http://www.floridaoilspilllaw.com/bush-energy-adviser-relief-well-will-fail-46-billion-gallons-could-flow-into-gulf

[View:http://www.youtube.com/watch?v=lOnJKAxBSns&feature=related:550:0]

[View:http://www.youtube.com/watch?v=fKLaBOeHqdY:550:0]

June 7 Ratigan

June 7: http://emptywheel.firedoglake.com/2010/06/07/senator-nelson-says-bp-well-integrity-may-be-blown/

[View:http://www.bloomberg.com/avp/avp.htm?N=video&T=Matthew Simmons Interview About BP Oil Spill &clipSRC=mms://media2.bloomberg.com/cache/vWQpBSBrTTFg.asf:550:0]

May 28th interview with Bloomberg’s Mark Crumpton and Lori Rothman

The “relief well may very well NOT work; so thirty years at 100,000+ barrels per day  (an Exxon Valdez every three days) is a real possibility. Apparently there is A LOT of subsurface oil.

[View:http://www.bloomberg.com/avp/avp.htm?N=video&T=Simmons+&+Co.&%2339;s+Simmons+Interview+on+Oil+Spill+&clipSRC=mms://media2.bloomberg.com/cache/vG_yOE2OH1OE.asf:550:0] 

May11 interview:

http://findarticles.com/p/news-articles/analyst-wire/mi_8077/is_20100511/matthew-simmons-ceo-simmons-company/ai_n53558170/

[View:http://www.youtube.com/watch?v=cDGAoU1H2gM:550:0]

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