The environment thread

[southsider2k5]

So basically, I'm probably better off figuring out how to take the $600 loss rather than having it all worthless.

 

Its tough to say. I could see a bankruptcy scenario, then again, I would see a lot of interest in that not happening.

[Balta1701]

Its tough to say. I could see a bankruptcy scenario, then again, I would see a lot of interest in that not happening.

I can see what you're saying in interest in it not happening, but frankly, the only way the debts from this don't kill the company is if the people wind up hung out to dry by the court system, and that'll take 20 years to wind its way through (see: Exxon).

 

Plus, one poorly placed hurricane and things go to Hell 20 times faster.

[NorthSideSox72]

I can see what you're saying in interest in it not happening, but frankly, the only way the debts from this don't kill the company is if the people wind up hung out to dry by the court system, and that'll take 20 years to wind its way through (see: Exxon).

 

Plus, one poorly placed hurricane and things go to Hell 20 times faster.

I'd lean towards them not going to bankruptcy. Their stock is still holding significant value as you see, so most of the street feels they will survive this without having to go that route.

 

Now technically, holding common stock does not NECESSARILY mean its worthless in a bankruptcy. What it does mean is that you are at the very end of the claims line, so for practical purposes, there is a 99% chance your stock would become worthless.

 

[Balta1701]

I'd lean towards them not going to bankruptcy. Their stock is still holding significant value as you see, so most of the street feels they will survive this without having to go that route.

 

Now technically, holding common stock does not NECESSARILY mean its worthless in a bankruptcy. What it does mean is that you are at the very end of the claims line, so for practical purposes, there is a 99% chance your stock would become worthless.

Understood.

 

Anyway, between the ickiness of holding it and the fact that I think there's growing downside with each day of new claims, I think dumping it at this level seems like a reasonable move to me. If all i do is pull out the $600 it's worth right now, I've cashed in $40-$80 worth of dividends a year for the past decade, and the drop in the stock is nothing but a paper loss. Probably should have dumped when I saw the first reports of the spill, but hell, it'll take me some time to figure out how to do that anyway.

[StrangeSox]

There's been rumors circulating of one of the other companies buying BP out because their stock has taken such a hit.

[Balta1701]

There's been rumors circulating of one of the other companies buying BP out because their stock has taken such a hit.

I think that's part of what is holding up their stock price, and I don't think it'll happen because I don't think any other oil company wants to risk the kind of liability that is possible in this case. There are so many different avenues for liability, from the government revenue lost on the barrels, to the government fine for negligence per barrel, to paying for the cleanup crews, to paying economic losses for the entire region (seriously, if this keeps gushing for a few more months and winds up at the doorstep of Tampa or Miami or the Keys? How much is 5 Florida tourism seasons worth?)

[southsider2k5]

I think that's part of what is holding up their stock price, and I don't think it'll happen because I don't think any other oil company wants to risk the kind of liability that is possible in this case. There are so many different avenues for liability, from the government revenue lost on the barrels, to the government fine for negligence per barrel, to paying for the cleanup crews, to paying economic losses for the entire region (seriously, if this keeps gushing for a few more months and winds up at the doorstep of Tampa or Miami or the Keys? How much is 5 Florida tourism seasons worth?)

 

They could get out of the civil stuff through bankruptcy. Its it he criminal stuff that could kill them.

[Balta1701]

They could get out of the civil stuff through bankruptcy. Its it he criminal stuff that could kill them.

Yeah, but like I asked...bankruptcy is exactly what, as a shareholder, I'm trying to avoid.

[southsider2k5]

Yeah, but like I asked...bankruptcy is exactly what, as a shareholder, I'm trying to avoid.

 

If BP stays as BP, it is much less likely to happen than if another company buys them. The image of BP isn't as important to, say, Exxon, as it is to BP.

[Balta1701]

If BP stays as BP, it is much less likely to happen than if another company buys them. The image of BP isn't as important to, say, Exxon, as it is to BP.

Really though, how much more damage can be done to BP's brand? Unless they start firing kittens into the geyser instead of shredded tires. Their image will take decades to recover.

[southsider2k5]

Really though, how much more damage can be done to BP's brand? Unless they start firing kittens into the geyser instead of shredded tires. Their image will take decades to recover.

 

If they quit paying claims voluntarily, instead going through court, that would be way #1.

[Balta1701]

If they quit paying claims voluntarily, instead going through court, that would be way #1.

Hell, I think with the "investor class", that sort of move would actually improve the perception of that company. The little people have already been screwed and had their lives ruined either way. May as well see how many of them you can push onto the government doles.

[southsider2k5]

Hell, I think with the "investor class", that sort of move would actually improve the perception of that company. The little people have already been screwed and had their lives ruined either way. May as well see how many of them you can push onto the government doles.

 

Which is exactly what would happen if BP was sold.

[Balta1701]

Which is exactly what would happen if BP was sold.

Presumably, if BP is sold off, the current stockholders wind up getting some value of shares in the purchasing company, correct?

[southsider2k5]

Presumably, if BP is sold off, the current stockholders wind up getting some value of shares in the purchasing company, correct?

 

I could see a Bear situation emerging, quite legitimately.

[Balta1701]

I could see a Bear situation emerging, quite legitimately.

Can I kindly ask for you to elaborate on that as more of an expert than I?

[southsider2k5]

Can I kindly ask for you to elaborate on that as more of an expert than I?

 

Bear Stearns was bought by JPM for $2 a share because of their precarious position of borderline failure.

[Balta1701]

Bear Stearns was bought by JPM for $2 a share because of their precarious position of borderline failure.

But that price came about because Paulson was determined to bring some moral hazard back into play. That price was a government intervention.

 

JPM was likely, at the time willing to pay quite a bit more for it, and then it would have wound up pushing JPM into bankruptcy because they didnt' know what they were buying.

 

Would the government have to step in to shepherd something like that through?

[Balta1701]

Blocked at work. I'll make myself sad again at home.

 

So, what can someone do locally (ie not moving to LA/ AL)?

CNN has an article on this today. Mostly everything is volunteer opportunities, like I said in my last post, but there are a few places that are interested in $ as well.

[southsider2k5]

But that price came about because Paulson was determined to bring some moral hazard back into play. That price was a government intervention.

 

JPM was likely, at the time willing to pay quite a bit more for it, and then it would have wound up pushing JPM into bankruptcy because they didnt' know what they were buying.

 

Would the government have to step in to shepherd something like that through?

 

This isn't too far different when you consider they don't know exactly how much criminal liability that could still be on the horizon.

[Cknolls]

I heard Buffet was sniffing around BP.

 

 

My question to the President......Is BP too big to fail? My answer would be yes..I think I know his answer....But once again he would be mistaken....We shall see...Options activity enormous yesterday in single digit strikes......

[Balta1701]

WHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHA.

"I think the people responsible in the oil spill--BP and the federal government--should take full responsibility for what's happening there," Boehner said at his weekly press conference this morning.

 

Boehner's statement followed comments last Friday by US Chamber of Commerce CEO Tom Donohue who said he opposes efforts to stick BP, a member of the Chamber, with the bill. "It is generally not the practice of this country to change the laws after the game," he said. "Everybody is going to contribute to this clean up. We are all going to have to do it. We are going to have to get the money from the government and from the companies and we will figure out a way to do that."

 

So today I asked Boehner, "Do you agree with Tom Donohue of the Chamber that the government and taxpayers should pitch in to clean up the oil spill?" The shorter answer is yes.

Now that's funny.

 

They're walking it back now that his statement has gotten publicity. But that's about as clear as you can get at the time.

 

Edit: Boehner's side is trying to make sure that the story gets reported in a way that gives them an out to having the federal government be responsible for dealing with all the job losses and illnesses along the coast, as long as BP pays for the cleanup. His office is currently refusing to answer whether he believes BP should also have to pay damages associated with the effects of the spill.

[Rex Kickass]

Oh Noes! Coffee Spill at BP!

 

[Balta1701]

Oh Noes! Coffee Spill at BP!

 

Balta1701: beating you to the thing you wanted to post since 2005.

[Balta1701]

Some semi-good news. The Senate resolution expressing disapproval over the EPA using its powers to regulate CO2 emissions failed today, with 47 votes in favor, including a handful of Democrats.

 

If nothing else, that means there's not currently a Senate majority in favor of blocking the EPA from doing so. That could change come November. But it also means there's certainly not a filibuster-proof majority in favor of blocking the EPA, so it's entirely possible, with the collapse of any sort of climate bill, that the administration will start pushing this route. Technically, by court ruling they're required to do so by current law.