David Kotok of Cumberland Advisors is out with some very gloomy comments about the economic ramifications of the Deepwater Horizon oil spill, and what it will cost. First he notes the ugliest case scenario:
This spew stoppage takes longer to reach a full closure; the subsequent cleanup may take a decade. The Gulf becomes a damaged sea for a generation. The oil slick leaks beyond the western Florida coast, enters the Gulfstream and reaches the eastern coast of the United States and beyond. Use your imagination for the rest of the damage. Monetary cost is now measured in the many hundreds of billions of dollars.
As for numbers:Usually, the first estimates in any crises are too low. That is true here. 1000 barrels a day is now 5000, and some estimates of spillage are trending higher. No one knows exactly. The containment and boom mechanism is subject to weather cooperation as we can see this weekend. Soon we are entering the hurricane season. The thoughts of a storm stirring up the Gulf, hampering any cleanup or remediation drilling effort and creating a huge 10,000 square mile black stew is frightening to every professional in the business.
This will be a financial
calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
As for the economy beyond BP...This will be a financial
calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
Thousands of small and independent businesses as well as larger public companies in tourism are hurt here. This is not just about the source of half the nation’s shrimp. That is already a casualty. It’s also about the bank loans for the $200,000 shrimp boat and the house the boat owner and/or his employees live in and the fact that this shock piles on a fragile financial system that is trying to recover from a three-year financial crisis. Case study, my fishing guide in the Everglades splits his time between Florida and Louisiana. His May bookings in LA have cancelled. His colleagues lost theirs and their lodge will be empty. They are busy trying to find work in the clean up. For him, his wife and eleven year old daughter, his $600 a day guide fees just went “poof”. When I asked him if he thought he had a legal claim on BP, he said he hadn’t thought about it yet but it gave him pause. As we suggested above, the $12.5 billion loss estimate is only a starter.
And the taxpayer...Federal deficit spending will certainly rise by tens, and maybe hundreds, of billions as emergency appropriations are directed at larger and larger efforts to clean up this mess. At the same time, federal and state revenues tied to Gulf-region businesses will fall. My colleague John Mousseau will be discussing the impact on state and local government debt in a separate research commentary.
We expect that the Federal Reserve will extend the timeframe that we have come to know as the “extended period” in the making of its monetary policy. We do not expect the Fed to raise interest rates at all for the rest of this year, and maybe well into next year. We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A “double-dip” recession probably has been made more likely by this tragedy.
We expect that the Federal Reserve will extend the timeframe that we have come to know as the “extended period” in the making of its monetary policy. We do not expect the Fed to raise interest rates at all for the rest of this year, and maybe well into next year. We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A “double-dip” recession probably has been made more likely by this tragedy.
Read more: Here..
This is awful. Just awful. I thought the economy was just getting off the mat, but this last month sales (at the business I work) were down. This will put us down again--face down-- if not finish us. The count is 9.....
ReplyDeleteAfter this new man-made disaster, it's time to get even more gold and silver.
ReplyDeleteAs if the credit bubble, housing bubble, derivative scam, and tech-stock bubble weren't enough.
as sarah the quitter failure says, drill baby drill and looky what we have now, what a stupid waste of time sarah the quitter is
ReplyDeleteI live 80 mi from the gulf; several friends own rental beach property and depend on tourism for their income. Cancellations all over are coming in. Condo's, beach homes, motels, etc. will tank in value. Everything related to tourism will be effected. Fla. is already suffering with high unemployment. This will create massive unemployment and ruin the seafood industry for years.
ReplyDeletewell i said it before
ReplyDeletethe generation of me has did it again
so we sowed we reaped
i could care less because unlike most americans
ive seen for years the i dont give a shit make a buck attitude
the evil is great any decent man could see
that the god some of you make fun of
will have his day which all were his days
love yea jesus
we humans are still not learning and destroying your planet before you come
i dont beleive anyone will be held accountable
some french man from golden sachs
im sure some guy from bp is getting laid
and doesnt give shit.
poor stingrays
Sarah wanted to drill on land in Alaska's wasteland. It was Obama that wanted to open up more ocean drilling. Get your facts straight.
ReplyDeleteand as we all know alaska is not surrounded by any ocean, Moron
ReplyDeleteAnonymous said... 6,50
ReplyDelete"Economy To Collapse Due To Oil Spill? NO NO NO.....Just like an article posted here which said that the economy will collapse due to swine flue....did it collapse NO NO NO.... just like the swine flue article was forgotten and buried in the archive the same fate awaits this article....and very very soon this blog will be dead and buried in the archives."
Actualy ,
he economy already collapsed in 2008 When credit supply for the US began to be withdrawn as investers realised the US was an unproductive Ponzi,A mountain of debt only held together by the glue of greed ,stiching together a bubble economy of dud bond paper and property values backed by a fast devaluing $ Dollar Hegenomy .
Only government spending and printing of paper keeps the U.S. economy going temporarily so the rich can complete the looting process.
All that is left of that imploding economy, is the Rich sucking out all remaining value held by the middle class including by creating fake flue scams and panics for the big phama elites profits for vaccines under cover of "science".
The flue scare was not a creation of conspiracy theorists or doomsayers , but "official" government backed "Science" not a panic created
by posting of articles on this wedsite.
Just like some of the exagerated cooked up
"Science" of Global warming as a tax scheme for saving the profits of capitalism.
You are a shrill and faith lackey , blaming the swine flue scare on this website not on government lies backed by 'official" science.
While the Ash cloud in Europe may have been a doomsday beatup ,like the flue scam, the oil gusher appears to be real.
But all you see and preach is what the governments current political 'scientific"
line is for reassuring the faith of sheeple like yourself.
Anonymous said...
ReplyDeleteand as we all know alaska is not surrounded by any ocean, Moron
Only on three sides "moron"?
Q.
To the American beauty contestant moron.
Why cant americans read Maps?
I wonder if they're gonna use this as an excuse to make sure gas is 4 dollars a gallon by Memorial Day. Cha-ching!
ReplyDeletelook at it from the flipside.. how about a boom to the economy.. Jobs anyone... i think im about to here mom calling me home for dinner... hey reconciliation we need a stimulus and jobs to clean up the mess.. is that a good enough reason to add to the deficit republicans, its budget measure only need 51 votes??? here u go poor folks. if u want some cash go scrub rocks and birds... a 9/11 of natural sorts..
ReplyDelete$4.00 a gallon,Try $10.00. It"s over.We knew something would push us over,whether it was the chinese not buying our debt or this.
ReplyDeleteObama,Clean up this mess.Make the welfare recipients scrub it off.
ReplyDeleteA lot of beachfront properties are going to be selling for ten cents on the dollar.
ReplyDeleteThis is the final nail in the coffin. Depression Coming in January 2011.
ReplyDeleteMake $ from Oil Discovery!
ReplyDeleteMake $ from Oil Spill too!
Intelligent minds in great corporations!
I wish that the people who can't type at all would just keep their thoughts inside their minds.
ReplyDeleteGuys like 9:11 have opinions that are worth straw dogs because they can't type! If you can at least type with some degree of formality then that would be appreciated, if you don't then it makes me think a 13 year old is behind the screen and I'll bypass the entire post.
As for my opinion I think that this economic destruction is the New World energies (God) giving dictation as to how we are supposed to transform. If you don't see that then it will appear as hopeless, the world is ending (human order at least). Maybe the people who have been layed off were those being called to make a shift and "repent"? Maybe there is no conspiracy and the people like George Soros are becoming very frightened and desparate to maintain their status, hence the excessive printing? You also have to remember guys like that become addicts - their lifeline is the money they make, they will be like a crack addict in a crack house, they will never know when to stop or even realize what they are doing! Addicts can't observe their behavior generally, they can't be critical or question themselves.
I think everything is getting terrible indeed, more so than ever before and progressively. But I have hope that behind the curtain of deterioration and degeneration there is a rejuvenation that is also going to occur. The only thing that concerns me is that I am a personality/ego that somehow would be around in these times leading up to the New World and death of the Old World, why? I guess if I carry in my DNA all information from the days of the dinosaurs, to the Romans, to Napolean, and also all other star systems and even altered worlds then I would be the microcosm responsible for all of them rather than just "me"... I would be bringing all things with in that sense. Those passing through would essentially heal all things that ever existed in this Matrix (Mental, Spiritual, and Physical Conscious Order) including those still residing in the Astral Realm as thought-forms (memories).
I am starting to get a more clear view of things now.
The estimate is said to be closer to 50,000-150,000 barrels a day, potentially. So another Exxon Valdez every other day if that is true.
ReplyDeleteCivilization has to run its course. There will be costs and devastation. Hopefully, when its all over, we can pick up the pieces and move in a new direction. The old paradigm must fall away. If we can not live in harmony with each other and nature, foremost, then we will be doomed to the same mistakes.
This is very scary, the pressure of this oil and natural gas deposit is 165,000 to 170,000 psi.
ReplyDeleteBP put this rig outside of US inspection limits on purpose to avoid safety inspections.How could they have been so stupid? They are guilty of murder!!!! If the sea floor colapses around the casing this disaster could destroy all oceans...... Come to grasp with that!!
People, think and see that PEAK OIL is bogus...
ReplyDeletePeak Easy oil maybe...but if this stuff is 6 miles deep and under high pressure, it didnt
come from dead dinosaurs and rotting plants.
THINK!
5:29 I'm interested in the source you have for the 165,000-170,000 PSI figure.
ReplyDeleteI found the home page of the Deepwater Horizon platform on BP's site and was reading up on the rig. It was a beautiful rig made by Mitsibushi heavy industries in Japan. This is all very sad what's happened here. Some say Haliburton is to blame because they didn't do the 'cementing' right and that lead to this but I don't know enough to understand how a bad 'cementing' can lead to this.
Also, the pipe casing the rig used from the seafloor to the platform was rated for 20,000 PSI. Why would they even think about drilling 170,000 PSI reservoir when their pipes are rated at only 20,000 PSI?
Also, they say the shut off valve at the sea floor failed to work, but how do we know that thing is even still on the well down there?
I'm totally disgusted by this, I'll never buy any BP product again!
ReplyDeleteIt is really amusing to read all of these comments, especially those who seem that the world is ending right before their very eyes. The oceans are extremely powerful. Salt water is a very corrosive and potent element that eats through this oil very quickly. Not to minimize that there will be some problems and damage, but the end of the world? Come on. This is another testimony, as well, to how much oil is under the earth's crust. The pressure of this spill is amazing! And to those who say they will never buy a BP product again, everytime you fill up your tank, and I don't care what brand of fuel you use, you are supporting BP.
ReplyDeleteSalt water eats through oil? What koolaid have you been drinking? Oil from the Exxon spill is still showing up 20 years later.
ReplyDeleteIf you think the spill will open up jobs, what would they be? Washing birds, seals and turtles? Yeah, that's really gonna offset all the berthed fishing and pleasure boats, the closed motels, the closed restaurants, the closed stores, etc.
Let's see, the other article is about how meat is being priced out of the supermarket, and now you won't be able to eat the fish, shrimp or clams. I guess America will be eating soy burgers at McDonald's--no wait, can't do that because soybeans have been genetically modified....
Guess we're all toast.
7:35 just how much pressure should it be under then, lying at the bottom of the ocean 5,000-6,000 feet deep, with some miles of rock on top of that? Plus the hole is very small in comparison so the pressures are going to be immense (just imagine a garden hose with your finger over it but on a grand scale).
ReplyDeletemost of the time i ignore the trolls but i did get a chuckle out of 1:46 comment
ReplyDeleteYou may be easily entertained, but I thought it was fairly inane. Oh well call me insane...
ReplyDeleteI believe this was an engineered disaster for a couple reasons. Dick Cheney's old company, the war profiteer Haliburton botched the cement job, Bush made it so BP and other rigs didn't need an acoustic shut off switch when every rig in any other country is required to have them. And a couple of other clandestine things and coincidences are not being covered. The leak could have been covered up but they continue to do what? TRY AND PUMP IT. They could cover it with sand bags and then use large steel containers over that and concrete it all in. But what do they do, they try and capture the oil so they can siphon it to their rig. This is a huge oil reserve and all these stupid little ideas on how to "stop or plug" it have failed and will continue to fail. Figure a firehose shoots about 2 and a half gallons of water a second, imagine this is oil, that's 216,000 gallons a day, this is a 21" pipe with even more pressure spewing oil and gas. I figure the estimate should be around 50-70,000 barrels a day. Who would believe BP anyway? This disaster whether engineered or not is being used for political gains. Many people will lose their jobs, other food sources will go up in price along with fuel and the coast is toast. Louisiana is screwed again. Fema will be there to make more enslaving fema cities and the U.S. will become more of a prison state even more quickly. The end of the world no, but another nail in the coffin yes. All this is happening while Nashville is under water being ignored by the media, and a false flag pathetic amateur car bomb gets all the attention. Now anytime a cup of coffee is left on the sidewalk, it's a bomb. They will install cctv cameras all over the city because of this. Like London, 1 camera for every 14 people, imagine that. The terrorist haven't touched New York in 9 years and they're still winning. Southpark figured that out. Sorry to get off track but this country is being run by criminals. First you get the money, then the power, then all is left is control.
ReplyDeleteI also don't wanna sound crazy but when you take something of volume such as gas and oil from an object such as the earth, it will collapse. Though oil comes from cavities in rock in deep parts or the Earths crust, I am pretty sure we are causing more and more of these earth quakes when we bleed the Earth. There is science to back it up, but of course no one wants to believe tiny little pin pricks could possibly effect such a large planet. It's time for a change. The fully electric car the EV1 was invented and worked very well in 1996 but the oil companies killed it. We have always had efficient alternative energy but as long as oil tycoons keep controlling it, we will forever be dependent on these corporations that run America. Let us learn from this like we should have learned from WW1. Let's as a people demand the truth and stop buying into what the media tells us it is.
ReplyDeleteTransocean Ltd. announced that its ultra-deepwater rig Deepwater Horizon recently drilled the deepest oil and gas well ever in the U.S. Gulf of Mexico. The Deepwater Horizon crew drilled the well to 35,050 vertical depth and 35,055 feet measured depth (MD), or more than six miles, while operating in 4,130 feet of water.
ReplyDeleteBP put this rig outside of US inspection limits on purpose to avoid safety inspections.
This is beyond insane; it was known that the pressure of this oil and natural gas deposit was 165,000 to 170,000 PSI and the pipe casing the rig used from the seafloor to the platform was rated for 20,000 PSI. Go Figure!
Well, sure enough, they hit a pocket of oil at such high pressure that it burst all of their safety valves all the way up to the drilling rig and then caused the rig to explode and sink.
If this isn't contained, it could poison all the oceans of the world. We are staring straight into possibly the greatest disaster mankind will ever see. Imagine what happens if that oil keeps flowing until it destroys all life in the oceans of this planet.
Our oceans are the lungs of the planet. The oceans produce about 71% and the land 29% of the oxygen we breathe. About 20% of earth's oxygen is produced by the Amazon rainforest.
Do the math -- The second angel poured out his bowl on the sea, and it turned into blood like that of a dead man, and every living thing in the sea died.
Hypoxia is a pathological condition in which the body as a whole (generalized hypoxia) or a region of the body (tissue hypoxia) is deprived of adequate oxygen supply. A mismatch between oxygen supply and its demand at the cellular level may result in a hypoxic condition. Hypoxia in which there is complete deprivation of oxygen supply is referred to as anoxia.
It's Judgment Time -- the Party is Officially Over -- GC
this is a national desaster. how did things ever get this bad?
ReplyDelete