naked capitalism

Even in this TARP and Fed supported, “heads I win, tails you lose” of the banking industry, the “you live by the sword, you die by the sword” element has not been entirely removed.

Witness the schadenfreude-gratifying distress at JP Morgan’s commodities unit, headed by Blythe Masters (a supersaleswoman who has already gotten a fair bit of profile as one of the moving forces behind the credit default swaps business). Less than stellar results of an internal unit seldom make for Bloomberg coverage, but evidently layoffs (which appear in part the result of an ill timed and perhaps also badly-executed acquisition, the acquisition of $1.7 billion purchase of RBS Sempra) and revenue shortfalls have led to juicy, unflattering rumors.

The business also appears to contradict the usual notion that low interest rates help raise all boats. Low interest rates reduce the cost of speculation, and aside from wrong-footing some market bets, a second cause of distress for the JPM unit appears to be spread compression, the result of too many dealers (and dealer capital) ready to act on behalf of (evidently) a less than commensurate level of end customer business. Indeed, the article indicates specifically that JPM’s coal trading unit, which suffered a big loss, was a disproportionately large player relative to the size of the market.

Of course, this begs the question of why government-backstopped firms are permitted to trade commodities at all….

From Bloomberg (hat tip reader Scott):

Blythe Masters, JPMorgan Chase & Co.’s head of commodities, sought to reassure her team on an internal conference call after “extremely difficult” dismissals, defections and a first half in which some results were as much as 20 percent below expectations….

JPMorgan’s fixed-income revenue, which includes commodities, fell 27.7 percent year-over-year to $3.6 billion in the second quarter, compared with $4.9 billion a year earlier and $5.5 billion in the first quarter. The company attributed the drop to poor results in the credit and commodities markets, and a squeeze in interest rates….

Coal derivatives trader Chan Bhima made an error of judgment, not of character, in “taking a risk on our behalf,” she said. Coal prices plunged 24 percent from January through March and then surged 35 percent through June. Marchiony, the bank spokesman, said Bhima wasn’t available for comment.

The company took an oversized position both relative to their fledgling operation and relative to the market, Masters said. The error cost the company as much as $250 million, the New York Post reported June 8, without saying where it got the information…

JPMorgan “became bigger than the market,” said Robin Bhar, a metals and energy analyst at Credit Agricole CIB in London. “They were the coal market,” Bhar said, adding, “these mistakes could happen again.”

The article indicates JPM lost some key members of the RBS Sempra oil team. It also makes for intriguing reading, the quotes are so exact and lengthy (with a lot of rah rah corporate speak) because a JPM employee recorded and leaked the entire call to Bloomberg, which is particularly amusing given that Masters also chides employees for talking to the media.

A breaking story at the Washington Post, based on a new analysis of the Deepwater Horizon oil spill, puts the total at 4.9 million barrels:

BP’s Macondo well spewed 62,000 barrels of oil a day initially, and as the reservoir gradually depleted itself the flow eased to 53,000 barrels a day until the well was finally capped and sealed on July 15, according to scientists in the Flow Rate Technical Group, supervised by the U.S. Geological Survey and the U.S. Department of Energy.

Note there is some dispute, given measurement difficulties, of the size of past oil leaks. The Post continues:

The new numbers, released by the government Monday night, once again nudge upward the scale of the disaster. If correct — the government allows for a margin of error of 10 percent — the flow rate would make this spill significantly larger than the Ixtoc I blowout of 1979, which polluted the southern Gulf of Mexico with 138 million gallons over the coursre of 10 months. That had been the record for the largest unintentional oil spill in the planet’s history, surpassed only by the intentional spills of the Persian Gulf War.

By contrast, Wikipedia shows only spill that is clearly worse as the Lakeview Gusher, in 1910 and 1911, which spewed an estimated 9 million barrels. Wikipedia’s sources come up with a wide range of estimates for the Gulf War leaks, of 2 million to 6 million barrels

This leak is well over the total for Ixtoc, heretofore the worst Gulf disaster, whose high estimate was roughly 3.5 million barrels. Exxon Valdez was a mere 260,000 to 750,000 barrels.

It looks as if Team Obama has reverted to form. In a repeat of its perfromance post the financial crisis, it appears to believe that no problem cannot be solved by PR, which puts it in league with the perps. Hat tip Glenn Stehle:

Readers may recall that we harped on BP’s refusal to try to contain oil around the site of the leak, and later, its failure to do proper booming to contain and remove oil and so reduce the amount that came ashore (note that the US also failed abjectly as a second line of defense; the Coast Guard did cosmetic, ineffective booming and the US turned down advice and assistance from the Netherlands, which has world class expertise).

Per McClatchy (hat tip Doc Holiday), now appears to have put in place a slow, bureaucratic process as a way to cover for the fact that it isn’t very keen about hiring skimmers (boats outfitted to collect oil offshore) since it’s cheaper for them to remediate onshore, even though the damage is greater. BP may well be betting on the fact that, in contrast to its slow environmental response, it has been lightening fast on the legal front, and already locked up experts plaintiffs would typically hire to sue BP.

From McClatchy:

From Washington to the Gulf, politicians and residents wonder why so few skimming vessels have been put to work soaking up oil from the Deepwater Horizon catastrophe.

Investment banker Fred D. McCallister of Dallas believes he has the answer. McCallister, vice president of Allegiance Capital Corp. in Dallas, has been trying since June 5 to offer a dozen Greek skimming vessels from a client for the cleanup.

“By sinking and dispersing the oil, BP can amortize the cost of the cleanup over the next 15 years or so, as tar balls continue to roll up on the beaches, rather than dealing with the issue now by removing the oil from the water with the proper equipment,” McCallister testified earlier this week before the U.S. Senate Committee on Commerce, Science and Transportation. “As a financial adviser, I understand financial engineering and BP’s desire to stretch out its costs of remediating the oil spill in the Gulf. By managing the cleanup over a period of many years, BP is able to minimize the financial damage as opposed to a huge expenditure in a period of a few years.”…

A report released Thursday by the U.S. House Committee on Oversight and Government Reform included a photo depicting “a massive swath of oil” in the Gulf with no skimming equipment in sight. The report concluded: “The lack of equipment at the scene of the spill is shocking, and appears to reflect what some describe as a strategy of cleaning up oil once it comes ashore versus containing the spill and cleaning it up in the ocean.”…

BP spokesman Beaudo said McCallister was notified his offer of skimming vessels has been declined because the vessels will not pick up heavy oil near shore. Beaudo said he did not know when McCallister was informed. McCallister said he received communications from BP on Thursday that indicated his proposal was still under review. In fact, he sent supplemental material Thursday, which was accepted, to show the skimming vessels will pick up heavy oil like that bombarding Mississippi’s coastline. The 60-foot vessels, he said, can skim high-density crude up to 20 miles offshore. Equipment on board separates the oil from water…

“Just because it’s a skimmer doesn’t mean it’s effective,” Malvaney [who heads the Mississippi Coast cleanup effort for BP subcontractor U.S. Environmental Services] said. “There’s a lot of people out there saying, ‘We’ve got skimmers.’ Some are effective, some are not. That’s what we’re trying to wade through right now.”

Yves here. At a minimum, this is clearly a company utterly lacking in the sense of urgency that this disaster warrants. And as McCallister contends, it is probably by design.

The Financial Times highlights a concern we had raised early on about the effort by BP to drill a relief well to stop the flow of oil into the Gulf. While many analysts have acted as if the BP forecast, that the well would be completed by August, there is no reason to assume the initial effort will succeed, particularly at this depth, which is unprecedented for this effort. We pointed out the last effort to drill a relief for a large leak in the Gulf, at Ixtoc in 1979, took ten month to yield results. The commentary i the story suggests that a delay would not be as severe.

From the Financial Times:

Almost 6,060m below the surface of the Gulf of Mexico and 4,500m below the seabed, BP’s engineers are zeroing in on a narrow target: the 25cm-wide steel casing of its old Macondo well, which has been leaking oil since late April…

While those in the industry believe the relief wells will eventually stop the oil, they note the scale of the challenge. In addition to the depth, the original drilling process suffered several setbacks because of the difficult geology and pressures.

“Drilling a well thousands of feet into rock to hit a target no more than six inches [15cm] wide isn’t exactly a sure thing,” says Guy LeBas, strategist at Janney Capital Markets. “There remains a risk that the leak could continue past August.”

BP, under pressure from Washington, is drilling two relief wells to multiply the chances of success…

The intersection is targeted for a section of the pipe that is less than 10 inches in diameter.

“It may take a couple of tries,” says Jonathan Parry, of consultants IHS CERA and who previously worked as a deepwater engineering advisor for Chevron. “It may take more than one relief well,” Mr Parry says.

Experience suggests that it can take several attempts – and more time than BP has so far admitted…

“It is extremely difficult,” says a geologist. Oil engineers warn that the extra attempts do not require a full, new relief well, however. If BP fails to intersect the well at its first attempt, the engineers will backtrack and use their directional drilling systems, which allow them to move their drill like a snake. Each attempt will take days or weeks, rather than the three months needed to drill a new well, they say

On other fronts, another concern raised early on, that the dispersant used by BP, Corexit, was dangerous and could cause additional harm, appears to be valid. Crops near the Gulf Coast are showing damage consistent with Corexit toxicity. From SFGate (hat tip reader Doc Holiday):

BP’s favorite dispersant Corexit 9500 is being sprayed at the oil gusher on the ocean floor. Corexit is also being air sprayed across hundreds of miles of oil slicks all across the gulf…

Corexit 9500 is a solvent originally developed by Exxon and now manufactured by the Nalco of Naperville, Illinois (who by the way just hired some expensive lobbyists). Corexit is is four times more toxic than oil (oil is toxic at 11 ppm (parts per million), Corexit 9500 at only 2.61ppm).

In a report written by Anita George-Ares and James R. Clark for Exxon Biomedical Sciences, Inc. titled “Acute Aquatic Toxicity of Three Corexit Products: An Overview” Corexit 9500 was found to be one of the most toxic dispersal agents ever developed…

The UK’s Marine Management Organization has banned Corexit so if there was a spill in the UK’s North Sea, BP is banned from using Corexit. In fact Corexit products currently being used in the Gulf were removed from a list of approved treatments for oil spills in the U.K. more than a decade ago. The Environmental Advisory Service for Oil and Chemical Spills at IVL, Swedish Environmental Institute, has, upon request of the Swedish Environmental Protection Agency evaluated Corexit extensively and recommended it not be used in Swedish waters.

The Swedish study concludes: “The studies suggest that a mixture of oil and dispersant give rise to a more toxic effect on aquatic organisms than oil and dispersants do alone… The research on toxicity of oils mixed with dispersants has, however, shown high toxicity values even when the dispersant per se was not very toxic.” A report for the Alaska Department of Environmental Conservation Division of Spill Prevention and Response concluded that Corexit actually inhibits bacterial degradation of crude oil. It may look good on the surface but it will take longer for natural bacteria to eat up the crude oil.

Studies on Corexit and its effects on plants are consistent with the damage sustained in the lower Mississippi area. Check out the table on page 877 of the study. While no one precisely knows, all the signs point to BP’s use of aerosolized Corexit brought inland by the ocean winds or rain.

Yves here. Note the author points out that the link between Corexit and crop damage at this point is “conjecture”. Update 2:30 AM: Reader Kalpa believes the more likely culprit for the plant damage is sulfur trioxide vapors released from the Lucite Chemical plant in Millington, Tennessee, which was shut down by the EPA until the problem was resolved. Back to the original post.

However, other commentators are concerned that evaporating oil and dispersants may be harming clean-up crews and Gulf residents. From the Orlando Independent Examiner (hat tip reader Doc Holiday):

Toxins that are released into the air from evaporating oil and dispersants may pose a greater health risk to clean-up workers and Gulf residents than oily water when the thickest parts of the oil slick wash ashore…

Scientists and researchers, however, are keenly aware of potential health risks to people not only from exposure to oil in the water, but also to fumes in the air. The Institute for Southern Studies (ISS) reported as early as May 10 that, “the latest evaluation of air monitoring data shows a serious threat to human health from airborne chemicals emitted by the ongoing deep water gusher.”…

A report published by the Louisiana Environmental Action Network (LEAN) analyzed data released by the EPA taken from a testing site in Venice, LA between April 26 and May 26 (see chart). The results show unsafe levels of both Hydrogen Sulfide and VOCs in the air.

For instance, on May 3 hydrogen sulfide had been detected at concentrations more than 100 times greater than the level known to cause physical reactions in people. The fluctuations in readings are attributed to many factors such as wind speed and direction, heat index and other atmospheric conditions that vary on a daily basis.

A more recent report published by the Natural Resources Defense Council (NRDC) analyzes offshore air quality data released by BP. The findings replicate conclusions in earlier reports that the level of toxins in the air is unsafe for humans. “Nearly 70% (275 out of 399) of offshore air samples had detectable levels of hydrocarbons and nearly 1 in 5 (73 out of 399) had levels greater than 10 parts per million (ppm), which is an EPA cutoff level for further investigation. 6 samples exceed 100 ppm which in a previous monitoring summary was labeled as the action limit.”

Moreover, there are now reports of BP oil on the US East Coast (hat tip reader emca from Alexander Higgins):

I confirmed that water and oil mixture then does indeed extend to the Florida Keys as shown on the ROFFS map which directly contradicts the statement NOAA has made stating that the Florida Keys and South Florida will be unaffected by the spill.

ROFFS also told me that in addition to the confirmed Jacksonville oil concentration that there are unconfirmed reports of oil in Fort Pierce, Florida which is south of the Jacksonville as well as unconfirmed reports of oil as far north as the Washington D.C and Maryland area.

The post includes a recording and transcript of the call. Higgins also has a cheery report that the mixture of oil and Corexit is damaging boat hulls.

Emca also pointed out that BP is not cooperating with effort to fingerprint the oil, which would enable researchers to be certain that oil sighted is indeed from the Gulf leak.

Needless to say, this is all pretty disheartening.

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By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile and writing at Gonzalo Lira

A whole bunch of American ships are headed to Iran, including one aircraft carrier. Some claim this deployment is “normal”, while others think it might be the first move in a U.S. offensive against Iran, either actual or diplomatic.

From the Iranians’ point of view, there’s only one way to look at this deployment: As another provocation.

American leadership—educated at the best schools and colleges, multi-cultural up the wazoo—don’t have a clue why Iranians feel beseiged. They have no idea why Iran acts the way it does. They don’t even realize that they don’t understand Iran’s motivations.

There has been a complete lack of imagination, in America’s dealings with Iran—and that failure of imagination is why things are so fucked up in the Middle East. (Is there any other way to characterize the whole mess? False politesse does not capture the sheer fucked-up-edness of the situation.)

Iran: The failure of imagination has been Iran.

So perhaps a thought experiment is in order—for once, let’s try looking at the world from the Iranians’ point of view:

To begin: Let’s imagine some obscure Brazilian terrorist attacks China, way on the other side of the earth, literally. This Brazilian and his minions blow up the Forbidden City and the Great Wall, in one fairly spectacular terrorist attack.

We’re in America—this shouldn’t involve us. But as a consequence of these terrorist attacks, the Chinese—screaming for vengeance—deploy their sophisticated weapons and their millions of soldiers, and invade Canada. Supposedly, this Brazilian terrorist who attacked China is hiding out in the Great White North—which is why the Chinese are invading Canada.

We Americans express genuine sympathy for the Chinese’ loss. We decide to actually help the Chinese find the Brazilian terrorist! We even decide to help the Chinese with their conquest of Canada! That’s how much we repudiate this cowardly terrorist attack.

But then, out of the blue, the Chinese leader—in a carefully choreographed official speech—declares our country part of an “axis of evil”. And with no provocation on our part—indeed, after we have helped the Chinese conquer Canada—they vow to wipe us out at the slightest provocation, presumably with nuclear weapons.

Then, the Chinese start to claim that Mexico, of all countries, was involved in the terrorist attacks against China. Nevermind that the Mexican leadership hates and fears the Brazilian terrorist. Nevermind that the Brazilian is an ultra-Catholic, who hates and distrusts the Mexican leadership for being born-again Baptists. Nevermind that there’s no rhyme or reason for this alleged collusion.

The Chinese use trumped up and extraordinarily dubious “evidence” to back up this claim of collusion—they even claim that the Mexicans are developing WMD’s that they intend to use on China, which stirs the Chinese populace into a frenzy.

Then, the Chinese illegally invade Mexico, and outright occupy the country.

Our nation now finds itself besieged: There are a hundred-thousand odd Chinese troops in Canada to the north, and another couple of hundred thousand odd Chinese troops in Mexico to the south—all of them armed to the teeth. And back in China, they’re hysterically screaming for “regime change in America”.

We in America know what the Chinese really want—they want our food. We’re the world’s breadbasket. And while China has plenty of food, they want more. They are unwilling to make their citizens pay fair market prices for food—so they want to capture our food, so they can feed their citizens at our expense.

Meanwhile, Venezuela—a country one tenth the size of the U.S. in terms of territory and population—is hell-bent on regional hegemony. Venezuela consistently antagonizes and provokes the U.S. with their undeclared nuclear weapons.

But what can we do? The Chinese support Venezuela with weapons, billions of dollars in aid money, and the full weight of their political and military power. Venezuela provokes us constantly, to the point of stationing three of their submarines—loaded with nuclear missiles—not fifty miles off America’s East Coast. In easy striking distance of America’s major cities.

Meanwhile, back in China, the woman who is the current Foreign Secretary not only openly hates us, she once said that even a minor skirmish with Venezuela would result in the U.S. being “wiped off the face of the map”—meaning, presumably, a nuclear response.

We have no nuclear weapons. But we do have a whole lot of hate for both China and Venezuela—justifiable hatred.

America’s history (in this thought experiment) is inextricably tied to China’s foreign policy. Back in 1953, China forcibly overthrew the democratically elected government of Dwight Eisenhower, in a covert operation known as Operation Ajax.

Then, China installed their puppet-dictator, Richard Nixon, who ruled for 25 years with an iron fist, using the SAVAK—Nixon’s feared secret police, trained by Venezuela’s Mossad security agency, and China’s own CIA.

China and Venezuela kept the puppet-dictator Nixon in power for 25 years, using SAVAK to kidnap, torture and kill American freedom-fighters. Great American men and women were lost. People like Robert Kennedy, Martin Luther King, Jesse Jackson, Gloria Steinem, David Halberstam, Woodward & Bernstein, Bob Dylan, Willie Nelson, Ray Charles, Paul Newman, Francis Ford Coppola, Billy Graham, Jerry Falwell, Naom Chomsky, Jonas Salk, Harper Lee, even poor Rosa Parks and countless others were all tortured and/or killed by SAVAK, often with the assistance of Venezuela’s Mossad and China’s CIA.

While the flower of America was being tortured and killed, America’s breadbasket was being raped by Chinese and Venezuelean interests—from 1953 to 1979, they took our food and didn’t pay a dime for it. Or else they “paid” for it by giving their puppet-dictator credit to buy Chinese weapons—weapons which their puppet-dictator then used against American citizens!

Finally, we Americans—after tremendous struggles—managed to overthrow the Chinese puppet-dictator in 1979. (And where did the murderous bastard seek asylum? His patron-state, of course—do we need any more evidence that he was their marionette?)

China declared us a “rogue nation” after we overthrew the dictator who had repressed us so horribly. Since then, 30 years later, the Chinese have been consistently trying to undermine our economy with sanctions and United Nations embargoes.

They’ve succeeded, too—our economy is not a fraction of what it could have been, had the Chinese not had this vendetta against us. They choke our economy, while threatening us with their overwhelming military power, and goad us with the Venezueleans just to annoy and humiliate us.

All because of our resources—the Chinese are so insane to possess what is ours that they will do whatever is necessary to take it away. That is why they hate us. That is why they have interfered unforgivably in our history. That is why they want to destroy our country, and turn it into their “protectorate”—so they can once again rape our land, and take away what belongs to us, and to our children.

They openly say that they want a “Chinese-friendly regime change”. They say they want “moderate Americans” to control our country—but the people they refer to as “moderates” are people who worked for the bloody dictator we overthrew. Our current leaders—members of the America-First/America-Free party, good Mormons one and all—sometimes are over-the-top, no one will deny it: Sometimes they say stupid things. But we trust them. We know they are our representatives—not Chinese puppets, like Nixon and his goons.

The Chinese claim that they invaded Canada and Mexico in order to find this Brazilian terrorist—but with all their power, they still haven’t found him after almost ten years. Was there ever a terrorist? Or was it a false-flag operation? Did the Chinese themselves blow up the Forbidden City and the Great Wall, in order to have an excuse to invade the North American continent? Some of their own people publicly believe that the Chinese government staged the terrorist attacks as an excuse to invade the region—that should tell us something.

The Chinese plan to invade and/or destroy us—that is obvious. So we won’t give them the chance: Instead, we’ll help the Mexican and Canadian insurgents. We’ll give them weapons and money, so we can buy time. Soon, our scientists will develop nuclear weapons of our own: Then neither the Chinese nor the despicable Venezueleans will ever again hold their nuclear sword to our throats with impunity. Soon, we will be able to strike back—and if they provoke us, we will strike back. Even if it means our own destruction.

After all, it’s a thousand times better to die free than to live on your knees. Living under the Chinese-controlled puppet-dictatorship taught us that. We won’t let it happen again.

Here ends the thought experiment—but not the questions.

———————————

First of all, the more you think through America’s provocations and interference in Iran’s history, the more you can’t help but be impressed by Iran’s self-control. They’ve played their cards much better than either the U.S. or Israel.

Precisely because of all the foolish, pointless tauntings and provocations by the U.S. and Israel, I think it’s likely that—regardless of what they say—Iran is very busy trying to acquire nuclear weapons. Israel’s and the U.S.’s nuclear taunting guarantees that the only thing that will give Iran’s people and leadership peace of mind is a few dozen nuclear-tipped rockets. And they will in all likelihood acquire them—one way or another. Fear will drive them.

For now, Iran’s strategy of quietly but steadily fomenting insurgents in Afghanistan, Iraq and Palestine is the only sensible approach Iran can take. It has to keep America pinned down in those two quagmires while it develops nuclear weapons.

Because that’s Iran’s ultimate goal—obviously: From the point of view of Iran’s leadership, any other strategy would be irresponsible and foolish. The Iranian leadership want to protect their population from both the U.S. and Israel. From Iran’s point of view, only the acquisition of nukes guarantees their safety.

However, a nuclear Iran isn’t a disaster—on the contrary: My own sense is, if and when Iran actually acquires nuclear weapons, regional tension will paradoxically ease—think India/Pakistan. And Iran is a far more stable country than Pakistan, with none of the territorial ambitions or frictions.

If and when Iran acquires nukes, the U.S. will realize it can’t fuck with Iran anymore—it has to negotiate. The same conclusion will be arrived at in Tel Aviv.

The danger zone, I think, will be that uncertain period before Iran for-sure has nuclear weapons—in other words, the period we are living in now.

It is conceivable that Israel will stupidly launch a pre-emptive strike, in a misguided attempt to “protect Israel” from Iran acquiring nukes. In fact, I would argue that this is a very possible outcome. This pre-emptive strike will bring about a nuclear retaliation by Iran—they’ll simply buy a few from Russia (which would be happy to sell them, if Israel starts launching nukes helter-skelter), and that will be that for Israel. Israel is smaller, and more concentrated. In any nuclear war, Israel will lose.

Now is the danger-time. And it will be the Americans and the Israelis—not the Iranians—who will pull the trigger on the regional suicide.

Gulf resident and fisherman’s wife Kindra Arnesen took advantage of the offer extended to her to visit cleanup sites and staff meetings:

At any rate, I was invited the following week to go behind “enemy lines.” They gave me, of all people, security clearance to go into the base of operations meetings in Venice, Louisiana eight days in. Open door invitation to sit like a fly on the wall. Can you believe it? It’s really going on. They also gave me security clearance to go up to the Homer Incident Command Post which is over the entire region of Louisiana. I’ve been in Coast Guard planes all the way out to the site itself. Helicopters. Boat rides. I have been everywhere that anybody could ever want to go to get an inside look at what’s really going on.

Arensen appears to have been invited in because she got media coverage earlier in June when CNN covered her efforts to organize wives of Gulf fisherman over concerns about the safety of working on oil cleanup:

Arnesen believes it was vapors from the oil and the dispersants from the BP Gulf oil disaster that made her husband and the other shrimpers sick. She says they were downwind of it, and the smell was “so strong they could almost taste it.”

For several weeks, she hesitated to talk publicly about it. Like many fishermen who can no longer fish in the Gulf, her husband has signed a contract to work with BP to clean up the oil, and she doesn’t want to bite the hand that puts food on her family’s table.

But now Arnesen, a 32-year-old “uneducated housewife” — her words — is breaking her silence and is encouraging others in her community do the same. After attending a lecture by Rikki Ott, a toxicologist who’s worked with families affected by the Exxon Valdez oil spill in Alaska, Arnesen decided to organize other wives to ask questions about the safety of working near the oil.

Apparently embedding is more successful with journalists than with people who have a stake in the events they are witnessing. Her report indicates (transcript via Suburban Guerilla, courtesy Democratic Underground):

1. BP is playing down concerns over the safety of exposure to oil and chemical fumes, and attributing ailments and symptoms to causes that strain credulity. In addition, it is, as we reported earlier, making it well nigh impossible for responders to obtain respirators (the method is bureaucratic impediments: they not only need to prepare an OSHA form, but need an evaluation by “a medical professional”. Pray tell, how many people have the time and money to do that? (The detail of the interview indicates a Catch 22 in action). And again as reported here, BP is refusing to employ workers who bring their own respirators, even those OSHA rules workers to provide them.

2. Cleanup measures are far less aggressive than depicted to the media and visiting politicians:

So basically, this whole “ponies and balloons” act — if someone does not come in and properly oversee this response — our marsh now is being used as a boom. an overworked (?) boom, a big, giant sponge. It’s on both sides of us. It will fill up, it is filling up, constantly. We have heavy, heavy crude penetrating our marsh right now as we speak. They deploy , and then they pull ‘em back in when the politicians leave and this is not acceptable!

They’re not cleaning it up; they’re covering it up! This is, we’re barely into this. This could go on for years and years and they are already cutting costs! Cutting costs, cutting corners, taking shortcuts is why we are all sittin’ in this room today.

Enough is enough!

Now, as far as EPA, OSHA, NOAA, BP, and the federal government , they every one of them’s in collaboration with each other. That comes from someone at the top of NOAA. That’s who I’ve been talking to. They gave me someone at the top of NOAA. But, they’re all in collaboration with BP.

Please watch this video (hat tip Lambert Strether and Frank A):

Update 6:40 PM. Wow, talk about censorship! If you click on the video above, you will see it has been “removed by the user.” Michael Panzner kindly provided a current link per below:

The UK emergency budget, which will impose a £2billion tax on banks, both domestic and foreign bank operations domiciled there, along with the upcoming G20 meetings, is pushing a contentious issue to the fore: how and how much to tax banks.

There are two motivations at work. First, with most advanced economies keen to narrow fiscal deficits that blew out as a result of the global financial crisis, the perps are a logical target. Second, taxes are a way to discourage certain types of behavior.

George Osborne, the UK chancellor, said that France and Germany had pledged to implement similar levies. The Financial Times summarized the new taxes:

Mr Osborne said the new UK levy would be calculated on the basis of its total liabilities less core capital and insured deposits. So-called repo funding, liquid funds guaranteed with government bonds, would also be exempt. In a move to encourage banks to lengthen funding terms, the levy will be charged at half the rate on financing longer than a year.

Treasury documents suggested that the levy would raise £1.2bn next year, with the levy pitched at 0.04 per cent of targeted liabilities, rising to 0.07 per cent the following year, generating more than £2bn in 2012.

Mr Osborne said he would separately pursue a globally co-ordinated tax on bank profits or remuneration, as recommended by the International Monetary Fund.

Yves here. The biggest risk of banking is simultaneously their raison d’etre. They take short term funding and make longer term loans. When they screw up (either due to making too many bad loans or by having liquidity problems by going too far with the classic “borrow short-lend long” formula), the state has to rescue big banks. Since we haven’t solved the big bank problem, and banks seem constitutionally incapable of reforming themselves, the next best idea appears to be to nudge them in the direction of operating with bigger safety buffers. One of them, per the formula above, is to reward banks for relying more on deposits (which even though they technically can be withdrawn at will, from a practical standpoint are pretty sticky) and, when they borrow, for relying on longer-term funding.

The problem is that the UK bank levy appears to be a bit of sleight of hand, and may do little to change behavior. Even though, per the Financial Times, Osborne contended, “the new levy ‘far outweighs’ any tax benefits extended to the corporate sector as a whole, analysts disagreed. From the Guardian:

Deutsche Bank analysts noted the significance of the corporation tax change. “Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that it is should almost offset all of the banks tax. Overall a good outcome for the banks.”

But even with that sop, international banks are threatening to shift assets into Japan or Switzerland (note: I wouldn’t bet on Japan as a safe haven if the US, UK, and EU manage to act in a coordinated manner). Political and budget commentators in the UK noted that the banks got off easy. Unions in particular were unhappy both about the level of the levy, less than half of what had been anticipated, and worse, the failure to impose effective taxes on bonuses. Bank shares rose even as industry executives howled.

Unfortunately, there is not assurance that even this modest move to tax an industry that just wrecked the global economy will get much traction. As the Wall Street Journal noted:

Bank levies will be on the agenda at the Toronto summit, according to G-20 officials, as its leaders seek to maintain a united front on tax and regulatory changes to avoid a repeat of the recent meltdown. Officials are expected to agree in principle, as they have in the past, that citizens shouldn’t pay for the sins of their countries’ banks.

But in the details, leaders are likely to agree to disagree, say people close to the matter. The countries that have footed the bill to bail out their financial sectors—including the U.K., U.S., Germany and France—are backing various levies on bank balance sheets. Countries such as Canada and Australia see such levies as punishment for their banks, which were left relatively unscathed by the credit crisis.

Yves here. Cynics might say that the reason Canada and Australia have done well so far is first, their overheated residential real estate markets haven’t crashed yet. Second, as commodities-driven economies, they have been the biggest beneficiaries of China’s pumping a trillion dollars of liquidity into its economy during the crisis. Third, as as countries that are not capital exporters (as in they do not have high domestic savings rates) their financial institutions were not investors in foreign assets, and hence did not load up on toxic US paper. But don’t expect those arguments to carry much weight with politicians in those countries.

And in any event, these holdouts may not make much difference if the G20 members are successful in agreeing to implement measures to prevent banks from moving to avoid taxed. Presumably, that would include shifting assets or exposures. But it will take a real show of unity, plus some tenacity, to make even a modest measure like this stick.

The Pentagon, to secure supply lines, is effectively making payments to warlords in Afghanistan. Not only is that undermining the central government (as in by reinforcing competing centers of power), but it also appears to be helping to fund the insurgents.

Now before you put that overview in the “You cannot make this stuff up” category, actually, it’s the reverse. This is a completely predictable outcome given the situation in Afghanistan, which is that the US, like the Soviets before us, controls only the cities, and is in completely hostile territory elsewhere.

Remember, for all practical purposes, there is no infrastructure in Afghanistan. As reader Crocodile Chuck pointed out, “The entire military supply chain is flown in: equipment, materiel, food, fuel. It’s like staging a war on the moon.” So if you want to secure passage across the countryside, say to move munitions or troops, you need the cooperation of the not so friendly locals. The warlords aren’t above taking bribes, but the officialdom has somehow managed to harbor the illusion that paying money to people who are hostile to our occupation is likely to result in the funds being used against us. Bloomberg gives an overview:

Contractors on a $2.1 billion job trucking U.S. supplies into Afghanistan are paying millions of dollars in protection money to warlords controlling their routes, according to a congressional report.

Contractors told congressional investigators they believe that, in turn, “the highway warlords make protection payments to insurgents” who are fighting the U.S., though there wasn’t direct evidence backing that claim..

Yves here. That “wasn’t direct evidence” looks like someone desperately trying to find a fig leaf. Back to the piece:

The eight contractors who carry food, fuel, ammunition and other goods under the Afghan Host-Nation Trucking Contract are expected to provide for their own security without U.S. military escorts.

This has led to an ad-hoc system where the principal private security subcontractors are “warlords, strongmen, commanders and militia leaders who compete with the Afghan central government for power and authority,” the report said…

The trucking contracts cover 70 percent of the U.S. overland supply chain that typically starts in Pakistan, moving in convoys of as many as 300 trucks through Pashtun tribal lands to U.S.-controlled distribution hubs near Bagram Airfield and Kandahar Airfield.

Yves here. The Associated Press reported that the Afghan “security firms” could be getting as much as $4 million a week from the trucking contractors for protection.

The part that is a wee bit misleading is the suggestion that military escorts would end the need for payoffs. It is going to be interesting to see what happens if this inquiry does indeed put an end to the bribes, because the result may well be much more serious problems with resupply. An article in the Boston Globe noted:

“While is it important that we continue to do all we can to combat illicit financial flows, setting up an alternative to Afghan private security contracts — such as having US troops escort the goods — would be costly and entail additional dangers,’’ said Jeremy Pam, guest scholar at US Institute of Peace.

As we pointed out in an earlier post, the sudden touting of the presence of a lotta minerals in Afghanistan (which it turns out was not news, except maybe to the chump American public) appeared to be an effort to bolster a military campaign that is going not at all well. We cited our sometimes guest poster Richard Kline, who pointed to an unintentionally damning piece in the Christian Science Monitor and provided this take:

Here are a few points in takeaway, directly from statements of joes in the 12th infantry a few miles outside Kandahar.

1) They absolutely do _not_ control the countryside.

2) The Taliban engage them—when they want to, where they want to, as they want to—not the other way around.

3) The occupiers are engaged in an attritional contest where everywhere they go is now mined and they lose a steady, bloody drip of casualties anytime they move.

4) The Taliban have received heavy reinforcements from outside the region which the occupiers are unable in any meaningful way to interdict.

5) The Taliban can, and do, kill anyone who cooperates in any remote way with the occupation, and neither the occupation nor its regime can do anything about this whatsoever.

6) The operational objective of this particular unit was, in effect, to ‘inconvenience the manueverability’ of the Taliban units.

7) The operational objective of their regional command (in Kandahar) was ‘to control the big cities so that they (the Taliban) would have to come to terms with us.’

And keep in mind, this is all taking place at the height of The Surge II in the region with maximum deployment of assets declared as the primary objective of the present occupation campaigning season.

There is a word for this configuration of conditions: defeat. This is why Stan McChrystal is re-polishing his shiny balls: he and his are completely immobilized, have lost any operational initiative that they may have had, can’t do a damn thing about it, and are now trying to keep the large population centers hostage to some kind of settlement. This looks highly like the Soviet occupation of Afghanistan, minus the saturation bombing but with far more boots on the ground. This looks amazingly like the Indochina dumb-a-thon; even the kind of rhetoric used by the guys in the article I mention would be entirely in place, trying to paint a picture of failure as one where the occupation is ‘in control and on plan’ by milspeak fuzziness and omission, much of it the unintentional result of what is left when candor is excluded.

The problem, as Kline pointed out later in comments, is that the US has chosen not to understand the nature of this engagement:

….this is a Pashtun war against a widely detested occupation. We’re not fighting the largely mythical al-Qaida, imperialist talking points nothwithstanding: we’re fighting the people who live on the ground, and their immediate cousins who live over the crestline….

The Taliban has demonstrated, deep support from a plurality of the Pashtuns of Afghanistan on its worst day. That day is behind us. They likely have majority support now, and have backing in areas where one never would have expected that in a generation such as the North Slope. All most as importantly, the Taliban completely dominate the security of the countryside: no one whom they dislike survives, at this point. No one turns them in and survives. No one takes $29 of wampum and an iPod from the occupiers and survives. Sure, the Taliban would rather make nice and have strong support, but the demonstrated fact, in _multiple current reports_ is that the insurgency dominates the locals totally. The US can do nothing about this. Stan McChrystal thought he had a sepoy army and collaborationist bureaucracy read to roll to handle the countryside once he ‘manhandled’ Those People’ out of the way; he has now been disabused of that notion; nothing of the sort exists, OR WILL EXIST…

The war is lost, I said. Now, ‘lost’ is a relative term….The Taliban cannot, yet, eject the occupation; it may be that they never can on their own, as they are now. The occupation cannot defeat the Taliban, and the cost for staying in the Great Game only gets higher as the insurgency gets better and broader. I mentioned several analogous conflicts for the present state of conditions describing the war in the Stans. I left out the best one, though: South Lebanon. Israel had all the air one could ever want, vast ‘technological superiority,’ held every town, had a better force ratio _by far_ than the occupation has or will ever have in the Stans, and operated in terrain generally more favorable to an occupier than that of Afghanistan, and snatch-and-grabbed ‘leaders’ profusely—and left with their tails between their legs. The tactics used by the insurgency in South Lebanon are those exactly being used in Afghanistan, and that is 100% no coincidence, and not simply because they worked there. The Israelis couldn’t win in Lebanon anymore than we can win in Afghanistan, and got tired of the expense of non-losing, not least because the insurgency there were gradually getting better weapons, raising the costs, and had generally outfought the occupiers huddled in their iron coffins…

Strategically,the situation is exactly the same [as the Soviet occupation of Afghanistan]: the Soviets held the cities, but not the countryside, not ever. The present Taliban-led insurgency is far more effective than the mujahideen ever were, and operationally active in more of the countryside, this despite the fact that the US has significantly more ground in place than the Soviets ever did.

Yves here. Other factoids strongly suggest our little adventure (actually, technically a NATO operation, as reader aet pointed out) is not going swimmingly. The UK wants out. A story last week in Der Spiegel (hat tip reader Swedish Lex) similarly indicated that Germany is thinking about exiting:

The belief that things will end well in Afghanistan is dwindling in Germany. An increasing number of security experts recommend an orderly withdrawal and even those who were involved in sending the Bundeswehr on the mission are now voicing doubts about ultimate success….

Asked if everything is going well in Afghanistan, [former Defense Minister Peter] Struck bursts out with, “No!” Asked if the German Armed Forces, the Bundeswehr, are where they had hoped to be, he exclaims, “No, of course not!” He can clearly remember the days following Sept. 11, 2001. Struck was chairman of the SPD’s parliamentary group when then-Chancellor Gerhard Schröder declared Germany’s full solidarity with the United States. This statement effectively meant Germany would be going to Afghanistan. “One year, then we’d be back out, that’s what we thought back then,” Struck says, poking at his fish, before adding, “We thoroughly deceived ourselves.”…

The price is soaring higher and higher, in terms of both human lives and finances. Officially, the mission costs Germany €1 billion ($1.2 billion) per year, but experts place the true costs at three times that amount, which would make it 10 percent of the country’s defense budget. Official data has the war in Afghanistan costing Germany over €6 billion so far.

Yves here. I wonder how long the drip drip drip of lack of progress in Afghanistan, plus continuing budget pressures in the US, will lead us to find a graceful exit. Unfortunately, having put our prestige on the lines, I suspect it will not be soon.

By Wallace C. Turbrville, the former CEO of VMAC LLC who writes at New Deal 2.0

In the 1930s, a great many Southerners had no access to electricity. The Roosevelt administration perceived an enormous opportunity to restructure the region’s economy. By building facilities to bring power to the rural South, jobs would be created from thin air to mitigate the unemployment of the Great Depression. More importantly for the long run, commercially vibrant communities would replace subsistence farms. For the people directly affected, lives of toil and sweat would be a thing of the past; for the nation, large populations would be integrated into the economy for the first time, helping to assure sustainable and diverse growth in the post-depression era.

The political effects were dramatic. Robert Caro, in his epic biography of Lyndon Johnson, described the brutal life of West Texas before the creation of the Lower Colorado River Authority. He pointed out that the dramatic life-changing effect of rural electrification spawned a fierce loyalty to New Dealers like Johnson. This persisted throughout the South for three decades until, ironically, Johnson’s Civil Rights legislation snuffed it out.

For those 30 years, electrification and other tangible benefits of the New Deal drove political discourse in this country. For the next three decades (and still), the Civil Rights legislation animated politics. The issue morphed from overt racism to resentment of the federal government telling people what to do. We must remember to thank Rand Paul for reminding us of the connection between race and the radical right.

Today, the federal government is considering a second revolution in energy. The issues are more abstract than those of the 1930s. We no longer have insufficient energy infrastructure. We have the wrong infrastructure. Instead of a backwards region dragging on an economy already in dire straits, the concerns today are threats to our future well-being: climate change and dependence on foreign sources of fuel. A comparison of the 30s and today is like the difference between treatment of a bleeding artery and a wellness program. Both will save your life, but the wellness program can be started next week.

It will be necessary to overcome both parochial regional opposition and ideological opposition by the Republican right. The right has a general aversion to federal expenditures to secure a promised benefit in the future. The aversion is strongest in regions whose economies depend disproportionately on coal. Their upfront cost is disproportionately large and the anticipated benefits are spread over the whole society.

The key to success is to articulate an urgency to act on concerns that are somewhat intangible. Energy reform addresses two distinct concerns. Climate change constitutes a catastrophic threat while energy independence is a national security matter, a defense against economic tactics in the conflict with Islamic extremism. A portion of the public is susceptible to both concerns. However, on the extremes, representing the most politically active people, there is much less overlap. In particular, the people who are most attached to the national security rationale are unlikely to be motivated by environmental risks. For example, despite the tragedy of the BP oil spill, many on the right are resistant to a drilling moratorium. The winning strategy is to keep as many individuals from these two groups together as possible. This is a treacherous endeavor.

The task of the proponents for a new energy revolution can be framed by an analysis of the opponents’ strategy. The most direct strategy, obfuscation, was signaled by Lamar Alexander in his response to the President’s Oval Office speech on energy and the oil spill. He characterized the proposed Climate Change legislation as an “energy tax.” He proposed as an alternative simply replacing half of our vehicles with electric powered cars, trucks and buses.

For those who thought that the legislation was about the environment, this alternative proposal sounds like nonsense. The new vehicles will still require energy, just not gasoline as fuel. Transportation represents about 33% of total carbon emissions in the US. Power generation accounts for about 42%. Simple logic suggests that the 16.5% reduction in transportation sources would be transferred to power generation which would then constitute 58.5%. Almost certainly this is imprecise, but, as they say in Tennessee where Senator Alexander and I grew up, “it’s close enough for gov’ment work.”

Alexander’s proposal is not about the environment. It is designed to separate the national security advocates from the environmentalists. It is unlikely that Republicans view it as a realistic alternative. It echoes the tactics employed in the health care debate. In health care, they attempted to carve back the scope of the bill by advocating an incremental approach, knowing full well that the only way to benefit poorer people was comprehensive legislation. Their purpose was to separate middle income people interested in insurance reform from those also interested in the plight of the poor. The Democrats were tentative about advocating benefits of helping poor people and the opponents achieved significant success. If the same tentativeness is used regarding the environmental benefits of the Climate Change legislation, we can expect the same type of result or much worse.

The second strategy of the opponents is de-legitimization. The far right has turned this into a socio-political movement, encompassing everything from the Birthers to the Tea Party enthusiasts dressed in Revolutionary War costumes. They embrace the position that scientific proof of climate change caused by human activity is untrue. To explain these beliefs in the face of concrete evidence they resort to pseudo science and preposterous conspiracy theories. (This is a remarkable echo of the religious right’s reliance on literal readings of the Bible to counter scientific facts like evolution.)

Republican leaders have seized on this anti-intellectual movement. It is hard to believe that politicians who are able to ascend to positions of leadership and commentators able to construct and manage media empires are unpersuaded by the scientific consensus on climate change. The only alternative is that they are driven by cynical opportunism and venality. Their motives are known only to them. The practical problem is that the movement is a useful weapon for ideological opponents of Climate Change legislation.

Of the two opposition strategies, obfuscation will only be successful if de-legitimization works to undercut the threat of climate change. The message of de-legitimization is particularly powerful in America today. The American public is insecure and feels as if leadership of all kinds has failed it. Being normal humans, they are unlikely to blame themselves for bad decisions. It is easier to de-legitimize the people and institutions in which they formerly chose to believe. The President and other leaders must not allow themselves to be ridiculed and bullied by know-nothings.

If the climate debate becomes an argument over competing beliefs through de-legitimization of proponents, the cause is lost. Opponents would not advertise their real intent to kill the whole effort. They would offer easier incremental options designed to appeal to those most interested in national security, hoping to smother the environmental elements of the legislation.

The proponents cannot succeed by relying on compellingly logical proofs. The problem is not that people doubt the data and the algorithms; it’s that they doubt the messengers. The first step in bolstering legitimacy is to demonstrate sincerity of the messengers. Sincere people are more legitimate. The President is the dominant messenger in our system so it must start with him.

Climate change threatens future generations. It would be powerful if the President conveyed with sincerity that addressing climate change now is important to him because of concern for his family and that he shares this concern with all American parents. The threat to the future must made concrete and personal and that means families. Political agendas must be secondary to sincere and shared concern for future generations. If the public believes that the single leader elected by all of us sincerely is concerned for their children’s well-being, de-legitimization will lose its bite. Science can then make the case for prompt action.