BP bigger blow to confidence than euro debt crisis
Forget Greece — the biggest blow to global investor confidence right now lies 5,000 feet below the waters of the Gulf of Mexico. That might seem an odd statement. After all, at worst the Macondo disaster would wipe out one big company, BP, while a sovereign default could domino throughout stock, bond and currency markets, bring down some of the continent’s biggest banks and potentially break up the single currency.
But what’s most worrying about the Gulf leak is the apparent inability of man — whether embodied by corporation or government — to stop the flow of oil. That impotence damages investors’ faith in the technological foundation of capitalism. Until the oil is stopped, the financial markets will labor under an oily coating of fear.
The stock market has already weighed in. The S&P 500 Index hit new highs while the Greek crisis spiraled. But U.S. stocks plunged as much as 14 percent as the scale of the damage from the April 20 Deepwater Horizon explosion became clear. They have bounced a bit from their lows in recent days.
The European sovereign debt mess can be cleaned up. Richer and more solvent countries stand ready to rescue the euro zone’s laggards. If that fails, a sovereign default is possible, and no wildlife or coastlines need be destroyed in the process.
Besides, when push comes to shove, belts could be tightened in Greece or any other defaulting European country without much misery. Some more years on the job before retirement and a fewer cruise vacations for pensioners — and in no time the national debt clock slows down, or even stops ticking.
Not so with the gash that BP’s failings have opened up on the sea floor. Like a debt clock, a camera shows black crude spewing out into once-pristine waters. Citizens look on helplessly while their government can only fume and prod a corporation to plug the hole with its supposedly sophisticated technology.
BP tries, but fails over and over. Each effort marks with abundant clarity the limits of human capability. Nothing can be more damaging to confidence than that.