BP bigger blow to confidence than euro debt crisis

By Rob Cox
June 16, 2010

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.


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Obviously the writer is not one of the millions of people who might lose their jobs if the European economy goes into a tailspin. Anyone who is surprised that man’s ability to control nature has its limits must have slept through all of human history. I really don’t think there is anything in the least bit profound, new, or surprising about a disaster that differs from most other disasters and technological mishaps only in being right under the short-sighted eyes of the American media.

Posted by Osomec | Report as abusive

‘….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…’

Fat chance. The stock markets has been reacting negatively about the Greek debt crises (which has been much more in the headlines) way before 4/20 and when between 4/20 and 5/15 all the ‘bad’ news was about the European debt crises. The Deepwater Horizon fiasco has only been weighing on stocks the last 2 weeks.

Posted by habakak | Report as abusive

This is neither a hurricane, nor an earthquake, not even a flooding, but a single leaking pipe that is missing something so trivial like a faucet to close it whenever needed.

I smell something deeper called negligence and carelessness. I have a ‘scientific discovery’ in hydrology being violated by flawed patents that even do not work.

I smell that negligence within public service is broad . . . Indeed it stinks far beyond our nose can grab . . .

Posted by Tubarc | Report as abusive

Investors’ irrational exuberance is legendary in a world about to be decimated by rapid climate change and sea level rise. Snapshot of the early 21st century: Investors are playing high stakes poker over bottles of high priced liquor aboard a luxurious riverboat about to plunge over Niagara Falls. We’re observing a priceless moment in human history that’s about to become one for the history books.

Posted by DisgustedReader | Report as abusive

Americans think Athens is their local diner. They have little comprehension of what goes on elsewhere in the world. Whereas Bubba Gump shrimp is right in their backyard.

Posted by williambanazi7 | Report as abusive

The writer is clearly (a) a writer and (b) an American to say the European crisis will not be as bad a the GOM situation.

With regards to negligence, I suspect there is a considerable amount of negligence. On behalf of BP as well as the MMS. But who will be charged, prosecuted and persecuted? Not the MMS whom the US will hide behind soverign immunity.

The day will come when the US will trip up and fall flat on its face. And I for one will not be there to help it back to its feet.

Posted by PassingResident | Report as abusive

A single leaking pipe? Really? My impressions are a bit stronger, but hey, we’ll toss that MA in physics, as long as the data is witheld it doesn’t matter what any opinion claims (altho a 1st yr student could do the math if the facts were known).
Basics: A “spill” denotes a known and finite quantity; a “leak” is usually a slow drip, quantity easily determined; A “gusher” pls see Jed Clampett, Jethro can do the math, clearly we can’t. No comfort knowing other “civilized” countries have turned their backs on basic education as well.

Posted by cas11 | Report as abusive