This article is written to analyze the potential economic fallout of the Gulf of Mexico oil rig explosion that occurred on April 20, 2010. I maintain that this incident could be the trigger of the American economic collapse. My expertise is in the insurance risk management and claims field. So, let’s look at what is going to happen as this disaster unfolds over time.
The oil drilling platform that burned and sank was drilling a well about 50 miles off the Louisiana coast. The derrick, the Deepwater Horizon, is owned by Transocean Ltd., and was leased to British Petroleum (BP). It was connected to the ocean floor by a “riser”…a 5,000 foot pipe that is now kinked like a garden hose. But the leaks are at the sea floor, not in the pipe. If BP, the lessee, cannot close the valve at the mile-deep wellhead, they may have to drill another well to relieve pressure. Some experts estimate that it could take two months to cap the well at the mile-deep ocean floor. And every day, somewhere between 1,000 and 5,000 BARRELS (200,000 to 1 million gallons) of crude oil float to the surface of the Gulf of Mexico.
The leading edge of the oil slick is about to make landfall at the Louisiana, Alabama and Mississippi coasts. But there exists the possibility that the oil spill may be caught by the Gulf Stream…the powerful, warm, and swift Atlantic Ocean current that originates in the Gulf of Mexico, exits through the Strait of Florida, and follows the eastern coastlines of the United States and Newfoundland before crossing the Atlantic Ocean.
And, we are just about to enter the Hurricane season, which extends from June 1st to November 30th. Any hurricane that enters the Gulf of Mexico will disperse the surface oil to parts unknown. There is no predicting which coastlines could be coated with crude oil. Any Gulf hurricane will impede and stall cleanup efforts as well as vastly expanding the geographic footprint of the spill. Cleanup cost could multiply exponentially.
Could be an active hurricane season. Sea surface temperatures are already above 80 degrees Fahrenheit from West Africa to the Gulf of Mexico (see Global Sea Surface Temperatures). And warm water spawns hurricanes.
So, we may be witnessing the humble beginnings of a disaster that could potentially affect the American coastline from Texas to Newfoundland.
Insurance Claims Issues
First Party Claims
There will be a flood of first-party claims, which are claims for direct loss or damage to covered property. But most Commercial Property insurance policies exclude pollution-related losses unless the loss was caused by a “specified cause of loss,” usually named in the policy…and usually confined to occurring on the insured premises.
Tens of thousands of claims will be filed under the Business Income and Extra Expense sections of commercial insurance policies. Untold number of businesses will be adversely affected by the oil spill, such as resort owners, commercial fishermen and shrimpers, coastal rental property owners, seafood wholesalers, most tourist-related business at the seashore, and charter fishermen.
But once again, BI and EE coverage requires direct physical loss to covered property. So, many businesses will be shocked to discover that even though they have Business Interruption insurance, it does not mean that they have a legitimate BI claim.
Even those policyholders that do have acceptable and covered BI claims may be limited in their monetary recovery by the policy language. The period of restoration usually does not include any increased period of time due to the enforcement of any ordinance or law that may require a policyholder to mitigate the effects of, or clean up the pollutants.
So most policyholders will be out of luck by filing claims with their own insurance companies. More on this later.
This denial of coverage will spell the bankruptcy and end of tens of thousands of coastal businesses. The ripple effect from those businesses to their customers and suppliers, as well as the families employed by all parties, will be catastrophic.
Third-Party Claims
Another huge consideration is the certainty of third-party claims. First-party insurers that pay claims related to the oil spill will subrogate (seek recovery) against those parties responsible and liable for the damages. Then consider all of the business that will file third-party claims directly against the parties responsible and liable for the damages. The list will continue to mount over the coming decade or longer. Timing will be crucial in this matter, since many of the responsible parties may have already exhausted their liability coverage and their corporate assets. Lawyers may find that many responsible parties will close their doors, effectively barring recovery.
Post-Katrina Insurance Industry Reality
In the wake of Hurricane Katrina, scores of insurance companies paid claims that they had originally denied. But sympathetic courts ordered them to pay claims that were arguably not covered. The same kinds of pressures will be brought to bear on ALL insurance companies in the aftermath of this oil spill disaster. In these kinds of widespread catastrophes, insurers will be required to pay claims that they may not owe simply because they CAN PAY. That takes some of the political pressure off of states and Washington.
Monstrous insurance loss payments can bankrupt insurance companies. But even worse are these politically-motivated claims for which the insurance company had not collected a premium. Do not be surprised to see many insurance companies fold in the wake of this ecological disaster if they are required to settle claims politically. And all insurance companies are backed up by reinsurance companies. The reinsurers will be hit with losses also, adding more ripples throughout the worldwide economy.
Lawsuits
In war, there is an old saying; “Kill them all…let God sort ‘em out.” That is kind of the philosophy of trial lawyers. In giant commercial enterprises such as BP, there will be dozens of entities that are involved…the parent company, subsidiary companies, contractors and suppliers. Trial lawyers customarily target the entities with the deepest pockets…plus everyone else. The lawsuits have already begun, and will name every business entity even remotely connected to the operation of the Deepwater Horizon oil platform. Every entity named in the lawsuits will be forced to defend itself.
And here’s where it gets even more complicated.
Many contracts between businesses and contractors contain a Hold Harmless clause that forces the contractor or vendor to absolve the business from liability, or at least to provide legal defense for the business. Common sense will tell you that subcontractors or vendors will have lower liability limits than the controlling entity, like BP. So lower liability limits will max out quickly.
The lawsuits will continue to be filed, and it will take years of legal wrangling to begin seeing damage awards meted out by all the various courts that will be involved.
Gigantic lawsuits and gigantic jury awards have the very real possibility of bankrupting the companies responsible for this oil spill.
Political Realities
Your Washington politicians have already passed legislation that protects their oil company buddies while exposing Americans to immense cleanup costs and business losses. A law passed in response to the 1989 Exxon Valdez spill in Alaska makes BP responsible for cleanup costs. But the law sets a $75 million limit on other kinds of non-cleanup damages. So, Federal law limits how much BP has to pay for damages such as lost wages and economic suffering in the Gulf Coast oil spill, despite President Barack Obama’s assurances that taxpayers will not be on the hook.
But the hue and cry from the Gulf Coast will be so great that Washington will feel entirely compelled to swoop in and start writing checks. The Hurricane Katrina/Rita debacle of 2005 is a scab on Washington’s skin that they don’t want torn off. And no Congressman is going to take a position against helping the poor Gulf fishermen and the rest of the populace that makes their living from Gulf and gulf-shore businesses. And despite Obama’s assurances, there is no way that he would refuse to sign a disaster relief law.
All of that means that the Federal Government will print more paper money and go deeper in debt. But printing paper money will hasten hyperinflation. And in order for Washington to go deeper in debt, foreign nations must by American debt securities. Eventually, foreign nations will cease cutting their own throats and say no to Washington.
Tens of thousands of Gulf Coast businesses will cease operations in the months to come. Banks that hold loans and mortgages on those businesses…as well as the loans and mortgages of the employees now thrown out of work…will suffer financial losses. Hundreds of thousands of coastal residences will be unemployed. Cars will be repossessed. Home foreclosures will escalate. Credit card companies will hold uncollectible accounts. Even the local Dairy Queen could suffer economic losses when the surrounding coastal community’s economy collapses.
And we haven’t even left the Gulf of Mexico yet. If the Gulf Stream moves the oil up the Eastern Seaboard, multiply all these predictions by an X factor.
Conclusion
As you see, the economic impact of the oil spill will reach around the world. Companies in the UK will be affected. Likely some insurers at Lloyd’s of London are involved. Reinsurance companies will take hits, which might affect companies in Germany, Switzerland, France and Bermuda. Domestic insurers will likely pay claims due to political pressure. Banks will suffer losses. Businesses will close. Unemployment will spike. Most importantly, it will place crushing pressure on Washington to fix the problem with money…and Washington withstands pressure like a Dixie cup under an elephant’s foot.
Therefore, I submit to you that the April 20th Gulf of Mexico oil disaster could very likely be the trigger of the collapse of the American economy.
© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
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DumpDC 
Very interesting, but what I’m mulling over is a string of, um, “coincidences.” All things are possible, statistically, including that if I put ten dollars’ worth of pennies in a basket, shake vigorously, and dump them over the balcony all of them will land heads up on the terrace below. I would tire of picking up pennies after finding even one tail long before I got that result. The climate crowd just got a very black eye and suddenly we have two coal mine disasters, the explosion on the rig leading to an oil spill, a refinery blowing up and a gaudy “car bomb” threat in Times Square. Obviously that is possible, but is it likely? Is BP indemnified against acts of terrorists?
Ms. Traynham- My career expertise is in the insurance claims field. I have handled many claims for multinational corporations like BP. They have what is known as a “manuscript” policy, which they basically write themselves, and then go find an insurer that will underwrite the risks. In today’s world, most multinationals will have a Terrorism Endorsement to indemnify the insured against acts of terrorism. I’m confident that BP has one.
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I am reading Herbert Spencer, “Principles of Ethics” 1875, -in two volumes. It is worth the effort -if like me -stepping back in time is the way you gauge the idiocy of our current age.
I am looking at the evidence that a catastrophic oil spill -has occurred. I am unconvinced of this on the public evidence. I see a large amount of hysteria about a few pictures, a big explosion, a few deaths, and a great deal of speculation, -but very little in the way of evidence of a massive oil spill -that could not be commonly faked.
I suspect, that like the stock market plunge today, this is all nothing more than what Herbert Spencer talks about in some brief passages in his greatest work.
Spencer writes about the variability of the perception-and-place of proscribing lying as a moral edict.
In some cultures, the primitive peoples could not and would not tell a lie to save themselves from their own funeral.
However, more telling, in many other cultures, including our own we should note, -lying well- is a measure of a man’s ability and can even build his esteem within his community.
The people who live in such places, (some of them), are astonished at the ignorance of those who tell the truth -with no compelling or profitable reason.
Among those places (and there are many, like all of South America claims Spencer) are West Africa and Malaysia, the two places that were the youthful cultural influences -of our most questionable president.
I looked carefully at the end of today -at the broad range of stock aftermarket quotes and the effect of the plunge on stock market around the world. Knowing this was about to happen -would be very profitable for someone with the means to profit from the information. I suspect Goldman Sachs is the most likely party -in conjunction and with the complete approval of the White House.
I looked at the articles concerning comparing this supposed oil spill to the hurricane -Katrina.
I looked around the world at our friends and foes.
And I looked at the purported efforts to control this spill.
I think that by tomorrow afternoon, intellects who remember this post, will realize just what a great liar Barack Obama really is, aka Barry Soetoro.
A vast fortune worldwide is likely being stolen by this stock market debacle.
This miserable president’s personal reputation will be greatly bolstered -when the non-existent oil leak is miraculously fixed before a mesmerized world of suckers -born every second of minute-.
Perhaps even Greece will be pulled from the flames.
I know this. Nothing today is what it seems. There is a war going on.
It is widely rumored to be the Third World War.
Where’s the miraculous fix??? We could use it really soon.
You are a paranoid Moron IMHO but you have such imagination you could write a fiction novel.
Dear Ms. Abbott:
I’m rubber, and you’re glue. Nasty words bounce off me and stick to you. Oh…wait. I thought we were back in kindergarten again for a moment. However, delighted that you came to visit.
Thanks for the kind words about my imagination. Don’t think I’ll write a fiction novel, though. Reality is too interesting right now for competition.
Russ
We may or may not be witnessing a gulf spill caused collapse.
An interview with a Transocean rough neck on the platform suggests that what happened was beyond anything governed by current policy, regulation and technology. We’ve had catastrophic earthquakes in Haiti and in Chile. The rig was located at a point between those recent quakes. Regulation specifies that deep water blow out valves and plumbing be engineered for 16,000 PSI (same as North Sea). According to the Transocean interview, the gas pressure that initiated the explosion exceeded by several orders of magnitude the regulatory requirements and technical allowances of the shut off valve mechanism.
Also note the slick had been around 3,300 sq miles in size. The booms and mild winds have reduced the slick to 2,000 sq miles.
The collapse of the US was not triggered by the recent catastrophe in the gulf. No, the collapse of the US was initiated years back by a weak citizenship, a US media that is essentially the PR voice for the oligarchy and the corrupt and bribed representatives, their staffers and equally corporate controlled executive and judiciary.
It’d be nice and simple to peg what happened in the gulf as the reason for our collapse. Truth is – the only reason the republic has failed is the face we see in the mirror every morning.
If the Gulf stream brings the oil slick to Europe, we can expect a different flavour of backlash. Europeans, the people and the Governments will not follow the way the Americans react. Hard to predict what the difference will be, but expect a bigger wedge across the Atlantic.
To Linda @ 3:17: You made some very stark observations of questionable coincidence. You might also consider that seafood WAS the only food staple that was neither (yet) genetically modified by one of the Frankenfood seed suppliers, nor cloned and injected with growth hormones.
This growing oil spill has already killed the Gulf fishing industry and, will not only destroy the tourist industry in the region but possibly the entire east coast. These shoreline communities cannot survive without the fishing industry and vacationers.
Imagine all of the damaged (condemned) beachfront property that will eventually be bought at tax payers’ expense at less than half of its current market value. Then the government can sit on these acquired coastal region properties for 30 years and re-sell them for much more than the taxpayer paid for them.
However, this theory is only hypothetical, because neither our government nor BP would ever think to intentionally cause something this destructive to happen, let alone capitalize on a man-made crisis of this magnitude. RIGHT?
I have been a tort lawyer for 32 years, the first four on the defense side and the last 28 on the plaintiff’s side.
You grossly overestimate the plaintiff’s bar’s ability to successfully prosecute a claim against big oil and their insurance carriers.
The Exxon Valdez litigation taught the plaintiff’s bar a huge lesson. Litigate for years and years and years on behalf of fisherman and coastal business and in the end come up with very little or next to nothing.
This article makes a great sales pitch for insurance companies to raise premiums and sell new insurance products, and that is about it.
Years and years of insurance advertising and disaster scenerio selling of insurance has decimated the ability of plaintiff’s lawyers to get satisfactory awards from juries, and in turn, pretty much bankrupted the plaintiff’s bar.
Couple that with the fact that young lawyers now get out of law school owing $150,000 or more in student debt, most young lawyers don’t have the means, if they have the will to become plaintiff’s lawyers.
My bet is that the plaintiff’s bar will be very apprehensive about taking on big oil and big insurance this go-around. They simply can’t afford the risk. The plaintiff’s bar was always a very fragmented, non-cohesive entity anyway. These days even more-so.
Speaking for myself, I would not want to get involved in this litigation and I know many who think like I do. I simply don’t want the risk of taking on entities that can afford to spend millions of dollars a month on legal counsel and can afford to litigate for decades. I’ll pass, thank you.
My bet is that litigation is not going to be very successful for the fishermen and businessmen of the impacted coastal areas, which will mean that even more will go bankrupt or require the assistance of government to survive.
So you may be right. It may be the straw that breaks the camel’s back of our economy, which was in dire straits before this happened. But I think big insurance will not be hit that badly from this incident.
Gary said
“This growing oil spill has already killed the Gulf fishing industry and, will not only destroy the tourist industry in the region but possibly the entire east coast.”
There is very little commercial fishing off Louisiana , especially near the mouth of the Mississippi River. Few, if any Gulf Bend resident would open their mouth to an oyster or prawn fished from that area given the fact that a 1000 miles of sewage and factory waste, not to mention leaks from fuel and trash barges navigating the Mississippi contaminate the the sea bed where the Mississippi dumps onto the delta. Shrimpers and Oyster harvesters always work west of New Orleans for that reason. They fish off the Texas coast.
Also understand that runoff from the recent floods will carry more toxins into the gulf than most of us would care to learn about.
So – before you get on Waxman-Reid-Pelosi “let’s blame BP for our inability to service the mandate our constituents voted us in for”, check your facts – quit watching GE TV – GE – the only news outlet that says using a gallon and a half of diesel to produce one gallon of methanol from corn, or GE’s wind turbine aspirations or GE and Haliburtons’ (the installer of the fail safe blow out device that failed) desire to build nuke plants media PR campaign at BP’s expense lead you astray.
Throb said
“There is very little fishing off Louisiana, especially near the mouth of the Mississippi River.”
I will somewhat agree with your statement, but I was not only referring to the remainder of the Gulf of Mexico that could be fished but, also the eastern seaboard of the USA and east of the continental shelf where waters are not polluted. I also realize that the Gulf of Mexico has a larger saltwater dead zone than most areas in the world.
You implied that the harvesters’ work west of New Orleans; however, this is where the oil slick is headed before it runs around Florida, into the Gulf Steam conveyor that will carry this mess up the east coast through the Carolinas.
You implied that I was party to Waxman-Reid-Pelosi’s irresponsible (blind?) support of BP’s unregulated actions [sic]. In actuality, Throb, I oppose ALL offshore drilling, especially when we have billions of barrels of oil on dry land in the Dakotas and, furthermore, because we no longer require fossil fuels (e.g. coal or oil) to generate electricity.
I know for a fact that there are free energy technologies which have existed for decades that could replace fossil fuels tomorrow but they are suppressed by the world’s governments and big business. It would be great to discuss the alternative of extracting hydrogen from seawater (e.g. regarding methanol: not only is methanol a higher pollutant that diesel fuel, but it requires 3-liters of water to produce one liter of grain or sugar cane alcohol). Also, nuke plants create a major problem with disposal of their solid waste and, therefore, they are also a bad option for energy production.
Gary-
As you’ll see, i edited out all of your insulting comments to Throb. Personal insults are not necessary. If you do it again I’ll ban you forever.
[…] questions about US support for Israel? The Oil spill is of such catastrophic proportions, very few people are mentioning the likelihood of the oil being carried by the Gulf stream to Europe. If enough oil spills it can […]
Sorry America Your juridical system stinks. The only winner in this game will be the lawyers, they will put it into a soap longer than any tv-company ever dreamed on so when will you ever learn? And the result of it will be a pocket full of change for the plaintiffs. But as usual, bring your army and your great power to solve the problem. But if not this oil rigg dissaster put the needs for alternative energi to a new spot at last
Addressing the title of the post . . .
No.
It’s total cost will be far less (and it appears the leak is far less than the alarmists estimated), than the absolute BS the Bammster administration and Dems in Congress are heaping upon the nation, a la Greece.
It’s a nice headline, but the gummint will kill the economy long before some oil floating in water.
cool site….what a mess!
Since the time of Russell D. Longcore’s article here several scientists, after having viewed and measured based on the recent publication of film footage of the gushing oil, now estimate the spillage is somewhere between 2.9 million and 4 million gallons per day. At 2.9 million gallons/day it equals the amount of oil spilled by the Exxon Valdez once every five days. For all who are prone to believing this is alarmist, consider this. BP initially claimed this oil spill was a minor incident. A day or two later they admitted the oil was gushing at 25,000 gallons/day. They then raised the estimate twice before admitting that the gush is 225,000 gallons per day. BP is disputing this latest 2.9-4 million gallon/day claim but their track record in this and previous spills doesn’t exactly inspire trust in BP. BP, Haliburton, and Transocean began circling their wagons early on in this spill. Those who were “alarmist” about deregulation of Wall Street over the past three decades turned out to be spot on, unfortunately.
[…] Gulf Oil Spill Disaster: The Trigger of American Economic Collapse? – This article is written to analyze the potential economic fallout of the Gulf of Mexico oil rig explosion that occurred on April 20, 2010. I maintain that this incident could be the trigger of the American economic collapse. So, let’s look at what is going to happen as this disaster unfolds over time. […]
[…] Gulf Oil Spill Disaster: The Trigger of the American Economic Collapse? […]
[…] Read more… Listen to the Presidential Sock Puppet And stop thinking […]
Love your blog, Gayle. I just added you to our Link page. Way cool site!
Russ Longcore
Russ, I do apologize for using the moron word (actually I tried to remove it too late) but I am curious about when will the non-existent oil leak be miraculously fixed before a mesmerized world of suckers -born every second of minute-.
It that still the story you are sticking to or bouncing off since you’re made of rubber?
Ms. Abbott:
Apology graciously accepted. I have no idea when BP will cap this gusher. The more crude that enters the Gulf Stream, the greater the potential for an economic catastrophe…as well as an environmental catastrophe.
Do you still believe the deep water horizon disaster was a created event and they can stop it at will? I’m sure anything is possible, but this seems like a real deal to me.
Ms. Abbott:
I have never said it was a “created event.” I said it burned and sank…period. Of course they cannot stop it at will. It’s a mile down, for heaven’s sake. I have HUGE questions about the engineering of the wellhead. But my questions won’t get the gusher capped any sooner. My questions have to do with negligence.
We’ve discussed this enough now, OK?
If it will “take two months to cap the well at the mile-deep ocean floor” as stated in the above article, BP should be halfway there. If they started on April 21st.
This is a very real disaster and will probably reach beyond the insurance companies and fishery. I have worked in the TX oilfield as a female mud logger for several years. 2009 was a hard year for us. This year started out better and with much more promise. I have worked a jobs and was to start following an Anadarko in June. I really will be suprised if that happens since they were in with BP for 25%. I am of the opinion that drilling permits will be harder to get both on and off shore, even for companies that do make efforts to emphasise safety and environmental issues. This isn’t at all what we need right now!! I also have no doubt the people on that rig knew they were playing a game with he devil when they were running seawater in place of drilling mud. Drilling mud=well control. I have spent many nights sitting in front of the guages that measure up hole gas among other things and have never bet my life or the lives of the others on the location on a piece of a machiery. It is about everyone doing their job and using experience and knowledge to maintain safety and the integrity of the well. I have no idea who was mud logging on that well but that person along with the “company man” have the burden of 11 lives to carry for a lifetime. I hope after an experience I had running water in place of mud on a land well I would have done everything in my power to stop that process before it resulted in the loss of life and environmental catastrophy this well has brought us. That land well also blewout. Thankfully noone was hurt!! Anyone else think this “incident” will have an adverse affect on the oil field getting back on its feet??
“1,000 and 5,000 BARRELS (200,000 to 1 million gallons) of crude oil float to the surface of the Gulf of Mexico.”
I respectfully wish to point out, there are only 42 gallons per barrel, not 200. I’m sure this was a typo, since the balance of the article seemed to be well thought out.
The role Of Neo-Liberalism, in widening the income gap between the rich and the poor.
June 5, 2010 by politicalsnapshots.wordpress.com
The role of Neo-Liberalism, in widening the income gap between the rich and the poor.
“One of the most pronounced effects of Neo liberalism is to create wealth inequality within national borders and between states. Within a decade of adopting free market policies, the class divide in the US and UK became significant.” Professor G. William Domhoff. UC @ Santa Cruz.
It is just another indictment of Neo liberalism and its multi-faceted destructive policies encumbered upon people of the world. It is very fascinating to note, that the income gap between the poor and the rich has more pronouncedly been evident in the US and UK, the joint creators of Neo liberalism.
This enormous income gap between the rich and the poor in the US has concentrated more power in the hands of the rich and has created a feeling of helplessness on the majority of American citizens who have been marginalized by Neo liberal policies.
Consequently, sooner or later, the question will arise, whose country is it anyway? It is obvious that the widening of the income gap in the US is close to the breaking point. It is not if, but when it breaks, no one can forecast how it might end. It is just that the Corporations are blinded by greed, and our representatives are muzzled by big business.
Writing on the subject of Neo liberalism’s impact on social cohesion, David Coburn, from the University of Toronto writes: “While it has been asserted that neo-liberalism produces a lowered sense of community it might also be argued that the rise of neo-liberalism is itself a signifier of the decline of more widespread feelings of social solidarity. The political rise of neo-liberalism is freighted with a more individualistic view of society and, perhaps, itself reflects a decline in the notion of we are all in the same boat. Not only do neo-liberal policies undermine the social infrastructure underlying social cohesion but neo-liberal movements themselves are partial causes of the decline of a sense of social cohesion.”
It is absolutely frightening, what Neo liberalism is doing to societies. It is corroding the very fiber that societies are built upon. Neo liberalism is cancerous. It is undermining our Democratic system. When a government becomes a by stander when millions are practically becoming paupers, while the few are amassing billions, then, the people have no protector. Laws, Rules and Regulations are in the books only to protect the interest of the rich.
In a wonderful article entitled, “Skewed Wealth Distribution and the Roots of the Economic Crisis”, David Barber, a Professor at the University of Tennessee, wrote:
“And what is true in the United States of the unequal distribution of wealth, and of the consequences of that unequal distribution, is true again on a world scale. This super-poor mass of humanity, from whose soil is ripped vast amounts of mineral and agricultural wealth, and out of whose labor the world’s manufactured goods increasingly come, are almost wholly excluded from participating in the world’s market economy”. So, what is to be done?
While a number of social scientists have forwarded divergent solutions for anarcho-capitalism to save itself, Professor Michael Rustin at the University of East London suggests the following points are “made necessary by the implosion of the neo-liberal system in the current financial crisis, and are needed to construct a new post-neo-liberal phase of democratic capitalism”.
The five points he has put forward are the following:
(1) A more active role for governments in regulating markets, and especially global financial markets
(2) Constitutional reforms which enhance democratic processes and civil liberties, and create more representative and pluralist systems
(3) Policies, which reduce inequalities, and give greater weight to social justice and social inclusion.
(4) The enhancement of the capacities of international institutions, and especially the EU, to maintain economic stability and growth
(5) Programmes to address the problems of climate change.
Very sensible, are they not? But Wait!!! We have to see which governments have any backbones left in them to try and regulate the market, and do away with thirty years of destruction of the people that started with Reagan and Thatcher.
As I am ready to post this article, I hear a news story that stated that “Hungary might default on its debt”. What is the world coming to. Wasn’t Hungary the darling of the West? Didn’t it do everything that it was asked to? It privatized everything. It reduced government employment. It cut welfare as it was told to do by “free Market Reform” advisors. Hungary did everything a good and obedient follower of Neo liberalism is supposed to do. Yet, it is threatening to “default” on its debt in spite of a $24 billion IMF and EU loan few months back. This is the fruit of Neo Liberalism.
Do you wonder, which devoted and submissive follower of Neo liberalism will bite the dust, next?
Professor Mekonen Haddis.
Unbelievable! Did the administration somehow think they could conceal the extent of the catastrophe? In the first place effects of the disaster are visible to people who live near the Gulf. Did they imagine somehow they could prevent the press from covering it by getting BP and the Coast Guard to keep them out? Or did they think they could influence the press coverage to prevent most Americans from understanding the true national and even global effects of BP’s malfeasance? Did they think the oil might not spread to Alabama and Florida beaches where there would it would affect more tourists?
[…] blow or two (or three) in the Gulf of Mexico this season are quite high. I’ve already written Trigger of American Economic Collapse? stating that any Gulf hurricane could spread this oil to every beach on the Gulf. But there’s […]
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