Wednesday, July 7, 2010

Awkward wording in article about BP

This is an interesting article on how the fallout from Deepwater Horizon can adversely affect BP, and how a possible bankruptcy of BP can also have a tremendous effect on the financial markets.  I did not know this, but according to the article, BP is deeply involved in the derivatives markets, just like Lehman Brothers and AIG were.  A bankruptcy of BP would unleash the same financial tsunami that occured with these other two corporations. 

Anyway, that isn't why I posted.  I found the opening sentence very telling:

As horrific as the gulf environmental catastrophe is, an even more intractable and cataclysmic disaster may be looming. The yet unknowable costs associated with clean-up, litigation and compensation damages due to arguably the world’s worst environmental tragedy, may be in the process of triggering a credit event by British Petroleum (BP) that will be equally devastating to global over-the-counter (OTC) derivatives.

So, although millions of gallons have spewed into the Gulf, causing ecological disaster not merely to the Gulf, but the entire surrounding region, and entire industries centering on the region (such as tourism and fishing) are at great risk of being eradicated, the possible bankruptcy of BP (and the ecomomic turmoil that would result) would be the real tragedy.  Sorry to be blunt, but "WTF"?


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Jeff said...


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