Business/Economic/Housing/Layoff News for July 14, 2010

How the “too-big-to-fail” banks got that way, and why the current banking reform won’t solve the problem

Hotels, promoter, real estate agents say LeBron James giving South Florida boost

Mish:FICO Credit Scores Collapse - 25% of Americans Sink Below 600 vs. 15% Historically

Sell Bonds, Buy Precious Metals, Rice as ‘Refuge,’ Rogers Says

Peter Schiff unravels on Alex Jones show, advocating preemptive strike on 'nuclear' Iran

Gold climbs most in three weeks on rekindled Europe debt concern

Crude Oil Falls From Two-Week High After U.S. Stockpiles Gain

BP Gives Up Control of Cushing Oil Storage With Sale to Magellan, LP (NYSE: MMP)

Rail traffic softens further in June
Jewellery store closures mount

Boston Fed’s Rosengren: Growth Slowing, Deflation Is Emerging Risk

Mish: Did Retail Sales Rise, Or Did Tax Rates Go Up

Tech stocks help European shares to seventh day of gains

Despite Stocks' Gains, Skeptics Wait and See

Caterpillar Paces Dow; Apple's Pain Grows

The twin Financial Frankensteins of Fannie Mae and Freddie Mac continue to wreak havoc on US Taxpayers

Obama administration backs private twist to public housing

NYC's Comptroller threatens to remove pension funds from Big Banks which are dragging their feet on loan modifications for homeowners

San Diego: Home Sales Up Due To Expiring Tax Credits, Soon To Change To Strong Head Wind

Get Ready for a Cataclysmic Market Crash! (Or Maybe Not)

Meet the Man Who Made a Fortune Exploiting the Poor With Payday Loans

WSJ: "Too Rich To Live?"


First Data cuts 78 employees from its staff in Ventura, CA

Mosaic Warns 221 of Layoffs at South Fort Meade Mine

Long Beach School Board fires 357 teachers

St. Francis Hospital in Kansas to cut 105 workers

Netflix to lay off 125 in Orange County

50 Lee County, FL workers for Department of Transportation to be cut as county tax base plummets from $96.5 Billion to $55 Billion

Salinas hospital offers buyout to 138 employees but really wanted to cut 200 employees from every department

59 year old laid off lawyer has applied for over 1000 jobs in 18 months and has never been called back for an interview

80 Oakland Police Officers laid off

Pensacola Beach: Not A 4th Of July Destination This Year

If you have ever visited the powder white sands on Pensacola Beach or swam in the pristine green waves, this will turn your stomach:

A $500,000 Remote Trigger, Not Required On U.S. Wells, May Have Stopped The Deepwater Horizon Catastrophe From Spreading

Reuters is reporting the following:

WASHINGTON, May 3 (Reuters) - U.S. lawmakers are focusing on whether lax government regulation that did not require BP to use a remote control "trigger" to shut an underwater pipe exacerbated the spreading oil spill in the Gulf of Mexico.

A $500,000 acoustic trigger may have allowed workers escaping from the burning rig by boat to send a remote signal 5,000 feet below the water's surface to close the valve and stop the oil.

Instead, BP (BP.L) is using submersible robots, whose tiny metal arms so far have been unable to move the lever that would cut off the flow of crude.

BP's ruptured well is still spewing about 5,000 barrels a day, nearly two weeks after its rig exploded. The massive spill is bearing down on the rich fishing grounds and tourist beaches of the Gulf Coast.

The Interior Department, which oversees offshore energy exploration, does not require acoustic triggers in deepwater drilling.

Oil producing countries such as Norway and Brazil require the triggers and some oil companies find the device so vital that they voluntarily include it on equipment when exploring for oil in the U.S. Gulf.

For those of you who have not been reading about BP's past safety violations, Pro Publica released some must reading yesterday titled, "Oil Companies Pay a Pittance in Penalties to Offshore Drilling Regulator".

BP is a corporation similar to Massey Energy (the coal company which just suffered a fatal mining mishap)in that they put profits above safety. Hence, BP was not one of these oil companies who "find the device so vital that they voluntarily include it on equipment when exploring for oil in the U.S. Gulf."

But that may change soon for BP as an outspoken critic of offshore drilling, Senator Bill Nelson (D-FL), is asking for an investigation. As Reuters mentions:

Democratic Senator Bill Nelson of Florida on Monday asked the Interior Department's inspector general to investigate whether regulations covering back-up systems to cap underwater wells were adequate. He also wants to know if energy companies have lobbied to soften rules.

"I ask that you determine in your investigation the extent to which the oil and natural gas industry exercised influence in the agency's rule making process," Nelson said.

Meanwhile, the House Oversight and Investigations Reform Committee is also investigating and wants to know why the Interior Department has not mandated the shut-off switches.

Still, some in the industry say these automatic shut-off triggers may not have prevented the huge Deepwater Horizon accident:

Interior does not require the acoustic valves because they have not been "fully proven or they haven't been deemed reliable," a department spokesman said.

A report commissioned by the department Minerals Management Service in 2003 said that remote acoustic systems were useful when the primary shut-off pipe device has failed and are also useful in depths greater than 10,000 feet.

However, the report said the acoustic system may not work well if the underwater well has significant oil flow.

The report also said other problems can occur that would prevent the remote trigger from working such as loud noises or a mud cloud on the sea floor caused by an accident.

One petroleum geologist at a company operating in the Gulf said an acoustic trigger would not have worked in this case because the control box on the sea floor was probably broken.

"You could have had 20 of the acoustic activation devices on 20 boats, circulating that rig," said the geologist, who did not want to be identified. "It's probably because something is broken in the control box that would activate it or there is something in the way."

Several posters on Motley Fool yesterday were discussing the "prohibitive" cost of these safety triggers. Yes, they do cost a half-million dollars. But what is $500,000? One day's revenue from a well as big as the Deepwater Horizon.

Also there is this to consider: by law, oil spill liability payments were capped at just $75 million back in the 90s after the big spill off California's coast. But as the Reuter's article says:

Meanwhile the oil industry may soon find the cost of acoustic triggers more affordable, compared with the cost of fighting an oil spill. Legislation was proposed in the Senate to raise the limit on oil company liability for spill damages from $75 million to $10 billion.

"There is no such thing as a 'Too Big to Spill' oil well, which is why we need this economic protection in place," said Democratic Senator Robert Menendez of New Jersey. It is unclear whether the legislation will be backed by Senate leadership.

Environmental lawyer Mike Papantonio, whose firm has filed a class action suit on behalf of Gulf Coast fishermen, said the triggers are a fail-safe protection against spills.

Will other class-action lawsuits soon follow from Gulf Coast watersports' businesses, recreational fishermen and environmentalists? A shake of my "Magic 8-Ball" sez "All Indications Point To "Yes!"

Stay tuned

Today's Statement From BP: It May Take 3 Months To "Contain Spill" ?

We already know BP is erecting gigantic steel and cement boxes which they hope to place over the leaks on the seabed. The boxes will have long vacuum hoses attached to their tops (like childrens' sippy cup straws) to pump the out-of-control oil gushers to ships waiting on the surface.

That still does not address how to permanently stop the volcanic rush of oil (5,000 barrels estimated per day at this time) into the boxes which are hastily being built. And please keep in mind this type of fix has never been tested on a oil break this size.


If that's the good news, what's the bad news?

Now comes news today from BP that it might take "three months" to drill down to the broken well and inject cement to stop the flow permanently.

Question: What happens if the vacuum box containers do not work?

Answer: We can kiss watersports and beaches good-bye in the Gulf of Mexico and most likely the Eastern Seaboard of America this summer. You can also say good-bye to the Great Recession recovery and any hope for a bottom in home prices in the Sunshine State anytime soon.

Three more months? Jesus H. Christ.

From the Times today "BP says stemming oil flow will take three months":

The fight to cut off the flow of oil feeding the giant oil slick in the Gulf of Mexico could take three months, BP said today.

The oil giant launched a new front in its battle to contain the spill, as engineers began drilling a relief well designed to cut off the leaking oil permanently.

The new well, which is in 5,000 feet of water, is planned to intercept the existing well at 13,000 feet — about two miles — below the seabed. It will be used to inject cement to cap the one that is leaking.

Drilling began on Sunday at 3pm local time, after days of delays caused by poor weather conditions. However, BP confirmed that the operation would take “some three months” to complete.

The operation, which will cost an estimated $100 million, is being undertaken by a second rig called Development Driller III, which BP towed to the site last week.

“This is another key step in our work to permanently stop the loss of oil from the well,” said BP group chief executive Tony Hayward.

“At the same time we are continuing with our efforts to stop the leak and control the oil at the seabed, to tackle the oil offshore and to protect the shoreline.”

An estimated 1.6 million gallons of oil are thought to have leaked from the site of the BP-leased Deepwater Horizon rig, since an explosion on April 20 which killed 11 workers.

Sarah Palin just yesterday was urging viewers on Fox to continue to believe in "Drill, Baby, Drill!" And Bill Kristol is telling his readers that we need to build the oil rigs closer to shore. (See my post earlier today "Heckuva Case of Oral Diarrhea, Brownie + 7 Stupidest Statements About The Growing Oil Amoeba In The Gulf Coast".)

If this is what passes as intelluctualism from the Fringe Right, you can bet upcoming elections are not going to go well for the Tea Party crowd.

Democracy Now: BP Oil Spill Worsens With No Solution in Sight, 210,000 Gallons a Day Spew into Gulf of Mexico

Drill, Baby, Drill Cartoons From Around The Nation

Business/Economic News for 4 May 10