Wednesday, June 2, 2010

Senators Begin Sharpening Their Knives

BP is one screwed pooch:

BP Should Suspend Annual Dividend, U.S. Senators Say
By Jim Efstathiou Jr.
June 2 (Bloomberg) -- BP Plc should suspend its annual dividend until clean-up and liability costs from its leaking oil well in the Gulf of Mexico are known, two U.S. senators said today.

A payment would be “unfathomable” until the cost is tallied, Democratic Senators Ron Wyden of Oregon and Charles Schumer of New York said in a letter to BP Chief Executive Officer Tony Hayward. BP will promise to maintain the 56-cent-a- share annual dividend this week, the Times of London reported today without citing its source. BP spokeswoman Sheila Williams declined to comment on the newspaper report. BP paid $10.5 billion in dividends last year, according to its annual report...

If/when this happens - what impact would that have on pension funds and folks relying on dividend income from BP? I wonder what the effects on British pensioners would be?

The Queen's oil company is caught between a pack of rabid senators on one side desperate for a cause that can distract angry voters from their own simpering incompetence, a continuing calamity in the Gulf on the other side, and is hamstrung by public relations failures like the gone-viral-on-Facebook quote (if it is accurate) from Randy Prescott where he states "Louisiana isn’t the only place that has shrimp."

I still believe this event could galvanize an odd alliance between enviromentalist groups, pro-gun Southerners and politicians at all levels to dismember BP. The potential for the anger to spill over into violence is quite real and if we see mood collapse, along with the stock market, then the need for scapegoats will intensify.

What is the over/under for the length of time before we see BP's U.S. assets nationalized? Six months? Nine?


David said...

Methinks that the next 6 years or so will see de facto nationalization of most enterprises.

By the end of supercycle a we're apt to experience the consensus belief that all public corporations are simply vehicles by which management strip-mines the shareholders' value.

Populism will undoubtedly try to ride this wave by collectivization.

We already saw what happened when O-Bomb-US and his henchmen stiffed all the pensioners holding GM bonds while redistributing wealth and power to the UAW.

Wait until the glove come off and it's an all out donnybrook over the few scraps of real wealth hiding under this $50 Trillion USD pile of IOU's.

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