You may think British Petroleum is an oil company. And it is, sort of. What it really is is a finance company. It leverages its huge asset base (cash, cash flow, oil rights, physical assets) to get cheap credit that it then loans out to others at a higher price.
You didn’t know this? Well, that is understandable. Do you think Obama and his crew know it? Or care? They should. By trying to take down BP for their own political gain they could mess up a precariously balanced, extremely leveraged, and highly interconnected international finance system where BP is a major player in the 615 TRILLION dollar company to company finance market (also known as OTC or over-the-counter).
OTC is where the real work of global business happens. It is where money is loaned, risk managed, and profits made.
If trillions in BP backed financial instruments, such as derivatives, credit synthetic options, credit default swaps, and other global arbitrage instruments, fail the result could be a deleveraging and liquidity crisis that makes the Lehman Brothers event that precipitated billions in government bailouts look like a hot spring versus Krakatau.
For more on the risk BP financials threads pose, read this helpful article, Sultans of Swap, by Gordon Long.
You can ignore or take to heart his predictions. I find it useful to really know what BP is and why we need to tread carefully in what we impose on it. This isn’t to say that companies can grow too big to be accountable, but with the good of large companies come plenty of risks. We can’t really have one without the other.
What I suggest is that Obama’s political skin isn’t worth, to the rest of us anyway, another, bigger, 2008 deleveraging event.
We can really only go one of two ways on these things. No controls, but make sure the players are playing with their money (not ours). OR do not permit these types of markets at all. Government half regulating, 1/4 crony, and 1/4 witless cannot keep up with the pace and complexity of these markets that in many ways welcome regulation as just another thing they can arbitrage.
I favor letting them do their own thing, with their own money. They will learn to not dig holes they can’t climb out of if we aren’t there to bail them out.