This Supposed Shakedown

Republicans seem to be promoting the idea that BP's $20 billion fund constitutes a "shakedown". And, in a way, perhaps it is. But, remember, hundreds of thousands of people have had their lives ruined, forever: some immediately, some in the months and years ahead, not even counting the staggering amount of dead wildlife.

It's easy to say to take your complaints to court - if there were a court in the universe big enough, and lawyers numerous enough, to handle the matter - which I'm afraid you won't find this side of the Pearly Gates. Just like the oil spill itself, the legal workload is too enormous. And there would little to stop BP from spinning off a 'responsible' (and bankrupt) corporate arm - a 'Patsy' if you will - in order to escape responsibility altogether. So, some alternate path has to be found.

If the government doesn't step in to police the matter, and find a way to get aid to the injured parties quickly, or if BP refuses to cooperate, it could well be anarchy. Anarchic shakedowns are a lot messier than anything Obama has up his sleeve. It's not charity, remember - these people (shrimpers, tourist trade folks, fishermen, etc., etc.) have been injured, through no fault of their own. Republican rhetoric notwithstanding, there is nothing wrong with trying to hold the party responsible for the damage, responsible.

But if Republicans want to argue otherwise, who am I to prevent them?

Meanwhile, fears of a BP bankruptcy, at least at the moment, seem overblown:

BP posted $17 billion in profit from its vast operations around the globe last year, compared with $5.7 billion for Apple and $6.5 billion for Google. More important, in the past three years the company generated $91 billion in cash flow from operations.

It's not highly leveraged with debt, as banks were during the financial crisis. And it has 18 billion barrels of oil in proven reserves, twice what the U.S. consumes every year.

BP has spent about $1.8 billion on the spill so far, but that's the first drop in a very large bucket. If BP faces criminal charges, for instance, it could end up having to pay tens of billions in legal costs alone.

Analyst estimates of BP's total cost range from $17 billion to $60 billion. If the worst predictions about the leak come true, that figure could surpass $100 billion, based on a Goldman Sachs estimate that each barrel of oil spilled could wind up costing as much as $40,000 in cleanup and compensation.

Such a big bill, even at the lower end of the estimates, would drive many companies under. But analysts said BP probably won't have to go to that extreme unless it wants to wall off liabilities from the rest of its operations to attract potential suitors.

Under Wednesday's deal with the Obama administration, BP will suspend its dividend for the rest of 2010, freeing up $8 billion. The company also plans to raise $10 billion from selling some assets. Add cash lying around in bank accounts and in short-term investments and BP could raise $25 billion without breaking much of a sweat.