Robert Reich: What BP's Oil Disaster and Goldman Sachs' Rip-off Schemes Have in Common

[marmar]

via AlterNet:




Robert Reich's Blog / By Robert Reich

What BP's Oil Disaster and Goldman Sachs' Rip-off Schemes Have in Common
After 30 years of deregulation, it's no wonder everything from oil production to banking is messed up.

May 5, 2010 |


What do oil giant BP, the mining company Massey Energy, and Goldman Sachs have in common? They’re all big firms involved in massive plunder. BP’s oil spill is already one of the biggest and most damaging in American history. Massey’s mine disaster, claiming the lives of 29 miners, is one of the worst in recent history. Goldman’s alleged fraud is but a part of the largest financial meltdown in 75 years.

All three of these companies are also publicly-held, which means that much of the financial costs of these failures will be passed on to their shareholders, many of whom are already watching their stock prices plummet. Prominently among those shareholders are pension funds and mutual funds held by people like you and me.

That may seem fair. After all, shareholders benefitted when BP made big profits extracting oil without paying attention to a possible blowout, when Massey Energy got fat earnings from its careless coal mining operations, and when Goldman Sachs did wonderously well for its own stock holders by allegedly defrauding others. In fact, it was pressure from their shareholders seeking the highest possible returns — and their executives, whose pay is linked to the firms’ share performance — that led all three companies to cut whatever corners they could cut in pursuit of profits.

But profits aren’t everything, which is why we have regulations that are supposed to be enforced. So a key question in each of these instances is: Where were the regulators? .........(more)

The complete piece is at: http://www.alternet.org/economy/146721/what_bp%27s_oil_disaster_and_goldman_sachs%27_rip-off_schemes_have_in_common

[Warpy]

1. Socialization of risk, privatization of profit

says it all. When they cut corners and create a massive fuckup, the whole country has to bail them out while they walk away with their pockets overstuffed with all the extra profit that cutting corners generated.

It's a hell of a racket, you've got to admit that.

[CanonRay]

2. Privatize profits, socialize costs

Thats the game, folks.

[girl gone mad]

3. damn straight. n/t