Gulf Oil Spill, Part 3, Housing Bottom, Taxes Due

There are numerous threads unraveling from the federal government's fabric, the latest being the replacement of the general for Afghanistan. The economy, immigration, deficit and so on are breaking at the seams, but I think the most immediate focus needs to be oil cleanup, knowing that the spill will continue until at least mid-August. Everyone agrees that the magnitude of this is unknown, and that is the reason why we need to give it our full attention now. The others are manageable. It takes strong leadership and discipline from the white house and congress to handle those. With the oil spill, it takes a special talent and strong flexible manager. The money is expected to be available from BP. While the plan is being formulated by the Secretary of Navy, someone needs to be in charge so that no time is lost in between. I don't see or hear from anyone who is doing this. The coast guard keeps us updated based on what BP and others tell them.

Also, I have written numerous times that I think the housing market has to bottom out before the economy turns around. Now that the credits are gone which only delayed the inevitable, May numbers reflect that the bottom isn't visible yet with existing home sales down almost 10% and new home sales down 33%. All the forecasts are optimistic versus realistic. For those who are investing in the markets, make sure you have the staying power for the long haul.

Another more invisible thread that has shown its opening is the IRS reported for 2008, there were over 97,000 federal employees who were delinquent on their taxes, owing $1B. That includes 1151 employees who owed $7M at the Department of Treasury which oversees the IRS. This implies that they receive special treatment over us in the way they are treated. And it is a clear reflection of not 'walking the talk' that they require all other tax payers to walk. This kind of behavior is what contributes to revolutions.

Gulf Oil Spill, Part 2

My previous blog stated my position on what is required to prevent this kind of tragedy with an oil spill and how the government is essential in keeping the oil companies focused on that.

Congress's behavior interrogating BP's CEO showed that there was no intention of having a meaningful exchange. This CEO knew the plan because words like 'slice and dice' and 'skewer' were tossed around by the representatives who would be questioning him. Why couldn't they rise above their normal patterns and participate productively?

Assigning the head of Naval Operations 'part-time' to come up with a plan for cleanup again reflects the lack of understanding of what it takes to manage something of this magnitude. I suggest the president rise above his political inclinations and beliefs to put the former mayor of New York, who handled the aftermath of 911, in charge.

The $20B agreement spread over 4 years is inadequate. That means only $5B would be available for this year. Here is what I recommend to the 'pay czar' who has been assigned to manage this money:

1. Get a broader understanding of the total amount needed now by having the IRS provide information on these states in the towns who are affected by this spill. Also, 10% of GDP is the estimate being tossed around. If GDP is $1 trillion, that is $100 billion exposure.

2. To get off the ground timely, have all the affected people and businesses submit the last 3 years of their tax returns to be used to verify they are in business and live there, and also use them as a basis to determine how much to pay them for the lost income this year. With that submission, have them provide their financial status. For example, those who are unable to meet their expenses, like being late on their mortgage payment should be first in line in receiving these funds (I did read that Citigroup has decided to forego foreclosures in these areas for 3 months).

3. Once there is data to show how inadequate the $5B is, there needs to be a working relationship between the government and BP to move the other $15B up.

Time is of an essence here, yet it will take a miracle for the federal government to act in time for those dependent on the gulf and clean beaches for their livelihood. This is an opportunity to test us to see if we are able to put aside all our personal beliefs and political orientation for the greater good of all, and choose the best of the best to handle this situation.

Purpose of Gulf Oil Spill

I look at the oil challenge as opening pandora's box. We are moving toward a change that the mind does not understand yet. What is apparent is the ignorance surrounding this event with BP not being prepared and the white house not having the expertise and practical work experience to play their role effectively. The President is learning the hard way because of the lack of understanding of dealing with a crisis.

During the cold war when I worked for a company that provided the communication equipment for the 637 class trident nuclear submarine, we had many redundancies built in the areas where if there was an equipment failure, another would come on so we would always be able to hear the enemy. For example, we had six SHF receiver units, one running at a time, because they were critical to the performance of the system. The cost was almost six times higher than just having one unit. One time, all the backup went down. The group of us responsible galvanized into action and had the sub back on track within 72 hours. Now I know this is different than the oil spill, but back before this well was drilled, redundancy should have been incorporated for any potential crisis. I look at this current situation and think that when drilling so deep underwater where no human can go yet, there should have been a backup well. Since public companies focus on the making money for the shareholders, the federal government could have taken an active role to require this as part of regulation.

For a government agency to be effective, people with practical work and management experience are required. Education only goes so far. It is being in the field, having experienced a crisis and resolving it, that provides the understanding on managing catastrophe's. Our president and his administration lack this important view. What drew me to this conclusion beyond the obvious occurred when the president told BP to fire the CEO and he has not even talked to him directly. I can only shake my head and wonder to what extent this situation will go until the blind can see through experiencing each day with this.