BP Is Not Too Big To Fail

I know a lot about a little and I know a little about a lot of things but I don't know a lot about everything.

That is a quote from American Idiot and conservative icon Samuel Wurzelbacher (aka Joe The Plumber). He is stupid. The quote, in my opinion, at the risk of alienating our progressive readers is actually not stupid. It probably describes most of us walking around killing time on this planet.

I am one of those people. I am not an expert on many things. For me, the list consists of the diet of anteaters and quotes from The Big Lebowski. That is about it. (This is an admission that should come as good news if your favorite NBA team happens to draft Patrick Patterson.)

So keep in mind that I am not an expert on BP and/or it's place in the national or global economy. However, I have an opinion and a blog so here goes:

There seems to be speculation amongst reputable media outlets that BP may be Too Big To Fail. I call bullshit on that. This is much different from the financial services industry. The difference primarily being systemic risk (the interconnectedness of that industry). It basically turned the financial services industry into a row of dominoes where the failure of AIG or Citigroup would have started a chain reaction where otherwise healthy financial institutions could've collapsed. I don't see that as the case with BP. If BP were to fail, Exxon and Shell and Chevron and the others would just gobble up their market share, employees would change employers but most presumably would still have jobs, etc.

True, if the BP stock price went to zero, there would some people who would see devastating loss to their retirement portfolio. So be it. That is the risk you take when you invest your money! If you did not want to assume some risk, keep your money in a low yield savings account (or other essentially risk free investments). Moreover, and I have admitted I am not an expert, even I know that the first rule of investing is to diversify! Furthermore, as I believe my co-blogger has pointed out, the shareholders of BP have long been reaping benefits of their inattention to safety so it is only fair that they "take the hit" when those business practices result in disaster.

I began this post with a quote. I will end it with a quote:

"Given the nature of all this new shit... this could be a lot more, uhhhh, complex... I mean it's not just, it might not be just such a simple.... you know?" --- The Dude

I know, Dude. Well said.