Will this effect oil tanker deliveries?

Perhaps this is the big one.

I bet exxon and co. don't have to make a Letter of Credit at Citibank out to Saudi Arabia so they will probably get their tanker delivery.

This brings up the question of who are th customers and suppliers, National Oil companies and US and European refineries perhaps. What isthe chain from supplier to refiner and end customer and where could it break down so that oil won'T be delivered because somebody is not credit worthy?

"Normal Accidents", which laid out a thesis that accidents happen because people tend to misunderstand the situation within which they are operating, thus make fatal decisions.

Great book.


The thesis is not so much that people misunderstand but rather that people do not operate well in complex environments; they are biased in a certain way. They "understand" and act in reflection of this bias and therefore mis-perceive the hazard and degree of risk exposure. The "accidents" are therefore not random events which cannot be foreseen but are "normal" artifacts of the manner in which the specific environment has been structured.


Three thousand people lost their lives on 9/11 with the result that the US has engaged in a costly war that has caused further great loss of life. Yet the automobile transport system results in an annual loss rate 10x the 9/11 losses and no one decides to wage war on Detroit. AGW may result in 100X the losses from 9/11 and still no one decides to wage war on Detroit.


We accept automobile casualties as a "normal" part of life, hence "normal" accidents. You are much safer on a commercial aircraft, or on an offshore MODU, than you are in your car but the public perceives the automobile as "safe" and the car and drilling rig as "risky" or dangerous.


Complex systems have multiple points of failure that interact in unpredictable and often undetectable ways, and are very difficult to diagnose and fix. We think of autos as under our control but in fact automobile operation is subject to a large range of variables over which we have little or no control.


With regards to the credit problem it is difficult to see how having several trillion of notional value (credit) supported by 1/60th of its true value (assets) could have any outcome other than the one we now experience. Having the people who bear responsibility for the problem attempt to resolve it is unlikely to work (unless you are a friend of Hank). The credit crunch is what occurs when you are no longer operating in a reality based economy. I would argue that the entire US is no longer anchored in reality and the problem is that reality will always assert itself.


The full title of the book is Normal Accidents: Living with High-Risk Technologies

Dow falls below 8000.

Fell more than 600 points but bouncing now (up over 400 points in 5 minutes). Looks like an attempt to stop the fall. Last night on Bloomberg they were talking matter of factly about how the PPT stepped in to halt the rot on Monday. Now on Bloomberg one expert is saying it's time the powers that be got out of the way as he thinks stretching things out is just making things worse not better.

Well, the U.S. stock market is headed off a cliff this AM. At 9:42, the Dow was down 690 points to 7,888. A wild opening for sure. It's already headed back up...we hope...

E. Swanson

Leanan, you posted this yesterday about Anderson Cooper's "10 Most Wanted", but I don't think you posted links to the actual video segments:

http://www.cnn.com/video/?/video/business/2008/10/10/ac.10.most.wanted.f...

http://www.cnn.com/video/?/video/politics/2008/10/10/ac.10.most.wanted.a...

I just love the part where they are showing Fuld, who made (ripped off?) almost $500 million as head of Lehman, and his palacial mansion in Grennich, Conneticut, his $21 million apartment in New York and his multi-million dollar estate in Miami.

All this is necessary and will be cathartic for the nation if these men are eventually stripped of their wealth and sent to prison. Does the nation still have the political will to do this? Does the word "accountability" still exist in America? Even though many politicians are rushing to exculpate criminality with arguments of incompetence, I hope the grass roots can raise enough of a cry and howl that justice will eventually prevail. If these men are not brought to justice, confidence in the system cannot be resored.

The country went through a similar process during the Great Depression:

Intermittently throughout the year 1933 the Senate Committee on Banking and Currency, with the aid of its inexorable counsel, Ferdinand Pecora, had been putting on one of the most extraordinary shows ever produced in a Washington committee room: a sort of protracted coroner's inquest upon American finance. One by one, a long line of railroad and public-utility holding-company promoters, stockbrokers, and big speculators—had filed up to the witness table; and from these unwilling gentlemen, and from their office files, had been extracted a sorry story of pubic irresponsibility and private greed. Day by day this story had been spread upon the front pages of the newspapers.

The investigation showed how pool operators in Wall Street had manipulated the prices of stocks on the Exchange, with the assistance of men inside the companies with whose securities they toyed. It showed how they had made huge profits (which represented the exercise of no socially useful function) at the expense of the little speculators and of investors generally, and had fostered a speculative mania which had racked the whole economic system of the country--and this not only in 1928 and 1929, but as recently as the spring of 1933, when Roosevelt was in the White House and Wall street had supposedly been wearing the sackcloth and ashes of repentance. The investigation showed, too, how powerful bankers had unloaded stocks and bonds upon the unwary through high-pressure salesmanship and had made millions trading in the securities of their own banks, at the expense of stockholders whose interest they claimed to be serving. It showed how the issuing of new securities had been so organized as to yield rich fruits to those on the inside, and how opportunities to taste these fruits had been offered to gentlemen of political influence. It showed how that modern engine of financial power, the holding company, had been misused by promoters: how some of these promoters had piled company upon company till their structures of corporate influence were seven or eight stories high; how these structures had become so complex that they were readily looted by unscrupulous men, and so unstable that many of them came crashing down during the Depression. It showed how grave could be the results when the holding-company technic was applied to banking. It showed how men of wealth had used devices like the personal holding company and tricks like the sale of stock (at a loss) to members of their families to dodge the tax collector—at the very moment when men of humbler station had been paying the taxes which supported the government. Again and again it showed how men occupying fiduciary positions in the financial world had been false to their trust.

Naturally the composite picture blocked out by these revelations was not fair to the financiers generally. The worst scandals got the biggest headlines. Yet the amount of black in the picture was shocking even to the most judicial observer, and the way in which the severity of the Depression had been intensified by greedy and shortsighted financial practices seemed blindingly plain. So high did the public anger mount that the New deal was sure of strong support as it drove on to new measures of reform.

Frederick Lewis Allen, Since Yesterday