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Fun and frolic in the sea near one of the world's thousands of offshore rigs 

Katrina II
Too big to drill trumped too big to fail this week in the world's headlines.
The latest catastrophe in Lose-iana was BP's gigantic underwater well blow-out. The causes are unknown because the witnesses died.
What is known is that this pollution nightmare will force the Obama administration to reverse its decision to permit offshore drilling on the east coast. And it shouldn't.
The facts are that most of the world's new oil is coming from offshore sources. There are 4,000 rigs in operation in the U.S. alone and this the first major spill since 1969. That's hardly the profile of a technological disaster waiting to happen.

Oh, Canada
The latest spill also sent NDP leader Jack Layton scurrying to a Parliamentary committee to stop Arctic offshore drilling.
Lest Jack forget, there has been a mini-North Sea play underway for years almost 200 miles off Newfoundland's coast. Platforms and rigs in three deep water fields are producing 267,613 barrels daily and at least two billion more barrels awaits exploitation.
Then there's the Beaufort Sea oil potential, just 10 miles offshore in shallow water, where one of the most promising wells in Canada was discovered then orphaned a generation ago because of Ottawa incompetence.
But political fallout is predictable. Oil-soaked turtles and birds are telegenic and very upsetting to all of us.

The real fix
Considerably more effective, in saving the turtles and the birds, will be the fact that BP's insurers, or re-insurers, are in for a frightening tab and frightening lawsuits in the U.S. because of the damage to tourism and fishery.
Like a bank crisis, the underwriting contagion will add mightily to everyone's production costs as offshore operations will be subjected to serious insurance premium increases or, possibly, denial of certain coverage.
That may shut in some supplies, which will increase prices in the long run. To be Cana-centric, this will skate the economics of Canada's oil sands production more onside than they already are and make the Canadian dollar go up. And Canadian resource stocks.

Audiences watch Sparta's massacre in "300". History repeats.

Greece isn't a country. It's a party.
The Germans, one of the few groups in Europe who work, are furious. They are balking at the bailout but must come across because a couple of big German banks are on the hook for Greece's IOUs.
Best suggestion by a German politician, not altogether silly, is that Greece should pay off its lenders with islands. These Aegean beauties are government-owned and their privatization might help skate the whole place onside quickly.
Despite the world's crisis, there are plenty of well-heeled buyers: the suits at Goldman Sachs (dubbed "haves" and "have yachts"), Russian oligarchs, oil sheiks or Mexican cartelistas.
That aside, the details oozing out about Greece's spendthrift ways, make it obvious that the real legacy of Goldman Sachs and Wall Street is that they democratized greed.

Hey gimme some of that
Greek retirement ages are 60 and 65 years, respectively, for males and females, but the average is more like 53 years because many jobs are considered physically strenuous or hazardous. These include hairdressers (all that standing and putting your hands into chemicals); musicians (all that plucking into the wee hours); bakers and radio presenters.
Public-sector employees have got bonuses for showing up to work on time. They received a 13th month's wages at Christmas and a 14th month's wages at Easter.
While these perqs are now history, at the insistence of the IMF and EU, it's hard to imagine the Greeks rolling up their sleeves and getting back to work. The same goes for the other members of PIIGS, more elegantly dubbed the "Club Med," which includes fellow miscreants Portugal, Italy, Ireland and Spain.
Well, the party's over for them, but not for Goldman Sacks (sic) yet. The investment banking casino played a starring role in the Greek comedy when it gave the country a strategy to hide debts from euro zone officials.
As we write, Goldman trading desks are busily shorting all those Greek stocks and bonds they once sold long to clients, and its underwriters are undoubtedly preparing a series of IPOs to peddle those islands.

China's unrelenting, subsidized trade success by sea must end

The subtext going on with the G2 -- the United States and China -- is fun to watch as an example of the Obama team's nuanced global strategies.
Both President Obama and his Treasury Secretary Timothy Geithner spent a chunk of their childhoods in Asia, so they get the culture. Obama lived for years in Indonesia and Geithner in India.
The challenge is getting China to stop cheating by keeping its yuan artificially low. However, this also involves admitting that it has been happening.
But the concept of diu lian, or loss of face, is critical in order to get Asians to reverse course. So nothing has been direct.
This month, Obama and his Treasury Secretary are to release the results of a currency study, which likely reveals China's currency should be 27.5% higher. In U.S. law, they can immediately impose tariffs on everything from China.
That would spark a world trade war and a sell-off or diversion by China out of U.S. government bonds.

Sober second thought by Beijing
But signs are China is coming around in a face-saving way. The President and Treasury Secretary have left the criticisms about China mostly to others, such as Brazil this weekend or Congress, which is probably China's only de facto opposition party.
Earlier this month, Geithner flew to China's arch-rival India for a two-day love-in, which was duly noted in Beijing. He then dropped in on China on his way back.
China's President Hu Jintao then went to Obama's nuclear summit in Washington and, for the first time, hinted it will stop vetoing sanctions at the UN Security Council against Iran even though it's a big oil supplier to Beijing.
Next, Geithner announced a postponement of his currency report and said he will go to China in May for a two-country, high-level forum to solve the world's problems.
All this was preceded by "softening up" when Washington suddenly announced US$6-billion armaments deals to Taiwan and a meeting with Tibet's Dalai Lama.
It will be interesting to see if all this face-saving, indirect pressure will work. This is the most important economic issue in the world.
Last weekend, Geithner was mute on the yuan but said, "We have seen encouraging signs of a shift toward more rapid consumption growth that needs to be sustained and reinforced by a return to market-oriented exchange rates."
With Brazil and others joining the fray, it's likely the yuan will start its quiet climb in May or June.

Goldman Sachs and other Wall Streeters face more problems, now that some of the banks they ruined, and the countries that bailed them out, realize they may have been taken.
Goldman Sachs is under investigation by the European Union into a 2002 swap deal it carried out with Greece that, some say, may have helped hide the extent of the country's financial troubles. May have hidden it? Is the Pope Catholic?
Friday's fraud charges against Goldman by the U.S.Securities and Exchange Commission led to requests by British, German and Dutch officials for information to pursue their own probes or lawsuits. SEC officials hinted that Goldman is the beginning of a widespread investigation into the derivatives that destroyed the world's financial system.
The collapse of 2007-08 was not about investors' manias. It was, as I pointed out in 2008, the result of America's unrestricted, reckless and rogue banking system.
Goldman "lifers" have run the U.S. Secretary of the Treasury for nearly a generation, removing walls between investment and other banks and taking controls off Wall Street cronies, non-transparent derivatives and hedge funds. Clinton listened to Rob Rubin for almost two terms (26 years at Goldman, director and co-chair) and Bush had Henry Paulson (ex Goldman Chair) until the end. Both were confirmed by the Senate. Both pushed for deregulation and both pushed around the SEC and other regulatory bodies.
The fallout may have just begun. Rubin's proteges are still there, namely Larry Summers and Timothy Geithner. Last week, another left before the SEC's fraud lawsuit  -- White House economic advisor, Lewis A. Sachs.

Clinton decoupling the politics
In an interview this weekend, Clinton admitted he was wrong to listen to Rubin. The significance of this is that it removes the Wall Street reform issue from the partisan fray over financial reform now before the Senate. It moves removing and fixing Wall Street from a Democrat versus Republican issue to a decent governance issue.
"I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency,” Clinton said. “And the flaw in that argument was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.”
He added he was wrong about understanding the consequences if that shadow market tanked. "So much money was involved that if they went bad, they could affect a 100 percent of the investments, and indeed a 100 percent of the citizens in countries, not [just] investors,” he said.
Just as Abu Ghraib robbed America of its moral high ground, so has Wall Street. Washington's house cleaning must be swift and severe.