Bill Bonner

Poor Tony Hayward.

The man was devoured by zombies last week.

Now that we’ve figured out how history works, we’re begging to see the forces of history at work all around us – an eternal fight between the zombies and the producers. We’re surrounded by zombies. They are all around us. Tort lawyers. Bureaucrats. Politicians. Welfare slaves. Chiselers. Layabouts. Whiners.

On the way to work, on the Washington beltway, there are so many lobbyists, we have to put up the windows and lock the doors.

But let’s look at the economy for a moment. Today is the longest day of the year in the northern hemisphere. That means the year is almost half over.

Stimulus measures are winding down…joblessness is creeping up again. Houses seem to be getting ready for another tumble.

David Rosenberg:

There is no denying the renewed decline in the US residential market, and this transcends the end of the tax credits – the sector is fundamentally weak. Moreover, demand has not reacted to the latest downdraft in mortgage rates and homebuying intentions are, in a word, moribund. The National Association of Home Builders (NAHB) housing market index sagged from 22 in May to 17 in June – a three-month low. Buyer traffic receded from 14 to 16 but the real story was the four point collapse in the “future sales outlook,” to 23 from 27 – it hasn’t been this low since the depths of the recession back in March 2009.

We ran some regressions and found that the “future” component does indeed have the best “fit” with both housing starts and new home sales – the latter is set for a renewed 10% in coming months, to a 600k annual unit rate, and the latter by 30% to the 350k level, which would [be] very close to the all-time low of 338k hit in February 2010. Ouch!

Hey, don’t say we didn’t warn you. It’s a Great Correction, not a recovery.

Stocks began last week with a swagger…but by the end of the week, they were barely crawling forward. Gold ran up day after day, adding another $9 on Friday. It looks as though it is aiming for the $1,300 mark.

Meanwhile, the zombies are gaining ground.

Last Thursday must have seemed like the longest day to Tony Hayward.

“Congress mauls BP chief,” is the way The Financial Times put it.

Mr. Hayward was confronted by a panel of zombies in Congress. They chained him to a rock so the members of the energy committee could take turns feeding on his internal organs.

For 7 hours, the BP CEO was asked the same questions, over and over again. No matter how many times he was asked, the answers were always the same. No, he wasn’t an expert on the bonding properties of sub-sea cement. No, he wasn’t there when the rig exploded. No, he didn’t know exactly what went wrong; he was waiting for the results of the experts’ inquiry, along with everyone else.

But the zombies didn’t really care about getting to the bottom of things. They were going for the jugular. And the right arm. And the liver.

From the reports we’ve read, Mr. Hayward held up pretty well. He played his part. He did not wander from the script. He remained calm as he was dismembered. His voice did not quake or complain as his liver was removed.

The politicians on the committee, meanwhile, were disappointing. Even for zombies. Hayward was the straight man. The zombies had the TV audience on their side. They should have made us laugh and cry. But for all their theatrical skills they seemed unable to do more than summon up a worn-out look of mock indignation. Like a man who wants to get rid of his wife and then catches her in flagrante delicto; their outrage seemed more stagey than authentic.

Neither Hayward, nor the leading zombies, Henry Waxman and Bart Stupak, will win Oscars. Still, they mostly performed as you’d expect. Hayward said what he had to say. His tormentors feigned profound concern for the fishes and fowl, the flora and fauna of the Gulf area, not to mention the oilmen idled by Barack Obama.

What disturbed us was the crowd reaction. There was a time when Americans had a sense of fair play. At least, we’d like to think so. In a fight between a group of zombies and a real producer, their sympathies should be with the oil man. After all, when they drive into the filling station, it’s not the Congressional Record that they pump into their fuel tanks. And when they heat their homes, it’s not tort lawyers whom they look to for fuel. Gasoline is valuable. They know it. And they know that someone has to get it. In fact, so keen is their demand for octane, and so high is the price, that the producers are lured farther and farther away from dry land. No one would drill a mile below the water for oil unless a lot of people wanted it badly. Sooner or later, one of the rigs was bound to spring a big leak.

You’d think the public would have more sympathy for the people who risk their lives and their money bringing oil to market.

Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.


    Thanks Bill for having the courage to swim against the (oily?)tide and show some respect for producers. Values in our poor fading nation are sickly distorted; hopefully one day to be corrected.

    One thought on the housing market–all houses are not the same. In the heyday of flipping the big, expensive mansions meant bigger profits or bigger equities to tap. Ignored is the reality that mansions are a huge ongoing cost with regard to taxes, utilities, insurance and maintenance. So just speaking of houses as one single generic standard is deceptive. The wrong houses were built at the wrong time which may help explain why there are so many going unsold.

  • JRod

    It is easy to be green and not cause environmental damage if you spend your whole life in a university. If you decide to raise some food, dig for oil, build something, manufacture something, or process something, make sure you make enough for the looters.


  • jason

    Well Congress is indeed useless, but Tony Hayward is no hero, nor is a “producer” who “risks his life and money” to bring us oil. As we have seen, he is out on his yacht while the oil spills. Hayward is out nothing, while the spill has taken away the livelihoods of many producers. Granted, it’s not Hayward’s fault that the entire world is dependent on oil–he just helps us to get it. Let’s face it: Hayward is the same as most other corporate types: an empty suit who makes his fortune by keeping the working people of this planet tortured, by entering endless mindless wars, unsafe and shoddy infrastructure and keeping the world spiritually and morally bankrupt. These bosses are frauds and they know it. They got their jobs by being hired by other frauds, or through their fraudulent parents. Let’s admit the truth about Hayward–he’s no hero nor victim. Meanwhile, what about the stock market? Recovery is back on!

  • Mars88

    How do you know at this point that short-cuts and collusion were not in play to reduce costs? How do you know that this company did not heed initial warnings that this area should not be exploited because of inherent geological instabilities? Then what would you have to say about this saint producer? Just because someone is a producer does not exempt them from law abiding behavior. But beyond that, these hearings are ridiculous until the facts have come out and the undersea gusher stopped.

  • theophiluspunofall

    Tony Hayward is torturing the steadfast proletariat and sending mothers’ sons off to fight unwinnable wars? Wow. You must be Harry’s little sister, or an AFSCME organizer.

    Buy a mule or pony ASAP. It will bring you back to moral and spiritual wholesomeness.

  • jason

    theophiluspunofall–you must have forgotten about the 11 people who died on the exploding rig. Who are the people who “risk their lives and their money to bring oil to the market”? Certainly Hayward is much more secure then the 11 steadfast proles toiling on the rig. 5500 people die on the job in the US every year. You must be Hayward’s little sister, or a corporate PR hack.

  • theophiluspunofall

    If I was Hayward’s little sister, I would be on his yacht right now, or assisting his group of Knights Templar in their next unwinnable military operation.

    Buy a pony anyway. And say hi to Harry.

  • ebbandflow

    1. Can you help me understand why we have foreign companies attaining permits, allowed to shortcut safety regulations, and drilling for our oil resources?

    2. When we have a trade deficit of $331 billion in petroleum products in 2007 why are we letting businesses from foreign companies drill and spill our oil reserves? If we have enough to give away to BP why are we buying so much foreign oil?

    3. Are we subsidizing the foreign companies as we do the domestic oil companies?

    4. Why would the USA want to open more areas to deep sea drilling when foreign companies are already extracting and now spilling our resources from the areas that are open?

  • chaz

    Let’s face it…we’ve all been had. “Tony” is the sacrificial lamb, the “patsy” chosen by Swan and his backers long ago. The money men are congratulating themselves and each other for their foresight in avoiding the spotlight.

    Mr. Hayward reminds me of a former child star given a leading man role. He knows the script, he delivers all his lines, but the critics are laughing and recalling his “beaver/cleaver” boyishness.

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