Yet Another BP Blowout Preventer Fails! ~ The Risk Averse Alert

Thursday, June 17, 2010

Yet Another BP Blowout Preventer Fails!

The question asked by CNBC's Melissa Lee at the top of today's abbreviated Fast Money was whether anything new was revealed during today's Congressional hearings grilling BP CEO Tony Hayward. The answer most emphatically is yes, there was.

It came just after 4:30 p.m. when the inquiry turned to the Deepwater Horizon's blowout preventer. It was like a nuclear bomb went off in the capital. Revelation of circumstances surrounding BP's modifications to the rig's blowout preventer was news to me.

Hayward looked perfectly stunned. I mean he was Elmer Fudd. If he had a gun he might have blown his brains out right on the spot. It was incredible theater, all too real and very much worth today's hearings — and this notwithstanding infantile rantings against Congress coming from that CNBC crowd who has yet to meet a hooker or a pot farm that could not be passed off as a respectable "business."

What could Subcommittee Chairman Stupak's line of questioning regarding BP's modifications to the well's blowout preventer be intending to expose? Was the congressman inferring intentional sabotage in an act of war, this following on the attack of the U.S. banking system executed by the London office of AIG Financial Products a few years back? That Hayward simply could not respond (because he knew something along these lines was being raised?) gave off the strong smell of real consequence emanating from a Mass Strike set to explode.

Telling, too, was that this matter revealing grave Congressional concern was left until after the market closed. Who knows, this might have been done to give deep-pocketed backers of the likes of Stupak time to unload as much of their BP exposure as possible. The company is sinking fast.

(On a related side note, CNBC's video library containing their coverage of today's House Energy and Commerce Subcommittee hearing finds a gap from 4:25 p.m. to 4:45 p.m, defying my desire to provide you a link to this most explosive moment. Well, it's like they say: the most damning evidence usually is in the cover up. However, it's not like I am desperate for evidence supporting my extraordinarily bearish outlook. To say the least, that the gap even exists truly is all the icing on the cake one really needs, Mr. Nixon...)

SPX 5-min

The formation of wave c of 2 off last week's bottom probably has a bit more yet to go before completing. Presently, the fourth wave of five waves [up] forming wave c of 2 is thought to be unfolding.

Come next week these five waves up from last week's bottom probably will be complete. If as a result wave 2 (of five waves down from late-April top), itself, in fact is completed, then the next few weeks following could be rather devastating, as wave 3 [down] would be expected to form.

As I have been saying, this approaching, strong move lower is likely to put March '09 lows squarely in the cross hairs. Yet in the grand scheme of things even this coming steep setback is seen but part of an opening salvo with much greater losses still to follow in the dying days of an insolvent financial system whose vulnerability offers incredible opportunity — the first of my adult life — for the United States at last to decisively demonstrate it truly is the land of the free and home of the brave.

It is on this note that, a stock market bear steeped in a history inexorably elevating self-evident truth recognizes today's bombshell exploded in Congress as a sign of times in which many a reckless imperial enterprise stand at grave risk of joining Deepwater Horizon at the bottom of the sea...

Fast Money
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