Wednesday, October 08, 2008

Chevron v. Ecuador - Can Chevron Get A Fair Trial? Appellate Court Screws Up

As some of you know, we've been following the Chevron - Ecuador story for some time now.  To recap, the problem is that in the 1960s Texaco produced oil out of that country and through 1990 and in partnership with the Country of Ecuador .  During that time, there were oil spills and economic damage due to oil production.  Texaco spent $40 million in "environmental remediation" which is another term for carrying out a cleanup program.  

Chevron purchased Texaco in 2001 for 46.3 billion, thus assuming Texaco's work and responsibilities in Ecuador.  By that time, Ecuador's then-new state-owned petroleum organization Petroecuador assumed responsibility for the oil wells that were once the product of the partnership.  But the problem is that since that time and through today, oil spills and environmental damage have continued, but Petroecuador has done nothing to either prevent the occurrence of or clean up what was done.  

Meanwhile, the Country of Ecuador has moved to work on three fronts: 

1) Nationalize the oil industry via Petroecuador
2) Kick out American oil companies like Occidental Petroleum and take over their production facilities.
3. Sued Chevron Texaco to get money to pay for environmental damage that their own state-owned oil company, Petroecuador, caused

The third point is the focus of my blog.  Ecuador's suing Chevron to have them pay the afforementioned damange.  To that end, they were assisted by a lawyer by the name of Steve Donziger, who had been working on the case as an "American Legal Advisor",  but who has also admitted his own financial ambitions as he could gain $5 billion from a victory .  The lawsuit -- valued at $16.5 billion by one estimate -- has been the focus of much legal movement.  The latest action by Chevron had it file an appeal to have Ecuador enter into arbitration discussions regarding the level of liability each party is responsible for.  But there's one large problem. 

The appellate court doesn't understand the contractual relationships. It calls Chevron a "third party."  


When Chevron purchased Texaco it essentially became Texaco, with all of its obligations and problems. Thus, it's not a third party.  But even with this fact, the U.S. Court of Appeals for the Second Circuit in New York took the step of ignoring Chevron's claims of being able to pursue arbitration by seeing it as a "third party" when it's not.

The result of this failure means that Chevron now must seek other legal tools to get Ecuador to pay its fair share, but the other problem is more sinister: Ecuador's rich continue to cover-up their behavior and irresponsibility toward that country's poorest people.  Making it look like it was just Chevron's fault does not erase the fact that Ecuador has been harming its poorest people.

The bottom line here is that just because a firm's an oil company does not mean it should be treated unfairly, especially when the lives of the poor of Ecuador are at stake.  Chevron / Texaco has paid and does its share; the Country of Ecuador, which by the way will never give Chevron a fair trial, has not done so. 

McCain's Mortgage Hail Mary May Alienate His Base

At last night’s second presidential debate, John McCain made what will surely be regarded as his umpteenth Hail Mary throw. In response to a question from an audience member regarding ways the federal government can bail people out of “economic ruin,” McCain said this:

I would order the Secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes – at the diminished value of those homes and let people be able to make those – be able to make those payments and stay in their homes.

Aside from the fact that McCain’s sudden epiphany is already part of the bailout package, McCain’s attempt, less than four weeks before the election, to transform himself from the champion of laissez faire economics to the great patron saint of government intervention into private markets, may backfire.

Surely this comment was tailor made for battleground states like Michigan and Florida, which have been disproportionately hit by the foreclosure crisis. If voters in those states who are struggling to make their mortgage payments are fooled into believing this was actually McCain’s idea, they may decide to vote for McCain. However, the reverse may also be true of his core constituency. Republicans are generally not in favor of government welfare programs, and this can be easily construed as such a program. Interpreted through the lens of McCain’s base, McCain is effectively saying “sure, I know you were foolish enough to buy a home you couldn’t possibly afford, but rather than allow you to suffer the consequences of your own fiscal stupidity, I’m going to take Joe Six-Pack’s tax money and give it to you, to save you from your own ignorance.”

Some voters, both republican and democrat, dislike the idea that the government is going to reward the foolhardy financial decisions of people who bought a house they should have known they couldn’t afford, effectively shifting the burden from those people to the responsible Americans who budget properly. After all, don’t Republican pundits label this as socialism – taking money from responsible taxpayers and “redistributing it” to people who make unwise financial decisions? By attempting to claim this idea as his own, McCain risks being inexorably linked to it, making his base view him as the one trying to play the part of Robin Hood. Thus, even if McCain’s latest Hail Mary (probably more accurately described as an interception attempt) wins him some votes from distressed homeowners in battleground states, those votes could come at the expense not only of support from his Party, but also of other potential votes both in those states and in Republican strongholds. In short, with this Hail Mary, McCain risks alienating his base at a time he can ill afford to do so.

Rob J
Cross-posted to Opinion Streams.

Obama Aide Robert Gibbs Goes After Sean Hannity For Anti-Semite Guest

Yeah for Robert Gibbs.  The top Obama Aide confronted the ever-irritating Sean Hannity over his hosting of an Anti-Semite guest Andy Martin as Sean was trying to make the stupid McCain-supporting Ayers connection that really has no basis in reality.  

It's too bad Gibbs didn't know about the White Supremacist friend Hal Turner Sean has had on his show, too.

Is McCain's Handshake Refusal Racism Toward Obama?

This is the supposed snub, but really I don't think so in looking at this again. Senator McCain tapped Senator Obama on the shoulder to turn him to say "hi" to Cindy McCain, but the way both of the McCain's handled the moment was clumsy and even then revealed a disdain that could be seen as a kind of racism.  

I don't like how McCain's running his campaign and he's trying to rip America apart.

Obama - McCain - Obama Will Win; The Economic Problem Is Why

This video was created just before the debate, but my prediction seems to have held and for the reasons I state here.

This American Economy is in trouble. It's in bad straights for three basic reasons:

1) According to the Bureau of Labor Statistics, the Civilian Labor Force Participation Rate topped out 10 years ago and then decreased and continued to do so through to present day. What that means is that more and more people basically stopped looking for jobs and working at jobs than ever before for the first time.

2) The total rate of job growth started to increase at a rapidly smaller rate in the late 1990s and that continues today. You can see the BLS data I collected right on the video. We added about 20 million jobs each decade from the 60s to the 90s, but again in 1999, the job growth party stopped cold. We added just barely 5 million jobs in ten years, that's a drop of 75 percent over what we've produced in the past.

3) During the period of the job losses and labor force participation problems consumer credit shot to rapid rates of annual increase starting just before the turn of the 21st Century. What that means is as we were losing our capacity to produce jobs, we were relying on the credit system to essentially make up for the lack of job growth we experienced in the past.

That's why we're in trouble now. Job losses due to the increased number of competitive market economies -- not the sub-prime mortgage issue -- is the real problem and its been years in the making. 

We have to fundamentally alter our economy and the current proposals and the Bailout Bill are only a start of getting at the problem -- but they don't impact this combination of forces that basically creates constant job loss and part of that is the overall International Division of Labor, where cheap workers overseas do jobs that were once located here.

There's an answer, and it's in something I call Zennie's Plan. Stay tuned.

On CNN IReport -- click here