Dudley says BP to pay dividends again soon

https://ftalphaville.ft.com/blog/2010/09/30/357401/better-paid/

Says it all really.

This comment was removed because the moderators found it broke the house rules. Explain.

BP is one of my shares! I put £100k in when they hit rock bottom (well not rock bottom but close enough, you'll never time it perfectly). I had faith that the UK's largest company would still have demand for its product, oil, despite wasting a bit in the gulf. Funny really, Americans moaning about oil invading America.

A bit like the queen only smelling fresh paint.

The captains of industry that you get to talk to will only ever talk the talk.
They will only ever say what is expected of them.
I mean you wouldn't expect any of them to say something unexpected. They are all playing the game, the market.
I could write their spiel. Weeks in advance.
Not months though - because of events.

So while BP re-inflate people's pensions with a dividend - the taxman is about to help himself to more than that through the change in the RPI / CPI calculation.

You win some, you lose some - but get used to losing some because you're going to be doing a lot of that in the future (overpaid bankers excluded of course)

The comment a new safety-first era for BP. The BP policy has been safety-first for the last 15 years at least, BP is and has been has been one of the most safety commited companies for the last 20 years. I have spent years working for several oil companies over the last 20 years as a consultant and BP had the most stringent saftey policies by far. For a less than safety-first approach you need to look at Chinese, European and smaller US oil companies.

BP might become slightly less vast and sprawling on his watch, as it sells off assets to meet the £20bn-odd costs

£20bn-odd?

And the rest!

@3 lindsay
It is funny. Funny how you tell us when there's good news, I'm pretty good at calling the market a day late too.

WOTW:

"You win some, you lose some - but get used to losing some because you're going to be doing a lot of that in the future (overpaid bankers excluded of course)"

Does that include you ;)

I've just realised something.

L from H so far has claimed to have.

Buy to let empire.
'Other' business (plural)
Made a fortune in shares.
Made a fortune in gold.
Is an accountant.

That's a lot of fingers in a lot of pies. Are you Deuce Bigalow?

6. At 5:03pm on 30 Sep 2010, tom wrote:


hmmm.

Here we go. Again.

People died. That isn't so good in terms of safety.
Where was the remote shut-off valve? Where was the rapid response?

https://www.gregpalast.com/slick-operator-the-bp-ive-known-too-well/
https://www.gregpalast.com/Podcasting/ctptpalast051010.mp3

https://www.gregpalast.com/palast-at-the-2010-fighting-bob-fest/

On their oil response plan in case of an incident (600 pages) has 25 pages defining the public relations response and 1 pages of telephone numbers for oil slick equipment!

I listened to Mr Dudley and his talk of "exciting investment opportunities".

I'm not too sure that pension funds and ordinary investors should feel reassured. I smell a rights issue coming up.

I would just like to note this for the record:

David Cameron's decision not to stand up to the US president's insistence that BP, a British company, suspend its dividend payments will go down in history as the first major gaffe of this government and a sign of weakness.

It is akin to Labour's decision in 1997 to continue with Millenium Dome project.

Bob Dudley has both an easy job and a difficult one. Easy because after Tony Hayward's performance since the oil rig disaster, the only way is up for his replacement. Honestly, Mr Hayward was so awful in front of the media, he couldn't punch his way out of a paper bag.

BP should have been stronger right from the beginning in trying to maintain that they were not solely responsible for the disaster. Both Halliburton, responsible for cementing the oil well, and especially Cameron International, responsible for the blowout prevention equipment, should have been forced to share greater public blame than they have.

I'm not trying to ignore BP's failures and liabilities, but the new chief executive now has to try to spearhead efforts to get BP back to its former reputation, a reputation which has sunk lower than it should have because of the incompetence of Mr Hayward, et all. This is important because BP was regarded as a key stock for pension funds and a lot of people have lost a lot of money.

Bob Dudley's job looks a tough one. Then again, Exxon Mobil doesn't seem to be doing too badly these days.

Posted it before but good for a laugh at BPs expense

https://www.youtube.com/watch?v=i5C9Q7ZLMVM

12. At 6:55pm on 30 Sep 2010, Sasha Clarkson wrote:

I smell deep sea drilling!
Maybe, as an oilman he means when oil extraction is difficult, and that makes oil scarce so that means they can charge more.

How much profit did they make from the 'little problem' they found themselves with in the Gulf? Think about it.

Oh, and don't forget polar bear land - have they got a slice of that pie?

@7 copperdolomite

I agree £20bn seems cheap, but then we are led to believe the oil just evaporated. I'm guessing that is not true, I'm guessing they put so much dispersal agent at the source of the leak that they emulsified a lot of it. It's dispersed but to where? Time will tell on this one.

They might get away with it, there was a slick while Hayward was around now there is just slick P.R.

Closing the barn door after the horse has run away.
Oil still has great value and will only go up on price.

5. At 4:57pm on 30 Sep 2010, writingsonthewall wrote:
So while BP re-inflate people's pensions with a dividend - the taxman is about to help himself to more than that through the change in the RPI / CPI calculation.
================
could you elaborate on the second half please, and its connection to the first.

'Company that extracts free money out of the ground will start paying dividends soon!'

No story here....now move along please, nothing to learn here.

17. At 7:42pm on 30 Sep 2010, szjon wrote:

It's dispersed to microscopic size, that's all. Remember any school chemistry? Or images like you see on a soap powder advert - one side of the detergent molecule doesn't like water, while the other side likes muck?

From what I remember, the molecular forces involved are London's forces (the link I've given mentions others - all weak and easily destroyed, unlike the bonds holding oxygen and hydrogen together to make water).

So the oil is not chemically changed. Instead of it being in a big space under the ground, it's now in lots of little spaces and those little spaces are floating in the ocean!

There are also claims that the natural microbes will eat the oil. Well, first they won't eat it as fast as my boss scoffs choccie biscuits and secondly, the bugs might not like the fancy, added detergents...

PS
I think that might be a reason for increasing university fees - too many people get to know too much and won't fall for the guff!


https://www.ausetute.com.au/detergent.html

Cheers for the link copperdolomite.

I do remember a bit of high school chemistry, they have emulsified it? Since the detergent is bio-degradeable (I hope) does it release the oil later? I guess the clue is in the name, dispersant. Where has it dispersed to. I remember being dispersed by the police with a group of protestors once, we didn't just disapear, never to be seen again, we went to the pub.

Maybe the oil is in a mexican wine bar?

It reminds me of the financial crisis, just kicking the ticking bomb down the road.....

Lordy, there are reports of a coup in Equador.

Does BP have pipelines there?

Chevron Lobbies White House to Pressure Ecuador to Stop $12 Billion Amazon Pollution Lawsuit
https://www.democracynow.org/2008/8/5/chevron_lobbies_white_house_to_pressure

Will the price of oil go up now?

#22 szjon

The hope is that the dispersed oil gets gobbled up by natural microbial action. Just as oil seeps have been for 10s of millions of years.
Nature is good like that.

@24 prudeboy

But as copperdolomite points out it's no longer oil is it. it's an emulsion and this surely changes the circumstances.

It's a bit like me putting vinegar on my chips so my wife won't nick them.

25. At 9:38pm on 30 Sep 2010, szjon wrote:
It's a bit like me putting vinegar on my chips so my wife won't nick them.

That's right - the calories are still there in that fat, except with the vinegar, you get it all to yourself.

What I'm not sure of is whether the oil-detergent forms enclosed spheres, thus preventing any microbes gaining access to the oil or not. I think that it is, just not 100% sure. Anyway, if oil was so easily destroyed by microbes, you do have to ask - why aren't petrol tanks in cars refrigerated and why doesn't it come with a 'eat-by-date' like supermarket cakes? Oil might have preservatives in it when you buy it but still.... try leaving that cake + preservatives lying around and see what happens!

#25,26

The oil companies will claim that since they first started to use detergents on oil spills like Torrey Canyon they have learnt a thing or two.
Like how to go with nature rather than how to simply try to smear the oil everywhere.

They do actually have nature with them. It just takes longer when they don't help nature.

The really interesting fact is never mentioned.Namely That Bob Dudley was effectedly removed from his current job by the Russians and Tony Hayward replaced him to satisfy the Russians.Now the Americans have effectively removed Hayward because they are not happy and Dudley is back.BP spends too much time grovelling to politicians whims.

27. At 10:23pm on 30 Sep 2010, prudeboy wrote:

Well, I'm sure while they are arguing they will provide references to independent data....

https://www.sciencemag.org/cgi/content/abstract/science.1196830

"The distribution and fate of other abundant hydrocarbon constituents, such as natural gases, are also important in determining the impact of the leakage, but are not yet well understood."

"Propane and ethane were the primary drivers of microbial respiration, accounting for up to 70% of the observed oxygen depletion in fresh plumes"

As you will know, propane and ethane are gases, not oils. And 'fresh plumes' does not sound like there was any application of detergent to me.

From this I could ask quite a few simple questions (I'm not a microbiologist nor a marine biologist). But the very first one would be 'so can the microbes that are digesting the gas in deep water migrate towards shallow waters and the surface? Secondly, what effect will large bacterial plumes have on the environment - if they multiply rapidly within these oil plumes what waste products will they generate, and how will the gulf waters deal with those?).

Another one would be, if these microbes are effectively acting as cleaners, then why is the sand in Alaska still oily 20 years after the Exxon Valdez spill? Aren't these species or bacteria, or similar found in that environment?

That's the thing with science. You make ask you question, make your observations, find your answer which leads to yet more questions, more observations......

No matter what any oil company tells you, they don't know all the answers, and that, as a scientist, is something I can say with confidence.

Scientific America is readable if you want to find out about a science field you aren't familiar with. https://www.scientificamerican.com/article.cfm?id=natural-gas-prompts-microbial-bloom

Whilst in no way am I an apologist for big oil it is interesting to look at what happened to the Braer oil spill in the Shetlands.
As I remember it a veritable wildlife disaster was literally blown away.
Very convenient for the ship owners no doubt.
Not good for the wildlife that was affected though,

30. At 11:46pm on 30 Sep 2010, prudeboy wrote:
Whilst in no way am I an apologist for big oil it is interesting to look at what happened to the Braer oil spill in the Shetlands.

Why?

@22 "Where has it dispersed to. I remember being dispersed by the police with a group of protestors once, we didn't just disapear, never to be seen again, we went to the pub."

Brilliant! I have similar memories too. However, we could afford to go to the pub.

In 1925 Churchill went back on the Gold Standard, at too high a rate, to make the next generation honour the debts of the previous generation - not to the ones who died or were mutilated in WWI, but to the "rentier class": those who on investment incomes who had lost though financing the War. The result was deflation, economic misery and the General Strike of 1926. My grandfather, a shop steward in the steel works was blacklisted, along with many others. The family was plunged into severe poverty. My father and his siblings died noticably younger than the previous generation.

France on the other hand wiped out a significant portion of the debt by controlled inflation, and did considerably better economically (according to Keynes in 'Essays In Persuasion', and Galbraith in 'Money Whence It Came, Where It Went'.

History has shown that any usurious system causes debts to get out of control, and exacerbate divisions between rich and poor.

Remember this about economic policy - you always have to decide whose side you are on. Who should pay for the mistakes of the past. Mrs Cameron's family, and Fred the Shred, will retain their estates, but many ordinary people will lose their homes and livelihoods. This is the choice which has been made by our leaders - Tory, Liberal or Labour.

Oh dear, we're back to the previous thread. I'm WOTW too! :-D

32. At 00:22am on 01 Oct 2010, Sasha Clarkson wrote:

Good comment.

I think it's really important for all of us not to forget that what is being decided isn't just about huge numbers passing across a screen, or huge drifts of oil destroying environments and fishing grounds.

It is all about the future of real people and whether they will have a contented existence or are frankly, left to endure misery.

What I can't understand is how banks are making large profits without lending any money. I mean a butcher couldn't make a profit without selling any meat, unless something very odd was goin on.

@ 10. At 6:14pm on 30 Sep 2010, szjon

Yes, I've noticed the same. I also asked for a prediction of the next opportunity but apparently that would be 'insider trading' and something which would mean everyone moving the market would somehow erode LFH's profits, rather than a backed opinion which may or may not pay off. The real risk is that LFH may be shown to be wrong so calling the market after is much much safer. It is so safe in fact, I actually looked at the graph and decided that I bought £1m in leveraged futures, sold puts, bought calls, giving myself a huge exposure but since I knew it had gone up, I feel confident enough to announce I've made about £30m since the very bottom of the recent dip in BP's share price. Since I have the benefit of hindsight, I thought 'why not pick the exact bottom?'. I'll wait until the top has formed and moved down from it before I tell you when I closed the position, which will be the top btw.

You'll note that only two people seem to claim to play the market so well and exclaim their apparent wealth on this blog. LFH and rbs_temp. Interesting that they feel the need to do this. I think its an insecurity thing which reveals more about their posts and opinions than perhaps they intend.

@34 robinthomas

Something very odd has been going on with butchers for a while. Ever noticed how your chicken breasts are all pumped up. That's because they are, injected with a saline solution to make them bigger and heavier. Bit like the banks on the Q.E. money.

Any time soon they will start 'mechanically recovering' any money left in the system with taxes and cuts. It's a crude method, but I'm sure they'll manage to form it into something and sell it on.

Every bit of meat we buy is seeped in water to squeeze out those extra few pence of profit, bit like the banks products. Have you tried frying a bit of bacon lately, it's nearly impossible, it ends up boiling in all the water they've forced into it.

of course we have the choice of the good stuff that isn't as bad, it just costs twice as much. I love that choice but I'd rather just have a few less slices that weren't full of rubbish in the first place.

Bacon is like a 125% mortgage these days.

#36

"Bacon is like a 125% mortgage these days."

So true.

actually, I've decided, £1m invested in the above is too round a number. It would be more realistic if I said I'd invested £1,056,341.
There, much more believable.

@hughjoctopus.

The afterthought alibi of the pathological. you can almost hear the thought processes.

(well not rock bottom but close enough, you'll never time it perfectly)

#34 - I tried to explain this the other day. Firstly, they are still making a profit on the money they have already leant. Secondly, they have leant more money but not as much as required (although they always seem happy to lend to me so perhaps they aren't lending to risky businesses which sounds like they are being more prudent so it's a case of damned if you do...). Finally, release of provisions. Let me explain by way of example. In year 1 the bank writes down the value of a £1,000 loan to £200. This causes a loss of £800. In year 2, things have improved and the write down turns out to be overly cautious (they always are as the accountants have to be prepared on a prudent basis) and the loan is actually worth say £500. You release £300 from the provision and you make a profit of £300. As easy as picking your nose!

Source, I'm a Chartered Accountant (although I no longer practice as one).

Now back to BP. This is marvellous news that the dividend will flow again and the oil will not. As the BP dividend is so large, the suspension of it was having a real impact on prudent pensioners who invest in equities rather than foolish ones that rely on interest (equities have been proven time and again to out perform cash and as life expectations increase it is surely prudent to invest in FTSE100 companies with strong dividend history). The young should take a punt on oil exploration stocks, much more risky but with larger potential returns.

Ahem, simples.

34. At 09:06am on 01 Oct 2010, Robin Thomas wrote:
"What I can't understand is how banks are making large profits without lending any money. I mean a butcher couldn't make a profit without selling any meat, unless something very odd was goin on."

This is how I understand it (but I am no expert). If we ignore fancy banking and just think about retail banking... think of banks charging rent on money. They haven't been starting much new in the way of rent. But existing rental agreements tick along. The rent _they_ pay on money they borrow is at a real low. So they can still make profits because many bank loans are pretty long-term.

Then you have all the non-lending elements of banking, which had a pretty good first half of the year apparently.

#40 please explain, as I'm not an accountant, how a reduced loss is a profit.

If I lent you a tenner and you said you lost it, then found £5 in your pocket, that wouldn't suddenly be your money would it. It would of course be mine. I would be only £5 down now but you would still owe me £5.

#40 L from H stated:

Finally, release of provisions. Let me explain by way of example. In year 1 the bank writes down the value of a £1,000 loan to £200. This causes a loss of £800. In year 2, things have improved and the write down turns out to be overly cautious (they always are as the accountants have to be prepared on a prudent basis) and the loan is actually worth say £500. You release £300 from the provision and you make a profit of £300. As easy as picking your nose!
-----------------------------------------------------------------------

I think your definition of profit is a little skewed the loss on the loan has been reduced by £300.00 this is not the same as making a "profit". The loan will only be profitable if and when the £1000.00 is repaid plus an additional amount to cover costs, leaving a "profit".

I'm glad you are not our Credit Unions accountant. I can see now why, perhaps, you are no longer in business as one.Which is why I will also be taking your advice on equities under guidance.

You have also criticised me in the past for using a term you have now used to end your post with, sad really.By the way how's Vasilav feeling, I hear he's a little upset about your treatment of him? or is it just a tiff?

#40 - perhaps the explanation of how to arrive at a profit from an un-repaid loan is why you are no longer a practicing accountant?

#42 Hugh Joctopus

You obviously got your reply in ahead of mine at #43. The world must be full of accountants at the moment, perhaps thats why the banks and the Gov'ts that now own some of these "capitalist" institutions are in such a mess.

No doubt our friend from Hendon will on here soon telling us the £20bn cost of cleaning up in the Gulf is PR spend.

#10 szjon in reference to Linsay from La La land.

That's a lot of fingers in a lot of pies. Are you Deuce Bigalow?
------


Please don't tell Vasilav this, he's upset enough about L from H already, if he finds out about this it might drive him back into the arms of his ladyboy friend.

Funny place Hendon, full of revolutionaries.

45. At 11:28am on 01 Oct 2010, creditunionhero

I think we should set up a firm, lend out trillions, pretend we wont get it back so write most of it down and then pretend we might get a lot back and post a profit. With this profit on our books, we can sell the firm and bank a real profit....unless its not that easy and I've missed something, I dunno, like we didnt have the trillions in the first place or perhaps we had to borrow trillions to fill the gap from our un-repaid lending. Surely that won't be the case and LFH will be along shortly to explain why....

#47

You were doing o.k. until you said;

we can sell the firm and bank a real profit....

I would put my share in the Credit Union, put it in a bank, no way.

No doubt LFH will be on to explain how this will jeopardise the capitalist system, putting the money in a "not for Profit" institution.
Whatever next a fair society?

It's simple a loss in year 1, a profit in year 2. The reason being that the loss in year 1 was bigger than it should have been.

Please ask your accountant where he would put a reversal of a provision. If he doesn't put in in the P&L then he is doing single entry accounting which is logically impossible. A profit (or loss which we sometimes call a negative profit) is the net result of the P&L. It's not my definition, it's the ICAEW's! Really, please take accounting 101. Your Credit Union couldn't afford me. I never had my own practice (I am Big 4 trained, not some small bit accountancy firm on the high street).

I didn't critize you for using "simples" I only asked what it meant. I also put "ahem" at the start to indicate I was using it humorously. Please read more carefully. You appear to just want to attack.

Vasilav will get over it. Opposites attract you know. I am a capitalist pig dog and he is Hendon's number 1 revolutionary (at least he's doing something about it).

" 19. At 7:56pm on 30 Sep 2010, AnotherEngineer wrote:
5. At 4:57pm on 30 Sep 2010, writingsonthewall wrote:
So while BP re-inflate people's pensions with a dividend - the taxman is about to help himself to more than that through the change in the RPI / CPI calculation.
================
could you elaborate on the second half please, and its connection to the first."
It's a non sequitur.

47. At 11:42am on 01 Oct 2010, Hugh_Joctopus wrote:
45. At 11:28am on 01 Oct 2010, creditunionhero
I think we should set up a firm, lend out trillions, pretend we wont get it back so write most of it down and then pretend we might get a lot back and post a profit. With this profit on our books, we can sell the firm and bank a real profit....unless its not that easy and I've missed something, I dunno, like we didnt have the trillions in the first place
that could be a slight hinderance; fortunately you have not missed it

I only have a vague understanding of credit unions but my understanding is that it is a place for proles to borrow small amounts of money. Hardly going to replace the banking system. Then you say it's not run for profit! Eek it must be staff by cardigan wearing liberals. Fortunately your time is coming to an end. The Lib Dems are talking about cuts as they feel honoured to be allowed to talk. The public will blame them for the cuts. Result, Tory landslide and then the real work can begin. Enjoy your chickpea salad!

49. At 12:11pm on 01 Oct 2010, Lindsay_from_Hendon wrote:
It's simple a loss in year 1, a profit in year 2. The reason being that the loss in year 1 was bigger than it should have been.

----------------------------------------------------------------------

Which exemplifies the ridiculous nature of the thing. If I owned such a company, please tell me how I could access this profit and where I could spend it?

If a profit is the net result of P/L then -£1000 + £500 is still -£500. Maths 101. Please don't claim that by looking at year 2, you can say the company is making a profit when still in debt.

52. At 12:44pm on 01 Oct 2010, Lindsay_from_Hendon wrote:
The Lib Dems are talking about cuts as they feel honoured to be allowed to talk. The public will blame them for the cuts. Result, Tory landslide and then the real work can begin.

Would the public not know that that a Conservative and a Tory are one and the same, so that they would all be tarred with the same brush. Or do you mean landslide in the form of a collapse?

#52 L from H
I only have a vague understanding of credit unions but my understanding is that it is a place for proles to borrow small amounts of money. Hardly going to replace the banking system. Then you say it's not run for profit! Eek it must be staff by cardigan wearing liberals. Fortunately your time is coming to an end.
--------------------------------------------
Were only a small business (Approx £70 million in assets) with 22,000 members, many of whom borrow upto £25,000 unsecured.We also provide mortgages a cash ISA paying 3% with instant access no hidden fees or charges.(also no short term bonus rates)
Which of the capitalist banks you seem so eager to support can match the products and services we provide.

No 20, DebtJuggler wrote:

'Company that extracts free money out of the ground will start paying dividends soon!'

What an ignoramous comment is that. If extracting oil out of the ground is indeed "free money" that would clearly apply to all natural resorces and thus all miners and for that matter water utilities too.

In that case case I am not quite sure what are you still doing here reading all those blogs. Surely, it's not your altruism. If all those riches can be so freely got at then you should be in Outer Hybrides or weherever with a shovel by now.

You are not one of those "useless idiots"? Are you?

Hugh_Joctopus - you are arguing against accountancy not me. Perhaps you should consider that its a subject you know little about.

You throw in a line about debt which doesn't make sense. Debt is money you owe. If you make a loss then that doesn't necessarily mean you are in debt. If you buy a car for £1,000 and it depreciates then if you were to account for this you would have made a loss say £200. You're not in debt though are you? You paid for the car in cash.

You also mention getting access to profit. You can't spend a profit only cash. True in this example your distributable reserves are negative but you still made a profit in year 2.

Consider:

Start with cash £100

Year 1

Loss £20 (ignoring accruals)

Cash £80 (ignoring non-P&L items such as plant and machinery)

Hence P&L reserve (£20)

Year 2

Profit £10

Cash £90

Hence P&L reserve (£10)

You see you made a profit but you can't distribute (pay dividends) as you have a negative reserve.

53. At 12:53pm on 01 Oct 2010, Hugh_Joctopus wrote:

"If a profit is the net result of P/L then -£1000 + £500 is still -£500. Maths 101. Please don't claim that by looking at year 2, you can say the company is making a profit when still in debt."

Ah, but Hugh, that's exactly banks do. In your example the £1000 loss in year one would be written off to tax. In year 2 £500 profit. Trebles all round!

L from H wrote

I didn't critize you for using "simples" I only asked what it meant. I also put "ahem" at the start to indicate I was using it humorously. Please read more carefully. You appear to just want to attack.
At 3:00pm on 30 Sep 2010, Lindsay_from_Hendon wrote:
----------------------------------------------------------

What is this "simples" that creditunionhero is always using? Does he mean "simple"? I don't get it, I mean once is a typo but every time...
----------------------------------------------------
As I have pointed out on an earlier post, I have only used the term once,so saying I use it every time is indeed a criticism.

Please read your own posts more carefully.

And by the way, really funny.

Your post at #52 would indicate you have only a vague understanding of most things and a sense of humour to match.Did your Big 4 training not extend to humour, shame :-D

#49

I am doing something about it, working for a not for profit organisation.

Revolution isn't just about riots on the street.

Attack Attack Attack...............................

#57 L from H is at it again, typical accountant, thinks in terms of accounts.These only ever show a picture of a business at a specific time, (usually year end).

In your example you say you made a "profit" of £10 in year 2, true.But over the 2 years you have stil made a loss of £10.

If you were to do the accounts covering the 2 year period instead of 2 separate year end accounts. Have you made a "profit" or a loss.Has the business made £10 or lost £10.

Answers on a postcard please.

#52 L from H

I only have a vague understanding of credit unions but my understanding is that it is a place for proles to borrow small amounts of money. Hardly going to replace the banking system.
---------------------------------------------------------------------
Teachers, The Fire Service, Nurses,Police Officers, The Clergy all have credit unions as do other groups,
Proles all, according to you. Shame :-(

Lets keep this topic on track i.e. about BP. As said elsewhere Cameron should have stood up to Obama the US too often are hypocrites Chevron in South American, Union Carbide in India they can hardly take the moral high ground.
BP should pay for its mistakes and especially compensation to the oil workers families of those killed on the rig. But the other two companies involved are equally to blame if they believed BP was short cutting safety they had a duty to inform the regulatory bodies but they did not, Why?. Could it be the huge revenues they derive from BP and other oil companies they work for? Its convienient just to blame a majority foriegn owned company (40% is US owned & the highest % of employees are US). We ALL know the huge risks to oil exploration yet we all regularly go to the pumps to fill up so by definition were ALL guilty.

55. At 1:11pm on 01 Oct 2010, creditunionhero wrote:

"Were only a small business (Approx £70 million in assets)"

Sounds like you still are a small business! Or do you mean "We're only a small business"? If the latter, which I suspect, well that's chump change buddy! Your system can never match the demand of the big banks.

59. At 1:40pm on 01 Oct 2010, creditunionhero wrote:

What is this "simples" that creditunionhero is always using? Does he mean "simple"? I don't get it, I mean once is a typo but every time...
----------------------------------------------------
As I have pointed out on an earlier post, I have only used the term once,so saying I use it every time is indeed a criticism.

- I still read this as me asking a question. I'm sure I've seen "simples" more than once, presumably others have used it as you deny using it more than once. But you did use it and for those of us that have never heard of Russian meerkats who don't sell car insurance (I think that's right), you must admit that "simples" looks a bit odd. We have no talking meerkats in Geneva.

Your post at #52 would indicate you have only a vague understanding of most things and a sense of humour to match.Did your Big 4 training not extend to humour, shame :-D

- Erm, no professional accountancy qualifications don't include humour training. I know of no qualification that does unless you mean a joke degree but that's a figure of speech.

#57 I admitt, it is something I can't claim expertise on but I dont need to accept that purely because someone agreed to the rules of accountancy, they are unquestionable or demonstrate the correct view of the world. Weren't we discussing the other day about how relaxation of the requirement to make certain provisions against loan default lead to lenders going against better judgement and handing out cash without suitable backup? I mean, that was the accounting rule so surely it must be beyond question?

I appreciate you can make a loss without being in debt (as in the car example) but you have used the car as a utility. In the case of a company losing 80% of a sum lent, they have gained no use from that lost cash since it wasn't an investment in anything which has provided them with use to achieve anything else. Hence, if they never received back the cash that was once in the safe, its a loss but if, like many banks and companies, the money came from borrowing elsewhere like the interbank market or say from equity release in a property, the loss is a debt since they cant service the borrowing due to not receiving their loans back unless they borrow more (refinancing). This was why there was such a problem when credit dried up.

My point is that when looking at a company, the term profit is misleading if what it is actually doing is paying back a previous loss. I don't think many of the banks who you indirectly refered to in your example weren't in debt - I dont think they had simply reduced their cash reserves as if they'd bought a depreciating car.

Re Profits & Losses.

Isn't the key thing that a P&L statement is only for a period of time. So a company can have made a profit, but still have an overall loss.

So I could make a 'profit' today, but still be overall lossmaking and skint. EG if I hold RBS shares (I guess I do as a taxpayer) I made a profit over the period since they were 11p. But overall still loss making. This would show in my 'retained profits' which I understand is the total of all P&Ls plug various jiggery pokery which only accountants understand.

...and if you can't turn a profit into cash then should it really be called a profit?

@63jeffa444

So, by your logic, when a cow tramples a poor woman to death I am partially to blame because I'm a bit of a steak lover?

I'd get myself back to B&Q and return that brush, it's a little large for the purpose.

#31 copperDolomite

"Why?"

Scientific curiosity that's why.
84,700 tonnes of oil spilled in a week and nature cleans it up. Quickly too.
Surely you are curious as to how?

https://shetlopedia.com/The_Braer_Disaster_%28Oil_Spill%29

The power of nature.
And how lucky were the Shetlands? It could have been way way worse..

61. At 2:00pm on 01 Oct 2010, creditunionhero wrote:

"If you were to do the accounts covering the 2 year period instead of 2 separate year end accounts. Have you made a "profit" or a loss.Has the business made £10 or lost £10."

The longest accountancy period allowed is 18 months. If you get in and we can now publish accounts over any period then let's do the last 10 years and then the banks never made a loss.

Besides I'm trying to explain how a business can make a profit from releasing a provision. I feel I have done that.


62. At 2:08pm on 01 Oct 2010, creditunionhero wrote:

Teachers, The Fire Service, Nurses,Police Officers, The Clergy all have credit unions as do other groups,
Proles all, according to you. Shame :-(

No, I believe the clergy are the first estate (you revolutionaries really should read history). Public school teachers aren't proles, the rest are as are the other occupations.

Oh joy!
Another layer of risk reviews and unqualified safety engineers making daft decisions.

BP have had very strict controls in place for years, yet it didn't stop the incident. I doubt they will see much improvement by adding more fiddlers to the mix!

It seems to me that some people need to wake up and smell the coffee.
YOU SIMPLY CANNOT REMOVE ALL RISK FROM THIS TYPE OF OPERATION!
You could spend 50x the money on every well and something like this WILL still happen again!

#6 Spot on! Having engineered jobs for many of the worlds oil firms, I totally agree with that. They have been and remain one of the strictest. They are just unlucky it happened to them but I suppose as they have a large share of the worlds drilling ops, they stand a higher risk of this happening to them.

Some of the others are total criminals....I won't name any small Canadian oil firms by name but some of them really are flying by the seats of their pants in terms of safety and risk management.

re: Profit and loss

L from H is right (although only on the accounting point - pretty annoying smug attitude) - the accounting rules deal with the write downs in certain ways - however, they also do include the requirements for the banks to disclose the amount of write downs and write backs in their accounts so it is possible to see the impact of this (however the media prefer to pick up the headline figures to sell papers).

Yes, commentators are right - writing back a bit of a loss to a not as bad loss isn't generating profit, but then again, writing down debts as bad when they are only doubtful shouldn't generate a loss until they "officially" become bad but most of the commentators were happy to blast the banks for these losses (which are exactly the same accounting treatment).

Incidently - if bank A lends £100 to bank B, who lends it to bank C, who lends it to Bank D, who lends it to a customer (which pretty much happens). Customer is deemed bad - therefore all bank A, B, C and D will write down the loan - all showing £100 losses. The media pick this up as 4*£100 or £400 loss (which help explain some of the ridiculously high global write off figures you see quoted around). Also means that customer gets less doubtful in year 2 (say only considered 50% bad) - means all the banks write back £50 as profit (total profit in the industry being £200). Also, for the government to bail out/insure the above they only have to cover £100 hence why bail out figures (for the insurance) are probably over inflated

Ain't accounting wonderful (although in some of the above its only partly accounting and partly the media picking up on headline figures to sell papers knowing (hopefully) that the are over-exaggerating things)

Braer oil spill link.

Looks like the Beeb cannot handle brackets (

This link should work properly:
https://tinyurl.com/3xwh283

72. At 2:57pm on 01 Oct 2010, Horned_Devil

Agreed, I forgot to add that to my post. Its not strictly a loss is you haven't lost it (yet) although may have had part default so far (in terms of loans). As long as the language used reflects whats going on then there is less confusion but that is where the problem began.

Rather off topic as mentioned but hey, far meatier blogs from RP have gone further off topic just as quickly such is the nature of these things.

65. At 2:16pm on 01 Oct 2010, Hugh_Joctopus wrote:
#57 I admitt, it is something I can't claim expertise on but I dont need to accept that purely because someone agreed to the rules of accountancy, they are unquestionable or demonstrate the correct view of the world.

So were do you want to put the credit dear boy? The rules of double entry accounting aren't up for debate, the total debit amount minus the total credit amount must equal zero. If it does not then the laws of logic have been destroyed. Some philosophers think even God couldn't do this (I accept though that if there is a deity then it is unlikely that they are concerning themselves with accountancy - would be brilliant if they did though! IFRS 19 is a real pain).

In summary, disagree with the rules of accountancy, disagree with logic (and by logic I mean 2+2=4, you can't have a simultaneously red and green all over object, a round square is impossible etc.).



"Weren't we discussing the other day about how relaxation of the requirement to make certain provisions against loan default lead to lenders going against better judgement and handing out cash without suitable backup? I mean, that was the accounting rule so surely it must be beyond question?"

Yes but you're not arguing against a standard here but against double entry accounting which as I've said above is impossible to change without defying the laws of nature.
"I appreciate you can make a loss without being in debt (as in the car example) but you have used the car as a utility. In the case of a company losing 80% of a sum lent, they have gained no use from that lost cash since it wasn't an investment in anything which has provided them with use to achieve anything else. Hence, if they never received back the cash that was once in the safe, its a loss but if, like many banks and companies, the money came from borrowing elsewhere like the interbank market or say from equity release in a property, the loss is a debt since they cant service the borrowing due to not receiving their loans back unless they borrow more (refinancing). This was why there was such a problem when credit dried up."

Ah, I see. Ok, this isn't called debt but rather a liability. Now, the thing is as soon as Mrs Miggins puts £20 into her bank account the bank has a liability as they owe her the £20. The ingenious thing is that the bank lends out say £200 knowing that Mrs Miggins and all her neighbours are unlikely to come round and all ask for their money back at once. I suggest you watch It's A Wonderful Life for an explanation of this and also it is a lovely film and should calm you down. Now of this £200 lent out, the bank gets jitters and thinks it won't get any of it back. It posts a provison of £200 and takes the loss to the P&L (it has to as there has to be two sides to the transaction). Now a provision is different to a write off as we still have the loans on our books, we are just valuing them at zero. Now time passes.........and not all of that £200 turned bad! You see we were overly pessimistic as accountancy standards (FRS12) tell us to be! Only 60% turned bad so we only had to write off £120 (no more loss incurred this is a straight balance sheet reclass - ignore it for simplicity!) and we can release a provision of £80 and take a £80 profit in this period. Now, the brilliant thing is we also made made a profit on the money lent out by way on interest received and the capital returned (£80) more than covers the deposits we received which was £20.

Mrs Miggins got paid interest and no longer had ne'er-do-wells robbing her house.

The bank makes a profit.

A borrower was able to buy something such as a house or a car which they otherwise would never get (imagine if mortgages didn't exist)

A bilker got to do what they enjoy best.



"My point is that when looking at a company, the term profit is misleading if what it is actually doing is paying back a previous loss. I don't think many of the banks who you indirectly referred to in your example weren't in debt - I dont think they had simply reduced their cash reserves as if they'd bought a depreciating car."

But the losses they took were also misleading. You see when you see a company has made a record debt always be suspicious. What's the difference between a £12bn loss and a £14bn loss? They always shove more through and then in the future, instant karma profits! Cash does not equal profits.

#70 L from H

But public school teachers are members of the Teachers Credit Union so are these Public school teachers proles,

Next time your in hospital are you going to call for a nurse or a prole?

As for reading history, remind me which revolutionary was it created the Church of Enland?

67. At 2:30pm on 01 Oct 2010, Hugh_Joctopus wrote:
...and if you can't turn a profit into cash then should it really be called a profit?



Company A makes widgets. In year 1 they finish the year with cash of £100 and P&L reserves of (£75).

In year 2, they take a bank loan out for £1,000 and have no other cash movements and make a profit of £25.

So they have cash of £1,100 and a P&L reserve of (£50)

You see cash has little relation to profit. Woolies was profitable but it didn't have any cash so it went under. Cash is king!

Going back to my previous example, remember the original loss wasn't a cash loss.

Accountancy is not a science, it's a black art!

72. At 2:57pm on 01 Oct 2010, Horned_Devil wrote:
re: Profit and loss

L from H is right (although only on the accounting point - pretty annoying smug attitude)

- The Lord of the Flies has just said I have an annoying smug attitude. Surely if the devil hates me, that's a good thing as it shows that I am on the side of peace and love?

#70 L from H

The longest accountancy period allowed is 18 months.


That might be the statutory max, nothing to stop a business doing accounts for whatever period it likes, for its own purposes:-)

Poor old L from H, perhaps you should ask Vasilav to pay for some humour training for you. Oh dear, forgot ................

79. Ok, brilliant news - the banks will produce P&Ls for whatever period they like. Bingo, no losses no need for capital injection we can all go back to the way things were. Thank you.

76. I don't go into public hospitals.

Revolution that started the C of E? Well it wasn't the Reformation but then again you could hardly call the Reformation an anti-capitalist movement. Do you mean Henry VIII divorcing his (third?) wife? You call that a revolution?! Blimely, everything's a revolution to you.

79 That might be the statutory max, nothing to stop a business doing accounts for whatever period it likes, for its own purposes:-)

To come back to this. That's why there's a P&L reserve. Have you asked your accountant where he posts a provision yet? I can't wait to hear his answer.

Getting bored now (hence why I never wanted to become an accountant) but...surely the point is that accounts are there to clearly explain the situation a company is in to everyone interested, not to hide behind the language used or way items should be considered. The rules of accounting should be there not only to allow the above but also to ensure entities are managed correctly, prudently even. If accountancy is a black art, this does somewhat suggest that things are done to conceal, re-name, hide conditions as to mask the true situation a company faces or interpret the rules in such a way as to go against the spirit of them and risk the prudence on which they should be based.

I'm not debating the rules of double entry accounting, I'm debating the language used and the impression that is given when a company which is in a hole, can make a claim which sounds like its making headway when in fact its merely catching up. A significant problem with this is the fact the grand fromages of these companies will take performance bonuses from this profit (RBS) when in reality, they aren't even back to square one.

To creditunionhero.

A question.

I've been reading your blogs for some months now and your constant endorsement of the credit union movement stimulated me to do an internet search to find out a little more, given that I have modest cash resources that I would be willing to invest.

I find your not for profit ethos most attractive.

However, my research seems to indicate that these organisations have very strict rules in relation to membership, particularly geographical or occupational limitations.

As I have not been able to identify a credit union operating in my neck of the woods can you advise me if there is a union that is available to participate in that is less restrictive in its nature?

Any assistance/information will be gratefully received.

Regards

77. At 3:20pm on 01 Oct 2010, Lindsay_from_Hendon

Lindsay
You may be many things but a Chartered Accountant is not one of them based on that analysis. You may have passed some kind of foundation course. I will give you that.

If you are studying, try and bring the real world of businesses and trade into your accounting, in other words get some practical experience and you will be much better off for it.

76/80 - it was Henry divorcing his first wife, Catherine of Aragon, and it lead to the dissolution of the monasteries, not the reformation.

#82 - bored by accountancy!

The point is the large losses from 2 years ago weren't real either. You can't complain that the profits aren't real if you don't accept the other side of the coin.

Accounts are prepared on a true and fair basis and are aimed at a "sophisticated investor". Otherwise every set of financial statements would have to include my Mrs Miggins example.

Now if you think that's boring, well my specialism was corporation tax. I can feel WOTW's blood simmering at this! The things I know, the companies I served, my effective tax rate! Personally I think schools should teach financial lessons including tax and accountancy. Perhaps they wouldn't have over borrowed then.

The thing is this, BP is overly beaurocratic, has too many different, often conflicting processes and systems, most of which have been introduced over the years in response to some event or problem. They make it ever more difficult and complex to carry out any project and then when things go wrong they wonder why, hold an inquest and introduces more processes instead of making things simple and empowering the people on the sharp end. Bobs adding a new division to make it even more difficult to get anything done, which meand more people will be forced to do the limbo to get under the many gates you have to go through or just not be able to deliver and BP will find they will create for themselves even more problems.

BOBBBBB! dont do it, instead have a good look at all BPs complex and contradictory processes, systems and gates and make it easy to do the job safeley and to best international standards, not even harder.

69. At 2:46pm on 01 Oct 2010, prudeboy

492,000-627,000 tonnes with no storm over an extended time period of oil from one source in one climate and one part of the world versus 85 000 tonnes of oil with a different chemistry (different sources) spilled over a short time period in a different part of the world (different environment and climate) and dispersed by a storm.

I'm just not sure how useful comparing the different situations would be in terms of cleaning up the mess.


The braer oil was when, 1993. Dispersing it isn't the same as making it disappear! Just because you can't see it in a great big lump or slick doesn't mean it has gone. That's like saying uraniam spread over Iraq isn't harmful because the bullets turned to dust! Those little droplets of oil spread out over the ocean will eventually be destroyed, perhaps by sunlight and microbes over a long time period. In the interim, that's a lot of oil, toxic oil. Some will say that it happens in nature anyway. My view on that is: lions die as part of nature too. That doesn't make it OK to go and shoot them all. Insects die as part of nature. That doesn't mean we should wipe them all out (as much as I detest midgies and from a personal point of view would happily have every last one of them wiped off the face of the earth!).

Nature should be left to get on with it, and we will just have to deal with what nature throws at us, not the other way around.

Am I right in thinking that the money the banks lost and taxpayers are losing has not disappeared and that it has gone to the land and property sellers?
Is an emergency retrospective windfall tax not a feasible way to recover some of this money and reduce the pain being felt by the least well off?

#88 copperDolomite

I have always stated that I am no apologist for BP.
My point is that nature is one of the most powerful tools available to man in clearing up spills. And yes I know out of sight, out of mind does not mean it has gone away. I have walked on beaches in Brittany where if you kick just under the surface sand you find a layer of what looks like asphalt. It is in fact oil spilled by the Amoco Cadiz in 1978. It is still there.
The fact remains that I am amazed that the Braer spill, in a cold environment, (no sun up there!), was cleaned up in the main part by nature.

Hopefully, hopefully note, the GOM spill will be cleaned up finally by nature.
Meantime we are living in the oil age.
We cannot expect there to never be a spill.
Just marvel at nature whilst being extra careful and hope not to need it.

90. At 8:28pm on 01 Oct 2010, prudeboy wrote:

You aren't wrong to marvel at nature - it's the most mind-boggling, interesting, inspiring thing anyone could ever observe or think about IMHO - why do'ya think I took off to do science!.

If you aren't an apologist for BP then why do you read like 'well, you know, it isn't so bad because nature will fix it'.

I'm marvelling at the asphalt laid down in 1978! Efficent nature! Equador is ruined with so much of the stuff lying around, causing all sorts of nasty deaths and illnesses never mind the destruction of the environment. Now, if the mighty Amazon forest with such biodiversity can't clear it 'effciently', what will?

Nature is efficient, but not in our human timescale and not in a way that we yet understand. It creates land, it destroyes land, life evolves and the tectonic plates move! Left to the most 'efficient' companies not much of this planet would sustain life!

I think the booms being to hand would have been a far better idea than waiting on nature! We know how to make them and we know how to use them.

Nature, on the other hand, can't be manufactured, looked up in Yellow Pages, made to order, called upon to be used in the performance of a given task or whatever. We can all be master of a hammer. I'm finding it difficult to think who is the master of nature. Lordy, we're still trying to figure out what it does and how let alone use it as a tool! We can manage gravity - dries the pots and pans really well, sunlight for drying things like tomatoes, wet clothes, sun tan, and even growing seeds. We can't even make it rain (or not) to order - just an ordinary every day thing but we can't even manage that!

Using more complex aspects of nature requires us to understand it and then command it. We can't so nature is not a tool, not when it comes to oil spills.

1. (Engineering / Tools)
a. an implement, such as a hammer, saw, or spade, that is used by hand
b. a power-driven instrument; machine tool
c. (in combination) a toolkit
2. (Engineering / Tools) the cutting part of such an instrument
3. (Engineering / Tools)
a. any of the instruments used by a bookbinder to impress a design on a book cover
b. a design so impressed
4. (Engineering / Tools) anything used as a means of performing an operation or achieving an end he used his boss's absence as a tool for gaining influence
5. a person used to perform dishonourable or unpleasant tasks for another
6. a necessary medium for or adjunct to one's profession numbers are the tools of the mathematician's trade
7. (Life Sciences & Allied Applications / Anatomy) Slang another word for penis
8. (Military / Firearms, Gunnery, Ordnance & Artillery) Brit an underworld slang word for gun
vb
1. (Engineering / Tools) to work, cut, shape, or form (something) with a tool or tools
2. (Communication Arts / Printing, Lithography & Bookbinding) (tr) to decorate (a book cover) with a bookbinder's tool
3. (tr; often foll by up) to furnish with tools
4. (when intr, often foll by along) to drive (a vehicle) or (of a vehicle) to be driven, esp in a leisurely or casual style

Efficient.

I'm sure nature will clean it up - but probably not in our lifetimes. It may 'clean it up' more efficiently than it takes for the earth processes to produce diamonds but it certainly won't clean it up as 'efficiently' as some booms and 'sucker ships'. And BP engineers know that. I'm sure the BP engineers are pretty appalled at that. But they, unfortunately are not the boardroom lads.

Adj. 1. efficient - being effective without wasting time or effort or expense; "an efficient production manager"; "efficient engines save gas"
efficient - able to accomplish a purpose; functioning effectively; "people who will do nothing unless they get something out of it for themselves are often highly effective persons..."-G.B.Shaw; "effective personnel"; "an efficient secretary"; "the efficient cause of the revolution"

'Efficent' is a word that really needs to be qualified with time/effort/resource data for comparison when talking about biological/chemical processes, otherwise it is, well meaningless. It's something management-speak people don't seem to grasp. They like it because they are convinced it makes them sound intelligent, learned, important and worth every penny of the bonus they are after - when you ask them to elaborate their brains fry, and then they become moody!

#84 - I was using simple examples to help people who don't even understand that double entry accounting requires two entries.

Foundation course that covers UK GAAP FRSs? Wow, how do they fit it in? I left before IASs came in but I am an ACA and I am Big Four trained so there!

85 - I was answering the question which revolution created the C of E. I'm pretty sure there was no revolution.

Who's been betting against WOTW?

'International Labour Organisation (ILO) notes that social unrest has already been reported in at least 25 countries'

https://mostlywater.org/global_unemployment_trigger_further_social_unrest_un_agency_forecasts

75. At 3:14pm on 01 Oct 2010, Lindsay_from_Hendon wrote:
"The rules of double entry accounting aren't up for debate, the total debit amount minus the total credit amount must equal zero."

Actually, not wanting to be too pedantic but P+L accounting is single entry book-keeping NOT double-entry!

It’s only double-entry when you introduce a Balance Sheet to record the balancing transaction against to track your overall Assets & Liabilities. (Yes, I am an accountant - been qualified for 25 years.)

I understand the point that you’re making that in any form of accounting (whether it’s money, beans, the aggregated energy value of the universe or whatever) the nett balance must always be zero but that's only true when applied to the entire Universe of Discourse not one small part of it.

For any discrete part of a system, and a commercial organisation is just one component of the entire commercial environment, it is possible to have either a surplus or a deficit.

In effect single entry book-keeping i.e. simple P+L accounting, doesn't violate the laws of mathematics (or physics for that matter) if the nett position is not zero - it just means that the balancing transaction exists somewhere outside of the system being quantified or in a form that is not being measured.

The universe allows for that - in physics they call it entropy but it can apply to any discrete system.

92. At 10:00pm on 01 Oct 2010, Lindsay_from_Hendon wrote:
I am Big Four trained so there!

Lyndsay duck, that's not something to mention in front of your grandmother! She'll only choke on her teeth, so, ssshhhh.

If you think the P&L scam is a good one, how about this:

"Hmm, we've got £10bn of dodgy loans here. Any ideas?"

"How about setting up a separate company in the Caymans and selling the loans to them?"

"Brilliant. That's a £10m bonus for you then. Trebles all round!....Hang on, this company doesn't have any money to buy the loans"

"No problem. We'll just lend them the money at 3%."

"That's a fantastic idea! Have another £10m bonus. Trebles all round."

"Thanks, John"

"Don't mention it, Bob. You'll go a long way in this bank!"

BP are probably the most unpatriotic company we have. Their lack of support for energy R&D in the UK is appallingly low and they now rarely take part in corporate venturing. In fact BP were responsible for killing off a small (£5m) venture fund set up by a half a dozen or so oil companies in Aberdeen by refusing to put in another paltry £1m or so for the second round funding.

They need to change their attitude.

98. At 12:27pm on 02 Oct 2010, Wee-Scamp wrote

Are any of them? It's corporate global domination now, remember.

#99

Oh yes...... Every American oil company is an ambassador for American service and manufacturing companies. Norway's STATOIL played a huge role in developing Norway's oil and gas supply sector (and is now doing the same thing for Norway's renewables industry) and the same applies to the French, Italian and Brazilian oil companies and others.

These oil companies saw themselves as catalysts for building their indigenous supply side. BP's one and only loyalty is to its shareholders.