OIL giant BP’s share price has fallen nearly 17 per cent to £4.12, its lowest level since March 2009.
The sharp sell-off came as it failed to plug the massive spill from its leaking well in the Gulf of Mexico.
The massive leak will continue for at least another two months, until relief wells can be drilled. Eleven rig workers died when the Deepwater Horizon rig exploded off the Louisiana coast and sank six weeks ago.
BP now faces the full anger of the Obama presidency and is likely to be billed for the full cost of its disaster in the Gulf of Mexico.
BP’s share price fell to £4.12 within minutes of the stockmarkets reopening on Tuesday, wiping £15.7bn off the price of the company in minutes
The assumption is that BP will be forced to withdraw from the US and that it will be barred from all future US government contracts as well.
Meanwhile, the US Attorney General Eric Holder is in the Gulf to meet attorney generals and federal prosecutors from the US states in the area to discuss criminal proceedings.
BP is going down and will drag down with it a big chunk of British capitalism, both banking and industrial.
In the last ten days British capitalism has lost over £100bn in share prices.
Stock markets across Europe were further undermined yesterday by the fall in manufacturing activity in both China and Europe.
London’s FTSE was 2.1 per cent lower at 5,080.71 points. In Paris, the main Cac index lost 2.2 per cent to 3,430.78 points.
Frankfurt’s Dax index was 2 per cent lower at 5,844.68 points and the Spanish Ibex lost 3.2 per cent to 9,065 points.
Meanwhile, unemployment in the eurozone rose again in April to a fresh all-time high.
Eurostat said unemployment in the 16 nations that use the euro now totals 15.86 million – equivalent to 10.1 per cent of the population.
Spain, Ireland and Slovakia recorded the highest rates of joblessness, with the Spanish rate now over 20 per cent.
The effect on the euro was to see it fall to a four-year low against the dollar.
It was trading as low as $1.2111 at one stage, and was also down to a one-year low against the pound, with one pound buying 1.1935 euros.
The unemployment pattern across Europe has highlighted the divisions between members of the EU and the eurozone.
Latvia, which is not a member of the eurozone, has the highest rate of the EU, with unemployment at 22.5 per cent. Across the 27 EU countries, there are now 23.3 million people unemployed – a rate of 9.7 per cent.
Meanwhile, the European Central Bank (ECB) has thrown fuel onto the flames by revealing that the EU’s banks face loan losses of 195bn euros (£165bn) over the next 18 months.
The ECB issued a warning that the ‘hazardous contagion’ of the sovereign debt crisis will spark a ‘second wave’ of loan losses, that will deepen the slump.
The ECB has gone as far as saying, in its latest Financial Stability Report, that the writedowns could be even bigger as heightened sovereign debt risk and the impact of government savage cuts drags economic growth down further.
This situation comes on top of the 238bn euros in bad debts written off by the end of 2009, and the fact that long term banking debts estimated at 800bn euros must be refinanced by the end of 2012.
The ECB added that in this situation borrowing costs will rise sharply, as banks are forced to battle it out with the massively indebted European governments to secure creditors on the bond market.
Meanwhile, the ECB has said that it began purchasing Greek, Portuguese and Spanish bonds last month to try to calm the crisis ridden markets and support the $1 trillion stabilisation package for the euro agreed by the EU and the IMF.
It is clear that the world capitalist crisis is deepening and that ahead lies a spate of major bankruptcies, a big growth in unemployment and savage cuts in workers jobs, wages and pensions.
Such actions will get a massive revolutionary response from the working class. Already mass strikes are developing all over the EU states.
We have entered the period of the struggle for the European socialist revolution, to replace the EU with the Socialist United S tates of Europe as part of the struggle for the World Socialist Republic. Capitalism is dead. Forward to Socialism!
