Friday, June 25, 2010

Cramer: BP Not Too Large To Fail, Bankruptcy Is An Option

Oh no, the best contrarian indicator has spoken about BP.

From the Maddmoney website: "During his “Eureka Moment” segment, Jim Cramer told viewers of his “Mad Money” TV show that BP is not too large to fail. In fact, he thinks its a real possibility that the Gulf disaster could could easily swallow up the entire company. “Because of the potential for a near infinite number of claims from the Gulf of Mexico oil spill,’ Cramer said, “bankruptcy is very much on the table for BP.”

"Cramer said the BP oil disaster should not be compared to the Exxon Valdez spill, but rather to the asbestos industry, which has completely wiped out due to the large number of claims it was hit with.”It’’s magical thinking to believe the company’s cash flow of around $7 billion a quarter is enough to get them through the disaster,” he said. Cramer said this would be especially true if a big storm blows through the Gulf of Mexico.
“if we get indictments,” he said, “the claims will overwhelm the company, and it will be in BP’s best interest to file bankruptcy in order to manage the process.”

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