Did BP (NYSE:BP) and Obama Make a Devil's Pact?

There's a lot being said about the deal made with the Obama administration and BP (NYSE:BP) where they will be allowed to use oil and gas assets based in the United States as collateral for the $20 billion compensation or escrow fund.

The basic idea is the administration and BP have gotten too close, and it'll undermine imposing sanctions on BP by the government.

An advocacy group, Public Citizen, described their concerns this way, "It threatens to inhibit ongoing criminal probes of the company's probable negligence. A criminal investigation resulting in sanctions imposed against BP -- including banning the company from federal leases in the Gulf -- will be at odds with the government's agreement to use BP's leases as collateral for the fund."

Admittedly, from various ways of looking at the BP debacle, it's a catch-22. You don't want the government in bed with companies, many don't want the government and business merging into a form of fascism, others want BP to be shut out of the Gulf market in the U.S.

The problem is, if most of these things were abandoned, then BP wouldn't be able to pay for their liabilities. It's as simple as that.

No government, and even BP, is going to say we'll shut down the Gulf operations to make some people feel good. BP couldn't survive, and every victim would remain that, as there would be no money coming in.

Then you have the pension funds invested in BP, the thousands of workers that would be out of jobs, etc.

The point is so many things are now interconnected in such a way as to destroy one would be to destroy another. And there would be many unintended consequences that would result.

I'm not a proponent in any way of government and business working together. We should be in a free market where businesses make decisions and government leaves them alone.

But the gravitation of business and government blending has been going on for some time, and leaves us in this situation where now people are raising their voices in opposition.

In the case of the government and BP it's far too late. The circumstances are already laid out, and there is no way the government would bail out BP by paying victims with taxpayer dollars. The only solution is for BP to pay for it, which is the right solution.

The idea that BP is going to be allowed to continue to operate in the Gulf of Mexico is what has people upset here, and if they weren't, who would pay for all the billions in bills owed?

The answer is nobody, and that's not going to be allowed to happen.