Peabody Coal filed for Chapter 11 bankruptcy protection yesterday. Among other obligations, Peabody estimates its has future environmental clean up costs at $723 million, which, as The Wall Street Journal noted, is “a concern for environmental activists. From Theo Spencer of the Natural Resources Defense Council:
The miner shouldn’t be allowed to “walk away from the billions of dollars in damages to landscapes, wildlife, and crucial water supplies that are part of coal’s legacy.”
The Wall Street Journal, “Coal Crash Sinks Mine Giant,” 4/14/16
Here’s a stark notice for Mr. Spencer: THERE IS NO MONEY! In 2011, Peabody, according to the stock market, was worth $20 billion. It is now worth $38 million, or about one-twentieth of what the company thinks it will cost to clean up the environment that Mr. Spencer wants cleaned up. Take a number, Mr. Spencer, and stand in line with Peabody’s other unsecured creditors: employees who are being laid off, suppliers who are being stiffed, banks who are writing off their loans, and anyone else who was counting on money from Peabody. Its bonds are trading at seven cents on the dollar. To reiterate: THERE IS NO MONEY! Get used to seeing that phrase as the debt contraction picks up steam and a world that produced far more debt than goods and services for decades discovers that what production that remains in the face of shrinking demand and falling prices is inadequate to service that mountain of debt. It’s sad, it’s unfair, and that’s life; you can’t consume more than you produce forever.