Tuesday, October 14, 2008

Federal Money Grab May Not Be Over for Defense Contractors

While the game may change in bail out capitalism, the high stakes players at the table seem to remain the same:
Not everyone is so gloomy [about the current economic downtown]. Loren Thompson, a defense industry consultant, thinks the credit crisis could work to the industry's advantage if policymakers are looking for ways to jump-start the economy.

"If you want to stimulate the economy you can give a tax break so someone can go buy a TV that's been built in Korea or if you buy weapons it all gets spent here, in the U.S.," Thompson said. "All the bad economic news of the last month works to favor defense stocks and defense companies."

In the past eight years, the Pentagon's defense budget has jumped 86 percent, from $361 billion to $672 billion in inflation-adjusted dollars ....

But the prospects for such programs have dimmed some in recent months. Even before Congress approved its $700 billion plan to bail out Wall Street, analysts projected defense spending for future weapons programs to tighten.
The article also points out that some defense contractors are asking to be called by more politically correct names like "global security companies."

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