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The Profits of War
Lockheed Links to the "Committee for the Liberation of Iraq"
01/15/2007 4:52 PM ET
A lengthy and informative investigative piece about the "iron triangle" connecting the U.S. government, lobbyists, and the defense industry has been published by that most enlightened purveyor of airbrushed female flesh--Playboy.

The tone set by the piece, epitomized by the subtitle, "The Story of How Lockheed's Interests--as Opposed to Those of the U.S. Citizenry--Set the Course of U.S. Policy after 9/11," presents a slightly overstated open-and-shut case condemning Lockheed Martin's alleged position as puppetmaster. However, cozy relations between politicians and defense contractors have long been an unsettling reality of American politics, and the implications of how this mutually-beneficial relationship has influenced government and military activities is something that demands greater scrutiny.

Jon Birger in Fortune shows the ripple effect on the consumer investor. He points out that higher stock prices are a result of the build up in Iraq,"Armor and body armor makers like Ceradyne and Armor Holdings, battlefield computer and communications equipment company DRS Technologies, and armored-vehicle maker Force Protection" will be the main beneficiaries. "Among the major defense defense contractors, the best bet is General Dynamics, maker of the Abrams tank and other military vehicles"

Birger points out that you might be too late if you wanted to surf the rise caused by the Presidents speech. Defense stocks have been surging since November in expectation of higher orders in the defense sector. More ominously, he points to an international arms race caused by increasing global tension as drivers of future gains in defense stock prices.

"The bottom line: what's happening in Iraq is simply the most visible manifestation of an increasingly militarized world, a point Merrill Lynch chief investment strategist Richard Bernstein made in a recent report. And while that may not bode well for world peace, it is good for the bottom lines of defense companies."


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