Wednesday, July 27, 2005

WICked (big) profits

The W-Industrial Complex (WIC) index continues to pay big returns on the back of questionable government policies. The WIC index, which tracks a basket of energy, defense, high end retailing, and conservative media stocks, is up 130% since January 19, 2001 compared to an 8% drop in the S&P 500 and a 21% decline in the NASDAQ.

What government policies drive these profits?

  • The Iraq war has been a boom for defense firms which have reaped a windfall from the $314 billion spent so far. Defense profits could continue to surge on future Iraq war spending of $458 billion according to the Congressional Budget Office;
  • As you pay $2.50 a gallon for gas, you can derive comfort from the knowledge that the Iraq war has also raised the perceived risk to the steady flow of Middle Eastern oil – increasing oil speculation and raising its price; and
  • $1.6 trillion in tax cuts 36.7% of whose benefits went to the top 1% of earners has resulted in a windfall for those who buy $125,000 Maserati Quattroportes as Christmas presents.

In case you feel at risk as a portion of every gallon of gas you buy pays jihad preachers in Saudi Arabia, these WICked big stock profits may balm the wounds.

1 Comments:

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