War has always been profitable. That is a given and I think no one would argue with that. However, until recently, there had always been an offset to that profitability. Meaning most families were required to send their sons and daughters to the war which meant that someone profiteering from the war also had a reason to stop it - they did not want their children to get killed.
Further, the economy would go into a "war time footing" meaning luxuries would be curtailed, things would be rationed, taxes would be raised etc. So, again, for the majority of the people, there would be a reason to STOP the war.
However, along came the "Dick Cheney" generation. I call it the Dick Cheney generation because it was Dick Cheney who said, when asked why he did not go to Vietnam, that he had "other priorities". They realized that if they played their cards right (and oh did they ever), they could become very rich while sending others off to war. Further, they could stir up a patriotic fervor that made it almost a crime to say anything about the war while all the time they are getting very very rich from it. Even think of how rich commentators such as Sean Hannity and Ann Coulter have become from this war.
To test my theory, I decided to compare the results of the Dow Jones against the ETF PPA which trades the SPADE defense index. This is an index of companies which do business in the aerospace, "homeland security" and DOD space. I wanted to see how they were faring compared to the average index. Here it is:
As you can see, a lot of money is being made off of this war. Just look at that gap in the index! That is amazing. The PPA is up about 30% since it's inception and at that time it was right about the same as the DJI. The DJI is less than 20%. So, let's think about the current situation:
- A lot of money is being made off this war; a lot of it by the perpetrators of the war and their friends (i.e., Texas Republicans and the like).
- They do not have to send any of their family to war - no risk of dying (i.e., Jenn and Barbara Bush, where are they).
- There is no sacrifice required at home.
So, why in the world would anyone want to stop this war? A great line I heard once was "Keep the bad people rich and the stupid people scared" and I think Bush et al has taken this statement to heart.
I think it is interesting that the PPA nosedived leading up to the election in 2006. The market figured the Democrats were going to put an end to this disaster. However, alas, looks like right what the "surge" was announced or known to be going to happen, the index took off like a rocket.
How is that for free markets!