[R-G] How to profit from the global recession

[Anthony Fenton]

http://briarpatchmagazine.com/2009/05/01/how-to-profit-from-the-global-recession/
How to profit from the global recession
By Anna Reitman
Briarpatch Magazine
May/June 2009

Everybody’s looking for a lifeline to pull themselves out of the  
global downturn. But with giant bailout packages failing to provide  
stability in the U.S. and grim predictions for the remainder of 2009,  
what are the emerging opportunities for secure and lucrative investment?

Financial experts the world over are surveying the wreckage of the  
global economy to devise a comprehensive investment strategy. They  
seek a strategy capable of turning high unemployment rates, huge  
pension losses, surging consumer bankruptcies and home foreclosures to  
their advantage.

One need look no further, though, than the human dramas playing out on  
the evening news. The arms trade is one industry virtually guaranteed  
to continue delivering higher than average returns during the global  
economic retrenchment.

The global trend towards increased military expenditures is evident in  
such recent opportunity zones as Israel/Palestine, the Democratic  
Republic of the Congo, South Ossetia and the ongoing skirmishes in  
Somalia, Afghanistan and Iraq. Military expenditures worldwide have  
ballooned to more than $1 trillion a year and continue to rise. With  
no end in sight for the nine major and 17 smaller-scale armed  
conflicts in the world, brisk sales of arms and military equipment can  
be anticipated at least through 2012.

Free-market enthusiasts will be pleased to note, however, that these  
growth opportunities extend beyond the state-controlled defence  
industries of the world’s leading military powers. They also reach  
into the efficiently unregulated global market in small arms.

Mexico, for instance, is an emerging market that should not go  
overlooked. A strong narco-state transit hub, it is also the number  
one importer of small arms worldwide. As a fellow signatory to the  
North American Free Trade Agreement, Canada is in the enviable  
position of being one of Mexico’s top suppliers. With gang wars  
breaking out over lucrative drug routes that criss-cross the entire  
globe, demand for small arms to facilitate these conflicts will remain  
strong. Canada is well positioned to capitalize on this booming  
industry because of its leadership role in global hot spots like  
Afghanistan and Haiti.

Some investors may feel uncomfortable counting on criminal enterprise  
to deliver the returns they have come to expect. For those “ethical”  
investors, there is an alternative. Privatized prisons in the United  
States have reliably delivered high returns, particularly during  
downturns in the business cycle. As unemployment, evictions and  
foreclosures increase, the prison population can also be expected to  
enjoy healthy growth. In the current “tough on crime” political  
climate, cost savings from the reduction of non-essential services  
like medical care, food and correctional guard training could increase  
these profits considerably.

For those seeking to invest closer to home, the recent surge in public  
support for tougher approaches to crime in Canada may also lead to new  
markets for human incarceration service delivery. More privatized  
prisons in more countries should result in higher dividends for the  
ethical shareholder.

The average shareholder, though, is perhaps more adventurous in  
seeking out the next lucrative bubble - for them, arms are the new  
real estate.

The Japanese symbol for “disaster capitalism” is composed of the  
symbols for “danger” and “opportunity.” Investors navigating the  
global financial crisis should remember that robust turnover in  
weapons inventory will, sadly, result in some collateral damage. The  
shrewd investor will seek out opportunities to turn collateral damage  
into collateral advantage. Construction companies, for instance, can  
vault over the housing slump and go directly to reconstruction  
contracts on territory that has been cleared of hostile occupants by  
warfare or natural disasters.

Similarly, local contracts can be gifted to Canada’s battered auto  
sector by retooling it to produce military vehicles. Other spinoff  
sectors sure to enjoy a collateral advantage are the energy,  
technology, pharmaceutical and security industries. This abundant  
economic activity will keep the discerning money manager sleeping  
soundly, investments tucked away safe.

Two-thousand-and-nine could yet be a comeback year. There is no need  
to worry about the future of the economy; the rules are operating just  
as they should.

Anna Reitman has worked as an adult educator and administrator in  
Canada, Uganda and Afghanistan. Her hobbies include selling  
Kalashnikov assault rifles and weapons-grade uranium.


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