The CEO of FIAT says the financial crisis is already affecting industrial business. He told Reuters that it had already brought one part of his company's business - financing sales of farm and contsruction equipment - to "an absolute standstill." That's just one example of how this result of rich-to-richer greed will harm middle class and working class people. No new equipment means less work getting done, means less small business profits and less jobs.
But one massive industry sector says it will be unaffected by the credit crunch. Guess who?
"The defense industry is perhaps among the least impacted by the events of the last week," said Jon Kutler, founder and CEO of Admiralty Partners, a Los Angeles-based aerospace and defense investment firm. "Defense companies are frankly a tremendous safe haven during the disruptions."
... the robust cash flow of most defense companies means that even if one bank providing credit to defense companies disappears, others will be more than happy to step up.
"Most defense companies are flush with cash," Kutler said. "Right now, they're very healthy, so they don't need debt unless they're making an acquisition."
Moreover, "the borrowing base for defense contractors is substantially better than for their commercial counterparts," he said. "In today's marketplace, while banks are not lending, they are substantially more likely to lend to a defense contractor than they are to many commercial companies."
How about we tap them for a windfall tax to help pay for the bailout then? After all, they got this cash-rich from taxpayer's money. It would be patriotic to give some back in the country's hour of need.
After all, about the only way defense companies would be affected is if the US government, their biggest customer, went bust trying to fund a bailout that doesn't work. But noted economist and journalist Liam Halligan writes in the UK's Daily Telegraph Sunday that it could happen. The arms manufacturers could call it an investment in future business.
