U.S. defense shares soar as investors ignore predictions of contraction

[xchrom]

http://www.washingtonpost.com/business/economy/us-defense-shares-soar-as-investors-ignore-predictions-of-contraction/2013/04/21/d92a1fd8-a903-11e2-8302-3c7e0ea97057_story.html

Automatic federal budget cuts were supposed to shake the fortunes of Pentagon contractors, with a leading industry lobbyist predicting an “unemployment Armageddon” for defense workers.

Instead, the shares of top U.S. weapons makers Lockheed Martin and Northrop Grumman have rallied. A Bloomberg index of the top 10 defense contractors has gained 5.3 percent since across-the-board spending reductions began March 1, compared with a 1.5 percent increase in the Standard & Poor’s 500 Index over the same period.

That performance belies more than a year’s worth of predictions about the dire consequences of the budget cuts known as sequestration. Former defense secretary Leon E. Panetta said the reductions would render the United States a “paper tiger.” Marion Blakey, head of the Arlington-based Aerospace Industries Association, the biggest defense industry advocacy group, estimated that more than 2 million jobs would disappear in 2013.

Investors may have concluded Pentagon proponents “overstated their case,” said Christopher Preble, vice president of defense and foreign-policy studies at Washington-based Cato Institute, which advocates for limited government. “The defense industry is still doing quite well relative to where they were a decade ago.”

[TwilightGardener]

1. Leon Panetta is a good guy, but said some dumb things. Don't tell the world

that sequestration cuts will make your country a "paper tiger", for God's sake--even if you think they're bad news. Because now it's actually happened.

[Warpy]

2. That's because the idiots in the Pentagon have cut jobs

instead of cutting the wasteful hardware they didn't want in the first place. I guess "thou shalt be a welfare office for arms contractors" is their first commandment.

Jerks.

[TwilightGardener]

3. To be fair, it's easier to furlough people temporarily and take quick money out of

day to day operations and flight time, than it is to mess with contracts and programs already in progress. That's more of a long-term budget and strategy thing, not something they'd do for what was supposed to be nothing more than a temporary Congress-invented hardship.

[xchrom]

4. It's lazy - maybe on purpose - the government is awash

W/ technocrats & budget specialists who know how to do that stuff.