[Marxism] Iraq war: quagmire for corporations?
lnp3 at panix.com
Sat Nov 5 09:24:13 MST 2005
Counterpunch, November 5 / 6, 2005
The Unfolding Economic Nightmare
Will Big Business Turn on Bush?
By MARK ENGLER
Is the problem just one of perception, or have the wages of war cut into
business profits? In June 2004, USA Today reporter James Cox wrote about
how financially ailing companies are pointing to the war as the culprit:
"Hundreds of companies blame the Iraq war for poor financial results in
2003, many warning that continued U.S. military involvement there could
harm this year's performance. In recent regulatory filings at the
Securities and Exchange Commission (SEC), airlines, home builders,
broadcasters, mortgage providers, mutual funds and others directly blame
the war for lower revenues and profits last year."
Among those complaining, Hewlett-Packard claimed that the occupation of
Iraq has created uncertainty and hurt its stock price; meanwhile, media
companies Hearst-Argyle Television, Sinclair Broadcast Group, and Journal
Communications bemoaned the number of TV and radio ads pre-empted by war news.
While fingering the war might be just a convenient excuse for some
underperforming executives, the level of grumbling is noteworthy, as are
the comments of outspoken fund managers profiled by Cox:
"'The war in Iraq created a quagmire for corporations,' David J. Galvan, a
portfolio manager for Wayne Hummer Income Fund, says in his letter to
"Vintage Mutual Funds concludes that 'the price of these commitments (in
Iraq and Afghanistan) may be more than the American public had expected or
is willing to tolerate'
"In an SEC filing, Domenic Colasacco, manager of the Boston Balanced Fund,
calls the ongoing U.S. occupation 'sad and increasingly risky.'"
Of course, we know that reconstruction companies are posting profits. Sales
of gas masks and armored Humvees are also up. But such war-supported
companies are a small minority. On the other hand, the diverse businesses
in the tourism industry have taken a huge blow. Delta Air Lines, JetBlue,
Orbitz, Priceline.com, Morton's steakhouses, Fairmont Hotels & Resorts, and
Host Marriott, to name just a few, have blamed disappointing returns on the
war. Travel industry leaders have warned:
"The US is losing billions of dollars as international tourists are
deterred from visiting the US because of a tarnished image overseas and
more bureaucratic visa policies... 'It's an economic imperative to address
these problems,' said Roger Dow, chief executive of the Travel Industry
Association of America, tourism's main trade body... Mr. Dow stressed that
tourism contributed to a positive perception of the US... 'If we don't
address these issues in tourism, the long-term impact for American brands
Coca-Cola, General Motors, McDonald's could be very damaging.'"
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