Economy of Fear
Thursday, August 10, 2006
I read on the news of some arrests that happened in the UK early today. You probably heard something
about it, too.
Due to these arrests, a few security agencies went into high alert and decided to introduce new commercial flying rules that estipulate that anything in a tube or liquid container must not be carried into a plane. This means that there will be a large number of tooth paste tubes being thrown out. It is clear that these products, whether they are tooth paste, water, or sports drinks, will have to be replaced at some point.
Who benefits from these extreme (and perhaps needed) measures and all the wastage?
I think The Proctor & Gamble Company stands to make quite a few extra sales that were not part of their usual forecasts. Investors, I think, are taking note as well. Take a look at P&G's market activity today:
It's a moderate change of 1.21% of their stock price, but it is moving up. The market opened at $59.60 and closed at $60.26.
There will be other companies that will see a bit of a jump on their stock price because of these new rules, but that is left as homework for you to figure out which particular products are being thrown in the garbage.
It is a bit cynical to point this out, however, our economical system is quite complex and everything is tied to everything, including fear. But I'm sure you already knew this and probably made the connection as soon as those mini mouth-wash bottles were hitting the bottom of those airport garbage cans.
Too bad I don't have any of these stocks.
(Note that all those clear plastic bags are not free either. Who makes those anyway?)