The world changed

When I grew up, we lived under the ever present threat of the Soviet Empire. We knew they were evil, we know for sure that they wanted to destroy and consume us and we knew us was not them. They went away and failed due to unsustainable and unrealistic economic principles. In short, we spent them into oblivion and they collapsed under their own weight. The Cold war ended with a wimper and business went on. In fact, those former soviets became pretty darned good at business and turned their attentions away from war. There was however a problem. The world, and people to a degree still see their strength in terms of physical might. Not economic might. The ability to project force is still viewed as paramount to a country and people's survival. The Russians proved this over the last 5 days.

For those not knowing, a dustup occured between the Republic of Georgia ( not the one in the USA) and a province known as Ossetia that sought independence from Georgia. After diplomacy failed, after enduring separtist attacks, and after more diplomacy failed, the pro western President of Georgia ordered his army to strike key targets in Ossetia. They did. Russia however responded and sent in hundreds of tanks, thousands of troops and lots of airpower. They invaded Georgia and due to world pressure stopped short of re annexing the former soviet republic. Georgia, a western ally was defenseless. It's outgunned and outnumbered army fled its northern cities, while the west was powerless to help. There was not time, there were not assets, and we couldn't get there fast enough if we wanted to. The stock market ho hummed and the Olympics were on anyway. The fate of gold medals was more important than the potential fall of a democracy. This bodes well for business though.

There are a good number of these democracies in eastern Europe and they don't really like Russia all that much, especially after this. These democracies just learned the hard way that if the bear is breaking down your door, a revolver in the night stand is a much more immediate solution than dialing 911.

For this reason, even with combat decreasing in Iraq, I see very good things for companies that manufacture defense related products. These emerging democracies are going to arm themselves and they are going to want to do it with western technology. They don't have the depth of people to go head to head with the bear and will have to do it with technologically advanced weapons of superior accuracy. They do not want Russian weapons. They want to deter Russian aggression and they want to ensure their sovereignty.

Russia just handed us the rebound to the mild downturn. These items are best made here and will not be off shored to China. Look for increases in engineering, manufacturing and export sales positions from defense contractors and their tier suppliers. This is where the market will go.

To be sure, Russia has announced it's withdrawl this morning. They made their point. They are still a threat and that threat will translate into jobs and $$ for the USA.