"Iron your letters." -- Leading germ-warfare scientist Ken Alibek, briefing Congress. He says putting a moistened fabric over envelopes and then ironing them will kill anthrax spores. Consumer confidence is low, unemployment is rising. And we're at war. These days, it seems the news is all bad, all the time. But rather than retreat, some people--particularly those in the upper economic echelons--are boozing it up, spending loads of money, and behaving as if each day were their last.
Call it the carpe diem effect. It's different from consumer patriotism, where the middle class is urged to spend at now-discounted prices. Carpe diem consumers are buying big-ticket luxury items. "People at the very top don't face a budget crunch," says Robert Frank, economics professor at Cornell University. Whether this desire to "seize the day" will help the economy is difficult to measure, but here are some examples from around the nation:
-- Ken Gorin, co-owner of luxury-car dealership The Collection in Coral Gables, Fla., reports "a high-end contagious energy" among customers buying $75,000-and-up Porsche 911 Carreras. "Since September 11, we've seen people who were sitting on the fence about buying a car now buying," he says. "People are saying, `It's okay to go out and enjoy myself."'
-- Dan Kendt, who owns Cactus Bar & Grill in Chicago's financial district, finds patrons living it up. "There's a sense of `It's only money, and maybe I've lost a lot, but money isn't everything,' particularly relating to the attacks. I mean, would you rather have a big stock portfolio or a fast car?"
-- Chuck Matthews, who sells $18,000 Harleys in Lancaster, Calif., reports doing brisk business: "People are buying them, because you never know what tomorrow brings."
Right now, it's almost a relief to know the hedonists among us are doing what they do best. Boeing (BA) is bracing for yet another big blow. Pentagon sources tell BusinessWeek that Lockheed Martin (LMT) is set to beat out Boeing for the largest defense contract in U.S. history: a $225 billion order for next-generation fighter jets, replacing the F-16. With an additional $175 billion in future sales to allies overseas for the next 25 years, the contract is worth at least $400 billion. Contract engineers confirm they've been asked to submit applications to Lockheed, but not to Boeing, to work on the jet. The Pentagon plans to announce the winner Oct. 26, after five years of testing.
Compare the two designs for the Joint Strike Fighter, and you'll see the obvious: Boeing's looks like "a flying frog with its mouth wide open," says a Pentagon source. Air Force officers have tastelessly dubbed it "Monica." Lockheed's design to replace the F-16 is simply better on technical and aesthetic grounds, they say, citing its better vertical-lift capability. "The Lockheed design wins hands down," says a senior Air Force general. The Air Force will buy 60% of the initial 3,000 planes; the rest go to the Navy, Marines, and to Britain.
Boeing officials, of course, say looks aren't part of the design and argue in favor of the jet's performance and their ability to meet the Pentagon's cost target of $30 million per plane. And they're not counting themselves out. "We design our planes to go to war, not to the senior prom," scoffs a Boeing spokesman. Pentagon officials aren't talking publicly. Lockheed officials say they're cautiously optimistic.
Boeing already cut 30,000 jobs and delayed aircraft deliveries after September 11. It will now likely exit the fighter- jet business and lose engineering talent to Lockheed. Winning the contract would have restored 6,000 jobs in Seattle and St. Louis. Lockheed's Forth Worth, Tex., factory which now builds F-16s, expects to now need 9,000 new workers. Boeing still makes F-18 fighters and C-17 cargo jets. Package scares are everywhere. But just try getting a sniffing dog these days. With malls, offices, and entertainment venues boosting security, the dogs are in such demand that the nation's few dozen private services are booked solid and running out of dogs to train.
The dogs search mainly for explosives but can also detect weapons and contraband. They used to work eight-hour days, one or two days a week; now they're putting in 16-hours, seven days a week, making $2,500 a day. "I used to write $300,000 of business a month. Now we're booking $1 million a week," says Russ Ebersole, owner of DDADE sniffer dogs. And, no, they can't sniff out anthrax. On the Internet, you can play the game "Get Osama." There are also a variety of anti-bin Laden products hitting the market. Some examples:
OSAMA PINATA, $30
Where to Get It: JJ's Party House, McAllen, Tex.
"I WANNA BOMB OSAMA" MP3 (To the tune of La Bamba), Free download
Where to Get It: www.ampcast.com
"OSAMA, YO' MAMA!" HATS, BOXERS, MOUSEPADS, $12.99-$17.99
Where to Get It: www.osamayomama.com
TOILET PAPER, T-SHIRTS, MUGS, $4.95-$5.95
Where to Get It: www.makempay.com While all eyes focus on antiterrorism efforts, Italy is quietly becoming a weak link in the coalition. The Italian government passed a law on Oct. 3 that makes it more difficult for magistrates to investigate suspicious cross-border financial flows.
The change may be a boon to terrorists, mafiosi, and plain old white-collar criminals. With other countries, such as Germany and France, tightening controls, followers of Osama bin Laden may find Italian banks a less risky bet for funding terrorist activities. Even if they're caught, Italy's new law makes it harder to obtain evidence, such as records from a Swiss bank account. "We are worried that the law could slow international judicial cooperation," says Heinrich Koller, director of the Federal Office of Justice in Bern, Switzerland.
The new law also benefits Prime Minister Silvio Berlusconi by derailing pending lawsuits against him for tax fraud, bribery, and false accounting. Another bill passed in September will partly decriminalize false accounting, shorten the statute of limitations on such cases, and reduce penalties for the guilty. Even Berlusconi backers are cringing with embarrassment at his rush to undercut suits against him. Still, at a meeting with President Bush on Oct. 15, Berlusconi pledged to help fight terrorism.
As Europe knits itself closer together politically and economically and races to boost cross-border cooperation, such measures are at odds with European conventions and U.N. counter-terrorism directives now in the works. With attention diverted, Berlusconi has won his own private battle with Italy's justice system--at a cost to international security. Don't count on seeing much merchandise from the U.S. Polo Assn. in stores this season. The sport's governing body says retailers aren't placing orders for its fall, holiday, and spring lines because of pressure from Polo Ralph Lauren (RL). The stores include T.J. Maxx, Bolton's, and Strawberry. "We were selling very well," says Robert Mintz, the Polo Assn.'s master licensee. "Now, we're not even going to be able to put product on the floor."
Lauren and the USPA have been duking it out in court, with Lauren charging that USPA's double-horseman logo (circa 1996) is too similar to Polo Ralph Lauren's 30-year-old horseman. It's the latest fight in a battle that's been going on since 1984. But now, Lauren seems to have run out of patience with the courts. Rather than waiting for a legal opinion this fall, it mailed a 2-inch-thick binder to retailers in May, warning that many USPA designs violate Lauren's trademarks. "We believe that that kind of activity is harmful to consumers and violates our rights," says Lauren lawyer Les Fagen. In July, a USPA countersuit said Lauren had approved the double horseman in previous settlement talks and now has "maliciously acted to destroy" USPA's retailing.
Malicious or not, the letters are working--Mintz says of the six retailers he knows received them, five put their orders on hold. Half of Americans surveyed online said they planned to buy financial products specifically to help the U.S. economy. Here's what they chose:*
Mutual Funds: 50%
Government Bonds: 34%
* Respondents were allowed to select more than one answer survey of 1,004 Americans, Sept. 23-24