STEVE INSKEEP, host:
Commentator Irwin Greenstein sees signs of trouble in the buying frenzy over everything homeland security.
IRWIN GREENSTEIN:
For those peddling anti-terrorist gadgets to the Department of Homeland Security, one free-market strategy rises above all others. It's called the greater fool theory. As taught in business schools, it suggests that a shrewd investor can sell an inferior product to a greater fool who then flips it for a profit to an even greater fool, and the greatest fool of all ends up holding worthless junk. That's what happened after the Silicon Valley tech bubble burst, when companies were launched with little more than a big idea and an `e' in their name.
This time around it's not Silicon Valley euphoria, but fear on Capitol Hill that's pumping up investors, thanks to a ballooning homeland security budget. Greater fools are pouring their money into questionable investments in the fear industry, and waiting for them is the Fortress America Acquisition Corporation. Fortress America isn't a company in the conventional sense. It's a shell company. Not as in bombshell. More like a shell game. Fortress America doesn't make anything. Instead, it buys smaller companies that find it hard to raise money through traditional channels. It then packages them as one company and promotes it to investors as the next hot IPO. The company was founded by Thomas McMillan, a former congressman and NBA star, and its ranks are peppered with Washington insiders: Don Nickles, the former Republican senator and Department of Homeland Security consultant; Asa Hutchinson, who used to run the Drug Enforcement Administration.
With connections like theirs, you might think Fortress America is a sure bet. But the truth is it's probably just another sign that we're in the midst of a homeland security bubble: a clique of government insiders turned entrepreneurs eager to cash in on a fear-driven market filled in part with federal officials so desperate to improve security that they're willing to shell out billions for unproven products from companies that have absolutely no track record.
So if you believe as I do that the homeland security bubble will burst, find someplace else for your money, unless you want to end up being the greatest fool.
INSKEEP: Irwin Greenstein is a contributing writer for the stock market newsletter the Penny Sleuth.
This is MORNING EDITION from NPR News. I'm Steve Inskeep. Transcript provided by NPR, Copyright NPR.
