In 2009, under the direction of Al-Qaeda, Umar Farouk Abdulmutallab, the “underwear bomber,” tried to blow up a flight headed to Detroit. Following the failed attack, the U.S. deployed L-3 Communications Holdings‘ body scanners that had a three-year initial estimated cost of $3 billion (since reduced).
Last September, the Izz ad-Din al-Qassam Cyber Fighters successfully targeted six banks, including Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co (NYSE:JPM). This attack, along with others, spurred the U.S. to invest heavily in cybersecurity initiatives such as the Department of Defense Cyber Crime Center — which partners with Lockheed Martin Corporation (NYSE:LMT) and its subcontractor CACI International Inc (NYSE:CACI). In fact, analysts expect that while defense budgets are cut, cybersecurity-related spending will increase.
Pre-9/11, the Congressional Budget Office stated: “Under current policies, total surpluses would accumulate to an estimated $2 trillion over the next five years and $5.6 trillion over the coming decade. Such large surpluses would be sufficient by 2006 to pay off all debt held by the public that will be available for redemption.” Then 9/11 happened.
America is a defense superpower, and Al-Qaeda doesn’t stand a chance in a frontal attack. But through their past actions, they’ve cost the U.S. trillions. Fortunately, or not so fortunately depending on how you look at it, the U.S. has already invested heavily in counterterrorism measures, so a sharp increase in defense spending is unlikely. Still, an attack by Al-Qaeda on the U.S. is likely to spur defense spending — even if we are in the middle of sequestration. Just look at what happened following North Korea’s missile launch: Defense Secretary Chuck Hagel stated that the U.S. would be shifting “resources” to boost funding to Lockheed Martin Corporation (NYSE:LMT)’s Aegis missile defense system, and beefing up missile defense — to the tune of $1 billion.
A grim wrap
The Department of State believes that now to the end of August is when the terrorists plan to attack. But the good news is that for now, this is all still hypothetical — and hopefully it remains that way. But if a “major attack” does occur, the best thing you can do as a Foolish investor is to look at what’s happened in the past, and not panic. The market may go nuts, oil prices could increase, and it could have an overall impact on the economy, but I don’t think it’ll be long-lived. And as Fools invest for the long run, the best thing you can do is stock up while the market’s low.
The article Will Al Qaeda’s Legion of Doom Destroy America’s Economy? originally appeared on Fool.com and is written by Katie Spence.
Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter: @TMFKSpence. The Motley Fool recommends Bank of America and owns shares of Bank of America, JPMorgan Chase, L-3 Communications Holdings, and Lockheed Martin.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
