Word spread to Wall Street where there was massive sell-offs of the two largest private prison stocks Corrections Corp of America (CXW) and GEO Group (GEO). CXW stock dropped 39.36% within hours of the announcement and GEO 40%. A rather massive crash for two booming stocks. Zero Hedge covered the crash here. The sell-off panic was certainly unwarranted as DOJ use of private prions is a mere 7% of GEO groups' profits.
It appears Wall Street has begun to realize how insignificant this recent announcement is as GEO is up 11.28% within ten minutes of the market opening this morning and CXW 9.85%. Good news for the brave investors who doubled down during yesterday's crash.
It appears the majority of people still don't truly understand how minor the DOJ announcement is.
As I already pointed out, this affects a very small fraction of inmates (11%) that are being held in private prisons by the DOJ. The vast majority of the American prison system is State operated. Further, anyone who has ever visited a FedEx store and the Post Office can tell you that the private tends to do a better job the Government. I cannot even name a single time the Government has out performed the private sector in anything. The US military even outsources war to private contractors now. So the tremendously small fraction of inmates that will be moved from private prisons to State facilities should not be expecting better prison conditions. It is a ridiculous stretch to call this prison reform.
The US still incarcerates more people that any other country and the number is only rising. Cutting the private sector out of the prison industry is not great news for the American taxpayers who will have to pick up the tab.
Private Prisons will live on. This announcement will not help anyone currently being detained by ICE in a private for profit prison.
We need to look at the larger picture here. The issue is not WHO is caging humans but the fact that humans are being caged! It is insane. We lock other people who never hurt anyone in cages like animals for breaking arbitrary rules.
Since I starting writing this post GEO is +12.66 and CXW is +9.56