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USA Inc.


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Must-see presentation, IMHO, if you have any interest in the US government debt crisis and/or the long term well being of the US of A.

http://www.kpcb.com/usainc/

USA Inc. is a non-partisan report that looks at the U.S. federal government as if it were a business. Mary Meeker, Partner at Kleiner Perkins Caufield & Byers and former research analyst at Morgan Stanley, created and compiled the report with the goal of informing the discussion about our financial situation and outlook. USA Inc. examines the country's income statement and balance sheet, aiming to interpret the underlying data and facts, and illustrate patterns and trends in easy-to-understand ways. The report also analyzes the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow. The full report, as well as the summary presentation, is available at kpcb.com/​usainc

The slide in PDF format and and full report are also available at the URL above.

 

Mary Meeker as some of you might remember (fondly or otherwise ;D) was a "star" tech analyst at Morgan Stanley who gained fame during the run-up of the dot-com bubble. Ms. Meeker joined venture capital giant Kleiner Perkins last year and penned a WSJ editorial on the same subject, USA Inc., sometime last year.

 

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Must-see presentation, IMHO, if you have any interest in the US government debt crisis and/or the long term well being of the US of A.

http://www.kpcb.com/usainc/

USA Inc. is a non-partisan report that looks at the U.S. federal government as if it were a business. Mary Meeker, Partner at Kleiner Perkins Caufield & Byers and former research analyst at Morgan Stanley, created and compiled the report with the goal of informing the discussion about our financial situation and outlook. USA Inc. examines the country's income statement and balance sheet, aiming to interpret the underlying data and facts, and illustrate patterns and trends in easy-to-understand ways. The report also analyzes the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow. The full report, as well as the summary presentation, is available at kpcb.com/​usainc

The slide in PDF format and and full report are also available at the URL above.

 

Mary Meeker as some of you might remember (fondly or otherwise ;D) was a "star" tech analyst at Morgan Stanley who gained fame during the run-up of the dot-com bubble. Ms. Meeker joined venture capital giant Kleiner Perkins last year and penned a WSJ editorial on the same subject, USA Inc., sometime last year.

 

 

There is a reason the federal government isn't run like a business.  In a recession, businesses cut costs.  What do you think would happen if the government did that?

 

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Mary Meeker as some of you might remember (fondly or otherwise ;D) was a "star" tech analyst at Morgan Stanley who gained fame during the run-up of the dot-com bubble. .

 

This an appeal to stop macro discussions on this board. This is just another example of the distort community: put some slides, that tackle only one part of the issue, say you are non partisan and put your wanted conclusions at the end.

 

Government is not like a family. Government is not like a business.

 

And Mary Meeker for god's sake.  People do not remember her vomiting cheerleading reports? Next we are going to receive macro advice from Dr Phil.

 

"Mary, the trick to being a good analyst is to be skeptical as hell. Don't take anybody's word for it. Trust then verify" I told her.

 

"My companies are usually right"

 

That was classic banker talk. To Frank Quattrone, I was Dr K, but Mary was Dr. Feelgood - Wall Street Meat

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This a general appeal to stop macro discussions on this board. This is just another example of the distort community: put some slides, that tackle just one part of the issue, say you are non partisan and put your wanted conclusions at the end.

 

Yeah that makes a great deal of sense. I wanted to stop macro discussion on this board, hence I started a thread that naturally invites macro discussion.  ???

 

I reckon there might be animosity against Meeker from value investors who lived through the 90s, but hey, booms and busts are a part of life - some of the great enterprises (eg Amazon) and essential amenities we enjoy today (eg high speed Internet, ecommerce) would not exist had animal spirit not run high during the period. And Meeker is still highly respected within tech circles for a reason. Chillllll, please.

 

Personally I like the presentation because it shed light on important but often hard to find data on the US government's balance sheet nd did so in a clear, easy to digest manner.

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There is a reason the federal government isn't run like a business.  In a recession, businesses cut costs.  What do you think would happen if the government did that?

 

 

I would argue that we would probably be a lot better off, but, I have a feeling that you are Keynesian leaning, whereas I am Austrian leaning (but, wouldn't put myself into the demagoguery that the label often carries)...

 

If the government cut costs during the recession, especially in areas like military spending, we wouldn't be having near the concern over the debt ceiling being raised, or, the imminent pain that our budget/deficit situation is likely going to cause.

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The metaphors that the USA is like company or household are tiring.

 

What business can require/force consumers (citizens) to purchase its "products" (taxes) and pay and, hence, earn in the currency of the business, create its own business currency (coins, paper or keystroke), and denominate liabilities in the currency of the business (issue debt)?

 

Not even ITEX!  :D

 

Riddle me this, why doesn't ITEX have inflation or debasement of ITEX dollars?

 

 

 

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"There is a reason the federal government isn't run like a business.  In a recession, businesses cut costs.  What do you think would happen if the government did that?"

 

-What would happen? Are we too scared to find out, or are the people in power too worried they will lose power?

 

The more we kick the can down the road, I believe, it gets more frightening to think what might happen. On the other hand, it is just as frightening (to myself) to see the amount of power being given to a SMALL number of fallible human beings!

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A little off topic: Government obviously isn't like a business but in many regards businesses are held to higher standards. Compare government accounting vs. business accounting, the legality of insider trading for members of congress (and their refusal to make this illegal!), etc.

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A little off topic: Government obviously isn't like a business but in many regards businesses are held to higher standards. Compare government accounting vs. business accounting, the legality of insider trading for members of congress (and their refusal to make this illegal!), etc.

 

Yes, it is off topic Prunes.

 

That is the problem with macro discussions in this board, people look for any pseudo-validation of personal points. We are supposed to be value investors that think independently and think correctly. Instead when we get to macro discussions, people think dependently and incorrectly.

 

Case in point, this report was prepared by Mary Meeker and starts with a false premise. Let's move on.

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There is a reason the federal government isn't run like a business.  In a recession, businesses cut costs.  What do you think would happen if the government did that?

 

 

Take a well run company like BRK. In boom times, it builds up cash reserves; in bad times, it invests the cash.

 

There is nothing inherently wrong with running a country like a business (with some differences perhaps on social issues). Singapore Inc is run like a business and operates pretty much along similar lines (even if their investment decisions are not as good as Buffett's) - saving during the good times and spending on infrastructure in bad times - and has been a success story.

 

The problem with USA Inc is that politicians today have no concept of saving for a rainy day - they want to spend in the both good and bad times

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saving during the good times and spending on infrastructure in bad times

 

Sorry OEC, that is not how "business" is run, and there is a long history of data supporting that point. Businesses in the generic as a whole have large cash piles today and they are not investing, they are saving. They have lots of excess capacity to take care off before they start thinking about investing.

 

Also using generics/aggregates like "congress" and "politicians" for the bad and specific examples like Buffett and Singapore for the good, it is an easy way out of discussing the underground forces. Most countries do not do like Singapore and most businesses do not do like Buffett. As well, not all politicians and congressmen do as "congress" and "politicians".

 

Screen shot 2010-09-07 at 3.09.08 PM

 

Just check the federal debt overtime. And even considering that, the problem of the US is not the federal debt, it is household debt ... consequence of this thing called residential mortgages.

 

Government is not like running a household or a business. Can we go back to talk investment ideas?

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