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Written by Shine Investments
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Monday, 14 March 2011 22:21 |
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A former Morgan Stanley Internet analyst has turned her attention to the finances of the U.S. government. In a fascinating new report, she analyzed the U.S. as if it were a business.
Like a traditional analyst report, Mary Meeker examines revenue and expenses, reviews trends, analyzes the quality of earnings, and discusses potential ways to grow profitability.
Here are a few excerpts from the mammoth report in a “letter to shareholders” that was published in the February 28th Bloomberg BusinessWeek.
“The U.S. is in sounder shape than Apple (AAPL) was in 1997, when it lost a billion dollars.”
“The bottom line on USA Inc.? Cash flow and net worth are negative, profits are rare, and off-balance-sheet liabilities are enormous. The "company" has underinvested in productive capital, education, and technology—the very tools needed to compete in the global marketplace. Lenders have been patient so far, but the sky-high rates on the sovereign debt of Greece, Ireland, and Portugal suggest what might lie ahead for USA Inc. shareholders and our children.”
“By our rough estimate, USA Inc. has a net worth of negative $44 trillion. That comes to $143,000 per capita. Negative.”
“Since Medicare and Medicaid are the biggest challenges to USA Inc.'s solvency, fixing their finances has to be at the top of the agenda.”
“The Congressional Budget Office estimates that USA Inc. could reach break-even without policy changes if economic growth were to average 6 percent to 7 percent in 2012-14 and 4 percent to 5 percent in 2015-20. That's well above the 40-year average growth rate of 3 percent, and it simply won't happen. But even a small jump in the growth rate would ease the pain of austerity.”
This report presents the challenges and opportunities facing the U.S. A worthwhile read to better understand the budget issues facing our country.
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