Business Week has a excellent and sobering article on what the ecomony of the USA looks like if it was analyzed as a public company. This is must read info for those who want to turn this country around as our debt is increasing. They believe we can overcome this, but there must be serious and painful austerity measures, the sooner the better.
<Snip>
Dear Shareholder,
You probably don't think of yourself that way. Citizenship isn't an investment, it's a state of being. But by birth or naturalization, every American has more than just an emotional stake in the United States. We have a financial one, too. And by any measure, that stake is at risk.
Two months ago the federal government issued a 268-page Financial Report of the United States Government. It doesn't have a glossy cover with photos of smiling employees, and a lot of the numbers are in trillions. Except for that, it looks a lot like the corporate annual reports of the companies I have followed. You can see how the various lines of business are doingSocial Security, Medicare, etc. There's even a mission statement: "to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity."
The United States isn't a corporation, of course. It can't exit from underperforming territories (pick your state) or auction off lines of business (the Army, Medicare). And its "customers" can reward themselves with unaffordable services because they're also the shareholders.
Still, the idea of the U.S. as a corporation is more than a thought-experiment. It's a way to reposition our approach to long-term problems. What would USA Inc. be worth? Who would want to buy its shares? And what would a turnaround expert recommend for a company that lost more than $2 trillion ("net operating cost") in 2010?
I took a deep dive into these questions a little more than a year ago, and I'm finally up for air. I reached three conclusions. First, USA Inc. has serious financial challenges. Second, its problems are fixable. Third, clear communication with citizen-shareholders is essential. If the American people embrace the need for bold action, their political leaders should find the courage to do what's right.
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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 technologythe 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.
Full Article:
http://www.businessweek.com/magazine/content/11_10/b4218000828880_page_2.htm
Powerpoint presentation: 460 slides
http://images.businessweek.com/mz/11/10/1110_mz_49meekerusainc.pdf
<Snip>
Dear Shareholder,
You probably don't think of yourself that way. Citizenship isn't an investment, it's a state of being. But by birth or naturalization, every American has more than just an emotional stake in the United States. We have a financial one, too. And by any measure, that stake is at risk.
Two months ago the federal government issued a 268-page Financial Report of the United States Government. It doesn't have a glossy cover with photos of smiling employees, and a lot of the numbers are in trillions. Except for that, it looks a lot like the corporate annual reports of the companies I have followed. You can see how the various lines of business are doingSocial Security, Medicare, etc. There's even a mission statement: "to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity."
The United States isn't a corporation, of course. It can't exit from underperforming territories (pick your state) or auction off lines of business (the Army, Medicare). And its "customers" can reward themselves with unaffordable services because they're also the shareholders.
Still, the idea of the U.S. as a corporation is more than a thought-experiment. It's a way to reposition our approach to long-term problems. What would USA Inc. be worth? Who would want to buy its shares? And what would a turnaround expert recommend for a company that lost more than $2 trillion ("net operating cost") in 2010?
I took a deep dive into these questions a little more than a year ago, and I'm finally up for air. I reached three conclusions. First, USA Inc. has serious financial challenges. Second, its problems are fixable. Third, clear communication with citizen-shareholders is essential. If the American people embrace the need for bold action, their political leaders should find the courage to do what's right.
<Snip>
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 technologythe 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.
Full Article:
http://www.businessweek.com/magazine/content/11_10/b4218000828880_page_2.htm
Powerpoint presentation: 460 slides
http://images.businessweek.com/mz/11/10/1110_mz_49meekerusainc.pdf
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