Reading List: Ticker :: USA

What if the USA were a business?  Not a novel concept, but trust Mary Meeker to take the idea a little further than simple metaphor.  Meeker, internet research queen before joining the venture firm Kleiner Perkins last fall, has issued a report on A Basic Summary of America’s Financial Statements.  From the summary:

Imagine for a moment that the United States government is a public corporation. Imagine that its management structure, fiscal performance, and budget are all up for review. Now imagine that you’re a shareholder in USA Inc. How do you feel about your investment?

Because 45% of us own shares in publicly traded companies, nearly half the country expects quarterly updates on our investments. But although 100% of us are stakeholders in the United States, very few of us look closely at Washington’s financials. If we were long-term investors, how would we evaluate the federal government’s business model, strategic plans, and operating efficiency? How would we react to its earnings reports?

Much of this basic conundrum is familiar to anyone who follows economic policy (e.g. entitlement programs make up 58% of expenses, and while 80% of Americans favor balancing the budget only 12% support cutting entitlement programs).  However there are parts that are also deeply illuminating, such as the comparison between GM as it entered bankruptcy, and the current fiscal status of the USA.

In the end, the point is pretty clear: no one would advise an investment in a public entity that looks like the USA.  Unfortunately (and intentionally) there is not much advice on what to do about it.  Luckily, hedge funds have not figured out how to short USA.  And hey, we still have better prospects than, uh, Iceland.