Friday, March 26, 2010
A status update from a serial tech entrepreneur, notorious gourmand, and general man about town:
Yikes. Now that the US has ratcheted up even more deficit spending projects, Berkshire-Hathaway, J&J, Procter & Gamble and Lowe's issued bonds this week at LOWER rates of interest than those issued by the Treasury. That means that people think those companies are a better credit risk than Uncle Sam. Our piggy bank is broke, but the crowd in power continues to find more ways to spend more than we have.
Moody's has warned that the US credit rating may be downgraded below its AAA rating ... it appears the market is already taking this into account.
Let's play "how low can we go?" while leadership is figuring out how to spend even more money.
If this were a corporation, the Board would be working on firing the CEO and CFO and probably the entire management team.
Of course if this were a corporation, the company would long ago have been broke, and its leadership have been in jail for precisely the same reasons Enron executives and Bernard Madoff are serving time: financial fraud.
Social Security "trust fund?" Spent. Cash? Gone. Now we have to borrow from the Chinese to pay our geezers the money we've promised them and spent. How long will the Chinese continue to fund us before they foreclose and ask for the keys to the Capital?
J&J has substantial overseas income. So does Proctor & Gamble. Both would survive if they didn't sell anything here.
Not that it would be easy.
Lowes will get by in the near term as more and more repairs and home projects are done by owners. Families will spend money for the home before they go to malls for the new fashions or to resorts or buy nice but unneeded new cars.
Berkshire? Don't know what their business mix is any more.
I have almost no US investments now. That may or may not be a good idea in the short term.
But will it matter? matter. The US government'd philosophy now is to just take what they want from anyone that has it.
So whether I own Canadian or Chinese or Brazilian stocks won't matter unless the government changes directions.