wall street

The Bullshit Factor

--Anyone who works in finance will sense, at least at first, the pressure to pretend to know more than he does. It’s not just that people who pick stocks, or predict the future price of oil and gold, or select targets for corporate acquisitions, or persuade happy, well-run private companies to go public don’t know what they are talking about: what they pretend to know is unknowable. Much of what Wall Street sells is less like engineering than like a forecasting service for a coin-flipping contest -- except that no one mistakes a coin-flipping contest for a game of skill. To succeed in this environment you must believe, or at least pretend to believe, that you are an expert in matters where no expertise is possible. I’m not sure it’s any easier to be a total fraud on Wall Street than in any other occupation, but on Wall Street you will be paid a lot more to forget your uneasy feelings.

 

~Michael Lewis, Occupational Hazards of Working on Wall Street

The P&L of USA Inc.

I recently attended a dinner where Mary Meeker presented the income statement of the United States. She applied Wall Street financial analysis to the United States and the results were enlightening. As a former Investment Banking analyst, I appreciated the discussion of the U.S.'s economic situation in terms that I could understand. After years of hearing pundits discuss entitlements on NPR I admit I didn't quite grasp what they were talking about. I realize how pathetic that sounds, but I'm being honest. Which makes me wonder how many others don't quite understand it either.

Anyhoo, after Ms. Meeker's presentation I finally understood the term "entitlement"! She used financial terms but really they're terms that anyone who has ever had to balance a household budget can understand, too.

The upshot? The current U.S. budget is not a company many would invest in. See some of her slides below.

A good representation of the word "trillion"

The income statement:

Why technology may not be the answer. See the point about MRI machines below: