America 3.0

Warren Buffett/America 3.0

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Somewhere, sometime, I read a bit of great investing advice. A guy listed ten things to do and not do over your investing life, and number one on the list of things to do was to read Warren Buffet’s shareholder letters. I finally found some time to read this years version, which recaps 2013. You can find them all here.

The letters are always entertaining to me, and I just love the way he uses “plain” English to describe his successes, operations, and failures.

One part really stuck out this year from page 6:

Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead.

In the title of America 3.0, it says:

America 3.0: Rebooting American Prosperity in the 21st Century-Why America’s Greatest Days Are Yet to Come

Yes, we will have some short term pain, but I have fully come around to thinking that indeed, we are eventually going to move forward at a rapid and profitable pace. And I won’t be betting against Warren Buffett and Charlie Munger any time soon.

Disclosure: I own Berkshire Hathaway B shares.

Mike Lotus at David Horowitz Freedom Center West Coast Retreat, March 23, 2014

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Mike Lotus will be speaking about America 3.0 at the David Horowitz Freedom Center West Coast Retreat on March 23, 2014.

The current plan is to have the lunch keynote discussion be on the topic of America’s Future. It will be a “three chair” format. The moderator will be Brian Calle, and the other person in the interview will be the distinguished Prof. Charles R. Kesler.

I picked up Mr. Kesler’s recent book entitled I Am the Change: Barack Obama and the Crisis of Liberalism. I will read it, though I find it hard to spend too much time on the distasteful topic of our current president.

“America as we have conceived of it is done.” Really? No.

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“America as we have conceived of it is done.”

Then why are we bothering to talk about it?

America as it exists today changed from something else to what it is now — and it will change from what it is now into something else again.

What the new something else is — is up to us.

Socialist ideas are wrong. Socialist policies fail to deliver. Socialist programs are value destroying. Socialist public bodies are wasteful and ruinous. Socialist promises are lies. Socialist politicians are fools or scoundrels. Socialist authority tries to coerce outcomes that it can never achieve.

Socialism cannot work.

Socialism always fails.

So as American gets more socialistic, it is simply that much closer to the exhaustion and disintegration of socialism, American style.

It is a matter of when and how, not if, a socialistically organized American public sector, or corporatist-public sector, will fail.

So, America as we conceived it is not only not done, it is going to be only alternative remaining when the people who benightedly or maliciously tried to “vote themselves rich” have imposed enough ruin on themselves.

Ronald Reagan was right about the Soviet Union, and everybody else, including me, was wrong. While earnest looking men in suits advised the President about that invincible Nemesis sprawled athwart Eurasia, Reagan would respond with a joke about how the elevators and toilets never work in Russia.

American style crony capitalism and political machine hackery will die a similar death for identical reasons.

We are having this discussion because even Rev. Sensing himself surely believes there is an America worth living in that we may yet succeed in creating — as hard as it will be to do that.

And technology is on our side.

We are near the bottom of a J-shaped curve, but the upswing is coming.

We are heading through a painful transition period to America 3.0.

Lift your chin. Be happy. Don’t give up.

Fear God and dread nought.

We are going to win this thing.

Who’s with me?

America 2.0 Looks To Be Worth Around Twenty Five Cents on the Dollar

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A while back I dissected the debt of Detroit, the classic America 2.0 case. By this, I mean a gigantic government presence, working with manufacturing and unions to push off obligations into the future with no clear plan of really what to do. In the end, of course, it all came crumbling down and yesterday we got a slight glimpse into just how bad it can get.

To review, here is the diagram I had to make after reading several sources on the subject, to help wrap my head around the calamity that was the city of Detroit’s books:

This looks crude, and it is, but it really helped me get my brain around the nightmare.

From everything I have been reading, Kevyn Orr is getting ready to propose that the general obligation and pensions get settled out at .25 on the dollar. That sounds a bit expensive to me, and as Lex Green said to me in an email certainly isn’t “fire sale” prices yet, but that is what the consensus seems to be saying.

In an odd bit of news, many private foundations have been trying to gather enough money to offset an auction of Detroit’s art collection, estimated by some to be worth up to a billion dollars. If I were Orr, that would have been the first thing I would have done is liquidate that stuff, but I am quite a bit less sensitive than I would need to be to ever consider a career being a politician.

All of this is subject to the whims of the BK judge, but if I were a retired Detroit fireman, I would certainly begin tightening the belt stat, if that wasn’t done already.

This may affect municipal investments, but honestly I imagine any fallout from it is already baked into the pie.

Is Chicago next? We shall soon see.

From a political standpoint, the Republilcans should make the Democrats own this just like they should own Zerocare ™ and the nightmare in Illinois/Chicago that is coming down the tracks. How easy can it get for a Republican? All they have to say is “look at that” and they should get easily elected in any of a number of districts in 2014.

(Disclosure – I have many different municipal investment vehicles in my portfolio).

Cross posted at LITGM.