No. of Recommendations: 39
> the overall view is that the USA is in a state of collapseI think that is why Buffett raised his cash pile. You don't have to have much of an Oracle to remember a period of time less than 10 years ago, and make some mild extrapolations based upon updated circumstances. Apple was a less than ideal holding because of how they've grown accustomed to enjoying a favorable USD compared to other currencies in nations capable of large scale advanced electronic manufacturing for their healthy margins on hardware, with premium global retail pricing supported by a halo effect around the perceived security and general goodwill towards US companies.
The US has permanently, for the near and medium term, lost a good deal of global soft power in the last month. I question future favorable trade deals, foreign tourism and immigration, availability of effectively free advanced workforce, and most importantly the desire to hold our debt. Buffett understands the value of cheap float, and TR knew to "Speak softly and carry a big stick; you will go far". The extra-constitutional closure of USAID - and you can agree or disagree with closing it, but alternate theories of the history of separation of powers are profoundly dangerous things - is probably larger than appreciated by the market. This was the first black swan.
The second black swan has already happened in the US Treasury. First off, it has been hacked. DOGE employees are young hackers, their methods are hacking, their tools and techniques are hacking. I worked for an elite security forensics company in a technical capacity. I assume every person here is familiar with the Birthday Problem, but it goes by many names ("chain is strong as its weakest link", etc). Our national security now depends largely on trusting the judgement and resilience of a bunch of young male computer nerds with some criminal backgrounds in their late teens/early twenties to many risk including their own egos or rival humint shops' human honey pots. My bets are on sex, alcohol, and personal glory. Even 250 years ago they understood this and required the president to be at least 35 years old. As a lemma to this, even ignoring security risk, any non-fungibility of Treasury obligations by controlling remittances on a per-payee basis makes them collectively less valuable. Get ready for more expensive debt, foreign oil (at least we can rely on our reliable neighbors, valued allies, and critically important major importers of petroleum, Mexico and Canada, to help us), and foreign goods as the world questions the validity of US debt. The poor 14th amendment.
The third is in the wings in H5N1. It has been a background factor for years and has hit the early stages of exponential growth. It is were Covid 10 was in early December 2019. A campaign promise to lower the price of eggs cannot cure another novel zoonotic. Funny enough, the administration has named a competent individual to pandemic response:
https://www.cidrap.umn.edu/public-health/trump-nam... so I assign less weight to this outcome.
Nobody needs me writing a book here, but then you have
* social upheaval from the above factors
* greater odds of potential failure to raise the debt ceiling this spring
* a completely unknown reaction to the breakdown of US governmental norms when judicial branch is ignored in ways that far surpass FDR and Jackson.
* domestic food shortages due to rapid changes in deportation enforcement
* card toppling realignment to China in the edge of the shrinking international US sphere of influence, and that impact on US multinationals, particularly vertically integrate E&P
* the twin dangers of real trans-human AGI and collapse of the investing bubble around it
* the danger of public corruption to an efficient capitalist economy
Berkshire is a US company. It has worked with 3G, sogo shosha and so on. But the crown jewels are bets on long term US success. It will be interesting to see what Buffett does with the cash pile in his remaining years.
Pax Romana was only 200 years. Circumstances have changed, but human DNA less so. We are what we were, and have always had problems recognizing what was truly valuable and coping with loss.
