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The Bottom Line: Revival
July 27, 2007
E. Johns
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From the July/Aug 2007 issue of Exchange magazine
U.S. Headed for bankruptcy ...or is it a value play?
Over dinner with some Europeans recently, we were discussing utopian ideals and the distinctly American concept of a "revival."
A revival, we explained to our friends, is a meeting or series of meetings presided over by an extremely charismatic preacher with or without formal religious training, like Charles Laughton in the movie "Night of the Hunter." Our friends were somewhat incredulous that revival meetings still take place and that these fire and brimstone preachers still exist.
Well, I have seen such a preacher and his name is David Walker.
Walker heads the U.S. Accountability Office, responsible for making sure that the U.S. government is fiscally responsible and answerable to the American people. He was appointed by President Clinton to a 15-year term in 1998.
The first time I saw Walker, he was speaking before a gathering of CFOs at the Sloan School of Management at M.I.T., an event at which AFP's Craig Martin was moderating a panel discussion on business in emerging markets.
If not wearing a green visor, I had at least expected someone straight-laced. What I encountered was a man speaking with great passion and literally waving his arms in the air like a self-help guru, the opposite of what one expects in an accountant.
Walker's thesis is that the U.S. may be headed toward bankruptcy if we don't stop spending more than we are taking in. In particular, he cites the imminent retirement of the first wave of baby boomers and the impending strain on U.S. Social Security and Medicare programs. Using language that CFOs can understand, he draws parallels between the health and future prospects of the U.S. and the red flags that appear when a company begins to go into distress.
Since his speaking engagement at M.I.T. Walker has given versions of this talk in many venues,even appearing on the television show "60 Minutes," and he will speak at the AFP Annual Conference in Boston in October. For the flavor of his message, there is a short clip of a Walker interview on YouTube.
But Walker stops short. As we all know, there is another way of looking at a distressed security, and that is as a bargain.
A recent issue of The Economist sees strength here, especially in the enduring value of our ideals. In the June 28 "Leaders" column, Kevin Lallaugher writes, "If America were a stock, it would be a 'buy': an undervalued market leader, in need of new management."
Without giving away too many details, David Walker in his speech does lay out a plan for responsibility and, indeed, a potential turnaround, one that doesn't necessarily require an angel investor, and we encourage you to hear what he has to say. Call it a value play: I also believe that our greatest strength is in our values, our optimism, that old utopian bent that my Euro friends find so amusing. Or, as Lallaugher notes, the greatest strength of the U.S. has always been the ability to correct itself.
Elizabeth Johns
Elizabeth Johns is AFP's managing director of communications. Send comments to exchange@AFPonline.org
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
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