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Apple and Google use cash to buy...treasuries?

money.cnn.com

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Re: Apple and Google use cash to buy...treasuries?

#21

Post by drawkbox »

kylec wrote: post #3

> If these firms are buying U.S. debt with that money, then U.S. taxpayers are on the hook for hundreds of millions in debt payments to the same U.S. companies they already buy billions of dollars from in iPads, software and routers. Isn't that the whole point? If it were undesirable for the US to borrow money and pay interest on it, why would the US Treasury issue bonds? And if they are issuing bonds, does it really…

Indeed. Basic rule of wealth, rich people collect interest, poor people pay it. This creates different actual worth on each dollar used.

One who collects interest, well their dollars are actually bigger, sometimes double that of the interest payers dollars due to that very interest. Companies are smart to do this if they can and so are richer individuals, it is banking but it also fuels economies allowing access to money.

Re: Apple and Google use cash to buy...treasuries?

#22

Post by dragonwriter »

rthomas6 wrote: post #8

Not criticizing them, but if you're buying that many treasuries, it might be a good time to start paying dividends instead.

Buying Treasuries is more trivially reversible when you encounter an opportunity that requires lots of cash than paying dividends is.

Re: Apple and Google use cash to buy...treasuries?

#23

Post by dustcoin »

kylec wrote: post #3

> If these firms are buying U.S. debt with that money, then U.S. taxpayers are on the hook for hundreds of millions in debt payments to the same U.S. companies they already buy billions of dollars from in iPads, software and routers. Isn't that the whole point? If it were undesirable for the US to borrow money and pay interest on it, why would the US Treasury issue bonds? And if they are issuing bonds, does it really…

Additionally, increased demand for treasuries results in the US being able to borrow at lower rates, decreasing the interest paid.

Re: Apple and Google use cash to buy...treasuries?

#24

Post by seanmcdirmid »

wmf wrote: post #13
julespitt wrote: post #7

Earlier quoted context omitted.

The article goes on to criticize American tech companies for not moving overseas funds here; this after they are being criticized for buying Government debt with the money they already have here. I am at a loss.

The article hypothesizes that they are buying treasuries with their foreign cash.

Note that much of that foreign cash has already been taxed locally, so companies are weary to move it back to the states, especially if they can use it in the country where it was already taxed, or in other countries where it would be counted as foreign investment capital rather than income.

Taxes are freaking confusing with a lot of tax-twice situations, and I don't really blame companies for not wanting to pay taxes twice.

Re: Apple and Google use cash to buy...treasuries?

#26

Post by snowwrestler »

magicalist wrote: post #11
TrainedMonkey wrote: post #6

Given that: 1. Some publicly traded companies have been sued for not maximizing shareholder value. 2. Not utilizing all of tax exempt vehicles provided to them could be counted as not maximizing shareholder value, unless of course there is a better investment they can make with their cash pile. 3. Given inflation of 1.5%, $100 billions in cash that Apple has would be losing $1.5 billions per year in terms of buying p…

There is no requirement that companies maximize shareholder value. At best you might be able to hold them to something in their charter, but generally lawsuits attempting this are thrown out pretty quickly, and even if it's not, except in cases of blatant mismanagement, it's difficult to prove that someone else there would done better with different decisions. I know this meme is persistent, but it's really not true.…

Agreed. One reference:

http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar...

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