The nonsense of continual government interference in business has been made clear yet again with the latest financial shenanigans, in which Apple Corporation has just sold $17 billion dollars worth of debt despite sitting on much more than that in cash holdings. To do this, they’ve had to pay Goldman Sachs a huge fee to organise the deal. So why would they do this? In a private world, they would just take some of their cash and send some of it to their shareholders.
Alas, however, they’re unable to do this in ‘government-world’, because they’d have to pay huge amounts of tax to the U.S. government to ‘repatriate’ that cash from abroad. So they’re borrowing money instead, to benefit their shareholders. And this is because of arcane tax rules, and a ‘tax shield’ effect of treating bond coupons as valid expenses and therefore as being tax-free.
So they have to issue debt to get ‘tax benefits’ and they have to keep their cash abroad, to get tax benefits. Both of these insidious effects make Apple less effective and less fluid as a company, and force their executives to spend time (and huge amounts of money in fees for Goldman Sachs) coming up with these complex tax scams. With that time, they should be coming up with great product ideas for me instead, such as an iPad I can write on with a stylus and which I can use as a phone, or other such ‘brainwave’ ideas. However, instead, they need to resort to accountancy chicanery to keep Wall Street financial analysts happy, instead of making me these great products (which Samsung are making instead, thank goodness, though don’t get me started on the Android operating system, which is just plain horrible compared to iOS).
And here’s the kicker, as the Americans say. If you read down through the comments of this ZeroHedge piece, it appears Apple are actually buying their own debt, via another complex piece of financial creativity via an offshore subsidiary based inside the United States.
So now we know why people are buying 30-year debt from a company that, let’s face it, is highly unlikely to actually be around in 30 years. Because these people are the same people who issued the debt. Perhaps the people at Apple are learning a central bank trick of buying your own debt with your own money. Fortunately, at least they earned their own money rather than simply printing it out of thin air.
And so this nonsense goes on, with all of us having to spend time and money with accountants trying to figure out ways of legally paying as little tax as possible, instead of spending this time and money trying to serve our clients better. Yet again, all the government can do is cost us, in time, money, and creativity, to feed its ravenous maw. And the benefit of doing all of this unpaid work is what again? Paper monies printed like rivers; health systems that soak up 10% of a nation’s wealth, year on year, and still find themselves incapable of treating the smallest ailment without waits of months and years; failing court systems; growing entrenched unemployment, except for government bureaucrats; and let us fail to forget their wonderful education systems, propagandising generation after generation into the belief that all goodness emanates from the font of government despite government having nothing except that which it steals from the rest of us.
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