
Apple and Google use cash to buy...treasuries? - hawkharris
http://money.cnn.com/2014/03/13/investing/tech-bonds-overseas-cash/index.html
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kylec
> 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 matter who buys them?

~~~
itg
Reading the news as of late, there seems to be a new narrative against the
tech companies, as if they are the new Wall St. See the bus protests,
gentrification protests, aren't involved in their communities, complaining
they don't pay enough taxes (while some other companies, such as oil, are
receiving tax subsidies), etc.

If someone can spin negative news against them, they will.

~~~
julespitt
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.

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

~~~
seanmcdirmid
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.

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steven2012
This article is inane. The authors have no understanding of what it means to
have large amounts of money.

Where else should companies store their billions of dollars in cash? You can't
just store money in a bank, because that bank could go belly up, meaning there
is a certain amount of risk. Having money in US treasuries is essentially the
lowest risk you can get, and they are extremely liquid.

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robgering
Treasuries are often used as a "risk-free" asset to adjust a portfolio in
order to meet a predetermined level of risk. Someone who works in finance can
probably tell us more.

~~~
selectodude
There the "risk free" aspect, but there also just really isn't much else in
the world that you can buy 100 billion dollars of in just a few years. Even
the entirety of taxable property in Manhattan can be had for just over twice
that amount of money. Not to mention good luck trying not to move the market
while buying 100 bn of anything.

~~~
seanmcdirmid
Exactly. Treasuries are just so useful for stashing money. Even if the rate of
return is below inflation, the Chinese really have no choice when dealing with
their dollar reserves. Treasuries also make the dollar attractive in the first
place, since the USA is more than happy to act as a debtor of last result
resort....remember money can only be saved if it's borrowed!

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AnimalMuppet
Why Treasuries? Well, they're really liquid. You can sell them in a hurry if,
for example, there's some juicy company you decide you want to buy for $19
billion. (As selectodude pointed out, they probably won't move the market much
by doing so.)

~~~
joncooper
This is an extraordinarily important point and one that nearly everyone
misses. Treasuries are some of the most liquid instruments that exist,
especially at shorter durations.

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TrainedMonkey
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 power. So not investing it is
paramount to loosing money.

I really do not see how can anyone can claim that companies are evil for doing
this. They merely operate in framework set up for them.

This also raises interesting point that it would be illegal to try to
repatriate gigantic cash supplies they have because that would definitely go
against maximizing shareholder value.

~~~
magicalist
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. If it were, you'd
end up with ridiculous situations, like every company with a down quarter
would be sued in an effort to get a windfall out of a loss.

~~~
snowwrestler
Agreed. One reference:

[http://hbr.org/2010/04/the-myth-of-shareholder-
capitalism/ar...](http://hbr.org/2010/04/the-myth-of-shareholder-
capitalism/ar/1)

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rthomas6
Not criticizing them, but if you're buying that many treasuries, it might be a
good time to start paying dividends instead.

~~~
devfeed
If you want to pay dividends with that money, you have to repatriate the money
first.

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drawkbox
Repatriating money should be tax free or very minimally taxed. Granted it is
nice to have investment in treasuries but most of this is a game to keep money
untaxed overseas. So just let them bring it back and use it here, that money
will go on to pay many more taxes, just not directly from that exchange.

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carlosrt
>If these firms are buying U.S. debt with that money...>

...then it means these tech companies have not invented the tech necessary to
grow the economy.

