Apple, the computer company, is sitting on $137 billion of cash in its banks. Even by today’s standards that is a huge amount of money.
Generally cash is best used by businesses in the business, as opposed to being kept in the bank. If the business has no need for the cash, the surplus cash should be returned to the shareholders, who would either spend it or invest in in other businesses that would use the cash for the purposes of the business. I cannot imagine what Apple would spend $137 billion on, especially as any large acquisition of a competing business would be blocked by anti-trust and anti-monopoly rules.
There are many other multinationals who are sitting on cash mountains. I think the Apple mountain is the largest.
Keeping the cash in the bank (or invested in bonds) produces a low and apparently risk free return for Apple and their like, although the risks are far greater than appear at first sight.
The banks are no longer the paragons of solvency and integrity. They are paying huge fines and face potentially damaging lawsuits. Those will reduce their assets and tie up management in defensive actions, rather than on growing and developing the business of banking. In addition all banks have to reduce gearing and improve their balance sheets, which might cause risks to the banks if those actions are not carried out carefully.
One of Apple’s shareholders (described by the press as “an activist” but more properly described as simply a shareholder) is a hedge fund. Hedge funds are noted for their aggressive business practices, and sometimes those practices are to be deplored but sometimes those practices are logical. The hedge fund is suing Apple asking the court to order that Apple releases some of its cash to its shareholders.
That is entirely logical.
There is no doubt that if those businesses who are hoarding mountains of cash release a share of it to their shareholders the cash would work its way through the economy. Shareholders would reinvest in businesses that did not sit on a pile of cash, some of the money would be spent and the governments would take their share in taxes.
However, if you have a big pile of cash you can resist and delay a lawsuit.
I have yet to learn of Apple’s reason for keeping $137 billion in the bank. No doubt the lawsuit will in due time provide the reason. In the meantime the Apple Mountain will grow, albeit very slowly.
Filed under: climate change | Tagged: aggressive business, Apple, apple mountain, banks, cash, investment, surplus cash |
Robert Kyriakides's Weblog 
http://userpage.fu-berlin.de/roehrigw/kennedy/english/chap3.htm
In most countries, the monopoly to print money rests
in the hands of the central government. Any trial run of
the new money system, therefore – even on a smaller
regional scale – would have to be supported by the
government. Obviously the introduction of an
interest-free money would be a highly political issue. It
takes courage for any government to admit that a system
of such inequity has been tolerated so far. On the other
hand, it is clearly very difficult for most people to see
why a “Parking fee” on money is a better solution than interest.
At present government leaders, politicians, bankers
and economists try to respond to the problems which are
caused by the basic flaws in the monetary system by
treating symptoms and offering band-aid solutions. In
election campaigns there are regular promises to combat
inflation, to improve social services and to support
environmental concerns and conservation issues.
The truth of the matter is that they are fighting with
their backs to the wall, and that the situation is not
improving but rather deteriorating, as we come closer to
the acceleration phase of the exponential growth curve
of the monetary system. Instead of improvements in the
social and environmental sectors, budget cuts force a
deterioration. Whether politicians belong to the
conservative or progressive wing, the room for real
change in the present system is small indeed.