Apple Could Make Money by Bailing Out Greece
bloombergview.com
bloombergview.com
The problem with a loan is that loans need to be repaid, and Greece seems unwilling to take the kind of internal reforms needed to generate enough revenue to pay back loans.
The issue has never been the willingness of others to extend Greece a bailout - it has been the unwillingness of Greece to accept the kinds of conditions attached to such bailouts. If Greece was willing and able to commit to the right kinds of internal reforms, then I am sure that Germany and other countries would be quite happy to extend another bailout. No-one (in the EU at least) wants to see Greece collapse.
On the other hand, simply giving away $200B for the kind of sweetheart tax deal that is usually achieved simply by gracing a country with the presence of a multinational headquarters (bestowing employment, secondary industries and prestige), seems to be insanely bad business. I mean, even if they wanted to bribe their way in, would it not be far more effective to bribe politicians a few tens of $M rather than an entire country $200B?
The UK has tried a more moderate version of the same nonsense, and if you look at the facts and past the propaganda it's clear that "growth" is stagnant. In fact there's no British recovery to speak of, beyond a trivial dead cat bounce and a foundationless wave of QE-induced share price inflation - which makes the "recovery" the slowest since the Great Depression.
The problem is entirely political. Who runs the government of Greece - the Greek people, or the IMF and the ECB?
The IMF and the ECB want to prove it's the latter. Unfortunately a Grexit would be a disaster for the EU and possibly the rest of the financial world, and the Greek negotiating team is well aware of this.
I think it's quite likely anyway, because in international banking it's more important to save face and status than to save an economy. But we'll see.
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> Unless Apple starts building cars -- or perhaps spaceships -- it will keep accumulating cash.
Their point is that Apple has so much cash (coupled with an MO of not casting a wide net in new product efforts) that they will never spend it all on R&D.
(And replace apple symbol with olive too)
>> ...and the American companies will keep accumulating cash they don't know how to spend.
Not too many US companies are having this problem though.
Greece is an unsustainable welfare state full of tax fraud where the government is the largest employer. If Apple "buys it" (partners with the current government for some kind of super sweetheart deal) and cannot send out those monthly public sector checks then a lot of angry hot heads with machine guns will be its biggest problem, not a cool reception to the Apple Watch.
Even if they cut a modest low tax deal, the EU would balk at a unilateral Greek deal cutting their tax revenues. At most Greece could offer Apple a low tax haven for domestic sales, but considering how small Greece's economy is, it would be financially stupid in both the short and long run to do this.
As a Greek-American and Greek landowner, I'd prefer the Greeks stop fucking up and get fiscally responsible for once instead of courting corporations or other nations to take care of them. I don't want the ancient lands of my ancestors sold off for some short-term cash relief. Nor do I want it to become some Cayman Islands-like tax shelter that will isolate it economically and become the plaything of the American super-rich.
I don't think the author of this piece remotely understands how incredibly stubborn and patriotic the average Greek citizen is. Greeks have lost their autonomy more than a few times in history. They aren't itching to lose it again. Saying, "You should let Apple buy you," in Athens would probably lead to a punch in the face fairly quickly for those reasons as well as the general anti-corporate attitude the largely leftist Greek population subscribes to. The American love of mega-corporations and super successful CEOs just doesn't translate there.
As a greek you should know that when the EU is bailing out Greece, they are bailing out European banks, not Greece. If Greece fails, the EU banks that are exposed to the Greek debt will fail too. EU will throw as much money at the problem as it needs to save EU banks, especially french , english and german banks that are over exposed to Greek debt. Because otherwise it will be the 2008 crisis x10 in Europe, and possibly the end of EU. Not that I would miss it though. But you can't have the same money without sharing risk. And if for Greece it means robbing your land and selling it, they will. There is no escape anyway, drastic measures WILL be taken, one way or the other.
That is what I believe, and hope, would happen not only in Athens but everywhere. Although on a second thought, fanboys of any kind or perhaps most of the new generation would simply not care.
> anti-corporate attitude the largely leftist Greek population subscribes to
I believe this is not the case. For years Greeks would vote for right wing parties and the one left wing on the outside but really right wing in disguise one. I agree about the general anti-corporate attitude though.
How much is the total tax burden in Greece? That may have a strong impact on the fraud...
In my country (France), compound tax/cost of running a business is about 68% in money and 15% of employee time. It is broken down as followes: 20% VAT, 46% various compulsory insurances and pensions (which may or may not cover your situation, hence the regular strikes), 15% income tax, 3% housing tax, and a myriad of compulsory accountants and administrative burden. I simply don't figure why there isn't more fraud.
And rename themselves 'Olivetti"
http://fortune.com/2012/06/06/new-study-says-2-trillion-corp...
> Non-financial American firms hold $1.73 trillion in cash (...), and $1.1 trillion of that belongs to the 50 biggest companies
Yes, American companies hold a lot of cash, but almost all of it is concentrated in the relatively few huge companies.
Other problems include that laws can always be amended. A law is only as hardy as your next election, and once Greece gets the money, you have no further leverage. We saw that happen at the last election, with the current government throwing out the previous government's solution to the problem.
Another issue is that without significant reform of government and some changes in society, Greece will end up in exactly the same place if it goes back to 'business as usual' - something which would be very easy to do if bailed out by an entity that has no future leverage.
Similarly, first-world countries with decent economies are doing their utmost to reverse the trend of tax havens, and if Greece did this, they would suffer politically in other ways as a result.
Edit: And then, of course, there is the question: Why would Apple spend $100B to secure a tax haven for themselves? Not only are there already quite a few tax havens to choose from, including in Europe, but if they turned around and decided to pay their fair share of domestic taxes, it'd take quite a while before their tax load would match their $100B in cash. Who knows what the world would look like then?
The author proposes these companies bail out Greece in exchange for permanent low taxes on non-US operations.
Certainly not a risk that is worth $200bn!
I for one, if I was an elected official would not let it stand. Allowing a select group of large corporations to evade taxes and have a huge advantage over all other companies? no thanks.
If Greece exits the Euro, the Euro group would pass legislation compensating against the Greek deal, effectively nullifying the new tax scheme.
There's zero chance such an arrangement either is allowed to work, or if put into practice ends up having enough financial returns after the Euro group responds to it that it justifies the extreme risk.
Notice that journalists might just summarize everything as cash.
It happens. That is, in fact, the explicit point of controlled inflation. The layman just doesn't realize it.
Apple's cash is subject to the same effect
You lose value on liquid cash sitting around in a checking account equivalent to the rate of inflation (less interest, which is negligible); companies like Apple know this and keep most of their liquidity in inflation-hedged instruments rather than in checking accounts.
Leaving aside the fact that the economy is booming for wealthy companies like Apple, how Apple 'feels' is irrelevant. You're anthropomorphizing. It's a corporation, it doesn't feel anything (like for example, shame or compassion, emotions which can govern human behavior even without explicit regulation). Corporations have to be operated in the public interest---that's their whole original premise, though it seems most people have forgotten it.
However Apple has found a way to repatriate the money without paying tax whilst still claiming its money is offshore.
Look up 'Braeburn Hedge Fund' based in Nevada. They manage Apple's money by way of shell corporations and invest the cash in US stocks, bonds and other financial instruments.
The law should be tightened so that this kind of scenario is not allowed. Tricky to do but surely some clever lawyer can figure it out.
> Unless Apple starts building cars -- or perhaps spaceships -- it will keep accumulating cash.
Yeah, I think both of those are more likely than bailing out Greece.
I'm pretty sure their board is interested in making money.
That must be the most fanboy statement I have ever read.
If that were true, why not lower their prices, thereby making their products affordable to even more people? With their huge margins they could certainly do it and still remain solvent or even profitable.
Apple is, at a very fundamental level, not different than every other successful corporation: they are machines for producing profit. Anything else they happen to produce--products, services, jobs, pollution--is a by-product of that primary function.
Ive: http://betanews.com/2014/11/15/jony-ive-says-apples-doesnt-a...
Cook: http://www.forbes.com/sites/stevedenning/2014/03/07/why-tim-...
I suppose I'm a fanboy if I take them at face value (and I don't totally), but they wouldn't be the first ones to believe that profit is not the purpose of business: http://mikenormaneconomics.blogspot.com/2013/03/william-cohe...
The old thing about lowering their prices - Apple wants that money in part because of institutional paranoia dating back to the 90's tailspin, and in part because big new things like cars can take a lot of capital expenditures even by Apple's standards. Buy a $30billion company or two like Tesla, pretty soon you're talking about real money.
Now i can understand that there are other reasons for inflating the price of your products other than pure profit. Making them feel more exclusive than they really are being the main one (Apple is after all fast heading towards being luxury fashion brand).
However if Apple is not interested in "making money for money's sake" why don't they clean up their supply chain, or stop fixing prices?
Tim Cook and whoever that other guy is are clearly deluded if they think anyone will believe that sort of rambling.