Symptom of the crisis

[Young Master Smeet]

http://www.bbc.co.uk/news/business-31016446

Quote:

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache – an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

Now, if you were a Leninist you'd see the response to this as to engage in imeprialism, and invest abroad, but wht this suggests is that because other areas of business aren't profitable, Apple is better off holding onto the cah, but this "investment strike" is preventing a take off of profits, and so reducing the avenues where Apple can invest.  I imagine a few otehr firm are doing the same thing.

[Dave B]

"Last year Apple funded its share buy-back with a $17bn bond issue.So, in effect, Apple did what Icahn and Einhorn wanted.The share price has recovered from around $60 in mid 2013 to around $110 this week."  That is quite common and is simpler than it looks. Apple writes out $17bn of IOU’s and offers them for sale on Ebay. They all sell for $16.5 bn; effectively a good 3% rate of interest on loaned money to a AAA rate company. Apple CEO’s take the cash to the stock market and buy Apple shares with it and put the share certificates etc into a big pile and burn them. Big purchases of Apple shares on Wall Street sends up the share price of unsold stock/share from “$60 to around $110”. As well as increasing the dividends on unsold and still extant shares. Existing share holders make a nominal 110/60, 83% “profit” on their share price .

[Young Master Smeet]

And here we have the thermostat model of economic crisis:http://www.bbc.co.uk/news/business-31034870

Quote:

Falling oil prices are forcing Royal Dutch Shell to cut investment by $15bn (£9.9bn) over the next three years.

So, imagine you're in a cold room, the evening starts chilly, but gets colder.  you decide to put the heating on, you put it on, but the room takes a while to heat up, so you turn the heating up, eventuially, the room gets too hot, so stiffling, you turn the heating off, repeat.So, here we have a rush to invest in producing oil, too much is produced so the price falls unsustainably low (compared to the cost of certain fields), and so investment is withdrawn, gradually the price will rise again, investment will lag behind the price signal, and people will ivnest again, and again glut the market.  Repeat.Of course, if it's bad, and infrastructure is lost, it becomes more expensive to reopen those fields.

[Young Master Smeet]

Of course, there is method behind the crisis:http://m.bbc.co.uk/news/technology-31438699Factories in Apple's supply chain have been exploiting bonded labour.

Quote:

Bonded servitude or labour sees new workers charged a fee – sometimes equivalent to a month's salary or more – for being introduced to a factory, typically by third-party recruiters.It means many employees will begin work in debt. Some have their passports confiscated.A BBC Panorama programme investigation last year highlighted the poor treatment of workers in Chinese factories.

Of ocurse, the story is that Apple have 'banned' the practice.  But hark, what are their new enlightened terms:

Quote:

It said that it had tracked more than 1.1 million workers on average per week in 2014 and that suppliers had achieved 92% compliance with its 60-hour maximum working week.

Anyone fancy a 60-hour week? Also

Quote:

Last year suppliers repaid $3.96m (£2.57m) in excess fees to more than 4,500 foreign contractors, according to the audit.

Did Apple bear the cost of that repayment?  And how many millions from previous years has Apple held onto?  It appears that Apple is now basking in teh halo of new reports that they genuinely have stopped beating their wife.  Well done for stopping beating your wife, Apple.

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