Why does Apple have more cash than the US Government?
The last thing I wanted to write about today was the current situation in the United States and how they’re about to go under with their debt. I was looking for something that was more amusing, something to set the tone for the weekend. But then I came across this article on BBC saying that Apple has more cash than the US government. Now that’s funny and well I just couldn’t resist writing about it.
According to that article, Apple has $76.4 billion while the US Treasury has an operating cash balance of $73.7 billion. At first glance, that might seem like a lot of money. It’s worth well more than the richest man in the world and that cash can actually buy out the company I work for, which I’ll hint is the top 5 companies in Canada. Now, I honesty should have paid more attention in my Economic lectures in University, but even I can tell that for a country that has the world’s number one economy to only have that much operating cash is pathetic.
How does the US debt affect us all?
Even though I’m not in the US, I can feel the affects in the stock market. Most of my stocks that have been performing relatively well the past few weeks have dropped somewhat significantly. If you’ve been reading what I write about investing, I could care less that my stocks are falling but I feel for those that want the stock market to continue its run higher as I think we’re going to see a bit of a stand still going forward.
The growth in the US National debt is nothing new. We often see images of the big National debt clock that has the gross national debt and each American family’s share in New York. The image that I borrowed from the Telegraph is from May 17th, 2011. On average the US National debt is said to be growing $3.81 billion per day.
Do you want to look at some figures in real time? Check US Debt Clock.org out it has some pretty cool numbers that are moving in real time, which I assume are estimates, but still cool nevertheless.
How to Invest Your Money Now
The same thing you’ve always done, diversify where you put your money. If you’re in the US and you only hold US stocks, it might be time to consider buying stocks from other countries and investing in debt of other countries. The question is, where? I’ve read somewhere that the Swiss Franc and Gold are considered to be the next safe havens after the US. But neither are big enough to take on the blow if the US were to default. At the very least, Moody’s and S&P should downgrade US debt.
I’m in Canada and while I do own some US stocks, I own Canadian stocks as well as some debt and currencies from other countries. If you can diversify what you have then you will be rewarded in the long run. My portfolio isn’t as diversified as it probably should be, but it’s a start and well as I keep adding to it, I will continue to look for ways to manage my risk while looking for decent opportunities.
Politicians will Always be Politicians
I’m obviously not a huge fan of politics. There definitely are some politicians out there (far and few between) that put the public’s interests before their own. And as much bashing as I might get for saying this, I do think President Barack Obama is doing a decent job. Give the man a break, he’s had to clean up the mess that his predecessor made and that’s a lifetime’s worth of work in itself. And President Obama’s predecessor, for those of you that are clueless I’m referring to George W. Bush, was a Republican and they should be held responsible to some degree for the current financial state of the US of A. $14+ trillion in US National debt doesn’t appear overnight, it’s because there was continuous abuse and to blame President Obama for the trouble that the US is currently in is just shameful.
If the politicians making the decisions right now have the public’s best interest in mind, they should be putting their Democratic and Republican hats aside and think about what it will take to move in the right direction. This, unfortunately, will most likely not happen.
What’s Next in this World of Sweet Debt?
The US will be able to dodge this bullet, I am almost certain of it. Greece is one thing, but the world cannot afford to have the US go under. The US will strike some sort of deal, probably to postpone the decision or raise the debt ceiling by August the 2nd. Just relax and let it be. Mind you, China owns roughly $1.16 trillion US Treasuries while Japan holds roughly $882 billion in US Treasuries. Check the list out at Wikipedia. I doubt that those two countries would be very happy if the US were to default.
The next issue will be Japan. Considering how Japan has an approximate public debt of 195% of their GDP while the US has a miniscule 59% in comparison, once the dust settles in the US, eyes will probably turn to Japan. Considering their fatal natural disaster on March 11th and how their nuclear crisis is still in trouble to this day, we probably won’t be hearing their problems for some time. The day that Bank of Japan will be tested is nearing. We’ll see how things play out for now.
I guess at this rate Apple will probably take over running the United States because apparently they do a much better job keeping their costs down. So maybe Apple is a buy? Please consult your nearest intelligent financial advisor before acting on my financial advice.
Thanks for reading.
Apple logo by eyeidea on Flickr. Looks awesome.
