Time to borrow from Steve Jobs? Apple now has more cash than the U.S. Treasury as debt crisis continues

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Time to borrow from Steve Jobs? Apple now has more cash than the U.S. Treasury as debt crisis continues

Post by ToddS on Sat Jul 30, 2011 1:37 pm

Time to borrow from Steve Jobs? Apple now has more cash than the U.S. Treasury as debt crisis continues

By Fiona Roberts

Last updated at 4:59 PM on 30th July 2011

Perhaps the U.S. government should start selling iPhones.

As the endless negotiations over raising the debt ceiling stalled yet again, it emerged the U.S. Treasury officially has less cash than Apple.

While Uncle Sam's cash reserves fell to $74billion this week, the technology empire headed by Steve Jobs has a balance of $76billion.

It's an indication of how powerful Apple has become since the launch of the iPhone in 2007. It's now the second biggest company in the world by market value, at $362billion.

And while it is still worth ten times less than the U.S. government, Apple has more cash to spend - $75,876billion, according to its most recent quarterly earnings report at the end of June.

But on Thursday the U.S. Treasury announced it had an operating balance of $73,768, as lawmakers struggled to reach an agreement to raise the debt ceiling and avoid a default.

Economic experts say Apple may be keeping such huge cash reserves due to concern about the stability of the economy.

Laurie Simon Hodrick, a business professor at Columbia University, told the Los Angeles Times: 'One of the reasons U.S. companies have amassed so much cash is that it provides them financial flexibility in times of heightened uncertainty.'

Of course, the two cash reserves aren't directly comparable - while Apple's $76billion is essentially the money in its bank account, the federal figure shows the amount left before the government hits its legal debt limit, a figure Congress are battling to change.

While it would be unimaginable for Big Sam to go cap in hand to Mr Jobs for a loan, it wouldn't be unprecedented.

In the mid 1890s, with the government facing bankruptcy after the financial panic of 1893, President Cleveland had to ask New York financier J.P. Morgan for help.

He pledged an enormous $60million in gold - around $1.5billion today.

Historian H.W. Brands wrote: 'The fact that Morgan had become a cosigner on the federal debt was what impressed the markets.

'Within days the Treasury's condition stabilized; within weeks the dollar's danger had passed.'

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