Worse, financial thinking has become so ingrained in American business that even our biggest and brightest companies have started to act like banks...(Rana Foroohar)

Worse, financial thinking has become so ingrained in American business that even our biggest and brightest companies have started to act like banks. Apple, for example, has begun using a good chunk of its spare cash to buy corporate bonds the same way financial institutions do, prompting a 2015 Bloomberg headline to declare, “Apple Is the New Pimco, and Tim Cook Is the New King of Bonds”. Apple and other tech companies now anchor new corporate bond offerings  just as investment banks do, which is not surprising considering how much cash they hold (it seems only a matter of time before Apple launches its own credit card).  They are, in essence, acting like banks, but they aren’t regulated like banks. If Big Tech decided at any point to dump those bonds, it could become a market-moving event, an issue that is already raising concern among experts at the Office of Financial Research, the Treasury Department body founded after the 2008 financial crisis to monitor stability in financial markets.

Big Tech isn’t  alone in emulating finance. Airlines often make more money from hedging on oil prices than on selling seats –while bad bets can leave them with millions of dollars in losses. GE Capital, a subsidiary of the company launched by America’s original innovator, Thomas Alva Edison, was until quite recently a Too Big to Fail financial institution like AIG (GE has spun it off in part  because of the risks it posed). Any number of Fortune 500 firms engage in complicated Whac-A-Mole schemes to keep their cash in a variety of offshore banks to avoid paying taxes not only in the United States but also in many other countries where they operate. But tax  avoidance  and even “tax inversions” of the sort firms like the drug giant Pfizer have done  -maneuvers that allow companies to skirt paying  their fair share of the national burden despite taking advantage of all sorts of government supports (federally funded research and technology, intellectual  property protection)-  are only the tip of the iceberg. In fact, American firms today make more money than ever before by simply moving money around, getting about five times the revenue from purely financial activities, such as trading, hedging, tax optimizing, and selling financial services, than they did in the immediate post-World War II period.

It seems that we are all bankers now.

 

Fuente: Makers and Takers. Rana Foroohar. Crown Business. New York. 2016.

 

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