How would a U.S. default impact tech companies?
For one, they may pull back on IT spending. Consumers might also pull back on discretionary spending.
However, cash-loaded companies, like Apple Inc., might not feel the same effects. In fact, Apple might be sitting in the catbird seat by being able to use its huge cash pile effectively for components and, perhaps, M&A.
Shira Ovide reports for WSJ.com’s digits (4:09):
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There won’t be a default.
Get over it…..
I agree there will not be a default. The government will just have to spend the money on things that are truly needed.
It must be sad to be a socialist when the government runs out of other people’s money.
just my $0.02
Sad…really sad to be you.
no king smell, sad to be you, you dirt ball-commie-america hater!!!!
No default. The U.S. Government will just take over Apple for the cash and pay their bills with it. Apple has too much anyway.
LOL. I know you are joking (probably)… 😉
BUT it was with about 4 days left before the August 2 deadline that the BIG headline about Apple now having more cash on-hand than the U.S. Government went up. So if the Feds confiscate Apple’s cash, how long will it last… about 4 days.
The scale of government (over-) spending is insane. I’m glad we have a debt-limit that is finally being taken seriously, instead of automatically raised as convenient.
u have no idea how economics works. Google 1937. Austerity put us back into depression then and it can again. U can’t cut your way to prosperity.
You will probably need to broaden the scope of your inquiry.
I appreciate this blog has a natural context within the broader context from which the question is asked (tech realm), but, the potential for global chicanery boggles the mind. The potential fallout of such a default is truly Biblical in proportions and actual point of reference.
Those forces which have been patiently plotting the downfall of the United States of America would be so emboldened as to take advantage of a truly golden opportunity.
Conspiracy theories anyone? Bilderberg Group? Illuminati New World Order? Islamic Jihad through the seizure of all Middle East oil producing governments? The final extermination of Israel? – Nah! God would never allow that to happen. A new Dark Ages? Armageddon?
In the ensuing vacuum, anything seems possible…
Dont forget the Masons!
Yes. This is what I wrote about earlier. Apple will lock up production and component sources. Apple can float and prepay for what they need locking the others out. If a vendor fails, Apple can acquire them.
Apple can muscle out the weak players with their huge cash pile. Now, everyone will see why Apple has all the cash.
Remember Apple saying, “We would have sold more if we could have made more.”
Now you will see what they mean.
It depends on their cash positions and debt costs. It will be a time to look for bargain aquisions
if the us defaults the prices apple pays for everything is going up as the value of the US dollar will plummet.
it will be ugly. personally apple will be the last thing on my mind.
If the debt limit is not raised, the U.S. Government does NOT run out of money. The ever-ongoing increase in debt finances the difference between revenue and spending. So government will be forced to balance revenue with spending; it’s the “balanced budget amendment” with no need for an amendment.
Financing existing debt will be a high priority, so there will not be a default. Other spending will be cut.
You are right in part. The Government doesn’t run out of money, but it WILL run short.
The one thing you forget is that while it is short of cash, there will be obligations that are ongoing, the IOU’s for which will still be there. Yes, the President has noted that interest payments will still be met, but just how long do you think that government contractors will continue to work while their invoices are not paid? If the government fails to pay contractors, it will be in default of those contracts.
If it fails to pay its employees, just how long to you think we will be able to keep working without a paycheck? We have bills to pay just like you do – gas, electricity, mortgages, rent, groceries. Some live a considerable distance from work – one has to buy gas to get there.
And what about the military? Just what are you going to do about them? We have deployed soldiers whose families will run out of money, often within a day of that missed paycheck! Just how well will they be able to do their jobs knowing that their families may get tossed out of rented apartments or houses, or may not be able to feed the kids?
It isn’t so simple. The debt ceiling isn’t there to KEEP the government from spending, that is what the budget is for – to control that beast.
Today, the debt ceiling has no real purpose. Historically, it was instituted just before the first world war. Congress at that time didn’t pass a line by line item budget. The President was only restricted by what Congress authorized him to spend – but Congress has a history of authorizing the spending of money that isn’t in the Treasury, going back to the First Continental Congress! They were afraid that the President at the time would take the war as an excuse and just borrow money like there was no tomorrow – so they passed a debt ceiling to keep him from borrowing too much.
The rest is history. Today, we are the ONLY industrialized country – except Norway – that has a debt ceiling. None of the other European countries have one, and almost none of them have debt loads nearly as big (on a percentage of GDP) as we do. (Greece being a major exception.)
Again, this is a manufactured crisis. There is no doubt that this country has the ability to pay our debt and reduce it quickly once this economic crisis is over. There is no link between the debt ceiling and our current deficit spending that requires immediate and draconian cuts to the extent that the Republican are demanding. This is ONLY a way for them to use the ceiling, and a threatened default, to blackmail the Democrats into killing programs that the Republicans have been after for decades. Programs they have NO hope of being able to affect at all legislatively otherwise, and are publicly VERY popular.
One can only hope that the American people aren’t stupid enough to let them get away with it.
Your comments are mostly right, except on Greece. The fact is that you, one and each of you Americans owes more per person than Greeks owes.
Sad but true
Your points are well taken, except that Congress hasn’t done a line by line budget in nearly 40 years. This is one of the unwanted side effects of the passage of COLA (cost of living allowance) in 1972. All government spending increases automatically based upon the inflation rate.
The us doesn’t have to default. Just cut all of the insane amount of waste, union bs, liberal bs, etc. and we will be fine. Maobama won’t do that though so watch out!
“No man is an island…”
Same for companies. Apple’s cash pile doesn’t mean shit if their customers dry up and blow away because of the business climate.
The truly sad part is that this whole mess is unnecessary.
cut the us gov by 2/3. We don’t need them.