Following on from my post last week on Apple's bond issue, click here to read Mark Roe's piece at Project Syndicate where he discusses why it might be a good long-term strategy for Apple to return a large chuck of its $137bn cash pile to shareholders. Roe believes that Apple may be at a point in its corporate and innovation life-cycle where the cash could be wasted by its management in pursuit of the next big thing - the iThingamajig. Consequently, he argues that the cash is better in the hands of investors.
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of