It has since "spiked" to 3.20%.

More on how to add incremental yield here and some perspective on investing in a low return environment here.

In the U.S., public borrowings passed $13 trillion for the first time this month, according to the Treasury Department. The debt will be larger than U.S. gross domestic product, now $14.2 trillion annually, in 2012, according to the International Monetary Fund.

From a PR point of view — and Warren Buffett cares deeply about his public image — yesterday was arguably the single worst day of Buffett’s life. He was dragged against his will — with a subpoena, no less — in front of the Financial Crisis Inquiry Commission, which grilled him on whether, as Moody’s largest shareholder, he took any responsibility at all for the disaster that happened there. His answer — no — was met with unanimous derision, both in the mainstream media and in the blogosphere: see The Pragmatic Capitalist, or Bond Girl (”It’s funny how heroes end up cutting themselves down to size even when no one else can”), or Edmund Andrews:

Warren Buffett has turned into an evasive, disingenuous, bumbling buffoon…

When asked by Phil Angelides, the commission chairman, what the agencies did wrong, Buffett passed the buck as shamelessly as every other Wall Street powerhouse player: “I think they made the same mistake that virtually everybody else made,” Buffett told in the first in a long series of evasions…

Having basked for years in public adulation for his his investment brilliance, Buffett suddenly acted as if he hadn’t the slightest idea about the goings on at Moody’s even though Berkshire Hathaway had been one of its biggest shareholders.

Between his Moody’s investment and his Goldman investment, Buffett is slowly working out that only half of his public adulation comes from his compounded annual returns. The other half comes from the fact that he seemingly got those returns investing in Coca-Cola, motherhood, and apple pie. Rather than in entities without which the current wave of misery overtaking homeowners nationwide could never have happened.

Buffett is that rarest of institutional shareholders: someone who actually owns and runs lots of large companies of his own. As such, he can and should act much more like an owner than most shareholders. But he doesn’t, and he has no visible desire to fix the problems at Moody’s or at the ratings agencies more generally. He just says he wishes he’d sold his Moody’s stock earlier, passing on those losses to some other sucker. I don’t think he’s ever going to be able to live this one down.

"From 2000 to 2004, we saw finding and development, F&D, costs rise from $4 to $6 per barrel. By 2008 we saw those costs rise to $18 per barrel. This is massive cost inflation," Khan said. "In order for companies to meet their cost of capital at $18 per barrel in F&D costs, we need an $80 oil price. So far these costs have been flattening out. A higher level of regulation could add to that."

Apple's stock market capitalization (AAPL) has not yet quite surpassed Microsoft's (MSFT), but the value of its actual business is now higher.

Specifically, Apple's business is now worth $200 billion, while Microsoft's is only worth $197 billion--at least by one simple calculation of enterprise value.*

What's the difference between a company's stock market capitalization and the value of its actual business (which is referred to as "enterprise value")?

A company's stock market capitalization includes the net value of the cash and debt on the company's books.  To figure out the imputed value of the company's actual business, therefore, you have to adjust for the value of those other things.

As an example, consider a company with a market capitalization of $1 billion that has $500 million of cash and no debt.  If you were to buy all of the stock in this company, you would spend $1 billion.  When you bought the company, however, you would also acquire the $500 million of cash that came with it, so your net purchase price would only be $500 million.  So the company's actual business, in this case, would have been worth only $500 million.

If the same company had a $1 billion market capitalization, $500 million of cash, and $500 million of debt, meanwhile, the company's business ("enterprise value") would be $1 billion. You would get the $500 million of cash, but you'd also have to pay off the $500 million of debt, so the net cost to buy the company would be $1 billion.

As of yesterday's stock market close, Apple had a market capitalization of $223 billion.  Apple has $23 billion of cash and no debt*.  Apple's enterprise value, therefore, is $200 billion (per Yahoo Finance--see clarifying note below*).

Microsoft, meanwhile, had a market capitalization of $228 billion.  Microsoft has $37 billion of cash and $6 billion of debt (per Yahoo Finance).  Microsoft's enterprise value, therefore, is $197 billion.

So, it's official: Apple is now worth more than Microsoft.

(And if you don't consider this an absolutely remarkable turn of events, read this >.  It really puts the changing of the guard over the past decade in perspective.)

* As several sharp-eyed readers immediately noted (and we forgot), Apple has an unusual method of accounting for some of its cash on hand, which is that it classifies $18 billion of cash as a long-term investment.  (This is because the cash is invested in Treasuries with maturities of more than a year).  When this cash is included in the company's cash balance, Apple has $42 billion of cash, not $23 billion.  This reduces its enterprise value by $18 billion or so, which still puts it below Microsoft's, at least for a few more days.  Yahoo Finance's simple calculation of enterprise value is standard, but a more detailed analysis of Apple's liquid assets shows that the market still values Microsoft's business more highly than Apple's.  We apologize for jumping the gun!

Join the conversation about this story »

See Also:

• Okay, This Really Puts The Microsoft-Apple War In Perspective
• CHART OF THE DAY: Apple Market Cap Just $5 Billion Behind Microsoft
• CHART OF THE DAY: Microsoft Spends Eight Times As Much On R&D As Apple

[via NYT]

How many jobs are there where being wrongly optimistic for ages gets you promoted? I offer you ... equity analysts, who have, on average, overestimated S&P 500 earnings by 2x for a generation.

[via HBR/McKinsey]