Re: The ultimate end
No, it is not even that: "They" are now skipping the entire part where "services and products demanded by the customer" is being produced and replacing it with the production of money via "financialisation" of the business.
Everybody does it. You pretend to sell an iPhone 6 at 300 credits per monts, plus say another 299 credits for "the plan" which is fixed for two years. That is 599 credits per month for two years coming into the shop. The cost of the iPhone is 7395 retail, now, the purchase price would be 1/3 of that, 2465 credits.
That means that we have 599 per month coming in for two years from an investment of 2500 + some service fee for running the network which we don't know - probably less than the cheapest mobile plan - 199 credits.
Traditionally, we would say that the cost of the iPhone is paid after 1 year and the next year is profit;
However ... in the financialised model we do something different:
We set up a holding company who services the subscriber contract. This company gets 599 per months for two years duration. This company also finance the iPhones for "the mothership", to do this financing it issues bonds. The iPhones are paid after 1 year, there is money coming in for 2 years and interest rates are really, really low.
So we offer a good deal on the bonds like 10% for two years. We now have 14000 coming in in total and we issue bonds for that amount (we pay the 10% interest from the 599). The 10% interest rate means that those bonds are probably going to sell in the market for at least twice the price of, say, government bonds yielding 2%.
That means that we have 28000 right there per mobile deal, in our little mitts NOW, and the incoming cash flow takes care of the interest, the costs of financing the terminals and the pay-back of the bonds after 2 years.
Of course this is not all: We can charge "the mothership" fees and interests for the financing deal and we can locate our holding company in a beneficial location for tax purposes and maybe set the fees so that the poor "mothership" hardly makes any profit and therefore does not have to pay taxes.
Basically, what we do is that we use a product to create debt, leverage it as hard as "the market" allows, sell it off for an instant profit, then use our
insider knowledge keen business acumen to avoid taxation also.