Corporate Leverage Gets Corzined …

A friend pointed us to a post by Macroman that discusses revisions to the flow of funds data published by the Fed that have apparently already been made a few months ago. Nothing about them seems remarkable, until one gets to corporate non-financial debt. Apparently, all that debt that has been taken on by companies in recent years has suddenly disappeared, as if by magic.

 

e-magician

Photo credit: ThinkStock

 

We admittedly don’t know what motivated the revisions and why the data now show such a huge discrepancy to what they showed before, but the change is truly remarkable. Macroman shows a “before” and “after” chart combination of US non-financial corporate debt as a percentage of GDP that is really quite stunning. It looks like this:

 

nf corp liabilitiesThe new and improved corporate debt picture, following some “benchmark revision” data fiddling, compared to the previous, slightly more concerning debt picture – by Macroman, click to enlarge.

 

The Greenspan and Bernanke credit bubbles apparently never happened; it was all just a bad dream. From eyeballing the difference between the revised and the original data, some 14.5% of GDP, or $2.568 trillion in corporate debt have evaporated into thin air. They existed one day, and abracadabra, ceased to exist the next. Pure magic.

As Macroman comments:

 

“[…] it’s hard to know what to make of this, as the magnitude of the revision renders the data literally unbelievable. As the saying goes, there’s lies, damned lies, and statistics…

 

(emphasis added)

Indeed, it is really extremely difficult to believe. How can almost $2.6 trillion in debt just vanish? It seems they been Corzined. Unfortunately, there is no good explanation to this we know of at this time. If anyone has one that sounds like it might make sense, we’d really love to hear it.

As our friend remarked, in light of this sudden debt evaporation one can of course immediately stop worrying about all that junk debt out there (of which more than $2 trillion have reportedly been issued – or maybe not? – over the past several years). Buy as much junk as your heart desires, there is now a shortage of the stuff! We’re positively debt-starved!

 

Conclusion:

We’re actually not really sure yet what the proper conclusion is, but this is certainly quite astonishing, to say the least. The video excerpt below may by now be suffering a bit from over-exposure, but it seems rather appropriate to the situation.

 

Meet the culprit

 

Addendum:

We already noticed a few weeks ago that more than $3 trillion were suddenly missing from the Fed’s “total credit market debt owed” chart, which was just a tiny bit below the $60 trillion level previously (we even proposed to get those 60 trillion party hats out, which will now have to be postponed by a few months…). Evidently also a victim of this harmless little data revision.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

3 Responses to “The Magical Debt Disappearance”

  • bc:

    If this is nominal value rather than notional value then it makes sense as interest rates did rise a little which would cause nominal value of such debt to plummet.

  • No6:

    Special relativity! simple. The economy has reached escape velocity!

  • rodney:

    Things that should outrage us somehow don’t seem to provoke a reaction anymore. Sign of the times, an empire in decline … the moral fabric of the country is rotten.

    15% of GDP of accounting fraud is truly banana republic territory.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The Hollow Promise of a Statist Economy
      Brainwashed by Academe Not a day goes by that doesn’t supply a new specimen of inane disclarity.  Muddy ideas are dredged up from tainted minds like lumps of odorous pond muck.  We do our part to clean up the mess, whether we want to or not.   No longer in demand: famous Enlightenment philosopher John Locke (1632–1704), who is widely considered the “Father of Liberalism” (classical liberalism, that is). [PT]   These days, individuals, who like John...
  • The Great Debasement - Precious Metals Supply and Demand
      Fiat Money Woes Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week.   Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT]   So, naturally, what is getting play is a story that Bank of England governor Mark Carney said the dollar’s influence...
  • Hong Kong - Never the Same Again
      Freedom Rock Hong Kong ranks among the freest societies in the world. Not only economically, but socially it is a very liberal place. It was marinated in British ways until 1997, much longer than Singapore and other colonies. Then China took it over as a special administered region, which according to the agreement with the UK meant that it was only nominally to be under Chinese control for the next 50 years. It was possibly the only colony in which a vast majority of citizens did not...
  • Suffering the Profanity of Plentiful Cheap Money
      A Case of Highway Robbery What if the savings in your bank account lost 55 percent of its value over the last 12 months?  Would you be somewhat peeved?  Would you transfer some of your savings to another currency?   USD-ARS, weekly. For several years the Argentine Peso has followed a certain pattern: it declines mildly, but steadily, with little volatility for long time periods, and then spikes in crash waves whenever a crisis situation comes to a head. In early 2011, it...
  • A Wild Week - Precious Metals Supply and Demand
      Paying a Premium for a Lack of Default Risk The price action got pretty intense last week! The prices of the metals were up Monday, Tuesday, and Wednesday. But Thursday and Friday, there was a sharp reversal and the silver price ended the week below its close of the previous week.   The net speculative position in gold futures has become very large recently – the market was more than ripe for a shake-out. [PT]   Silver made a round trip down from $18.35 to...
  • Don’t Be Another Wall Street Chump
      The Future and the Past Securities and Exchange Commission Rule 156 requires financial institutions to advise investors to not be idiots. Hence, the disclosure pages of nearly every financial instrument in the U.S. are embedded with the following admission or variant thereof:   “Past Performance Is Not Indicative of Future Results”   “Buy and hold”... “The market goes always up”... “No-one can time the market”... “Buy the dip” “With what? You...
  • Will the Nikkei Win the Next Olympic Games?
      Listless Nikkei On 24 July 2020 the Olympic Summer Games will begin in Tokyo, the capital of Japan. Olympic Games and Soccer World Cups are among the largest sporting events in the world.  Do you perhaps also think that these events may affect the performance of local stock markets?   Olympic Summer Games 2020 – official logo (left), and a fan-made logo (right) by designer Daren Newman [PT]   Let us examine whether and in what way such major sporting events impact...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!