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The Magical Debt Disappearance

Tyler Durden's picture




 

Submitted by Pater Tenebrarum via Acting-Man blog,

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 liabilities

The 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.

 

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Wed, 02/25/2015 - 13:53 | 5827671 Tsar Pointless
Tsar Pointless's picture

We undebted some folks?

This isn't a banana republic. To refer to the United States of America as such would be denegrating toward bananas.

Wed, 02/25/2015 - 14:01 | 5827712 maskone909
maskone909's picture

http://www.zerohedge.com/contributed/2013-11-18/%E2%80%9C85-trillion-tax...

 

“$8.5 TRILLION In Taxpayer Money Doled Out By Congress To The Pentagon Since 1996 … Has NEVER Been Accounted For”

 

and then there is that

Wed, 02/25/2015 - 14:05 | 5827731 Publicus
Publicus's picture

Money printing will solve all problems.

Wed, 02/25/2015 - 14:20 | 5827808 Stuck on Zero
Stuck on Zero's picture

If you can rehypothcate assets and debt is now an asset can't you rehypothecate debt?

Wed, 02/25/2015 - 14:35 | 5827887 Manthong
Manthong's picture

But at least it was a tad less traumatic than the $2.3 Trillion that went up in smoke at the Pentagon on 9-11-2001.

Wed, 02/25/2015 - 15:25 | 5828106 max2205
max2205's picture

They minted the 3 trillion dollar coin but forgot to tell us

Wed, 02/25/2015 - 15:30 | 5828124 Four chan
Four chan's picture

120% financing cures all till the bottom drops out again.

Wed, 02/25/2015 - 17:11 | 5828602 ml8ml8
ml8ml8's picture

Weren't there some changes to some FASB lease accounting rules?  That sounds like a "non-financial debt."

Wed, 02/25/2015 - 14:01 | 5827716 Thirst Mutilator
Thirst Mutilator's picture

That magician sucks! He made the model's tits disappear!

Wed, 02/25/2015 - 15:48 | 5828209 Magnix
Magnix's picture

Keep printing, they will disappear again...

Wed, 02/25/2015 - 14:01 | 5827720 Bullionaire
Bullionaire's picture

Eyeballing this chart tells me the series started to diverge during the tenure of SecTres Bob Rubin.

Which tells me all I need to know.

Wed, 02/25/2015 - 17:11 | 5828559 ThroxxOfVron
ThroxxOfVron's picture

I will wager that this 'corporate debt' was owed to banks, investment banks, hedgies -and .GOV PENSION FUNDS- and it has been whisked off the balance sheets.  

Maybe the debacle in Detroit was a wake-up call.

Now we know why the banks aren't foreclosing on millions of defaulted commercial and residential mortgages all over the north eastern US.  

They bundled that shit up, labelled it corporate ( REIT/MBS ! ) debt, and rolled it over to the big black hole of rehypothecation at The FED.

Stealth QE/FED Cartel Bailout: the Maiden Lane accounts @ The FED just got refilled with defaulted 'corporate debt'.

Stock market will go higher and buy-backs will continue unabated, the Corporate Persons have been provided more fuel for their LBO frenzy.

...& Rubin didn't engineer this way back when: this was done recently.  

It appears from the timing of the revison that Obama and the Democrat controlled CONgrASS own this.

Wed, 02/25/2015 - 14:12 | 5827723 bwh1214
bwh1214's picture

Classic, I noticed the same thing. Below is a link to a good overview of the system and notice the fred chart in it shows total debt at about 60 trill a few months ago.  Its certainly worth the read but to see the chart its about half way down:

 

http://debtcrash.blogspot.com/2015/02/history-and-introduction.html

Wed, 02/25/2015 - 14:13 | 5827773 OldPhart
OldPhart's picture

Jew-belee!!

Now they can borrow moar.

Wed, 02/25/2015 - 14:14 | 5827777 S73
S73's picture

... and republics

Wed, 02/25/2015 - 13:54 | 5827673 Ignatius
Ignatius's picture

"The debt can't be repaid.  The question then is, how it won't be repaid."  --  Michael Hudson

Wed, 02/25/2015 - 14:01 | 5827718 TrumpXVI
TrumpXVI's picture

And now we have the answer!

Wed, 02/25/2015 - 14:03 | 5827726 Bullionaire
Bullionaire's picture

We hedonically adjusted some debt.

Wed, 02/25/2015 - 13:56 | 5827682 cowdiddly
cowdiddly's picture

Hey Rocky, watch me pull a rabbit out of my hat

Again? That trick never works.

Wed, 02/25/2015 - 13:56 | 5827683 newdoobie
newdoobie's picture

Ah La Peanut Butter Sandwiches!

Wed, 02/25/2015 - 13:56 | 5827686 dexter_morgan
dexter_morgan's picture

I have a question. I frequently receive emails from Ron and Rand Paul related to auditing, and eventually abolishing, the FED.

My question is are they really serious about this, and if so how have they not been "Kennedy'd" by now?

Seems like a dangersous game talking about abolishing the FED.

Wed, 02/25/2015 - 14:00 | 5827708 Tsar Pointless
Tsar Pointless's picture

Perhaps they're merely playing the "good cops" in this little theatrical absurdity.

Wed, 02/25/2015 - 14:01 | 5827711 froze25
froze25's picture

Killing them would just help their cause they must be discredited, made to look a fool.

Wed, 02/25/2015 - 15:06 | 5828033 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

The Fed is going to need scapegoats when the SHTF.

If this SHTF event is conveniently timed to coincide with the start of a Fed audit all can be blamed on them for reducing confidence in their "money" system.

Wed, 02/25/2015 - 14:05 | 5827732 Bullionaire
Bullionaire's picture

Ron is righteous; Rand is a ZioNazi fellator.

Wed, 02/25/2015 - 17:08 | 5828581 ThroxxOfVron
ThroxxOfVron's picture

The ratio of up to down votes are very telling as to the general perception of Ron and Rand...

Wed, 02/25/2015 - 14:07 | 5827740 cro_maat
cro_maat's picture

The propaganda machine has branded them as conspiracy nutcases. They are now used to as a magnet to round up dissidents.

Both Ron and Rand will have large FEMA camps named after them soon.

Wed, 02/25/2015 - 14:09 | 5827749 p00k1e
p00k1e's picture

Jeb Bush will save us.  Jeb Bush. 

Wed, 02/25/2015 - 14:24 | 5827826 Hubbs
Hubbs's picture

Actually, it will be easier to trace if Hilliary gets elected. She has demonstrated the capacity to suck  political, banking , and military industrial complex money into her accounts, starting with her $1,000 Comex investment years ago which morphed into $100K or such.

Wed, 02/25/2015 - 14:32 | 5827872 NotApplicable
NotApplicable's picture

So... you're saying that the "Clinton Global Initiative" is the most honestly named trust around?

Wed, 02/25/2015 - 16:07 | 5828286 JRobby
JRobby's picture

No, I think what was said is that Hillary really sucks

Wed, 02/25/2015 - 15:06 | 5828028 roadhazard
roadhazard's picture

Jeb (I'm my own man) BushCo.

Wed, 02/25/2015 - 17:02 | 5828561 buyingsterling
buyingsterling's picture

<----- Secession is still a faint hope

<----- We need our own Pinochet

Wed, 02/25/2015 - 14:49 | 5827950 FrankieGoesToHo...
FrankieGoesToHollywood's picture

they make a great argument and most of the time I agree with them.  But then I read stories about Congressman calling for the bailout of greece.  Try to imagine maxine Waters at the printing press throttle and I second guess getting rid of the FED.  Its all relative I guess.

Wed, 02/25/2015 - 15:02 | 5828015 dexter_morgan
dexter_morgan's picture

Don't get me wrong, I love the Paul's but just wonder how they are staying above ground talking this stuff. Maybe because TPTB figures theres a snowballs chance it goes anywhere?

Wed, 02/25/2015 - 16:36 | 5828422 daveO
daveO's picture

It's like a chihuahua yapping at the heels of an elephant. TPTB blocked Ron from speaking at the GOP convention, remember.  

Wed, 02/25/2015 - 13:57 | 5827689 i_call_you_my_base
i_call_you_my_base's picture

It's because the fed lies.

Wed, 02/25/2015 - 13:58 | 5827694 KnuckleDragger-X
KnuckleDragger-X's picture

When money is imaginary pesky little problems can be made to disappear with a few strokes on a keyboard..

Wed, 02/25/2015 - 13:59 | 5827701 Honey Badger
Honey Badger's picture

Maybe some of the debt stopped looking for work and thus stopped being counted.

Wed, 02/25/2015 - 14:00 | 5827705 Honey Badger
Honey Badger's picture

Then again, maybe the birth/death model of the debt requires adjusting it downward.

Wed, 02/25/2015 - 14:01 | 5827713 Honey Badger
Honey Badger's picture

Or maybe it was a hedonic adjustment, like what is done to the CPI.

Wed, 02/25/2015 - 16:50 | 5828430 commoncourtesy
commoncourtesy's picture

Maybe they have added the GDP value accumulated from the cestui que vie trust/Fide CommissaryTrust via Birth Certificates of all the new immigrants:

https://angellucci.wordpress.com/2013/05/28/the-cesta-que-trust-is-an-account-you-inherited-due-to-the-bankruptcy-of-the-u-s-in-1933-and-the-subsequent-ceasing-of-all-the-citizens-gold/

Wed, 02/25/2015 - 13:59 | 5827703 glenlloyd
glenlloyd's picture

That vid clip never gets old, but the full clip is better.

Wed, 02/25/2015 - 13:59 | 5827704 Automatic Choke
Automatic Choke's picture

the fed bought up all that corp paper and filed it away.

oops, now they can't find the paperwork.... sorry, just take it off the books.

(sound of hands briskly making washing motion...)

 

Wed, 02/25/2015 - 14:02 | 5827722 Madcow
Madcow's picture

its as simple as deleting a couple rows in an XLS spreadsheet. 

the rest of the world is too stupid to simply get their own printing press and follow suit.

Wed, 02/25/2015 - 14:08 | 5827747 Stoploss
Stoploss's picture

The Romans were heavily engaged in this same thing.

This is a very bad sign. 

Like hitting the nitrous button 100 feet from the wall...

Wed, 02/25/2015 - 14:05 | 5827734 Quinvarius
Quinvarius's picture

If it is as a percentage of GDP, maybe it is the GDP revisions. 

Wed, 02/25/2015 - 15:10 | 5828022 deadelephant
deadelephant's picture

GDP would have to be revised upward for debt as a percentage of GDP to fall.  Since GDP is usually revised downward, the revisions on this chart should actually be above the initial results.

Edit: I just checked the data and revisions have actually bumped up GDP by a total of 1% since 2007.  That would account for some of the difference on this chart, but really an insignificant amount of it.

Wed, 02/25/2015 - 14:05 | 5827737 matinee55
matinee55's picture

Its FIAT magic, NOW WORK HARDER TO SEND YOUR DOLLARS TO CRAPPYITON

Wed, 02/25/2015 - 14:07 | 5827743 matinee55
matinee55's picture

WHAT!!!  The US has DEBT???  CLICK!!!  NOT ANY MORE.  MAKES ME FEEL SO WARM & FUZZY & SECURE

Wed, 02/25/2015 - 14:09 | 5827751 astoriajoe
astoriajoe's picture

They used it to buy back stock, so they owe it to themselves......?

Wed, 02/25/2015 - 14:38 | 5827902 NotApplicable
NotApplicable's picture

That was my first thought (cuz it's just nonsensical enough to work!)

Wed, 02/25/2015 - 14:11 | 5827755 yogibear
yogibear's picture

It's why the Federal Reserve doesn't want to be audited.

They would realize that trillions of dollars just disappeared and it's one big scam institution.

Outside countries should demand a supervised audit before they buy treasuries.

Wed, 02/25/2015 - 17:19 | 5828644 buyingsterling
buyingsterling's picture

That might happen post collapse. Until then, this is a one-way ride: buying treasury debt is buying dollars, and bidders are going to be lining up for years, we really are the cleanest dirty shirt. All of the buyers know that the debt will never be repaid, in spite of that this is considered the safest place to park big money. Imagine that: the inherent momentum of the system is so great that people gladly pile into an 'investment' that all agree is ultimately empty. All just count on being able to roll it over, and outside of a few nation states, everyone is firmly attached to the same treadmill. China has its own treadmill going. Maybe only Russia could break away, but to what effect? No, they are going to run this system until it collapses, then we all get mounted on a new nag of their making. That's the way it will be as long as the current elite controls the bastions and levers of power, and those wont be surrendered without fighing. Either way, they've boxed us into an ugly future. One has a lot of puss and drainage and festering wounds that seep on and on, the other is a body sized bandaid that will leave us scarred and crippled as it's ripped off. I'll take that.

Wed, 02/25/2015 - 14:11 | 5827759 gcjohns1971
gcjohns1971's picture

Now you know what Bernanke meant when he said he could simply add zeroes to the accounts of financial organizations.

Now you know why most large corporations established financial arms in recent years.

Wed, 02/25/2015 - 14:13 | 5827771 Longarm
Longarm's picture

Duh, what did you expect?

Wed, 02/25/2015 - 14:13 | 5827774 SillyWabbits
SillyWabbits's picture

Wasn’t there about 2.6 billion dollars missing from the Pentagon just before 9/11?

 So, the missing money was found not to be there!

Wed, 02/25/2015 - 14:41 | 5827919 NotApplicable
NotApplicable's picture

You mean trillion.

Wed, 02/25/2015 - 14:45 | 5827934 SillyWabbits
SillyWabbits's picture

Yup!

My mistake,  Thank you.

Wed, 02/25/2015 - 14:44 | 5827927 StarfishPrime
StarfishPrime's picture

2.6 trillion*

Wed, 02/25/2015 - 14:14 | 5827776 Usurious
Usurious's picture

 

 

A little jubilee for the multi-nationals.....which are owned by the banks anyways........and why not....they run the world

Wed, 02/25/2015 - 14:15 | 5827780 joego1
joego1's picture

It all works fine as long as all the bleeting sheep believe it.

Wed, 02/25/2015 - 14:25 | 5827835 matinee55
matinee55's picture

there all on their phones talking about their diapers & extra money from mommy & daddy not giving a dam about anything

Wed, 02/25/2015 - 14:18 | 5827797 semperfi
Wed, 02/25/2015 - 16:00 | 5828255 NotApplicable
NotApplicable's picture

No worries. Tungsten qualifies as "good delivery."

Wed, 02/25/2015 - 14:27 | 5827842 Comte d'herblay
Comte d&#039;herblay's picture

I checked around and found it in Al Gore's Lockbox.

Wed, 02/25/2015 - 14:31 | 5827862 Seasmoke
Seasmoke's picture

Why anyone would pay their outstanding debt ever again is beyond me. Especially those stupid fucking credit cards !!!!

 

Wed, 02/25/2015 - 14:32 | 5827866 rejected
rejected's picture

The Treasury issues bonds. The Fed Reserve buy's the bonds and notes the amount on their books.

The Federal Reserve returns the interest .gov paid on said bonds to the treasury as is the law. 

When said bonds retire the Federal Reserve removes the amount from their books and Presto! No debt. Free Money as defined today.

Uncle Sam got and spent the cash, received the interest back they paid and the debt disappears from the Feds books

 

I am sure the corporations are doing the same circular accounting tricks the Fed is pulling. Today is the wild wild west where accounting is concerned.

 

 

Wed, 02/25/2015 - 14:35 | 5827885 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

Up is down

Left is right

2 + 2 = 5

Cats and dogs living together

All the fudgings, revisions, and doublespeak are surely just one more tool of TPTB to confuse the already stupid american masses into complete and total complacency.

Wed, 02/25/2015 - 15:11 | 5828052 Mike Honcho
Mike Honcho's picture

Did someone recently receive their Common Core GED, hats off sir!

Wed, 02/25/2015 - 14:39 | 5827910 Everybodys All ...
Everybodys All American's picture

Who said you can't make this shit up?

Wed, 02/25/2015 - 14:40 | 5827916 The Mav
The Mav's picture

It's called Enron.

Wed, 02/25/2015 - 15:52 | 5828002 nakki
nakki's picture

I was thinking the same thing. Everything TPTB, are doing now, is or has been used before. Usury, counterfeiting, protection money, buying politicians, drug dealing, stuff the mafia use to do is all know very legal and what corporations do. Payday loans owned by banks, usury. FED owned by banks, counterfeiters. Big Pharma drug dealers. 

 

Wed, 02/25/2015 - 14:44 | 5827930 orangegeek
orangegeek's picture

that southpark clip cracks me up silly

Wed, 02/25/2015 - 15:02 | 5828011 Salah
Salah's picture

wait until the crisis is over....it'll be "sterilization on steroids"

Wed, 02/25/2015 - 14:44 | 5827931 rejected
rejected's picture

The worse thing that happened to honest accounting was the advent of Mr. Digital.

Thievery and scamming, all with ease from your keyboard. 

Wed, 02/25/2015 - 14:45 | 5827935 RabbitOne
RabbitOne's picture

Dis is da vay vee do tings in da USSA? No?

Wed, 02/25/2015 - 14:57 | 5827980 Bemused Observer
Bemused Observer's picture

Umm, I'm probably naive here, but wouldn't such 'disappearing debt' be, for all practical purposes, the same thing as a default?
Think about it...if you were a lender, and discovered your borrower pulled a stunt like that with a bunch of his other debt, wouldn't that make you worry about what he owes YOU?
What would be the difference, really?

Wed, 02/25/2015 - 16:05 | 5828271 NotApplicable
NotApplicable's picture

I'm going to guess that the debt is still there, and maybe even is still "performing," but a new gimmick has been created to take it off of the debtors books.

Somebody's asset, yet nobody's liability. TADA!

Wed, 02/25/2015 - 14:58 | 5827993 Consuelo
Consuelo's picture

When do certain nations decide the risk level is simply too high, no matter the short-term consequences, of outright abandoning the $USD in trade?

Wed, 02/25/2015 - 15:00 | 5828004 dexter_morgan
dexter_morgan's picture

So, basically why do we even have to pay taxes? They can just print up whatever they need.

I guess it's the social engineering and wealth redistribution (upwards) is why we still have a tax code?

Wed, 02/25/2015 - 15:09 | 5828047 Mike Honcho
Mike Honcho's picture

We live in a multi-tiered system, some call it caste.

Wed, 02/25/2015 - 15:59 | 5828249 matinee55
matinee55's picture

because it keeps you a flucking SLAVE

Wed, 02/25/2015 - 16:29 | 5828392 NotApplicable
NotApplicable's picture

Crazy how nature do that.

Wed, 02/25/2015 - 15:12 | 5828060 silverlamb
silverlamb's picture

An agreement between the FED and big business?. Put more debt to buy back your stock with the aim of providing support to the markets and you have my commitment (FED) of that in the future buy all your debt and I will make it disappear forever.

Wed, 02/25/2015 - 15:22 | 5828097 Batman11
Batman11's picture

The bullshit and the reality.

What is the message we are spoon fed today “The way to the top is through hard work, drive and ambition”.

The reality in the UK in 2015:

1) The Duke of Westminster is the richest person in the UK (an old aristocrat). Once he had navigated his way through the birth canal his life’s work was complete.

2) A privately educated elite, ie: fee paying schools and rich parents are the way to the top.

The same reality that prevailed in the 19th Century, there is no meritocracy here.

What would a meritocracy look like?

1) Everyone succeeds on their own merit

2) There is no un-earned wealth or power, e.g inheritance, hereditary titles

3) There is a uniform schools system for everyone with no private schools

Why does inherited wealth distort the picture so much?

a) Those with excess capital invest it and collect interest and rent.

b) Those with insufficient capital borrow money and pay interest and rent.

If you inherit enough, like our Duke Of Westminster and the many old money types in the UK, there is no need to work at all, your inherited capital will earn all you ever need.

The message we are spoon fed today “The way to the top is through hard work, drive and ambition”, well if your surname is Clinton or Bush you might be allowed to get to the top.

 

Wed, 02/25/2015 - 21:26 | 5829557 kelley805
kelley805's picture

Here are two bubble charts.  One has the Corporate Debt Market spread leaping 30%.

http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/

 

Good luck.

Wed, 02/25/2015 - 21:52 | 5829667 mijev
mijev's picture

They probably just stashed it next to the WMDs and Obama's birth certificate.

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