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Where Did All The Money Go? Here!

Tyler Durden's picture




 

In part driven by the 'regime uncertainty' of "authorities having dispensed with the rulebook in trying to shore up the tottering edifice of Western finance" and in part "a defensive response" to the crushing liquidity suck out of the credit crisis, as Sean Corrigan notes this week, money is distinct by virtue of the fact that 'it flows' and this transmission mechanism is clearly broken. US non-financial corporates hoarding of a $630bn mountain of money in 2.5 years (or 85% of retained earnings) have retarded the most incendiary effects of the Fed's extraordinary actions. The key issues will be whether these same corporates will begin to spend this cash, or whether they will simply rediscover an appetite for alternative, non-money assets (and the Fed should certainly take the opportunity to trim its swollen security portfolio by helping satisfy this reawakened urge, should it arise) and then, if they do, what those to whom they redirect the funds will do with them in their place. If the upshot is that there is a sizable remobilization of this money, things could quickly get very hot on the inflationary front if the transition is not managed well.

 

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Fri, 03/23/2012 - 15:18 | 2284626 Sudden Debt
Sudden Debt's picture

My own boss took a little bonus of 120 million last year, while all our wages where frozen.... With 4500 employees, that's just nuts!

Fri, 03/23/2012 - 15:19 | 2284630 catacl1sm
catacl1sm's picture

But he makes 'life & death' decisions for the company!

 

/sarc off

Fri, 03/23/2012 - 15:21 | 2284633 Sudden Debt
Sudden Debt's picture

He's a freaking idiot who's never at the office. He hasn't got a clue whats happing in the company. It's been over 12 months since we had a managment meeting. Thank god we have capable people who don't need much guiding or we'd be bankrupt.

Fri, 03/23/2012 - 15:25 | 2284643 Deep79
Deep79's picture

what company?

 

 

Fri, 03/23/2012 - 15:56 | 2284736 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

AIG

Fri, 03/23/2012 - 16:07 | 2284765 sgt_doom
sgt_doom's picture

AIG is a very sound company, after all.

They are the guys who gave the world "finite insurance" (another form of financial fraud).

And the same guys who did that money transfer of $500 million with Gen Re to cook their books (another form of financial fraud).

And also those guys who employed the legendary Harvard econ prof, Martin Feldstein, also of the National Bureau of Econ Research (NIMROD), at their Financial Products as a director --- you know, those guys who sold $460 billion worth of credit default swaps without having the capital on hand to back it up (another form of financial fraud).

Fri, 03/23/2012 - 16:18 | 2284817 shuckster
shuckster's picture

And funnelled pallets of taxpayer money into Goldman during the 2008 shakeup

Sat, 03/24/2012 - 01:06 | 2286039 derek_vineyard
derek_vineyard's picture

I know where the money aint going------it aint going to create jobs

Sat, 03/24/2012 - 19:22 | 2287373 Spirit Of Truth
Spirit Of Truth's picture

I hear the yacht industry is hiring...

Fri, 03/23/2012 - 16:10 | 2284777 francis_sawyer
francis_sawyer's picture

So you work at the White House & your boss is Obama? I didn't know Obama was 'moonlighting' as the king of Belgium...

Sat, 03/24/2012 - 01:39 | 2286071 cynicalskeptic
cynicalskeptic's picture

Well, when Bob was at PW, all he was supposed to do was create a new broker system... never did.... lots of smoke and mirrors and when they caught on he got demoted to Southern Regional head and told to 'demo' the new system.... he ran for the hills and somehow got in at Met LIfe.  He destroyed that company - though the execs made a fortune.    

Don't be too hard on him though.. People got upset when he used private jets to fly in from his estate in Croatia anymore - and commercial flights are soooooo icky.  He never did like associating with people smarter than he is.

Fri, 03/23/2012 - 16:07 | 2284769 JustanEmotion
JustanEmotion's picture

hey deep, what company do you work at?

Fri, 03/23/2012 - 19:46 | 2285568 i-dog
i-dog's picture

NOYFB!

Sat, 03/24/2012 - 19:07 | 2287340 Escrava Isaura
Escrava Isaura's picture

CIT

Fri, 03/23/2012 - 15:24 | 2284644 molecool
molecool's picture

Of course those 'capable people' did not get a bonus, right?

Fri, 03/23/2012 - 15:26 | 2284651 Sudden Debt
Sudden Debt's picture

I kid you not, his words where this : "they all deserve a kick in the ass and step it up or heads will roll"
I felt like spitting in his face.

Fri, 03/23/2012 - 15:32 | 2284669 Temporalist
Temporalist's picture

It's a good thing you stayed. The banksters need slaves.

Fri, 03/23/2012 - 19:41 | 2285557 smiler03
smiler03's picture

SD I call Shenanigans.

Fri, 03/23/2012 - 23:56 | 2285950 GMadScientist
GMadScientist's picture

Embezzlement!

Leave him explaining the hole to the board; it'd be a sweet send off.

Fri, 03/23/2012 - 15:25 | 2284649 Sophist Economicus
Sophist Economicus's picture

If he owns the company, it's his money anyway -- the bonus is just a way of moving it from one pocket to the other.

 

If this is a publically held company, the shareholds and board are asleep at the switch, given what you said....

Fri, 03/23/2012 - 15:29 | 2284660 Sudden Debt
Sudden Debt's picture

It is, and we all have to comply at the sec rules for posting our Numbers and we're audited ever 3 months by ernst and young.
I've got access to all the daily figures and whatever i see isn't what we report. That's all i'll say about it.

Fri, 03/23/2012 - 15:38 | 2284688 Crab Cake
Crab Cake's picture

You are a coward, and thats all Im going to say about it.

Fri, 03/23/2012 - 15:54 | 2284727 Sudden Debt
Sudden Debt's picture

Ha!
Iwhat would be my gain to snitch? We don't have your american laws you know. Money rules the law.
It's easy to say but nowhere have i seen anybody snitch these thing.
I know a dozen of companies, all on the stockmarket, who cook the books.
It's always been like this.

Fri, 03/23/2012 - 16:20 | 2284828 shuckster
shuckster's picture

"GAAP rules will necessarily skyrocket" (in order to paper over the rampant fraud) Enron, MF = canarie 

Fri, 03/23/2012 - 16:20 | 2284832 DoChenRollingBearing
DoChenRollingBearing's picture

Hey Sudden Debt!  I hear ya re snitching, not worth it, but DO LOOK at Rocky´s suggestion just below, tip Zero Hedge!

It sounds like your boss is not the kind of guy who reads ZH...

+ 1 and good luck!

Fri, 03/23/2012 - 16:32 | 2284886 Crab Cake
Crab Cake's picture

Ah, I see now, you're not a coward you're a scared and conflicted criminal who is motivated only by greed.

You should leave this site and never come back. You are no better than Corzine.... just smaller.

Fri, 03/23/2012 - 16:56 | 2285014 Toolshed
Toolshed's picture

Get real dude. You are talking some serious shit.

Fri, 03/23/2012 - 20:09 | 2285593 smiler03
smiler03's picture

After all this time Sudden Debt you suddenly decide to become a whistleblower?

I agree with others, you must be drunk. BUT if you're not, tell us more.

4500 employees.

Boss got $120m bonus in 2011.

Wages were frozen in 2011.

Boss never in the office. (You work in Belgium, so that narrows it down a huge amount).

"Thank god we have capable people who don't need much guiding or we'd be bankrupt." This is stating the bleeding obvious. Without capable staff you'd be bankrupt but thankfully they are capable so he can take a $120m bonus.

We're audited every 3 months by ernst and young.

We don't have your american laws you know. (Kind of suggests it ain't a US company).

Shenanigans (again).

Disclosure: I lived and worked in Belgium for 15 months in 1989/1990 for AG.

 

Sat, 03/24/2012 - 16:23 | 2287013 Likstane
Likstane's picture

What would you gain by telling the truth?  How about being able to look yourself in the mirror without knowing you are part of the lying super-majority? 

Fri, 03/23/2012 - 16:04 | 2284755 aerojet
aerojet's picture

Oh please.  The little guy in the US can't win--the system is designed to keep us right exactly where we are.  You can either suck it up and do right by your family, or you can show up to work with a handgun and try to kill the piece of shit.  It's not an act of cowardice to act in your own best interest as best you can.  Not that I wouldn't like to see more of these corporate CEOs get IED'ed, but you have to be rational about all of it, and being dead or spending life in prison is not going to help those whom you are responsible for.

Fri, 03/23/2012 - 16:36 | 2284913 Crab Cake
Crab Cake's picture

Sounds like you are trying to convince yourself there buddy. Two options? Not very creative are you?

Fri, 03/23/2012 - 21:45 | 2285761 BigDuke6
BigDuke6's picture

Hey, it's cool.
I can see cc is just up for a fight... So c'mon man pick me.
While I ain't no friend of sd, I think he's a Belgian pervert....

CC , how come it sez ur a member for 2yrs and this is the first I remember noticing u? Do u talk shit?
Or are u a creepy dude who bought the ID from some Chinese teenager who opened up 10 accounts to sell on eBay?
And that's why your called CrabCake.
LOL

Sat, 03/24/2012 - 12:04 | 2286630 RockyRacoon
RockyRacoon's picture

You're outta your league.  Crab Cake could have you for a snack.  We go way back.

Sat, 03/24/2012 - 00:02 | 2285960 GMadScientist
GMadScientist's picture

So make it look like an accident then. If he's got multiple enemies, you've got abundant cover.

And he could leave said fraudulent enterprise, or is SD an indentured servant?

Fri, 03/23/2012 - 15:40 | 2284693 derek_vineyard
derek_vineyard's picture

Bosses bathroom janitor knows all.

Fri, 03/23/2012 - 15:44 | 2284698 RockyRacoon
RockyRacoon's picture

Tips: tips [ at ] zerohedge.com

Fri, 03/23/2012 - 23:31 | 2285222 slewie the pi-rat
slewie the pi-rat's picture

right!  Hahaha! 

trying to get him killed?  i'm wondering if he's just making this stuff up, b/c if he isn't, he might wanna get his affairs in order...

but, if i worked for a company w/ 4500 employees and that happened, i'd say the same fuking thing as sodden_debt!  but probably only if i were "kidding"...

i hope he's totally shitfaced and telling the truth, tho

we'll have a zH murder to solve and can dedicate a chat-room or just use the one for free sex

seanCorrigan or tyler, in considering the $639 Bil "mountain of money" might want to consider that it may be earmarked for the MIC by the "printer"and the "borrower of first resort" here

imo, this "excess liquidity" has already been spoken for in theBudget of the USA and via BOTH fiscal AND montary policies

it's all they've got printed of "dryPowder" and, yes, it will go into IOU paper as needed, and it may not last too long, either, given the burn rate and all the bankster-education, and of course, what the FED will do "afterTwist"...

personally, i think "after" will also be primarily about keeping that T cost-of-funds about as low as she'll go = house0crads + kickTheCan = FEDtwist2

whatever "inflation" the PPT can't wring outa the commodities is gonna hafta be "acceptable", but "twist" maybe can't be used for "too long"?  bullshit!  twist1consists of "rolling" $400 Bil from the short end into the long end, and the market soared and people unloading Ts did about as well is they had ever dreamed.  $400B and it "ends" june 12,12 or so, but we have already heard that FED policy is to keep rates low for about another year after that

maybe the FED can come up w/ something "better" for investors, but i don't see how;  not as conservatively and inexpensively to the cBank as more "twist"

i hope he surprises me, but if he does keep rates low and not change policy, fixed income investors and "savers" are gonna lose no matter what he does, aren't they?

they might try a coupla little programs for political reasons, but in the end we have a bank, and a budget and a deficit and not a whole lot more, from what i see right now

if the chairsatan runs outa short bonds, he can "swap" the banksters longBonds for cash and keep dancin the ZIRP; personally, this seems pretty good to my limited understanding, considering how terminally fuked up things are getting, macro-wize

no matter wtf anybody "wants" beyond that, as my mom usta say:  slewie!  we'll just hafta wait, and see!

Sat, 03/24/2012 - 00:05 | 2285964 GMadScientist
GMadScientist's picture

So you don't buy Gross' MBS 'big bet'?

Thar be a slew a Slewies.

Sat, 03/24/2012 - 03:21 | 2286156 slewie the pi-rat
slewie the pi-rat's picture

i've said from day1 the FED has done enuf damage in this department, failed miserably at all aspects, and anybody who thinks they should "fix" MBS should be taken out back and shot

then i said that i was pretty damned sure benzelbub would not lose a minute of sleep if gross handles that MBS "portfolio" on his own.  thanks, bill!  Hahaha!

i'm not kidding about either of those things, either; there's sometimes only one of me;  you might be seeing double or worse:  pink slewies!

Fri, 03/23/2012 - 15:46 | 2284703 MeelionDollerBogus
MeelionDollerBogus's picture

see.... that's how you GET the raise. Ooh, magic, look at all these invisible numbers turning back into re-appearing disappearing ink?

Ya, about that raise...

 

Fri, 03/23/2012 - 21:47 | 2285766 BigDuke6
BigDuke6's picture

How I wish you were the real MDB

Fri, 03/23/2012 - 16:20 | 2284831 debtor of last ...
debtor of last resort's picture

So you work for the FED he?

 

duh...

Fri, 03/23/2012 - 17:22 | 2285085 grid-b-gone
grid-b-gone's picture

 "never at the office" is a key strategic component of plausible deniability.

 "hasn't got a clue" is the second leg of the triangle, but must be supported by an empty email trail.

 'no meetings with operational management' completes the trifecta and justifies the $120 mil payout.

 

Fri, 03/23/2012 - 19:28 | 2285517 DOT
DOT's picture

Yes, that is how it works.

Fri, 03/23/2012 - 23:18 | 2285904 Pejorative Requiem
Pejorative Requiem's picture

What a bunch of cry baby bull shit. Oh - the post regards non-financials, dumbass. If you don't want to out your employer, perhaps you could tell us what widget he makes?

Fri, 03/23/2012 - 17:52 | 2285198 Sam Clemons
Sam Clemons's picture

Someone has to figure out tax loopholes so that the government resorts to borrowing (printing) what it spends...
 
This chart is what happens when corporations don't have to pay taxes and the government can print what it spends passing the bill along to poor people in the form of inflation. 

Fri, 03/23/2012 - 15:24 | 2284640 molecool
molecool's picture

I think that pretty much says it all!

Fri, 03/23/2012 - 15:27 | 2284653 spekulatn
spekulatn's picture

Call cousin Eddie. He knowz how to deal with greedy bosses.

 

http://www.youtube.com/watch?v=4fyS5CLBgyM

 

 

Fri, 03/23/2012 - 15:35 | 2284677 TruthInSunshine
TruthInSunshine's picture

There's also well over 2 trillion (probably closer to 2 1/2) in corporate debt, thanks to the low yields corporations could sell their bonds at as a result of Bernank's ZIRP (much of which was used to buy their own stock back), to consider.

I know I have mentioned this 3 times now, but there have been 3 articles where I've felt the need to highlight this because the article didn't.

 

Robust Corporate Bond Issuance Is Approaching Weekly Record


And it was near 2 trillion of corporate debt back in 2011, so who knows how much higher that figure is as of now -

Law of Unintended Consequences: Corporate Borrowing Binge

So far in 2011, syndicated loan volume has increased a whopping 56% compared to 2010, according to Dealogic. The total of $1.76 trillion is the highest single-year sum since the pre-financial crisis days of 2007...

 

...

This is yet another unintended consequence of zero percent rates.  Investment grade companies increasing their borrowing by 68% year over year has certainly not led to hiring.  Maybe we can just say that perhaps it stalls the pace of further layoffs, we seem to have gotten good at merely accepting "saved jobs" these days anyhow.

 

And so the Balance Sheet Recession continues apace for the deleveraging consumer while those with the greatest ability to borrow (and, god forbid, spend) continue to pad their balance sheets with fresh cash.  That they have no need for.


Nicely done.

 

Here's the problem the sell-siders and even many innocent observers never mention or don't understand:

This 2 trillion plus (by now, since the 1.8 trillion figure was back in 2011) of 'borrowing' IS NOT CASH. It's debt that has to be rolled over or repaid.

Fri, 03/23/2012 - 17:29 | 2285107 Dulcinea
Dulcinea's picture

But what is important is the net borrowing, not gross.  From where I sit, I see a lot of companies who aren't investing or making plans due to the uncertain environment.  Everyone is on hold.  The net effect is deleveraging for a certain group of entities.

 

I don't know the statistics and am not suggesting you are wrong, I'm merely stating that this is not what I see in my microcosm.

Fri, 03/23/2012 - 20:11 | 2285621 TruthInSunshine
TruthInSunshine's picture

I am not following you.

The numbers cited in those two articles basically speak of the total amount of corporate debt corporations have sold in the form of corporate bonds to investors who biugh those bonds, with that amount still outstanding.

How does the fact that some companies may not be borrowing any money or making investments affect the total corporate debt in the forms of bonds issued/sold?

Fri, 03/23/2012 - 21:49 | 2285768 Dulcinea
Dulcinea's picture

Sorry for being so unclear.  I'm suggesting two things for consideration, which may or may not change the net result.  First, that what is being cited is the total issuance of debt (gross) but that some of this debt may have retired existing higher interest rate debt (thus the net issuance is lower).  I have read Bruce Krasting's piece on the issuance of debt for dividends (shocking) but surely this is not all of the issuance.  Some of it has been refinancing taking advantage of lower rates to reduce interest.

Secondly, these figures capture public company issuance, for the most part.  I connect with a lot of entities in the privately held sector, generally smaller than their public counterparts but there are many of them.  For the most part, this sector does not have access to the public credit markets and is not borrowing as much from the banks either (those that I am familiar with).  Note that many banks have huge availablity.  In my tiny sector of the world, I see entities paying off debt and building cash.  How much of this is an offsetting factor to the public issuance that you note?  I don't know, but my anecdotal unscientific experience corroborates the cash build. 

I've been surprised in a couple of business meetings lately how openly people are discussing alternative views.  People have been quoting Jim Grant and the austrian school.  Awareness has really changed and this concern is being expressed in very cautious actions in privately held entities (in my experience).  Hope this communicates my thinking better.  Blogging is not my strength.

Fri, 03/23/2012 - 18:11 | 2285276 Donnie Duvanie
Donnie Duvanie's picture

Look Sudden Debt - these days, 120 Million divided 4500 different ways just doesn't go very far. Put yourself in his shoes and decide what you would do. (120,000,000/4500 = 26,666.666,666,666,666... oh man, whatever you do, don't snitch.)

Fri, 03/23/2012 - 19:10 | 2285465 Reptil
Reptil's picture

don't tell me, the HQ is in Brussels LOL

Fri, 03/23/2012 - 15:19 | 2284629 Joe Davola
Joe Davola's picture

Stock buy-backs that prop up share prices so mgt can pad their earnings with ISO income.

Fri, 03/23/2012 - 15:38 | 2284686 chart_gazer
chart_gazer's picture

bingo...share by backs to keep up the eps charade as the world slows. also, gotta keep paying those execs high bucks.

Fri, 03/23/2012 - 16:02 | 2284751 mirac
mirac's picture

Yep!  And Bruce Krasting will give you a few examples...

http://brucekrasting.blogspot.ca/2012/03/bernanke-i-want-to-bring-back.html

Fri, 03/23/2012 - 15:20 | 2284631 GeneMarchbanks
GeneMarchbanks's picture

'If the upshot is that there is a sizable remobilization of this money, things could quickly get very hot on the inflationary front if the transition is not managed well.'

On a long enough timeline....

Fri, 03/23/2012 - 17:58 | 2285225 Sam Clemons
Sam Clemons's picture

I think I read once that people in the Weimar republic first mistaked the inflation for economic growth...

Sun, 03/25/2012 - 07:59 | 2288115 BorisTheBlade
BorisTheBlade's picture

There is a brief period in almost all hyperinflationary episodes where money velocity picks up as people start buying anything tangible to get rid of paper money. Economists would easily confuse this spike with genuine growth, well, since the output is growing. Well, not for long, since after some time high inflation disrupts pretty much any genuine production especially in today's highly specialized economy. That also explains 'paradox' of simultaneously high inflation and unemployment.

Fri, 03/23/2012 - 15:21 | 2284632 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

I would be happy if my account balance looked like that chart  ...

Fri, 03/23/2012 - 15:23 | 2284637 Sudden Debt
Sudden Debt's picture

If the chart where your sexlife and you had only one big top in over 50 years that would be kind of sad he? :)

Fri, 03/23/2012 - 15:22 | 2284634 holdbuysell
holdbuysell's picture

Seems like a great chart to bring to the boss and say, 'raise time' (sarc)

Fri, 03/23/2012 - 15:57 | 2284648 Sudden Debt
Sudden Debt's picture

WHERE'S MY RAISE BITCH!!!! I'VE BEEN WORKING IN THIS SHITHOLE FOR 3 MONTHS NOW AND I WANT MY RAISE!!!!!!!!

Fri, 03/23/2012 - 19:53 | 2285586 UP Forester
UP Forester's picture

"Get back on that fryer or you're outta here!"

Fri, 03/23/2012 - 15:23 | 2284638 Schmuck Raker
Schmuck Raker's picture

I'm glad to hear that if the economy improves........ we are STILL fcuked.

Fri, 03/23/2012 - 15:58 | 2284743 Sudden Debt
Sudden Debt's picture

Some people pay good money for that

Fri, 03/23/2012 - 16:07 | 2284768 chet
chet's picture

I was looking at St. Louis Fed data today for the monetary base, M2, total lending. There is a lot of money hanging out there.

But the velocity of money is literally at the low of the historical series, and seems to still be trending downwards.  But once velocity starts to revert to the mean, look out.

Fri, 03/23/2012 - 15:28 | 2284641 SheepDog-One
SheepDog-One's picture

No problem! CNBS and Schwab are SURE that retail investor will be 'lured into' buying the equity bubble top any minute now!

Man, couldnt believe THAT headline! Theyre obviously very desperate at this point.

Fri, 03/23/2012 - 15:35 | 2284678 fonzannoon
fonzannoon's picture

apparently that is a recycled headline. They ran it months ago.

Fri, 03/23/2012 - 15:40 | 2284689 SheepDog-One
SheepDog-One's picture

Thats what theyve been hoping for ever since the DOW was at 7,000....and its never going to happen. Only a lunatic would buy this muppet market.

Fri, 03/23/2012 - 15:25 | 2284646 Dick Darlington
Dick Darlington's picture

But Beardmonkey said it will take 15 minutes to take care of inflation. Not sure if he meant additional manipulation of the hedonistic yard sticks by which he "measures" inflation or something else. Quite a magician...

Fri, 03/23/2012 - 15:30 | 2284662 SheepDog-One
SheepDog-One's picture

Now reduced due to HFT upgrades from 15 minutes to only .08 nanoseconds. They got this shit, fer sure.

Fri, 03/23/2012 - 15:37 | 2284682 Dick Darlington
Dick Darlington's picture

So transitory flash crashes and endless suspension are coming to inflation data too. That must require additional "asset" purchases. In the name of stabeeletee and shit.

Fri, 03/23/2012 - 20:56 | 2285692 SystemsGuy
SystemsGuy's picture

Stopping hyperinflation is easy. Raise rates to 10%. Of course, the effect of this on the interest from the Federal debt would be very much akin to the effect of a hypersonic jet slamming into a mountain at Mach 10.

It actually brings up a good question. How DO you stop hyperinflation without causing the Fed balance sheet to explode? 

Sat, 03/24/2012 - 02:00 | 2286086 amadeusb4
amadeusb4's picture

Not all problems have a solution. This is one that the US political system caused willingly because each step was the path of least resistance.

Sat, 03/24/2012 - 08:56 | 2286342 Sudden Debt
Sudden Debt's picture

Low rates are like somebody taking morphine against the pain of cancer.
It gets worse and shuts down your immune system completly but you don't feel the pain.
Stop the morphine, and the pain comes back and your system tries to fight the cancer but there is still no cure.
To do you you need to start the chemo and for the central banks thats pulling out cash from the system.
Twice the pain....
So the time we spend now will have to be repaid double.

But the fed won't pull out liquidity.... And unlike a human, they can switch bodies. Another currency. A new name. Start over.
And that's what history shows us in hundreds of examples.
In the end, it always ends like that.

Fri, 03/23/2012 - 15:25 | 2284647 blunderdog
blunderdog's picture

I like money.

Fri, 03/23/2012 - 16:47 | 2284975 Alasdair
Alasdair's picture

I like lamp.

Fri, 03/23/2012 - 15:27 | 2284654 centerline
centerline's picture

Bubbles forming everywhere.

Fri, 03/23/2012 - 15:47 | 2284706 Winston Churchill
Winston Churchill's picture

Prick.

Fri, 03/23/2012 - 16:10 | 2284780 mr. mirbach
mr. mirbach's picture

You mean one little prick can cause the bubble to blow?

Fri, 03/23/2012 - 19:56 | 2285591 UP Forester
UP Forester's picture

Only if she's blonde and you tell her it's eight inches....

Fri, 03/23/2012 - 15:27 | 2284655 Uinta
Uinta's picture

Looks like money on the sidelines

http://www.zerohedge.com/news/3-charts-money-sidelines

Fri, 03/23/2012 - 15:28 | 2284657 CrashisOptimistic
CrashisOptimistic's picture

CFOs presented with a cost of capital environment where it costs nothing to borrow money . . . WILL BORROW MONEY.  The cash will sit in the company until the company sees an investment to make AND THERE ARE NONE.

This cash hoard is the product of a generation of CFOs having been taught to load up the corporate treasury with money when it's cheap.  It is NOT GOING TO GET SPENT.  Why they hell SHOULD it get spent?  You don't borrow money to pay a dividend so it's not going to be distributed.

CEOs also know that the fundamental analysis algorithms glory at large cash positions and reward them with stock purchase, so the CEOs are DAMN WELL not going to spend.

It's all silliness.

Fri, 03/23/2012 - 15:39 | 2284690 centerline
centerline's picture

Maybe until they get the sense the value of that cash is going to be crushed and they mobilize it in a hurry.

Fri, 03/23/2012 - 15:47 | 2284707 LawsofPhysics
LawsofPhysics's picture

It is actually much worse, because as ZH has already pointed out, some companies are borrowing money to pay a dividend or buy back their own stock.

Totally fucking stupid, capital misallocation at it's worst.

Fri, 03/23/2012 - 16:24 | 2284845 CrashisOptimistic
CrashisOptimistic's picture

Well, wait a second.

Borrowing from a bank to pay a dividend is a GREAT thing. It guts the banks of cash, sends the money to shareholders, and then declare bankruptcy.  What could be nicer?

But of course there are usually covenants on loans that preclude divvy payout or buying ones own shares.

Fri, 03/23/2012 - 21:01 | 2285701 SystemsGuy
SystemsGuy's picture

Covenants? You mean companies actually pay attention to covenants any more?

Fri, 03/23/2012 - 15:37 | 2284683 Pairadimes
Pairadimes's picture

Yikes. You really don't want to see shit like that. This is one way to say 'broken' without using words.

Fri, 03/23/2012 - 15:38 | 2284687 kalasend
kalasend's picture

Well then it justifies those analysts who say price to book values are good, no??

Time to buy stocks, yes?

Fri, 03/23/2012 - 15:39 | 2284691 SheepDog-One
SheepDog-One's picture

Go ahead, have fun, or whatever.

Fri, 03/23/2012 - 15:42 | 2284694 Stoploss
Stoploss's picture

Im pretty sure none of that "cash" is coming back "in" for at least another five years..

Kinda like when a team quits on the coach, what usually happens to the coach??

Our team has already quit on our coach.. This is how it manifests itself, and is confirmed by what??

Gun Sales..

Barry is going bye bye at some point in the near future regardless of the election in which he will win.

Or, be the President of Nothingness.

Fri, 03/23/2012 - 15:45 | 2284701 LawsofPhysics
LawsofPhysics's picture

Two words; capital misallocation.

Fri, 03/23/2012 - 17:22 | 2285086 Winston Churchill
Winston Churchill's picture

mal-investment.

Sat, 03/24/2012 - 00:21 | 2285986 Arrowhead
Arrowhead's picture

Malworth

Sat, 03/24/2012 - 00:22 | 2285989 Arrowhead
Arrowhead's picture

Malwealth

Sat, 03/24/2012 - 05:07 | 2286216 Wakanda
Wakanda's picture

WaLMaRT

Sat, 03/24/2012 - 12:30 | 2286683 falak pema
falak pema's picture

hole in the wall gang...its chinese/us sheeple gang bang. 

Fri, 03/23/2012 - 15:55 | 2284717 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

These are currency flows/holdings.  Fiat is currency.  It is not money.  We must understand the difference between money and currency.  Money is a store of wealth.  Currency is a mediem of exchange, and fungible, as is money, but currency does not store wealth. 

The choice of words can change the paradigm.

End the Fiat Ponzi, invest in money.  Money is PM.  Nothing else is.

Fri, 03/23/2012 - 16:24 | 2284852 Atomizer
Atomizer's picture

Well said. :)

Fri, 03/23/2012 - 16:36 | 2284917 LawsofPhysics
LawsofPhysics's picture

precisely.  I would add that there are lots of stores of wealth.  Many you depend on every day.

Fri, 03/23/2012 - 15:59 | 2284745 ekm
ekm's picture

What the fuck is that?

Corporations are hoarding money because consumers CANNOT buy what they produce.

If they used the money and increased production, who the fuck will  buy all that?

Money is used and people are hired only when there is consumer demand.

As long as the consumer has liabilities exceed their assets, hence over indebted, money will continue to be hoarded.

Fri, 03/23/2012 - 16:43 | 2284954 Belarusian Bull
Belarusian Bull's picture

Good point. But i can't understand why they hesitate to invest in PM's or foreign tangible assets.

It should be obvious by now that things will not get better and the currency will be destroyed via hyperinflation.

So what's the point in hoarding it?

Fri, 03/23/2012 - 16:52 | 2284997 ekm
ekm's picture

Quite simple answer.

If you are from Belarus, it'd be quite simple to remember and understand that government controls fucks all the private investors.

Since basically USA, Europe, Russia, China are controlled by governments,  hence no real free market exists, the corporations DO NOT trust anybody since they may lose all that money by government edicts. Hence, the only place it seems safe, (again it just seems) is the at the US Fed.

Again, it just seems safe until US congress loots that money also (frankly I think they should).

Fri, 03/23/2012 - 17:06 | 2285043 Belarusian Bull
Belarusian Bull's picture

So, basicly, the logic considering foreign vs domestic investments for US corporations sounds like this: He may Be a Son of A Bitch... But He's Our Son of A Bitch.?

On the side note, if you invest in Belarus a few billions now, you can become Lukashenko's criminal buddy by supporting his regime... You might actually be safer than in US! It's a joke ofcourse, you don't want to side with a psychopath...

Fri, 03/23/2012 - 17:23 | 2285090 ekm
ekm's picture

On the psycopathic point of view I don't think there is much difference between Lukashenko and Bernanke. The first thinks he rules Belarus, the second thinks he rules the world.

Fri, 03/23/2012 - 17:33 | 2285114 Belarusian Bull
Belarusian Bull's picture

Lukashenko does not think he rules Belarus, he thinks he owns it. I bet Bernanke and Obomber think the same about the world.

Fri, 03/23/2012 - 17:45 | 2285156 ekm
ekm's picture

No objections.

Sun, 03/25/2012 - 08:56 | 2288156 falak pema
falak pema's picture

Luka = Kaiseridee boss

BB/O'Bammy = US oligarchy bosses, who share with Oligarchs. Magna Carta bitchez!

Sun, 03/25/2012 - 08:58 | 2288155 falak pema
falak pema's picture

Free markets are for selling potatoes to the small guy who thinks he can buy lke Mcdonalds does; he is wrong. He can buy like Daffy Duck does. Period. There are markets and markets, even for potatoes...

When it comes to Big OIL or any other major commodity, then the prices are ALL political ones, thus no FREE markets. Its PURE power play and the big boys have their BUYING CENTERS, aka trading companies, in Off shore locations; tax arbitration oblige, with government collusion. The government needs the Oligarchs to run the machinery of world commerce. The Oligarchs needs the MIC/government that holds the big stick that allows Big Capital to play their own games in far off locations. Its a win-win and the East India COmpany and Rule Britannia invented it; by copying Spanish Main absolutist construct, in a private-public combo. Magna Carta oblige, the British feudals from Eton wanted their liberty and wouldn't buy into state absolutism. 

That is the ESSENTIAL difference between Anglo capitalism and Kaiseridee capitalism of Euro zone; all inspired by Caesar and Charlemagne. 

To share or not to share...power is now networked and civil society gets its share in western world. Napoleon/Stalin  lost, Bill Gates, Steve Jobs and the Sage from Omaha won. Viva USA! Until the USD goes belly up !

PS : Send Joan Robinson a rose for her contribution to our understanding of Big Business Economia!  

Fri, 03/23/2012 - 16:31 | 2284891 Scalaris
Scalaris's picture

They should invest the cash on politicians.

Oh wait..

Fri, 03/23/2012 - 16:49 | 2284982 gatorontheloose
gatorontheloose's picture

bonds up, indices up,PMs up.  WAT ?

Fri, 03/23/2012 - 16:59 | 2285011 delivered
delivered's picture

So this chart simply reinforces what everyone should understand. The currency created by the Fed is caught in an endless circle jerk which has created no real value (i.e., sorely needed capital finding its way to real businesses and opportunities that are creating and innovating every day). The circle jerk is the Fed creates the currency which eventually finds its way to the balance sheet of first, financials, and then non financials. This currency is not invested in new RD&D, training, education, marketing programs, innovation, etc., etc., etc., but rather is hoarded on the balance sheet to recycle into US Treasuries (plenty of supply here with over $1 trillion in incremental debt needing to find a home each year). So rather than the Fed purchasing USTs directly, they use their proxies such as banks, Apple, and all of the other hoarders to sterlize the debt. What really concerns me about this trend are two items:

First, even in the ZIRP environment, you can't tell me that these companies can't find some other use for this cash that can generate returns of between 5 to 10%? Are you kidding me! The internal hurdle rate of return has never been lower and they still can't find a use for the funds! Something is seriously wrong with this picture as they either don't believe a.) the US market has any life left, b.) a serious economic shock is coming and they need the cash to survive, or c.) they are now using their vast cash holdings as a competitive weapon (if you restrict/eliminate the flow of fuel to a utility provider, it can't produce engery and it quickly dies, same principal with capital needed to support new business innovation).

Second, an article posted by ZH noted how much cash was sitting in individual demand accounts, MMA's, CD's, etc. (I believe in the trillions of dollars). So combined with the dead cash sitting in financials and the lazy cash sitting in non-financials, TPTB have created a mechanism for the federal deficit to be funded for years. What's amazing is how many parties are willing to accept 1 to 3% returns on their savings (from USTs and HG corporates) when the real inflation rate is running at a much higher rate and any spike in rates will hammer the principal value of the long dated debt. Equities getting worked over by 30 to 40% is one thing as most individual investors would sit back and say, "I told you so" (as I'm not getting burned again). However, if long-term rates spike back to normalized levels (and actually increase further to a rate that properly compensates for the real default credit risk associated with debt that can never be repaid with real value), the FMV of everyone's investments in medium to long dated bonds are going to get creamed. Just think about it. First, I was tricked into investing in stocks and got hammered. Then I was told home prices in the US never fall (and got hammered). Now, I've been led to believe that USTs, the safest of all investments (as TPTB want everyone to believe) run the risk of getting hammered. Nowhere to run and nowhere to hide as for those that still believe the USD will hold its value, this too will get hammered (on a global scale) once the world's global economies fully rebalance.

Finally and to the point of corporations increasing cash as a result of new debt issuances - makes perfect sense and why wouldn't they given how cheap cash is. This is an unintended consequence of ZIRP which I don't believe the Fed ever really understood or anticipated. Yes, this debt will need to be rolled over at some point but once you have the cash, the holders of the debt lose leverage (which basically means if the debt can't be repaid, we'll just restructure it ala Greece).

Capital, the life blood and fuel that runs the engine of a capitalist system, is being choked off and for lack of a better term, rationed by those who believe they know what they're doing (when in actuallity, they have NFI). What created the real problems for the US economy is that properly functioning capital markets ceased to exist when TPTB elected to bailout failed banks, insurance companies, auto companies, and governments. This is still going on today and until it is rectified (a term which I use in jest given, and in the words of Jack Nicholson who played the Joker in the first Batman remake, how badly "this country needs an enema"), the next round of business innovation that is so sorely needed to produce real economic growth is going to be stuck in neutral.

Fri, 03/23/2012 - 17:09 | 2285052 Bear
Bear's picture

Thanks for the great perspective

Fri, 03/23/2012 - 17:30 | 2285108 Belarusian Bull
Belarusian Bull's picture

Sounds like a perfect can kicking scheme you are drawing here. Fund deficit, grow government via elected puppets and fear mongering while the real economy slowly dies off...

 But was it really unintended? Looks highly doubtful.

Fri, 03/23/2012 - 19:19 | 2285489 itstippy
itstippy's picture

I fully agree, delivered.

There's no reason for corporations to invest in additional production capacity (expanded facilities and workforce).  There is a global glut of production capacity.  China alone has enough manufacturing capacity to supply the World with consumer crap.

Bernanke strokes his beard and wonders at the conundrum that his flood of cheap capital hasn't resulted in lower unemployment and higher GDP.  He just can't SEE that things are different now and the "Great Moderation" is replaced by the "Great Globalization".

The only capital expenditures corporations are willing to make target increased productivity, not increased capacity.  They automate facilities.  They offshore work to reduce labor costs.  Everything they do that deploys the available cheap capital is geared toward eliminating U.S. jobs, reducing U.S. tax exposure, avoiding U.S. regulations, etc.

QE, TWIST, and ZIRP are destroying the U.S. economy, not saving it.  It's a basic carry trade.  Ask Japan how well it works.

Sat, 03/24/2012 - 00:25 | 2285965 slewie the pi-rat
slewie the pi-rat's picture

actually, mr_t, i think the economy was destroyed b4 anybody even heard of QE, twist & zirp

and as i said above, maybe the "money" is earmarked for the Treasury and to de-stress the bankstering system

i don't know for sure, but at least it explains why the "money" isn't being "used" without resorting to mushrooms for an answer:  it is earmarked for financing Treasury deficits? 

and btw, if that is true, i think it is great, considering some of the other alternatives

yeah. zirp is tough on certain things and types;  but benzelbub can't do too much about the "economy" at this point except try to keep the financial world from collapsing, and the goobermint from "lowering the floor" on US creditworthiness at too rapid a rate, can he?  and if he can do those things, i think i'll give the professor a passing grade for the next semester

maybe it can be about "energy policy" and "job creation" and "housing stimulus" and "consumerism" again, in another decade or so, maybe less.  maybe not.  perhaps even theJoker would recognize the country has HAD a fuking enema due precisely to "business innovation" and i may have been born at night, too, but it wasn't last might...

right now, it looks to me like it is about survival, so i think we need to focus on the FED's raison d'etre: financing uncleSugar

in his comment, delivered is well spoken and cogent, but he sees the money in the system for this financing as a "negative";  maybe the private wealth, yes, if it goes to the goobermint in too big globs~~not good for stuff in general and i agree better to get it into more commercial/ag/industry/service, if possible;  but the 'fiat money' being 'held' in the banking system?  ship it!

we still have an economy;  the rain falls and the rooster crows;  people have jobs;  but that deficit needs to be financed and the numbers are numbing;  practically a national emergency... 

it looks to me like the ducks are lined up ok for these priorities, so let's keep it simple and tone down the rhetoric for a while, too

steady, mates, steady

Sat, 03/24/2012 - 00:50 | 2285993 oldman
oldman's picture

@Slewie

pi-rat,

You are my last hope on a question I posted twice yesterday-----would you give it a try, please?

Thanks       om

In the old days, no matter whether it was a day trade or back office error or a simple typo, there had to be a confirmation generated and on the errors a separate confirmation cancelling and/or correcting the first confirmation. If this is still the case, then why can't the CFTC do an audit to see whether each tick represents a trade and then match up the confirmations with the trades to be certain that these are not wash trades to launder money or hide the theft from the Fed by the banks?

It has been obvious since December that the game has really changed in gold or, at least what is represented by the tick activity on netdania. If I wanted to wash money or steal from the Fed---I would certainly take advantage of these HFT trades---they are  dream to steal with because no one has to report the day trades and certainly not the nanosecond trades to the CFTC.

How does anyone know what is going on when the majority of the trades go unreported?

I'm just imagining how easy it might be to move money from gov't. agency to banks, individuals, big ben, little timmy, jomama,

or to my favorite--oldman, if one had access to such a beautiful machine                 om

 

Sat, 03/24/2012 - 03:00 | 2286138 slewie the pi-rat
slewie the pi-rat's picture

well, they could do such an audit and quite easily, too, i would imagine, b/c on the crimex, every open long has a corresponding open short, such is the nature of the contracts

now, with the strikes and the options and the spreads and the straddles and the games and the secrecy, it is complex, but not impossible for daBoyz to get the picture

wash sales?  everything nets out for cash, except the deliveries

are there advantages to showing unreal "wash" volumes?  yes, but these are still contracts bought and sold on an exchange at the end of the day and the trades are accounted for, at least gross, on a timely basis

money laundering?  sure.  these are brokerages and banks;  there are different kinds, too. they accept deposits;  the morgue accepts gold bullion as trading collateral;  do they ask where you got it?  bilary, long ago made a shitload of green stamps from a "pooled (i believe) commodities trading account" where theClintons allegedly gave the broker some money and he just hit the wheel 3 times in a row and then gave them the "winnings" or something.  law, politics, brokers, banks, games.  they were "blind" to the trades and just floored at the profits, too!   L0L!!!  what a surprize!

now if you have PPTs acting for the centralBank, Treasury, or ?, one might imagine there is some "gov't money" getting onto the table and possibly into certain hands or pockets, especially when you figure some "play" or "slack" in the reckoning, now and then

shit, oldMan! we got the fuking email and phone records from the MFG debacle while for DAYS the trading accounts "would not balance" and TPTB sat on their hands while this B.S. BK was "arranged"

this is a great crime in itself as annBarhardt pointed out while closing her brokerage:  how the FUK can a team of auditors get involved with these asswipes AND NOT PULL THE PLUG?

well, they did!

why, how could these MFG commodity trading accounts be so outa whack?  we must have a glitch somewhere;  please be patient, we're working on it and working and working and...

well, the money isn't there b/c it was transferred, possibly due to re-hypothecation, and then vaporized in the BK.  or something 

when everything is there but the money, that is when the control function pulls the plug;  this is why we have fuking auditors in the first place!  everything was there but the money, and they didn't pull the plug

ruh-roh!

Sat, 03/24/2012 - 12:47 | 2286711 ekm
ekm's picture

Thx for the lengthy explanation.

Quite, quite interesting.

Sun, 03/25/2012 - 16:53 | 2289011 oldman
oldman's picture

Thanks, pi-rat,

All that you say is sooo true! I'm sorry to say.

I was not so concerned about the lying, cheating, and stealing as I was about the non-reporting quality of the 'day trades'. The HFT, if it was a single machine, could easily fabricate a 'market' without ever showing a real trade, providing it could generate enough non reportable trades. I'm speaking of this as if I know something of which I haven't a clue---too long away from the table.

My concern is more with the falseness of these markets with so many nanosecond trades. Couldn't a smart boy just allocate these in any way he wanted since they need not be reported? A buy at 10.00 and a sell at 11.00 with however divisions in whatever increments to whomever he wanted to and to whomever he wanted to lose? If so, it is equal in flexibility to the allocations the mutual funds used to make.

Sorry, Slewie, my head is spinning from the possibilities of something I am as ignorant as an ant about.

Thanks again for your help, the point you make is the bottom line of all of this---I'm just lost in this high tech stuff-----still 'buying to hold' in gold stocks and currencies as hedge against an impossibly deep devaluation in the the greenback---my only weak spot              om

Fri, 03/23/2012 - 17:12 | 2285059 grid-b-gone
grid-b-gone's picture

A Fed that can choose winners and losers among asset classes can also pick winners and losers within asset classes.

 

 

Fri, 03/23/2012 - 17:37 | 2285125 Catullus
Catullus's picture

The money flows myth. 

What happened to money being used as a store of value? 

Apple is 1/6th of this number in cash. 

It's probably that a lot of corporations have the cash parked in other countries and making money off the Fed-provided swaps.

Fri, 03/23/2012 - 17:59 | 2285221 Dre4dwolf
Dre4dwolf's picture

When you create? money out of thin air everytime you lend it, and you are "owed" 1million, and the person who owes you 1million doesn't have it to repay, and you "loan" him another 1.5 million to pay you which again he wont have , and then you loan him another 2.5 million to give you.

All you are doing as a bank is counterfeiting money and giving it back to yourself.

CORRUPTION AND FRAUD BY DEFINITION.

 

 

The only one the bailouts help are, the banks who are "owed" all this money.

It makes them richer and richer and the debtor more leveraged and in debt.

you owe 1 million and endup owing 20 million on that original 1million due to all the bailouts.

 

Its no different than going into a meeting and saying, I can't afford to pay this off, raise my interest rate and here, while your at it , charge whatever you want on my credit card.... (as the debtor) lol its nuts,!!!

 

IF YOU ARE STUPID ENOUGH AS A DEBTOR TO FALL FOR THAT LOL.......... your better off defaulting on loan number 1 than ever entering into loan number 2 in the first place... you have LESS to lose.

Fri, 03/23/2012 - 18:27 | 2285338 Winston Churchill
Winston Churchill's picture

On refection of those figures pose four questions:

!)How much of that cash is on big Pharma's balance sheets ?

2)what are the cash /bad debt provision ratios ?

3)what are the cash/goodwill ratios ?

4)cash/shereholder funds ratio ?

Basic questions that would answer a lot of questions as to whether this a prudent move

by those companies, and if they are going to buy back shares.

That cash hoard is sitting there on short term ,for a reason.

Fri, 03/23/2012 - 19:11 | 2285469 swissaustrian
swissaustrian's picture

Bullish for velocity, bitchez!

Sat, 03/24/2012 - 01:18 | 2286053 andyupnorth
andyupnorth's picture

The Big Company that I work for is sitting on Billions of $.  They just announced the layoffs of 100 people yesterday.

I woulnd't be surprised if there's a salary freeze coming my way next year.

Sat, 03/24/2012 - 01:20 | 2286054 ekm
ekm's picture

What does the company make and sell?

Sat, 03/24/2012 - 06:44 | 2286252 memyselfiu
memyselfiu's picture

Pratt & Whitney just announced a layoff of 100

Sat, 03/24/2012 - 12:44 | 2286705 ekm
ekm's picture

Thx a lot

Sat, 03/24/2012 - 06:36 | 2286231 falak pema
falak pema's picture

where have all the flowers gone?

Take a walk down history lane. Forget all your troubles and jump into the next next century! Its only round the corner on the geological scale!

involuta

Sat, 03/24/2012 - 19:09 | 2287344 flow5
flow5's picture

Demand is always paramount in successful business planning and commitment decisions.  If sufficient demand is not expected to exist, it matters not what the expected costs will be.  "Sufficient" demand, of course, covers all costs plus and expected after tax profit margin. 

An economy such as ours which is geared to mass production requires concomitant mass consumption.  Payrolls must be sufficient to buy the goods and services produced - at the asked prices. 

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