You may have missed this fascinating Real Time Economics article (Corporations Not Hoarding Cash) buried at 5am Saturday morning in the WSJ, but here it is:

In the Federal Reserve quarterly “Z1 flow of funds” report released late this past week, there was a slight discrepancy in the amount of corporate cash in Q1.

It was “up to” $1.74 trillion dollars.

And by up to, I mean down from $2.23 trillion dollars.

Did this money actually go missing? From the Fed report, its not clear whether or not this based on a significant accounting revision from recent quarters — meaning it never was really there in the first place. Alternatively, the money actually was pent, and corporate America added an additional half a trillion dollars in economic activity.

I suspect its the former . . .

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Whoops! Where did I put that half trillion dollars?

Chart courtesy of WSJ
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Source:
Number of the Week: Corporations Not Hoarding Cash
Ben Casselman
Real Time Economics, June 9, 2012
http://blogs.wsj.com/economics/2012/06/09/number-of-the-week-corporations-not-hoarding-cash/

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Missing: $496.5 Billion in Corporate Cash”

  1. PeterR says:

    Thanks Barry, you are probably right that it is the former. When the magician doing the pea and walnut shells game feels a threat, just change the rules?

    BTW perhaps I missed it, but speaking of accounting standards, and your great insights therein for the last few years, how accurate are the banks’ publicly released books viz a vis both residential and commercial real estate mortgage etc. paper?

    How much is still “off the books” entirely (Jeez, how did this pigeonhole ever get approved/accepted!)?

    Are there still CDO assets for banks (and is this acronym still current, or did they move the walnut shells on this terminology too)?

    In brief, how bad is the top-heaviness of the House of Cards in your opinion?

    Are you still coming out to the East End? It is glorious here today.

    Cheers,

    Peter

  2. Winston Munn says:

    Half a trillion here, half a trillion there, and ;pretty soon you are talking about real money…

  3. Chief Tomahawk says:

    “Whoops! Where did I put that half trillion dollars?”

    We better put Snake Plissken on this right away!!!

    http://en.wikipedia.org/wiki/Snake_Plissken

  4. NoKidding says:

    Marking closer to market? Reconsidering what qualifies as liquid? Big bath revision to make easily beaten benchmark?

  5. lunartop says:

    And the world kept spinning… maybe David Mitchell is right about the Wanker bankers http://www.boreme.com/posting.php?id=20902

  6. rd says:

    That’s odd. It starts to diverge in late 2009. I wonder what was going on then that could lead to funny book-keeping? Certainly our crack government regulators would be on top of any funny money shenanigans in the wake of major financial crisis.

    I think that is also the time when the WTI and Brent started to diverge as well. Pure coincidence.

  7. Robespierre says:

    Mish has been talking about that for a while. He said that the hording of cash does not exist because they also have liabilities to offset that cash. Is the “disappearance” of that cash related to that?

    “What’s fascinating about the “corporate cash” argument is that few observers recognize that a great deal of this cash is not retained earnings but new debt issuance.”

    http://globaleconomicanalysis.blogspot.com/2010/08/are-corporations-sitting-on-piles-of.html

  8. ToNYC says:

    Maybe it’s a derivative of the estimated oil reserves of some M.E. semi-sovereign entities but double counted floating around the high seas fleet monte? The new game is to buy refineries to complete the hands. JDR one stick thought of that refinery trick in 1859 or so.

  9. b_thunder says:

    Just like the infamous “cash on the sidelines” touted by 4 out of 5 so-called “market experts” on CNBC.

    Is Big Corporate America becoming (has it already become) a Ponzi?

  10. Frilton Miedman says:

    If it’s the former, Cap ex, then the question goes the where the money was spent?

  11. CitizenWhy says:

    Could it be that the missing cash was hidden away in secret accounts abroad?

  12. Icouldabenacontendah says:

    “Alternatively, the money actually was pent, and corporate America added an additional half a trillion dollars in economic activity.”

    Pent or spent?