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Winehole brought this up like a week ago right when it happened.
More evidence a (complete) meltdown is imminent
[email protected]
Suitcase With $134 Billion Puts Dollar on Edge: William Pesek
Commentary by William Pesek
June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.
Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?
The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.
The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar.
The dollar is, for better or worse, the core of our world economy and it’s best to keep it stable. News that’s more fitting for international spy novels than the financial pages won’t help that effort. It is in bent upon the U.S. Treasury to get to the bottom of this tale and keep markets informed.
GDP Carriers
Think about it: These two guys were carrying the gross domestic product of New Zealand or enough for three Beijing Olympics. If economies were for sale, the men could buy Slovakia and Croatia and have plenty left over for Mongolia or Cambodia. Yes, they could have built vacation homes amidst Genghis Khan’s Gobi Desert or the famed Temples of Angkor. Bernard Madoff who?
These men carrying bonds concealed in the bottom of their luggage also would be the fourth-largest U.S. creditors. It makes you wonder if some of the time Treasury Secretary Timothy Geithner spends keeping the Chinese and Japanese invested in dollars should be devoted to well-financed men crossing the Italian-Swiss border.
This tale has gotten little attention in markets, perhaps because of the absurdity of our times. The last year has been a decidedly disorienting one for capitalists who once knew up from down, red from black and risk from reward. It almost fits with the surreal nature of today that a couple of travelers have more U.S. debt than Brazil in a suitcase and, well, that’s life.
Clancy Bestseller
You can almost picture Tom Clancy sitting in his study thinking: “Damn! Why didn’t I think of this yarn and novelize it years ago?” He could have sprinkled in a Chinese angle, a pinch of Russian intrigue, a dose of Pyongyang and a bit of Taiwan-Strait tension into the mix. Presto, a sure bestseller.
Daniel Craig may be thinking this is a great story on which to base the next James Bond flick. Perhaps Don Johnson could buy the rights to this tale. In 2002, the “Miami Vice” star was stopped by German customs officers as he was traveling in a car carrying credit notes and other securities worth as much as $8 billion. Now he could claim it was all, uh, research.
When I first heard of the $134 billion story, I was tempted to glance at my calendar to make sure it didn’t read April 1.
Let’s assume for a moment that these U.S. bonds are real. That would make a mockery of Japanese Finance Minister Kaoru Yosano’s “absolutely unshakable” confidence in the credibility of the U.S. dollar. Yosano would have some explaining to do about Japan’s $686 billion of U.S. debt if more of these suitcase capers come to light.
‘Kennedy Bonds’
Counterfeit $100 bills are one thing; two guys with undeclared bonds including 249 certificates worth $500 million and 10 “Kennedy bonds” of $1 billion each is quite another.
The bust could be a boon for Italy. If the securities are found to be genuine, the smugglers could be fined 40 percent of the total value for attempting to take them out of the country. Not a bad payday for a government grappling with a widening budget deficit and rebuilding the town of L’Aquila, which was destroyed by an earthquake in April.
It would be terrible news for the White House. Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void.
On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been surrep iously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years.” Adds Denninger: “Let’s hope we get those answers, and this isn’t one of those ‘funny things’ that just disappears into the night.”
This is still a story with far more questions than answers. It’s odd, though, that it’s not garnering more media attention. Interest is likely to grow. The last thing Geithner and Federal Reserve Chairman Ben Bernanke need right now is tens of billions more of U.S. bonds -- or even high-quality fake ones -- suddenly popping up around the globe.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at [email protected]
Winehole brought this up like a week ago right when it happened.
Sorry just saw it; week ago was on vacation. I'll look for the thread.
Interesting speculation here.
I completely believe they are real...
Fascinating.
By David Lawder
WASHINGTON, June 19 (Reuters) - A purported $134 billion in U.S. government bearer bond certificates seized by police near the Italian-Swiss border are fake, the U.S. Treasury said on Friday.
"Based on the photograph we've seen online, they are clearly fake. And not even good fakes," said Stephen Meyerhardt, a spokesman for the Treasury's Bureau of the Public Debt.
He added that there is only $105 million in Treasury bearer bond securities outstanding, so the $134 billion amount seized far exceeds the universe of outstanding securites.
The Treasury's determination confirmed the su ions of Italy's Guardia di Finanza, or tax police, which seized the bond do ents in early June from two Japanese nationals at the Chiasso rail station in northern Italy, close to the border with Switzerland.
The bonds comprised 249 "Federal Reserve" bonds of $500 million nominal value each and 10 "Bond Kennedy" with a $1 billion nominal value, the tax police said on June 4 in a statement on the seizure of the bonds.
A senior tax police officer said Italian authorities also were checking whether the two travellers' Japanese do ents are genuine.
In the last two years, Italian authorities have seized some $800 million of U.S. bonds in the Como area in northern Italy.
Meyerhardt said U.S. government investigators believe that the seized bond forgeries were made using commercial photo software to alter the image of a $100 bill to increase the amount into millions or billions and add what appear to be interest coupons.
He said this appears similar to scams that the Treasury uncovers fairly frequently involving bearer and other securities issued in the 1930s and 1940s. Images of similar counterfeit bonds appear on a Treasury website aimed at combating fraud, here .
The case has been turned over to the U.S. Secret Service, which investigates and combats counterfeiting of the U.S. currency. A spokesman for the Secret Service was not immediately available for comment.
The forgery determination came a day after the Treasury warned U.S. banks against the potential for increased currency counterfeiting activity and large cash transactions by North Korea in an effort to evade U.N. sanctions aimed at cutting off financing for Pyongyang's nuclear weapons and missile programmes.
http://www.reuters.com/article/marke...44623120090619
My bull detector started going off the second I read it.
Which is more plausible:
Stoopid greedy crooks attempting to couterfeit billions of dollars of bonds.
or
Someone allowed two dorks to attempt to smuggle $134 Bn worth of bonds all at once into Switzerland in a suitcase.
?
Who allowed two dorks to smuggle $134 billion in bonds?
If *two dorks* stole or forged it they've got more balls than brains, but you've gotta admire the gumption. They swung for the fences.
They'll be on a beach earning 20%
you forgot the ... after "beach" and before "earning".
that is just begging for that picture of the guy with elephan us of the nuts...
This story is still in the news?
Not really. My bump was a fringy, Italian source.
Cool. I don't mind reading fringy things. Here's someone's musings on what might have been at play.
Oh, and thanks for the Gatto link. I'm through Ch. 7 now.
I imagined brass...
Meyerhardt said U.S. government investigators believe that the seized bond forgeries were made using commercial photo software to alter the image of a $100 bill to increase the amount into millions or billions and add what appear to be interest coupons.
WTF...why bother counterfeiting money if you can go for 134 billion of bonds at once? And they thought somebody would fall for the ruse? Perhaps some bozo in back alley for 10k bucks.
If that's true they deserve a honorable mention at Darwin awards. They'll be spending a mighty long time in jail after all.
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