Below is a major story missed by the mainstream media. Business Insider reports that Italy Seizes $135 BILLION Of US Bonds.
(emphasis mine) [my comment]
Italy Seizes $135 BILLION Of US Bonds
Joe WeisenthalJun. 11, 2009, 1:43 PM
Update: The picture on the right is of the seized "bonds", via Italian site Adnkronos.
They look an awful lot like the bonds pictured in this story, about an age-old scam designed to confused seniors into buying fake bonds.
That being said, there was a period when the Treasury did issue high-denomination bonds up to $500 million.
Original post: This is a totally crazy story.
Asia Times: Italy's financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.
The question now is whether the bonds are real or counterfeit
Karl Denninger, who discovered the story, notes that either way, this is wild:
If they're real, what government (the only entity that would have such a cache) is trying to unload them?
If they're fake, this is arguably the biggest counterfeiting operation ever, by a factor of many times. I've seen news about various counterfeiting operations over the years that have made me chuckle, but this one, if that's what it is, is absolutely jaw-dropping.
The cute part of this is that if the certificates are real Italy just got a hell of a bonanza - their money laundering laws provide for a statutory 40% penalty for failure to declare instruments and cash in excess of $10,000 Euros, which means they'd garner a close-to-$40 billion dollar windfall.
We're leaning towards counterfeit on this one [hopefully. Otherwise it looks like Japan is dumping its US reserves]. Either way, we wanna know more! [Agreed]
Japan Today reports that 2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy.
2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy
Thursday 11th June, 06:18 AM JST
ROME — Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities.
According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that was searched by the Italian authorities June 3 when they were in Chiasso, at the border with Switzerland, about 50 kilometers north of Milan. The daily did not say on what charges they have been detained, but the two may have been detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it because the paper said they had not declared the bonds.
Asia News reports that these bonds are undistinguishable from the real ones.
Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen's attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.
The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
While we are on the subject of stories not picked up by the mainstream media, here is another one that was missed. OCRegister reports that the international media had a big laugh over Treasury Secretary Geithner's visit to China.
Wednesday, June 10, 2009
John Tamny: Withering dollar not funny
Does Geithner's indifference to the collapse of the dollar signal further weakness? [yes]
Though the U.S. press mostly withheld mention of it last week [I wonder why], the international media had a big laugh over Treasury Secretary Geithner's visit to China. Apparently more aware of the dollar's withering condition than our chief dollar steward — a scary thought on its face — they clearly understood the audience laughter when Geithner told Chinese students that dollar—denominated "Chinese assets are very safe."
It doesn't take an in-over-his-head Treasury secretary to understand that when the dollar is falling, the assets that pay out those dollars are necessarily imperiled. The Chinese, and all holders of U.S. Treasuries are necessarily skeptical, and with good reason. Whereas a dollar bought 1/250th of an ounce of gold in 2001, as of this writing it only buys 1/960th. Despite this stupendous collapse in the unit of account, Geithner remarkably believes that our federal debt is a good bet.
For this alone, it's hard to be optimistic about the dollar's prospects. When Treasury heads exhibit total ignorance about its value, and in Geithner's case a sanguine countenance, this is a signal that the greenback is being ignored and that further weakness will be accepted.
The Gartman Letter explains the significance of this event even more clearly:
The Telegraph in London was even more severe when it said, tersely, that "US Treasury Secretary Tim Geithner was laughed at by an audience of Chinese students after insisting that China's US assets are safe.... The comment provoked loud laughter from the audience..." But the US media avoided any reporting of the laughter that greeted Mr. Geithner's speech. None of the US television stories reported laughter; none of the US newspapers reported the laughter; none of the US magazines covering the trip reported the laughter... but the laughter was loud; it was palpable and it was very, very real. Simply put, the US fiscal circumstance has become a laughingstock, and we do not say that lightly. It is, however, true.
My reaction: The US media is deliberately missing some major stories.
1) Italy's financial police has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.
2) These seized bonds have big implications:
A) If they're real, some government is trying to unload large quantities of US securities.
B) If they're fake, this is arguably the biggest counterfeiting operation ever, by a factor of many times.
3) The international media had a big laugh over Treasury Secretary Geithner's visit to China.
4) Geithner's indifference to the dollar's collapse signals that the greenback is being ignored and that further weakness can be expected.
Conclusion: Although I could see why the US media decided to suppress both these stories, it is still amazing what is being ignored:
1) Evidence of possible surreptitious dumping of US Treasury bonds (bearer bonds) by the Japanese government done quietly in Switzerland to avoid alerting people (including presumably the US Government).
2) The US fiscal circumstance has become a laughingstock.