Italy Seizes $135 BILLION Treasury Bonds And US Fiscal Circumstance Become A Laughingstock

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 Weisenthal
Jun. 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.

This entry was posted in China, Currency_Collapse, Federal_Reserve, Market_Skepticism, News_Developments, Wall_Street_Meltdown. Bookmark the permalink.

44 Responses to Italy Seizes $135 BILLION Treasury Bonds And US Fiscal Circumstance Become A Laughingstock

  1. Robert says:

    That's a rather interesting story. I'm inclined to think they must have been real - other than as part of an elaborate confidence trick to gain a few grand from greedy idiots the bonds would be useless unless they were real.

    Who are these japanese men? Maybe they were just the delivery guys but these bonds could only ever be sold by someone affiliated with a G20 government.

    I wouldn't be surprised if the US manages to get them declared officially fake though just to make this go away.

  2. Robert says:

    Another reason to think they must be real;

    Customs don't go regularly go searching people for billion dollar bonds in hidden suitcase compartments. They knew what they would find.

    There's only two reasons for this that I can see - either

    a) Lots of Japanese businessmen (or these particular ones multiple times) have been smuggling billion dollar bonds from Italy into Swizerland for the last few months.

    or

    b) Someone tipped them off about this particular delivery.

    If these were smalltime crooks playing a confidence game against greedy and gullible senior citizens it seems pretty unlikely that the police would have been tipped off.

  3. Jeff Burton says:

    If they are bearer bonds (Denninger was speculating, I think), they are fake. The treasury stopped issuing bearer bonds about thirty years ago. In fact, bearer bonds of all types were made essentially illegal in the U.S. in 1982. In 1980, 135 billion would have represented almost 15% of the entire U.S. govt. debt.

  4. Robert says:

    Certainly would be a convenient cover story if they do turn out to be bearer bonds then ;)

  5. Robert says:

    Perhaps it will turn out that they were fake and since they never declared them to have any value there was no crime committed and the mysterious japanese men disappear off back to japan never to be heard of again.

  6. Robert says:

    Another possibility that occurs to me though is that maybe it's part of a psychological game played by someone who had just shorted a bunch of US treasuries.

    a) short treasuries
    b) send japanese men to get caught with treasuries implicating the BOJ
    c) ...
    d) profit?

  7. Anonymous says:

    The media have underplayed the story so far and no further details have arise.
    It must be something very serious.

  8. Dread says:

    Jim Sinclair says Time For Delivery...

    "I suggest to you now that you take delivery of all gold held in vaults and depositories on your behalf, but this time even from the most prestigious."

    Now, for something a little more significant in this light. This will take courage to read. Please, have the courage to read this. If you think you don't have such courage, then please pray for the courage to read this...

    20 Fold...

    If before reading this, you think you don't understand money, then I guarantee you, that upon finishing this read, the 7th POTUS will educate you. If only he were alive today, what words would be transcribed into his teleprompter.

    I'm afraid, that even if our present POTUS, somehow garnered the courage to have and promulgate same such words, that he would only most assuredly meet a very similar fate that of our 35th POTUS. A fate, almost exact, that our 7th POTUS initially escaped most assuredly via Providence.

  9. Anonymous says:

    What I don't understand: The Treasury issued 500M Bonds 1955 - 1969. So even if these were 30 year bonds from 1969, they should have matured in 1999. Can someone please explain that to me? I'm not an expert, so forgive me if I'm misunderstanding something here.

  10. Anonymous says:

    did those guys have mask and swords?

    lol. Italy would not bring this to light unless this was planned. Do you not know Italy, its government and the crime families that are in power??

    Please...nothing happens for nothing. This is just another well orchestrated event...for whatever reason we shall soon find out.

    fooser77....good luck with that crap. I think many have seen the light of America falling to the wayside for years.

    America needs to "die". They have killed, poisoned and murdered millions of people across this world...without cause. Meanwhile, americans are holding candlelight vigils for aborted fetuses. Go figure that one out.

  11. Anonymous says:

    $135 billion is a large amount of money, even for a rich country like Japan. No country in the world could afford to sell such a large amount of securities without the US Treasury becoming aware of it. The bonds must be fake - any other conclusion does not make sense.

  12. OperationNorthwoods says:

    Anon,

    Isn't the question whether a whole bunch of sub rosa bonds have been created over the years? It's not that the US Treasury wouldn't know about them, it's that the financial press wouldn't.

  13. Anonymous says:

    This is almost incredible - I mean, the value of the bonds are just too high to be of any practical use to any "scam" involving anyone other than government institutions - or is it? This whole thing doesn't make much sense, and I think that if the truth is ever revealed it would be even more incredible.

  14. Josey Wales says:

    OpsNorthwood,

    Yes, I think you may be right that there are bonds that were issued for special purposes, with varying maturities outside the norm, and in amounts that are not standard either. They may also have put features and other exotic traits. i have heard of these but could never prove or disprove their existence.

  15. Anonymous says:

    fooser, just as a head's up in the article...among many things, i'd particularly point out that going from a 7.9 to a 9.9 (or any other increase of magnitude 2.0 on the Richter scale) would be a 100x increase from the former measure). it is ten-fold for one single point, but then the next single # is also 10x it's previous.

  16. Anonymous says:

    @all

    Is there a simpler more legal way to pay Italy money which can be forwarded to Fiat for the help in the Chrysler deal?

    The whole deal is stupid. If this is a real deal, then customs would not have found it. Those treasuries are simple to hide and could have been moved to Switzerland directly... why not fly directly into Switzerland? Why not do it in 10 tranches?

    It does make no sense otherwise.

  17. Robert says:

    @anonymous,

    That's a pretty good theory. I always figured that Fiat must be getting money from someone to do the Chrysler deal.

  18. Michel says:

    I am Italian, and read some more articles on the subject, though also here newspapers did not cover the new, and their articles were more on the strangeness of the fact than on its political and economic implications.

    I believe that the two Japanese were in fact caught by chance, because they took a local train rather than an intercity, and a guard noticed this fact and asked to check their luggage.

    However, I too believe that, if the bonds are real, it is very strange they were not carried in a diplomatic bag not subject to inspections, and that they were carried all together.
    There are also serious objections to the case they are fake, even in the case they were intended to be sold one by one.

    In any case, I doubt we will ever know all the truth about this matter.

  19. Anonymous says:

    @michel

    I think that the authorities think that no one will care anymore, too.

    Traveling with regional train for long distances makes no sense. I don't know how it is in Italy, but in Germany you basically never see Police in the trains. No one, except for money saving, takes regional trains for long distance trips.

    I actually think that any other "obvious" way of funneling the money would be - even if at first hidden - not legally correct. Here only two people vanish, Italy keeps 40% and the 60% go back to whoever or vanish outright, because no one claims to be the lawful owner of the stuff (would raise to much questions). End of story.

  20. Jim says:

    Obviously fake. A billion dollar bond note? Even if we had one, then the transfer would have taken place electronically. Another stupid con designed to seperate money from the stupid. And, I'm glad that at least one country has enough sense to laugh at Geitner. What an ass he is.

  21. Anonymous says:

    > ... in Germany you basically never see Police in the trains ...

    I am german, and this is wrong. If you live in a near border area, you see police in trains quite frequently.

  22. Anonymous says:

    Who in his right mind would counterfeit a 0.5 bn$ bond?

    What would it serve for?

  23. OperationNorthwoods says:

    Jim,

    You are assuming that everyone wants their entry in a computer. Some would argue that the world is run by criminals, and they can only go so far in assuming the sheeple will ignore their obvious criminality. Thus, the need for unregistered bonds.

    Josey,

    Japan is notorious for these off the books deals with the US. Read "Gold Warriors" by Seagrave for one take on it. In any case, there's a huge amount of hidden assets, including gold and bonds, in the world. We're just not supposed to mention that Japan plundered Asia, Germany plundered Europe, and the rulers of Taiwan grabbed everything they could as they left China. And, of course, one could assume the US has plundered Iraq.

  24. Anonymous says:

    If real, US bonds seized by Italian customs would wipe out Italian budget deficit.

    Read: http://is.gd/102DE

  25. Michel says:

    Yes, the 40% fine for illegal export of money above 10,000 euros would account for this year deficit of Italian government (and maybe also for rebuilding Abruzzo region hit by an earthquake).

    Here in Italy newspapers and TV do not talk anymore of the fact. TV did never. Only bloggers are still debating it.

    BTW, I read also that the two "Japaneses" are not in jail, but were left free because illegal money export is not an offence granting jail in Italy. If the bonds are counterfeit, however, they will be charged for moeny forgery, which is a grave offence.
    BTW 2: the hats are those of Swiss and Italian finance police.

  26. Anonymous says:

    What if the value is real and Japan is hiding a major gold transaction with the Swiss?

  27. Anonymous says:

    The story does not make any sense regardless whether the bonds are fabricated or real. For that reason the story must be a fake story. That also explains why the official media keep quiet about it.

  28. Anonymous said...
    The story does not make any sense regardless whether the bonds are fabricated or real. For that reason the story must be a fake story. That also explains why the official media keep quiet about it.

    The story is real. Click here for more information inclusing links to two bloomberg articles.

    By the way, whether they are genuine or fake, the confiscated US bonds were no doubt heading to a "port franc". These places are a legal "no man's land", located in Switzerland but not officially on Swiss soil (like embassies). These "port franc" are used to store all types expensive and exotic (sometimes illegal) goods, including art, gold, weapons, bearer bonds, etc...

    My mother has been to Geneva's port franc several times to authenticate the art stored there (she is an art restorer).

    I will write an entry about these "port franc" over the weekend.

  29. Anonymous says:

    Perhaps the Japanese royal family is cashing out on their secret American investments to either pay off large debts outstanding or because they have lost confidence in their American partners?

  30. Anonymous says:

    nobody does any googling anymore? trillions of fake us bonds have been around for some time it seems...

    http://news.bbc.co.uk/2/hi/asia-pacific/1180171.stm

  31. EPC says:

    In Japanese it was first picked up by Kyodo on June 10 (cf. http://www.47news.jp/CN/200906/CN2009061001000996.html), in a press release based entirely on published Italian press sources (primarily an article in the national daily Il giornale).

    Searching for the following terms together -- "??2?" "????" "???" "??" -- yields "about 1,320" results on Google. But most of these are from minor news sources or blogs, not the major papers (Asahi, Yomiuri, Mainichi, Nikkei) or networks (Fuji Sankei, Asahi, etc.). So apparently the news is not being considered -- or treated -- as very important in Japan. And since the original article on June 10 (and recall that the ADNKronos story published on the Guardia di Finanza's official site is dated June 4) there do not seem to have been any new details appearing in Japanese.

  32. EPC says:

    On further searching, I did find initial articles published on June 11 by both Mainichi and Asahi, but simply repeating the Kyodo article.

    Oddly enough, the coverage in China has been almost zilch (despite all their laughter at Geithner). The only real _news_ report in Chinese on the incident was published June 12 by -- of all things -- the Voice of America (http://www.voanews.com/chinese/mobile/displaystory.cfm?id=643478&metadataid;=10), and the story has not been picked up by any other media outlet. The only other entries for this story in Chinese that show up on Google (searching for ??? ????? ???? and similar terms) are about 6-7 entries on blogs and Twitter pages.

  33. Anonymous says:

    First, with the US Treasury creating second, third and fourth sets of Balance Books, as is well known now, there is no telling anymore what is real money or not. The vague identity of these bonds is no surprise. What may be clear is that the "forgery" theory is rediculous, since only the upper elite on this planet handles custom-designed bonds of this size, and these are unavailable to normal markets. One could contest that all Bonds and US dollars are a forgery, since there are multiple, publicly inaccessible balance books that prove the actual value of any US-based currency. That aside. What the purpose of this bonds transport was is beyond anyone's scope. What does one do in Switzerland? Deposit cash, and/or buy gold. Why they got caught is the real matter. I think these Japanese guys were patsies, fall guys, uninformed, and well told how to travel, where and when, maybe even unaware of the actual content of their suitcase. Bonds are only worth money to those that think they are. The Treasury couldn't care less. They print them, stock them, and can declare them fake at a whimp. What is left is the agenda for this subtle scandal. Any news about anyone dumping 135 billion US dollars for Gold has an impact on the market. Follow the money. Next to that one might look at the international stage, to see whether there are factors to be found that may indicate why at this moment specifically, the Japanese government needed to be pressured, warned, or discredited through this loss of face.

  34. Anonymous says:

    Die Welt, German news site, claims US bonds, seized in Italy, are REAL. http://is.gd/11GLY

  35. Anonymous says:

    The article in "Die Welt" says only that according to Italian authorities the bonds are "probably real". The ultimate confirmation of the quality of these bonds can only be given by the US Treasury. So far, we have not heard anything from US authorities.

    Assuming that the bonds are real, what legitimate owner of these bonds would chose to transport them over the Italian Swiss border putting 40% of the bonds at risk to be confiscated by the Italian authorities? People are not that stupid.

    The only possibility left is an illegitimate owner of real bonds or an illegitimate owner of fake bonds. I still think that the bonds are a high quality scam.

  36. Anonymous says:

    This is certainly a interesting story. What I got from reading several articles is that Japan is dumping anything they have in US currency. Why they didnt know if these where real is because only governments can have such high value US bonds.
    Side note a ranking official in Japan has resigned this week.
    And I agree the US media is blacking out anything to do with this story. The only reporting I have seen is on the Glenn Beck show on the Fox news channel.

  37. GregZw says:

    Based on the amounts and countries involved, and the timing with the recent U.S. Treasury auctions, I wouldn't be surprised if the FED sent the money to Japan to buy the U.S Treasuries and send them back to the FED.

    The FED had been catching a lot of flack from China, Russia and others for buying U.S. Treasuries. Right after the auctions it turned out that Japan was the primary buyer and announced they had "great confidence" in U.S. Treasuries.

    The mister making the announcement recently resigned for some reason.

  38. Anonymous says:

    I'm from the US. US Government Bonds are issued in exchange for money with an agreement with the US Government to pay the money back plus interest. These Bonds have the purchasers name on the face of the Bond and the US Government has a record of whom the Bond was issued to. If the originally Bonds are lost, the US Government may chose to not pay the money back to the Bond purchaser. This allows the US to gain money from foreign countries by the issuance of the Bonds but not have to pay the money back. What a way to obtain wealth while the original investor gets screwed.

  39. Anonymous says:

    Here's something to consider. These guys may have been carrying Japanese passports, but are we sure they're actually from Japan? North Korea has been suspected of counterfeiting US currency. See this article from 2006.

    http://www.nytimes.com/2006/07/23/magazine/23counterfeit.html?pagewanted=all

  40. Anonymous says:

    This could be a false flag perpetrated by a group who bet the dollar would fall.

    They would need a lot of money to pull this off, but they would profit even more if it worked and the dollar fell sharply in the days following the news stories.

    Here's how it would work. A group of investors bet a very large sum the dollar will fall around that date. They basically short the dollar, perhaps with $20 billion.

    One of the leaders of the group hires an expert forger from Thailand who speaks no English to create the fake bonds. Maybe he spends $100,000 for the forgieres.

    He then hires two Japanese businessmen to carry the suitcases, but they don't know what's inside.

    The leader then gives a tip-off to the Italian police about the suitcases. If he didn't the police never would have found them hidden the way they were.

    When discovered on that certain date, the group leaders make sure all the newspapers hear about the story of Japan supposedly dumping $135 billion in dollars.

    Lo and behold, the dollar falls sharply in a few days, perhaps losing 2% or 3%, which means their $20 billion investment in "shorting the dollar" bring them $500 million profit in just a few days.

    At least, that's how the group leaders hoped it would go.

    In reality, Japan doesn't need to sell dollars on the black market. It can sell what it wants on the regular market no problem, but Japan doesn't want to sell dollars.

    It was a hoax perpetrated by a group who wanted to short the dollar to make a quick profit. To find the culprit, look for the biggest European group who promotes dollar sell offs and shorting the dollar.

  41. Anonymous says:

    Wow. So many paranoid nut jobs in one place. Amazing. This is just a case of some seriously stupid forgers doing a laughable job -- it's the international equivalent of that guy who tried to use a million dollar check at Wal-Mart. Not a real news story, except maybe for News of the Weird or This Is True. Sure did push y'all's buttons, tho! You folks need some fresh air.

  42. Jim says:

    I wouldn't call them seriously stupid forgers since they did such a good job of it. AFter all, it's not supposed to be easy to forge the bonds. Though these denominations never existed, and if they did, they would have only been owned by banks and governments, and they would have used electronic transfer as most transactions are done today. Excepting bearer bonds of course, but those of US origin (I believe this is correct though I no longer follow the market regs that closely since I left the field entirely in 2003) would have matured long ago.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>