Odd Stuff

UPDATES

2009-06-18T13:56:00.000-07:00

Smuggled $134 billion in T-bonds probably fakes, U.S. says

Speculation about the Italian smuggling case involving $134 billion in purported U.S. Treasury bonds may have been fun while it lasted, but the Treasury Department says today the bonds are bogus.

"They’re obvious fakes," said Treasury spokesman Steve Meyerhardt in Washington.

Two Japanese men were detained by Italian authorities last week after they were caught trying to enter Switzerland with what appeared to be $134 billion in U.S. Treasury bonds in a suitcase.

As I noted in this post on Wednesday, conspiracy theories have run wild in the blogosphere based on the few details that had emerged about the case -- and because mainstream media had largely ignored the story.

Meyerhardt said Treasury authorities could see immediately from photos of the bonds that they were doctored.

What’s more, the package of bonds was said to include "Kennedy" bonds worth $1 billion each. "There is no such thing as a Kennedy bond," Meyerhardt said.

Most important, the total of Treasury paper "bearer" bonds outstanding is a mere $105 million, he said. The Treasury has been issuing bonds solely in electronic form since 1986, although a relative handful of investors never bothered to convert their bearer bonds to electronic form.

And yes, I realize that there’s probably nothing Treasury can say to satisfy people who believe that there’s something more sinister going on here.

The big question, still, is what the apparent forgerers hoped to do with the paper.

Mafia blamed for $134bn fake Treasury bills

In Washington a US Secret Service official said the agency, which is working with the Italian authorities, believed the bonds were fake.

Officials in Tokyo were nonplussed. Takeshi Akamatsu, a Japanese foreign ministry press secretary, said Italian authorities had confirmed that two men carrying Japanese passports had been questioned in the bond case but Tokyo had not been informed of their names or whereabouts.

“We don’t know where they are now,” Mr Akamatsu said.

Italian officials, while pointing out that hauls of counterfeit money and Treasury bills were not unusual, were stunned by the amount involved. Investigators are looking into the origin and destination of the fakes.

Italian prosecutors revealed last month that they had cracked a $1bn bond scam run by the Sicilian Mafia, with the alleged aid of corrupt officials in Venezuela’s central bank. Twenty people were arrested in four countries.

The fake bonds were to have been used as collateral to open credit lines with banks, Reuters news agency reported. The Venezuelan central bank denied the accusations.

Glenn Beck: Men Caught With Billions in U.S. Bonds—Why is the Obama Media Silent?

2009-06-16T19:24:00.000-07:00

The mysterious case of the $134 Billion in US Bonds

2009-06-14T11:23:00.000-07:00

What's the story behind the mysterious $134 Billion in US Bonds?
There does indeed appear to be something very fishy about this as we shall see.

Timeline of events:

June 3rd 2009
Two Japanese men stopped at the Swiss/Italian border trying to cross into Switzerland.

June 4th 2009
Guardia di Finanza in Como, Italy's financial police; posted the case online.
Link to official post.

June 5th 2009
Italian news picks up the story.

June 6th 2009
Italian news posts more details
Link to news post.

extract (translated from Italian to English by google)

The two Japanese - this is so far the reconstruction possible - meet their 'load' in Milan on the afternoon of Tuesday, perhaps Wednesday morning. To be sure, the two Tuesday night sleeping in a hotel of the center. The next morning, with the two suitcases fixing, embarking into Switzerland. Could get on the Intercity depart from Central Station which landed directly in Lugano. Instead go to Porta Garibaldi, a station by commuters, and take a train from commuters who stopped riding on the border. The regional 10,854 of 13.38, a kind of care that stops power at all stations - Lentate, Carimate, Cermenate, Cucciago so on - and takes an hour and six minutes to reach the border. The two Japanese, of course, matter more to go unnoticed that in a hurry.
But, once in Chiasso, unnoticed can not pass. The border now officially no longer manned, since Switzerland joined the Schengen Agreement. But customs officials and financiers are still there, and money from traveling even dark here and across the border. The altr'anno had caught a hundred million Americans securities. A few days ago, eight hundred thousand euros of securities in Luxembourg. Less than small change, facing the incredible loot that jumps out of two suitcases. "As a bond by a billion dollars - tells a specialist journal in the art - I never even heard speak. If there are, I believe that circulate only in relations between States. " To understand who the hell are these titles, spoke yesterday of the 007 United States, the Secret Service dell'ambasciata Rome. The international intrigue is only just beginning.

June 11th 2009
The story gets picked up by Japanese media and a few blogs.

June 11th 2009

U.S. Treasury Secretary Timothy Geithner on Friday will meet Japanese Finance Minister Kaoru Yosano and Russian Finance Minister Alexei Kudrin in Italy, the Treasury Department said on Thursday.

June 12th 2009

Japan says trust in Treasuries unshakable.
Yields on 10-year notes fell after Japanese Finance Minister Kaoru Yosano said yesterday that his nation’s confidence in U.S. securities is “unshakable.” A class of investors that includes foreign central banks bought a greater- than-average amount of U.S. debt at the Treasury’s sales this week. Government securities tumbled earlier in the week after Russia said it may switch some reserves from Treasuries.
Japan minister resigns in fresh blow to PM.
The story goes viral and pops up all over the web in both media sites and blogs. Theories run rampant.

And that is the story so far.

Some interesting facts to absorb.

The United States has not issued bearer securities since 1982, completing a process started in 1966. $7.5 million in Treasury securities were "mislaid" by one of the Federal Reserve banks in 1962, which started the move to book entry.

According to the Treasury, less than 1% of "Marketable Treasury securities" exist in bearer form. $134 billion is an interesting number suddenly- unless there is some nuance to "Marketable" here.

Assuming for a moment that the bonds are legitimate, the timing is interesting in the face of deteriorating confidence in U.S. Debt. What would two Japanese (appearing) men be doing with such a large sum? Several days later the Japanese consulate is still unable to confirm they are even Japanese nationals. That's odd.

If a theft, it would certainly be the largest on record ever. And in such amounts, it seems clear that only government connivance would make such an "operation" possible. Quietly unloading Treasuries in Switzerland? Or establishing a cash pile abroad for a bit of extraterritorial QE? Buying Treasuries with credit established with a bunch of long off the books Treasuries? That's pretty recursive. I like it.
Source

Stay tuned as more will be posted here as it comes in.