This recent strange and ominous event will no doubt lead to an interesting story. Just how do two Japanese nationals get caught with U.S. government bonds, in this amount?
134.5 billion USD — Real or Fake
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Well, it could be that the North Koreans have learned a more lucrative counterfeit money scheme – and are using the sympathetic Japanese Korean community in Japan to launder the money in Europe. It seems that bonds like these wouldn’t be too hard to smuggle across borders – how hard would it be to deposit bogus bonds with a bank?
There was simular case here in Korea a few years ago:
http://joongangdaily.joins.com/article/view.asp?aid=2756466
To be fair though, the “counterfeiting” bonds is quite easy. In a past life I worked for Xerox, and they had color copiers that would copy things currency so crisp you would not believe it, and as a coincidence the print felt slightly embossed like a real bill due to the waxy inks used in the copier. The only thing that gave it away was the standard typing paper the machine used. There was a rumor that the machine micro-printed in the margins a serial number so if a fake bill was found it would give a lead in who printed the thing.
Anyway to my point, given how few people actually see US Bonds regularly, when compared to US currency, I think it would be easy to make something on the computer that would dupe some schmo for pennies on the dollar.
They are Japanese. Therefore, they are innocent. This is clearly something perpetrated by nasty Koreans to besmirch the good name of the Japanese.
Sincerely,
Gerry Bevers & “Matt”
Mother of God that is awesome. If those aren’t 100% legitimate bonds imagine the balls it must have taken to try that, either that or they were batshit insane.
Something of the old world glamour about bonds..those papers look so quaint and innocuous yet so, powerful..
According to an update on this link, the bonds have been confirmed as real, and they were issued by the US federal reserve bank. And Italy is about to collect $40 billion of these dollars as fines. I don’t know how much truth there is on this story. But can it be possible Japan is secretly dumping the US treasuries?
Sorry here’s the link
http://www.dailykos.com/storyonly/2009/6/13/742096/-Japan,Italy,and-U.S.,-134-Billion-in-US-Bonds-Smuggling-Case
Going back to Italian duty, if the bills turn out to be real, according to Bloomberg, Italy stands to collect 40% of the bonds due to illegal non-declaration of the money. That will make it 53.8 billion dollars, not 40 billion dollars. That’s should beef up the Italian economy a little.
A couple thoughts:
If the bonds are real, they can presumably be traced back to the Japanese government, if that’s who bought them originally. So, does it really make much difference to sell them in person in Switzerland, as opposed to wiring it to Switzerland?
Secondly, how tight can security be between Italy and Switzerland? I imagine you probably don’t have to get out of your car when crossing the border, do you? So what are the chances that a briefcase would be searched, and a secret compartment within that brief case discovered? Very unlikely I’d bet. So someone must have been tipped off ahead of time.
#9
It’s because they are playing the Contraband Game of the manga/drama series “Liar Game” in real life.
If they’re not bearer bonds it should be relatively easy to figure out if they’re fake or not. Does the US have 130 billion dollars worth of bearer bonds in circulation? Does the Japanese Government buy bearer bonds?
This is so crazy I don’t know what to think. I wouldn’t worry too much about Japan dumping treasuries. If the guys are Japanese it’s probably purely coincidental and something to do with not sending Ecuadorian mules over the border because they always get searched. If they’re smuggling them into Switzerland it’s probably to hide them in a vault somewhere, not to flog them on the open market. I could just about imagine that someone in the Japanese Government is caught up in some grand money laundering deal, but I doubt it.
Dumping treasuries would be a dumb thing to do anyway, much better to just stop buying new ones. If Japan stops buying treasuries you’ll see it in the auctions first, not in the secondary market.
Someone who has 130 billion dollars to move around isn’t going to be best pleased if Italy uses the money to pay off their debts. And if ever there was a country that had too many friends with 130 billion dollars to hide in a suitcase…
Here’s more on this in this link. The thing is getting more bizzar by the minute.
http://www.asianews.it/index.php?l=en&art=15505&size=A
The US bond is in grave turmoil. The interest rates are rising quickly as the US government is borrowing like crazy in their last ditch effort to stave off financial disaster and they’re digging a deeper hole! What’s strange is that this story is curiously so under reported and unreported. Why? Because they want to keep the massive panic from happening? The bonds could be a fake. But I also wouldn’t be surprised if this story is somehow linked to the panic that’s gripping the US.
If you have mortgages coming due shortly, I would tie them up long time. The interest rates are surely about to rise big time. The ride’s going to get real rough in the coming years.
Let’s not panic, according to Bloomburg the bonds were issued in 1934, before denominations of $500 million were printed, hence they are fake.
And, you would think that any bank or anyone else able to purchase $500 million in US bonds would check to see if they were authentic.
I bet that these were printed in N Korea, carried by sympathizers from Japan to Europe, where the Italians or Swiss were tipped off and promptly arrested them.
In and out of Switzerland is probably the most guarded border in Western Europe. The last time I crossed to Italy from Switzerland I was only asked what was in my bags by the Italian Border guards. But other times I’ve had people actually open them up and look. Must be because I look suspicious.
They probably also do the occasional rigorous random check for statistical purposes, just like they do at airports.
Very interesting indeed. I first dismissed cm’s statements as typical conspiracy theory (sorry, cm, but you do have a bit of a hair trigger when it comes to economics), but the bonds do almost certainly have to have come from a sovereign government. The amount is just TOO LARGE to have been scraped together by a tycoon (the world’s richest men are worth about $40bil, and that’s measured in total assets. Bill Gates and Warren Buffet can’t just lay their hands on even $10 in liquid bonds without someone noticing). Also not surprised they were confirmed as authentic. Again, the value is just too large for anyone to think they could pass it off as legit if it weren’t.
That said, I absolutely do not buy the suggestion that Japan is trying to get out of Treasuries. That would be MAD*. But lord, if that turned out the be the case, well, the world as we know it would end. Buy bottled water, tinned food, guns and bullets, convert your cash to gold, hunker down.
This story will be very interesting to see unfold. There can be a simple bungling-crook explanation for $130mil, but not for $130bil. And the story could extend almost anywhere – just because the transporters were Japanese doesn’t mean they weren’t carrying the property of some tinpot ruler from Africa, Central Europe, Latin America, etc.
mutual assured destruction
Here’s the link:
http://www.bloomberg.com/apps/news?pid=20601101&sid=afJXAA1ahZyo
^ Let’s hope that you are right.
But if this turns out to be real bonds, this could cause a global financial panic. In which case, I wouldn’t be surprised if the Italian, Japanese, and US governments collude with each other and pin this on North Korea.
Ah, well then, it really could just be a couple of idiots with a high-quality photocopier and no concept of how much money $130bil is.
cm’s advice on the banking sector back in February;
http://www.rjkoehler.com/2009/02/21/the-crisis-of-credit-visualized/#comment-212839
S&P 500 performance since the last week of February? Up 25%.
Awesome. This is not the place to come for investment advice. cm screams “Sell!!”, timed within one week of the actual bottom, and I was on here back in July or August screaming “Buy!”, maybe a month before the great September cliff dive.
Unless they’re zero coupon bonds (and again, 130 billion dollars worth of zero coupons?) then the beneficial owner would need to be registered somewhere as you need to know who to send the coupon payments to. The only reason you’d give up the coupon payments and hide them in Switzerland is if you were up to some really crocked shit that made it worthwhile giving up around a billion dollars a year. Plus it’s presumably easier to forge old bonds than new ones.
It’s looking increasingly likely that they’re fake.
Ah yes, that reminds me, I should price up the UK-Korea default swap trade that I was going on about way back when. With the coupon payments and the benign outlook I suspect the Chosun Ilbo is doing quite well out of it by now.
They would have been perceived as less fake if the value was something believable like millions instead of billions…which begs the next question, why 134.5 billion? Why not go the whole hog and print 134.6 trillion gzillion googleplex ? Did they run out of toner?
If the men were in their 20′s or even early 30′s with coloured contact lens, I think they were doing cosplay for Liar Game and that was part of their prop.
“S&P 500 performance since the last week of February? Up 25%”
What I didn’t expect was investors falling for all the lies and phony figures that the US government put out. There are absolutely nothing that indicates those stocks should be that high – it’s totally driven by wishful thinking and sentiments, rather than any real hard recovery wrapped in numbers like job figures. This leads me to believe the we’re heading for even a bigger fall after this bear market rally is over.
cm also has some gold he would like to sell to you, too, by the way.
Laugh now dokdoforever, but mark my words, the hard times are coming soon. The charade can’t be kept on forever. Look at the US numbers of a complete collapse of the credit market (despite what the US government keeps saying). This all effects everyone’s wealth with severe future consequences.
Have to agree with cm on the state of the economy;
http://www.financialarmageddon.com/
http://www.economicroadmap.com/
Have been following Michael Panazer for the past year and he has been scarily right so far…
if I recall, cm had bought into the “peak oil” theory and was warning his fellow MH’ers of the imminent falling of the sky/armageddon because of that too.
Good point cmm. Look at the oil prices today, how it’s gotten so how so quickly.
You really think we’re out of the woods on both of those new realities?
I might have missed the discussion on this, but does anybody remember an incident back in 2001 or 2002, post 9/11 I believe. when an Asian criminal suspect – I think he was a Chinese-Filipino who was accused of some kind of financial scam – threatened to unleash a wave of fake US treasury bonds on the market and collapse the entire US economy if he and his criminal gang was not left alone. It was reported for about 1 or 2 days and then I never saw any follow up.
The quickness of the death of this story – given its potential magnitude – struck a chord.
Also, I agree with someone above who says there must have been a tipoff. people don’t usually go looking for false bottoms in suitcases of Japanese businessmen traveling to Switzerland, do they? And even if they do, wouldn’t it more likely be the Swiss at the incoming border control rather than the Italians at the outgoing?
This whole things smells very funny.
No, not very convinced we are out of the woods, but very convinced that the situation will not be as dire as you were trumpeting.
Yeah hamel that was me who thought it was a tip off. If the border crossing is like airport security, with X ray machines, than it might be possible to turn up a false bottom of a briefcase. Otherwise, it would be nearly impossible I think.
On the other hand, don’t you think that whoever would buy these fake treasury bonds (for $500 million!) would bother trying to authenticate them? On second thought, it doesn’t seem so plausible to try to pass one of these off on someone.
And, isn’t it frustrating how interesting stories like this just tend to die off? There’s never any follow through from the media. They don’t seem to have the patience to wait for answers. Take the story on flight 447 for instance. The media is fascinated by the sensationalism of the plane crash, but now no more updates on the investigation into why the plane went down. We’ll be very lucky if we ever hear any more about the smuggled $134 billion again.
Don’t worry! President Palin will have a plan.
Someone once came to a certain local law firm with a photocopy of a one-million dollar bill, supposedly from the 20s or 30s, and wanted to know if he should accept it as payment for a smaller obligation. Well, a simple Wiki check said that the largest bills ever produced were $100,000 in denomination, and that they didn’t look like a Franklin with some zeroes added. I have since wondered if one of P.T. Barnum’s suckers ever went for it.
Forget the media. This story is tailor-made for the internet. I think someone should set up a page and dig to the bottom of it. The internet really needs more sites like that.
The best story I’ve heard so far is that the US has secretly and illegally been issuing bearer bonds to the Japanese to hide the size of the deficit. They’ll deny it, claim the bonds are fake, the Japanese will deny it, even the mules will eventually be forced to admit that Kennedy bonds don’t exist, but some intrepid netizen will smell a rat and continue digging until he has a site with 528 pages of evidence to prove a cover up. So just sit back, relax, and wait for the internet to do its thing.
maotai, if those are the types of financial blogs you’re into, I think you’ll be happy to meet Karl Denninger:
http://market-ticker.denninger.net/
Enjoy!
Undoubtedly. I’ve had to deal with one or another such foolish inquiry every year like clockwork since I’ve been working in Korea. Some Korean guy comes in and shows us an Eleventy-Billion Dollar Treasury Bond with a picture of Bozo the Clown on it that he bought for W500,000,000 or something, and wants us to verify its authenticity. And then he wants to argue with us — often quite vociferously — that we’re wrong.
I was recently given some Zimbabwean currency as a gift – a single note with a face value of 100 trillion dollars! I was told that, at the time it was issued, it had a relative value of W1,000. They’ve apparently issued a newer form of currency, so this bill is no longer legal tender there, but all those zeros still surprise.
Brendon Carr (#34) wrote of the hard times coming:
“Don’t worry! President Palin will have a plan.”
Maybe, Brendon, but everything that she does will then be undone by her hanger-on husband, Palin-drone, who does everything backasswards.
Jeffery Hodges
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