Japanese caught smuggling $134 Billion in U.S bonds - trying to dump $US without causing a currency meltdown?

      Home » Current events and news » Japanese caught smuggling $134 Billion in U.S bonds - trying to dump $US without causing a currency meltdown?

Japanese caught smuggling $134 Billion in U.S bonds - trying to dump $US without causing a currency meltdown?

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 back story of this massive amount of money must be fascinating. Not to mention just how long the Japanese must have been monitored to be stopped at what is normally a non existent border.

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.


smuggled-bond.jpg - 39.71kb
By netchicken: posted on 11-6-2009

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.

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.

In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.

If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.

If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.

As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.

Some important international financial newspapers had already reported on the existence of ‘funny money’ circulating on parallel, i.e. unofficial, financial markets.

By netchicken: posted on 11-6-2009

Now with video!

Seen this on the main news yet? Nope, me neither ...

More http://www.businessinsider....

italianbonds.jpg - 22.03kb
By netchicken: posted on 12-6-2009

Did the Japanese try to dump their money on the black market? This provocative article thinks so. The action was an attempt to get rid of US Dollars without causing an international panic and run on the US Dollar.

These denominations are strictly for government-to-government transactions and are not found in the private sector.

The 16 primary dealers who make a market for US government debt are the only private sector organizations even remotely likely to have access to bonds of that size in paper or bearer form. However, the auction process is entirely electronic and has been so for decades ever since the Depository Trust and Clearing Corporation was established. This would suggest that these bonds, if real, belonged to a Central Bank.

As for forgery, it would be extremely difficult for a forger to make a successful market in denominations typically exclusive to central bank transactions because of the eyebrows it would raise.

This is why art forgers generally try to avoid replicating Rembrandt and other high-profile old Masters. The values are so high, and the market so thin, that the white-hot intensity of the screening process would immediately expose all but the very best counterfeiters.

The identities of the men captured have been withheld, and as of this writing (pending further developments) there is nothing to indicate that they have been formally charged with a crime.

The men captured are being treated with the courtesy normally provided to government agents. Colonel Mecarelli of the Guardia di Finanza in Italy said that he asked the SEC to verify the bonds authenticity, and that he expects a reply “within a few days” according to the Bloomberg article.

And then we have the suspicious comments uttered the following day by Yosano which were widely disseminated throughout the news media - with no immediate reference to what I have decided to refer to as the ‘Italian Incident’.

The $134.5 billion in US government bonds would have represented roughly a third of the Japanese’ debt holdings. As such, any attempt to liquidate them openly would have resulted in a panic- and a potential collapse of the Treasury market.

The evidence as of this writing strongly suggests that a major Central Bank, most likely the Japanese, attempted to liquidate $134.5 billion dollars in US government debt on the black market, at what would have to be a deep discount. The ‘Italian Incident’ is perhaps the biggest news story never to hit the front page.

Assuming this is in fact the case, it means that the market for Treasuries is inefficient. Vital price signals that would have been sent through an open liquidation have been suppressed due to parallel market activity.

These and other concerns have led to the increased popularity of TBT and ETFs that attempt to replicate the inverse performance of dollar and Treasury bond indices. I am not a fan of leveraged ETFS for reasons other than intra-day trading, but would strongly encourage investors to find ways both transparent and liquid to hedge their overall dollar exposures.

Much more http://seekingalpha.com/ins...
By netchicken: posted on 17-6-2009

This news article is still quietly growing. That such a massive financial event is still not mainstream news is as surprising as the news itself.

This isn't just pushed by tinfoil wearers on the fringe of the net, but mainstream financial websites such as this new article on Bloomberg.

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 incumbent 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.

By netchicken: posted on 18-6-2009

Japanese caught smuggling $134 Billion in U.S bonds - trying to dump $US without causing a currency meltdown? | [Login ]
Powered by XMB
Privacy Policy