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XMFSinchiruna (27.56)

The Surreal Life of the U.S. Dollar: the $134.5 Billion Bond Scandal in Focus!

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June 22, 2009 – Comments (48)

By this point, many of you Fools will have caught wind of the great bond caper that occured in northern Italy June 3. What began as a virtual press blackout has gradually emerged as a global news event, but despite the gradual uptick in international coverage, the shroud of mystery and intrigue surrounding this bizarre event still hangs in the air like a truth-obscuring smog.

Here is my article on the series of compelling dollar-related mysteries of the past couple of weeks. Please read it first, rec it if you apreciate the coverage, and return here for discussion. I want to know your thoughts on this matter, which I think is potentially one of the most fascinating chain of events I've witnessed in world news in many years! I urge all Fools to take a personal interest in seeing that a comprehensive and satisfactory explanation of these events is offered to the citizens of the world.

http://www.fool.com/investing/general/2009/06/22/the-surreal-life-of-the-us-dollar.aspx

$134 billion in U.S. Treasury bearer bonds were recovered by Italian authorities from two Japanese nationals attempting to cross into Switzerland. Treasury would like us to believe that these were unimpressive forgeries, depicting bonds of a type that never even existed, but early reports from the Italian agents on the scene described the bonds as "filigree paper of excellent quality" and that they "seem credible / believeable" (as per Sinchi-verified translation from German news site Handelsblatt.com). Asia News reported that if the bonds were fake, "the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones". 

Incredibly, by the time we received treasury's statement that the bonds are fake, we learn that japanese media have declared that the alleged smugglers were released, and that their whereabouts are unknown. Are you kidding me? ... busted smuggling $134 billion, and they were free to go? This simply does not add up, and I urge all Fools to join me in demanding an honest explanation of these events from our very own favorite admitted tax-evader: Tim Geithner.

In a vacuum of facts that make even a lick of sense, there is plenty of speculation running through the web, and under the circumstances I think some serious questioning is in order. If ever a news story has stunk to high heaven, this is it. 

See also: "Strange Inconsistencies in the $134.5 billion bearer bond mystery" from SeekingAlpha.com

Something stinks to high heaven here.

Fool on!

 

 

 

48 Comments – Post Your Own

#1) On June 22, 2009 at 6:06 PM, XMFSinchiruna (27.56) wrote:

sorry for typos above. :)

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#2) On June 22, 2009 at 9:21 PM, Option1307 (29.95) wrote:

Nice write up as usual Sinch!


I've bene following this event carefully the past few weeks and it still just baffles me.

This is either A) the biggest fraud in history, or B) somebody/group is trying to secretly dump massive amounts of US bonds...Both of those scenaris seem like a bombshell and a huge news story. Yet, the "facts" are seemingly impossibe to determine here and there has been very little domestic repoting. Whats the deal with that?

I'm not one to jump on the conspiracy bandwagon, but doesn't this whole event just make you go "hu"?

If these Bonds really are obvious fakes, why doesn't the treasury come right out and say that and show pictures? If this is a massive fraud, say it with authority.

The US governemnt is already walking a fine line in terms of their credibility, and this BS surrounding this seemingly large event is not helping their street credit any...

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#3) On June 22, 2009 at 10:08 PM, Bays (30.17) wrote:

No way!!!!! Keep us updated on this one Sinch.

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#4) On June 22, 2009 at 10:11 PM, binve (< 20) wrote:

Sinch, ... wow. No I had not heard this yet. That is just crazy. Thanks for the post!

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#5) On June 22, 2009 at 10:24 PM, russiangambit (29.31) wrote:

Denninger has been following this saga, and I tell you, it could be made in a book and it would become a bestseller. If the men were released, then the bonds must've been real.Or they had diplomatic immunity, in which case the bonds also real.

So, japanese are trying to get rid of bonds quietly so that US doesn't get upset. It is the only explanation that makes sense.

A twist to it is that somebody apparently tipped off italians. Why? Somebody wanted the dollar collapse, I would guess. But who would have this kind of knowledge and be short dollars at the same time? I have a couple ideas but I think they are better to be left for the bestseller.

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#6) On June 22, 2009 at 10:33 PM, XMFSinchiruna (27.56) wrote:

russiangambit

It is the only explanation that makes sense.

I have to differ with you there, russian ... I think that several alternate explanations could also make sense, including the possibility that authentic bonds were issued to the Japanese in the lead-up to the G8 summit as compensation for co-operation on several levels (for example pledging their unshakable confidence in Treasury debt). In executing such a deal, the U.S. could essentially undertake further quantitative easing to back ongoing spending without it showing up publicly as QE.

I'm not saying that's what happened, but offering it as another potential scenario to point out that other plausible explanations exist ... in fact several could be dreamed up in a mysterious event like this. Fools need to continue to demand coverage / information, and are advised to remain skeptical of official explanations unless they are both fully documented by verifiable evidence and consistent with all the verifiable information reported thus far.

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#7) On June 22, 2009 at 11:33 PM, jesusfreakinco (28.93) wrote:

Chris,

Good blog.  I have seen this is several places such as bloomberg and Jsminset.  Please update the post if you see any more info on it.  This is a critical issue.

JFC

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#8) On June 22, 2009 at 11:37 PM, angusthermopylae (40.13) wrote:

I would offer another counterpoint to the "crashing the dollar" belief:  If the bonds are put in a Swiss bank, or even converted into another currency, would they still be out of circulation because the new owners are still holding them?

And if the bonds were to be deposited into a Mad Genius's Swiss bank account, then they are also out of circulation  (until they pay for the Death Ray...and cue "Skullcrusher Mountain" as the soundtrack.)

It's not like someone can discreetly spend $134.5 billion...

Fears about hyperinflation and a collapsing dollar might be justified in the end, but it appears that a lot of "money" that everyone has been screaming about is actually tied up in assets that aren't liquid--they exist on paper, but actually don't do much to expand and overheat the money supply.  That's one of the current complaints about TARP and banks; they aren't lending that much more, despite all the government backing.

I would add that to the inconsistencies and illogical explanations around this whole story.

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#9) On June 23, 2009 at 7:40 AM, abitare (87.45) wrote:

itulips has the story:

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#10) On June 23, 2009 at 8:50 AM, TigerPack1 (97.60) wrote:

Gold priced in foreign currencies is at a 5-month LOW this morning, after adjusting for changes in the U.S. currency.

If the U.S. Dollar confounds conventional wisdom and rises a minor 10%-15% vs. other currencies into December, the U.S. gold price may end 2009 closer to $800US an ounce vs. the $1000+ mainstream investor expectation today.

-Food for Thought

 

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#11) On June 23, 2009 at 9:07 AM, XMFSinchiruna (27.56) wrote:

TigerPack

I have allowed for that possiblity throughout my recent coverage of pms, though I consider it a highly unlikely scenario since there exists no single identifiable source of support for the USD and no identifiable accelerant to losses for global currencies that would not also impact the dollar equivalently or to a greater extent. 

Because of the inevitability of the dollar's decline, from a fundamental standpoint, the dollar would already have broken below 0.80 without the help of desperate manipulation by powerful stakeholders, and gold would already be well over $1,000. Anything above 0.80 for the USDX is a selling opportunity to purge additional exposure to USD-denominated assets, just as any price (whether it be $800 or $900) below the $1,000 mark is an amazing opportunity to add exposure to the world's best hedge against a deteriorating greenback.

Fool on!

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#12) On June 23, 2009 at 9:28 AM, portefeuille (99.65) wrote:

I heard of the story via someone telling me about it (he had heard it in the main German television news as they did cover it from "day one"). My reaction was: "You mean millions, not billions ..."

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#13) On June 23, 2009 at 9:40 AM, AnomaLee (28.66) wrote:

I think that several alternate explanations could also make sense, including the possibility that authentic bonds were issued to the Japanese in the lead-up to the G8 summit as compensation for co-operation on several levels (for example pledging their unshakable confidence in Treasury debt).

Sinch,

These operations are typically electronic transfers. Since the "pepetrators" were quietly released I think it's fairly safe to assume that they had ties to very influential political and/or financial figures.

The fact that these bonds (bond notes) were hard copies makes it more likely that they were promisary notes and the purpose of the trip was to execute a transfer of ownership.

I'm sure there is plenty of intelligence on this matter. The fact that these two individuals were stopped is an indication of that. It "just so happened" that "lowly security guards" unveiled the story.

I wouldn't count out the dollar making one last rally and strongly hold above 80 for most of this year. From a TA standpoint it seems likely, and TA functions control the Forex market more than any other.

I've been waiting for gold prices to dip below $890 before I consider buying. Long term I think gold and the dollar will be negatively correlated with gold prices reaching $1700 by 2011.

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#14) On June 23, 2009 at 9:42 AM, XMFSinchiruna (27.56) wrote:

angusthermopylae

As a point of fact, if the bonds were "converted to another currency", then $134.5 billion in USD would be recirculated in the process.

This is no mad genius if the bonds are in fact real. :) Sums of this magnitude are only held by sovereign entities.

 

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#15) On June 23, 2009 at 9:43 AM, portefeuille (99.65) wrote:

Gold priced in foreign currencies is at a 5-month LOW this morning, after adjusting for changes in the U.S. currency.

gold spot in EUR

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#16) On June 23, 2009 at 9:56 AM, XMFSinchiruna (27.56) wrote:

AnomaLee

I wouldn't count out the dollar making one last rally and strongly hold above 80 for most of this year. From a TA standpoint it seems likely, and TA functions control the Forex market more than any other.

From a TA standpoint, the dollar remains in a long-term decline that featured one freakishly anomolous rally already. USDX's inability to gain much ground since recapturing the 0.80 mark recently is technically unimpressive in my opinion, and suggests that sub-0.80 territory is beckoning with a powerful magnet. 

If the dollar rallies, it will not be because of free-market technical flows as much as orchestrated by powerful folks in a hail mary pass to buy our terminally ill currency some crucial time.

I won't rule out one last move into the mid-0.80s on the USDX, but I wouldn't expect it to last the remainder of the year, and I would view it as nothing more than a further-enhanced buying opportunity for gold and silver.

Solid gold support stands at the 200 DMA near $870. If we break below $900 gold, then sub-$880 is where I will be going all in. And again, the beautiful part about investing in-line with unavoidable long-term fundamental drivers is that even if my target prices turn out to be wrong (since I believe no one can consistently time short-term market movements, and always invest with the understanding that I may be wrong in the short-term price expectations), I'll sleep well knowing that at $2,000 gold I won't sweat such minor diffferences in entry points.

Thanks for commenting, AnomaLee.

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#17) On June 23, 2009 at 2:17 PM, gunark (77.70) wrote:

Some of you need to stop massaging your own nipples and come back to reality. The possibility that these papers were real is somewhere between slim to none.

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#18) On June 23, 2009 at 2:29 PM, XMFSinchiruna (27.56) wrote:

gunark

On what basis are you staking that claim?

If they were forgeries, why were the counterfeitors released without prosecution?

Why would conterfeitors of sufficient skill to cause Italian customs agents to note their credible appearance be dumb enough to think that bonds totalling such a ridiculous sum would not be authenticated by whatever means necessary before any willing buyer could be found. Counterfeitors avoid the scrutiny of careful authentication by sticking to smaller denominations.

I'm not saying they were real, but just raising the logical questions that arise from these unavoidably mysterious inconsistencies in the "official" story.

It's fine if you're resistent to entertaining potential scenarios that differ from the official story, but to do so effectively you have to help us to understand the glaring inconsistencies.

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#19) On June 23, 2009 at 2:53 PM, jmt587 (99.87) wrote:

To add to the mystery, just over a year ago, on a vacation to Europe, while in Rome, my girlfriend and I met a Japanese prince in a bar, and we went with him and an Italian woman to his apartment, where we hung out and drank some special liquor he had.  I don't know if there is a connection to the forged(?) bonds, but my gut tells me that there must be!

Ok, I kid, but we really did meet a Japanese prince and go hang out with him at his apartment with an Italian woman.  I have pictures, or at least a blog post from last year (not on the fool) that I can send you, if anyone doesn't believe me!!  I don't know what that liquor was, but man were we hung over the next morning.  We missed our fast train to Naples, and had to take the slow regional one.  That was a miserable train ride.

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#20) On June 23, 2009 at 5:20 PM, gunark (77.70) wrote:

f they were forgeries, why were the counterfeitors released without prosecution?

Possibly because once the italians figured out that they had mistaken monopoly money for US treasury bonds, they thought it might be best to save any further embarassment/attention and make this go away.

Why would conterfeitors of sufficient skill to cause Italian customs agents to note their credible appearance be dumb enough to think that bonds totalling such a ridiculous sum would not be authenticated by whatever means necessary before any willing buyer could be found. Counterfeitors avoid the scrutiny of careful authentication by sticking to smaller denominations.

Have you ever dealt with "Italian customs agents"? If you had, you probably wouldn't be asking this. In my experience they are somewhere between alarmingly incompetent and outright retarded (the ones at the Fiumicino airport in Rome at least).

I'm not saying they were real, but just raising the logical questions that arise from these unavoidably mysterious inconsistencies in the "official" story.

If there is some sort of cover up here, chances are it's much, much more mundane and less interesting than we would all hope.

I know, it's titilating to think that something like this could happen just as it's titlating to think that the lottery ticket in my pocket might be a winner, but the chances of the former being true are about as great as that of the latter.

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#21) On June 23, 2009 at 6:03 PM, XMFSinchiruna (27.56) wrote:

gunark

Your response to the first point is nonsensical. Photographs of the bonds are in the public record ... they were at the very least solid attempts at forgeries. I am nearly fluent in Italian, and have read the local coverage of the events ... customs agents on the Swiss border crossings are no strangers to forged currency instruments. If these were fakes, they were excellent fakes with respect to their appearance and the paper on which they were printed. That much has been established as fact.

As to your second point, I have indeed had first-hand experience with Italian customs on at least 12 occasions, and speak their language quite comfortably. I've had my bags inspected, and found them to quite thorough, and I differ entirely with your derogatory characterization of their intelligence and/or competence. That point of yours also skirted the question entirely, which had nothing to do with the customs agents, but rather the obvious scrutiny that bearer bonds would be subjected to buy any potential buyer when dealing with $500 million and $1 billion denominations.

I don't "hope" that there is some wild story of global conspiracy behind these events ... to hope for such would be to hope for the undermined confidence in U.S. dollar paper assets and the likelihood that game-changing events are underway behind the scenes ... away from the eyes of public scrutiny. I would never hope for such things to be true.

"Something like this" did just happen. The world is crying foul, because something doesn't add up. With all due respect, the likelihood that your explanation is correct ... that they were two really poor-quality counterfeitors whose bad forgeries representing unprecedented sums in obscure bearer bonds fooled retarded (your word) customs agents, causing such embarrassment that the apprehended criminals were immediately released without so much as a slap on the wrist, even as the whole world watches ... that scenario which you offer makes no rational sense whatsoever.

I know it's titilating to think that only truth emanates from official sources like the media and the U.S. Treasury, but Fools know otherwise.

Your arguments are entirely unconvincing, and amount to turning a blind eye to the available evidence. You're going to have to do a LOT better of you intend to convince anyone on this forum that there are not significant portions of this story that are being witheld from public consumption because of their potential implications.

 

 

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#22) On June 23, 2009 at 6:20 PM, XMFSinchiruna (27.56) wrote:

Free-thinking Fools will want to pay close attention to this article:

http://www.ft.com/cms/s/0/82091ec2-5c2f-11de-aea3-00144feabdc0.html

Note how the author leads with an enormously impactful headline that pins the whole caper on the mafia in no uncertain terms. Then, note how the only evidence presented that could actually link these events to the mafia is the fact that a $1 billion bond scam was recently pinned to the Sicilian mafia with help from Venezuelan central bankers.

Rationally speaking, if you're the Sicilian mafia, and your $1 billion bond scam is broken up by authorities and the perpetrators apprehended, is your next move to try a similar scam weeks later with much, much larger sums of money that would draw added attention every step of the way? (From the sale process, to the laundering process, etc.]. Of course not. Until it is revealed what reason authorities have to suspect the mafia in this $134 billion caper, this Fool remains entirely unconvinced.

As an added inconsistency, this article reports that the $1 billion Kennedy bonds were "used as inter-government payments", while Bloomberg reported that $1 billion Kenedy bonds in fact never existed. Again, it does not stand up to rational scrutiny, and if ever Fools have had cause to be skeptical about the real event behind a scandal ... this would be the time!

 

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#23) On June 24, 2009 at 12:34 AM, angusthermopylae (40.13) wrote:

Sinch,

I'm still trying to understand how "converting  to another currency" would put USD out there.

I take in $134.5 billion in these bonds to the Swiss.  I say, "Give me yen, marks, and British pounds."  They give me those currencies, and I leave.  The other currencies are now in my pocket, ready to be spent.  The $134.5 billion in bonds is still sitting with the Swiss...not in circulation.

OTOH, if I said, "Give me $134.5 billion in USD", that would increase the US dollar supply...or would it?  Those actual dollars would have to come from somewhere...normally money in actual circulation.  Nothing new would be created, just moved around.

The only scenario where those bonds would increase the actual money supply is if/when they were turned in to the US Treasury for actual cash.  "Hey, I got this stack of IOUs here...."

(OTOH, if they made their way to a bank that could use them as an asset in a fractional reserve system, that surely would cause a problem...about 10-fold, right?)

I'm not saying that, ultimately, that wouldn't happen.  But if the bonds were real, then they were already out there, being counted as an asset on one or more country's/corporation's/mob boss's books.

If they weren't real...then that just goes right back to "Boy, that was a stupid attempt."

In the end, I absolutely agree--nothing in this story, it's explanations, or the current results make any sense.  I think we're not getting the whole story because, real or forgery, someone big is trying to prevent a major embarassment.

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#24) On June 24, 2009 at 8:27 AM, XMFSinchiruna (27.56) wrote:

angusthermopylae

I never said they'd increase the money supply, just that USD would be circulated by any transaction. No buyer is going to give you a different currency that those in which the bonds are denominated unless the seller is willing to take a substantial discount on the face value of the bonds. Otherwise, they would be exchanged for USD and then exchanged into another currency in a two-stage transaction. That's just how transactions of that magnitude are handled.

The question is moot anyway, since you're failing to realize just how large a sum $134.5 billion is. I don't fault you in this, as the sticker shock of all the events of the past year makes it hard to conceptualize that this is still an enormous sum ... but it truly is. :) There is NO BANK you can walk into in the world and expect to convert anything for $134.5 billion. Transactions of such scale are only handled at the highest level of central banks, which gets back to the scrutiny issue I mentioned above.

You're making guesses about money supply issues that are very complex ... which is not advised. Money supply is not affected even when you redeem Treasuries, since money was created at the ISSUANCE of those bonds ... not at redemption.

Thanks for the discussion ... these are important points, and please don't take my straightforward reply as anything other than a speedy response to a complex set of issues. :)

Fool on!

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#25) On June 24, 2009 at 8:34 AM, XMFSinchiruna (27.56) wrote:

"The lie can be maintained only for such time as the State can shield the people from the political, economic and or military consequences of the lie.

It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State."

–Joseph Goebbels

Reich Minister of Propaganda in Nazi Germany from 1933 to 1945

 

Rather an interesting quote, considering the source. Don't you think?

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#26) On June 24, 2009 at 9:24 AM, catoismymotor (< 20) wrote:

Thank you for continued follow ups and opinions on this developing story.

 

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#27) On June 24, 2009 at 9:40 AM, catoismymotor (< 20) wrote:

"Cross your pop Kaiser Soze will get you."

 

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#28) On June 24, 2009 at 11:00 AM, XMFSinchiruna (27.56) wrote:

catoismymotor

Amazing clip ... Kevin Spacey is fantastic. What movie is that from???

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#29) On June 24, 2009 at 12:13 PM, catoismymotor (< 20) wrote:

The Usual Suspects. It is my favorite "gangster" movie of all time.

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#30) On June 24, 2009 at 1:11 PM, XMFSinchiruna (27.56) wrote:

catoismymotor

moved to the top of my Netflix queue. Thanks! :)

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#31) On June 24, 2009 at 2:30 PM, angusthermopylae (40.13) wrote:

Very appropriate, cato...a movie about "you never know what really happened" in a blog about an event that makes no sense.  Bravo!

Sinch, my understanding of high finance and international intrigue is pretty limited...and my questions and assumptions probably reflect that.  I both bow to the master, and await more details on how this all turns out.

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#32) On June 24, 2009 at 2:45 PM, catoismymotor (< 20) wrote:

Thanks, August. Verbal's monologue that I posted from YouTube would not leave my head after reading this story. It kept nagging at me. I am thankful for YouTube for making the clip available.

Sinch, I hope you enjoy the movie. Spacey won me over with his performance.

I screwed up the quote above. I appreciate everyone letting that slide.

 

 

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#33) On June 24, 2009 at 2:51 PM, farmnut1985 (31.26) wrote:

Wouldn't this raise red flags to anyone purchasing these bonds had they made it through?  The intents of these men really leaves me puzzled.  Good post.

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#34) On June 24, 2009 at 4:02 PM, catoismymotor (< 20) wrote:

I feel the need to speculate about what went down. Why? Well, I’m dodging my responsibilities.

 

I believe the Japanese men were attaches from their governments. I believe they were carrying the $135 billion in bonds to Switzerland in order to sell/exchange them with a different foreign government. I believe our intelligence officers caught wind of what was going down, called the Italian authorities to tell them about counterfeit bonds being smuggled by two Japanese nationals. The Italian authorities intercepted the two men, delivered the bonds to one of our people who deemed them to be counterfeit (a lie) and confiscated them in order to have them destroyed at home. I believe the $135 billion in bonds are now safely in the hands of the US government, have been converted to shiny new bonds of equal value and added to the national coffers ready to be sold to the next obliging foreign government.

 

What of the two Japanese attaches? I believe they flashed their diplomatic papers, were taken to the Japanese embassy where they were verbally abused for the next 72 hours, then put on a plane for home. The question now is why Japan has not said anything about this? Japan hates negative attention. $135 BILLION DOLLARS was just stolen from them by the government of the United States of America. That ought to make up for the dollar cost of the Manhattan Project and then some! If they confirm they were trying to sell our bonds to the Republic of XYZ, on the down low, it would not be good for them because it would strain the relations between our two countries. It would raise the question of why Japan is trying to dump our bonds after saying they believe our bonds are safe. They would be exposed on the international stage as liars. Japan would be made to look foolish if we said openly to the world that Japan had somehow gotten its hands on $135 billion dollars worth of worthless paper. Japan would also be exposed for doing something semi-underhanded. That would not look good to the people at home because that would mean the government is up to shenanigans just like everyone else. So I believe Japan is lying low while waiting for all this to pass. Keep an eye out for a high ranking Japanese government official that suddenly becomes ill and dies in the next month, a thinly disguised episode of seboku.

 

And what of the mysterious Republic of XYZ? Who could they be? I have no real idea of where to start speculating. I’ll let you have fun with that.

 

I hope you enjoyed by speculations.

 

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#35) On June 24, 2009 at 4:11 PM, XMFSinchiruna (27.56) wrote:

farmnut1985

Personally, as I state above, I suspect that the bonds were authentic, and that the men were carrying an off-the-books transcation between central banks ... potentially with a connection to the G8 financial summit taking place in Italy around that time.

To me, such a scenario does the best job of explaining why the men were abruptly released and not tailed, the apparently obscure nature of the $500 million instruments, and the sheer scale of the haul. The painfully obvious cheerleading for USD noted after the G8 summit by the both Japanese and Russian officials adds further circumstantial evidence for such a scenario.

Of course, I can not prove that this scenario is indeed what took place, but in the absence of an official explanation that does make a lick of sense, this is the most sensible alternative explanation I can muster.

If they were real, Italy must be peeved, since the official declaration that they're fake would cheat them out of their $53 billion finder's fee. :)

The bigger question is ... what was said or took place in that G8 meeting that led Japanese and Russian officials to emerge singing the praises of the USD. We already know that the world economy came within hours of unraveling chaotically in the lead-up to the TARP passage, which no doubt was explained in stark detail to U.S. legislators in a manner that left them in a visible state of shock. Was this a similar event ... did Geithner scare the pants off of everyone in the roon at the G8?

If so ... what lies ahead?

This is not the time to stop questioning what is offered as 'truth'.

Fool on!

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#36) On June 24, 2009 at 4:33 PM, catoismymotor (< 20) wrote:

Governemnts hate the following questions: Who? What? Where? When? Why? When people ask questions it shows that someone is paying attention. Politicians hate that. When the population stays silent they feel compelled to proceed like no one is watching because they are not being questioned. I want answers to what went down. Mostly because the truth should be entertaining as heck!

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#37) On June 24, 2009 at 4:47 PM, jesusfreakinco (28.93) wrote:

China buys Addax for £4.4bn to tap Iraqi oil

http://www.telegraph.co.uk/finance/newsbysector/energy/5623265/China-buys-Addax-for-4.4bn-to-tap-Iraqi-oil.html

 

More China divesting of its USD holdings...

 

JFC

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#38) On June 24, 2009 at 4:52 PM, XMFSinchiruna (27.56) wrote:

jesusfreakinco

Spot on! Thanks for posting.

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#39) On June 24, 2009 at 6:58 PM, XMFSinchiruna (27.56) wrote:

catoismymotor

I almost skipped right over your comment #34 without seeing it. Fascinating thoughts! Well done, and keep it up. We can't have too many plausilble scenarios while we have a complete absence of plausible explanations.

Thanks again!

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#40) On June 24, 2009 at 7:41 PM, XMFSinchiruna (27.56) wrote:

In the interest of entertaining all kinds of opinions, here's another random dude's hypothesis, revolving around them being fake:

http://seekingalpha.com/article/143876-134-billion-in-smuggled-bonds-almost-surely-a-scam

"The securities almost certainly are forgeries. Forged securities (except for the occasional bearer bond) never are traded, because it is too easy to verify authenticity. But there is a scam as old as the Spanish prisoner story involving fake collateral. I’ve seen purported certificates of deposit of nine-figure denominations forged with the letterhead of South American or Russian banks. The object was to get a brokerage account somewhere to accept them as collateral."

"The most likely explanation is that the supposed Treasury securities were intended as props in a scam. Perhaps something resembling the Bernie Madoff operation required visual proof that the proceeds of a Ponzi scheme were invested in something real; perhaps the corrupt employee of a minor bank intended to use the securities as fraudulent collateral for brokerage loans. The fact that the Italian authorities stated that they required time to determine authenticity is very odd. An email to the Treasury Department should have taken care of that."

 

 

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#41) On June 24, 2009 at 7:59 PM, TMFBent (99.82) wrote:

I have been following this since it first broke (I was in Como only days before it happened) and as much fun as the gold bug, inflation alarmist conspiracy theories are, I really don't see anything here to suggest that this is anything more than the authorities say it is: an amusingly brazen forgery attempt.

As for Italian delays, ignorance on the authenticity, and releasing the two guys, I've spent enough time in Italy (years in total) not to be surprised by this in the least. This is a country where, not long ago, in order to send a package overseas you had to procure special twine and lead seals from licensed sellers (then bribe the postal employee to step up to the window and do his job).

Sometimes, when you hear hoofbeats in the middle of the night, it's not a giraffe, but a horse. Sometimes, when your car keys are missing, it's not because they were stolen by the Ukranian mob, but because you left them in your other coat pocket.

Sj

 

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#42) On June 24, 2009 at 8:23 PM, starbucks4ever (98.75) wrote:

My own guess is that these were genuine bonds owned by the mob, or, perhaps, by some corrupt polical leader of a country like Phillipines or Nigeria who'd been using the country's Central Bank as a personal ATM machine. The point was that the owner, whoever it was, could not properly account for the origin of these bonds, which made him an easy target for confiscation. Officially a noble endeavor and an anti-mob operation, in reality - an operation to renege on $134 of debt by cracking down on the more vulnerable bondholders who for some reason or other could not defend themselves in court. And just in case the country in question asks their money back, these bonds are forgeries. Can I look at them? NOOOO!!!

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#43) On June 25, 2009 at 6:32 AM, sycologist (< 20) wrote:

Get real people. If you had US$134.5 billion worth of assets would you risk getting busted by border guards and losing that amount of money?!!!!!!!!!! Of course not!!!! You would simply "take measures" in advance to make sure that you would not get caught - not difficult if you have that much money at your disposal.

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#44) On June 25, 2009 at 9:28 AM, farmnut1985 (31.26) wrote:

sycologist, Good point, they could have easily bribed their way there with that much $$$$.

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#45) On June 25, 2009 at 4:28 PM, XMFSinchiruna (27.56) wrote:

TMFBent

You can lead a horse to water, but you can't force the horse to accept that it's water even if it's tasteless and colorless. :)

The official explanations are utterly nonsensical and mutually contradictory, and without addressing the specific holes in the story, any attempts to brush alternate scenarios off by categorizing them as "gold bug, inflation alarmist conspiracy theories" is nothing less than insulting.

There are to many facts you're ignoring, like the fact that participants in a $1 billion counterfeit scam undertaken by members of the Sicilian mafia just weeks before was broken up by a sting operation and the perpetrators thrown behind bars. For two guys busted with $134 times that sum of supposedly fake instruments to then be turned loose is a totally unrealistic scenario.

Also, the decision to detain these guys or set them free would not have been the decision of the Italian authorities alone. The U.S. government was involved in this investigation from the moment they were contacted by the Guardia di Finanza. Surely you will concede that the justice department would have wanted a chance to chat with these supposed counterfeitors of such massive sums of USD.

zloj

Actually, failing to declare the bonds made them automatically eligible for confiscation.

Your mob / unknown country's central bank theory flies in the face of the fact that original bank documents were included in the haul ... documents about which we've heard nothing further since the initial reporting.

sycologist

We are not aware of them having any money .. only bearer bonds denominated in units of $500 million or more. If this was a dimplomatic-level event, and the transferrance of authentic bonds was meant to be maintained in secrecy, then the predicament of the couriers may have been more complicated than simply handing over a $500 million bribe.

They did, you'll recall, hide the documents in a concealed compartment of a briefcase. 

 

How many times must people be told straight-faced lies by their government representatives before they begin to question what they're told with a a rational dose of scrutiny? We know for a fact that Presidents have lied to us. Senators and Congressman have lied to us more times than any of us can count. Governors lie to us. Fed Chairmen (appointees, but not representatives) lie to us:

"The last duty of a central banker is to tell the public the truth."
-- Alan Blinder, Vice Chairman of the Federal Reserve, on PBS's Nightly Business Report in 1994

Attornies General lie to us.  Treasury Secretaries lie to us. Mainstream media outlets routinely lie and willingly convey the lies of others.

 

If you want consistent truth, you have to be willing to look beyond what you're told.

I will never lie to you.

Fool on!

 

 

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#46) On June 25, 2009 at 5:55 PM, starbucks4ever (98.75) wrote:

"Actually, failing to declare the bonds made them automatically eligible for confiscation."

Quite so. On the one hand, the bearer of the bonds who can't declare them officially. On the other, bonds that are claimed to be forgeries but look suspiciosly authentic. How would you reconcile these facts? 

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#47) On July 20, 2009 at 12:10 PM, GNUBEE (24.70) wrote:

If they were real, wouldn't the attache's claim diplomatic priveledge, thus protecting anything found in the briefcase?

So if Japan used highly connected, but not diplomatically sanctioned couriers then they put themselves at risk of loss.

If it was this important why wouldn't they use people with diplomatic capacity to protect the documents? (No one would know what was in the bag in the first place.) Sounds like an attempt to destabilize the dollar. (yes I have heard of those NOKO - North Korean- theories too)

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#48) On May 18, 2011 at 1:13 PM, BillyTG (29.21) wrote:

Wow. Yep, can't remember hearing of this in the news. 

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