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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 11:34 AM
Original message
Is this the death of the dollar?
Edited on Sun Jun-21-09 11:59 AM by Fainter
Source: Telegraph.co.uk

Border guards in Chiasso see plenty of smugglers and plenty of false-bottomed suitcases, but no one in the town, which straddles the Italian-Swiss frontier, had ever seen anything like this. Trussed up in front of the police in the train station were two Japanese men, and beside them a suitcase with booty unlike any other. Concealed at the bottom of the bag were some rather incredible sheets of paper. The documents were apparently dollar-denominated US government bonds with a face value of a staggering $134bn(L81bn).

How on earth did these two men, who at first refused to identify themselves, come to be there, trying to ride the train into Switzerland carrying bonds worth more than the gross domestic product of Singapore? If the bonds were genuine, the pair would have been America's fourth-biggest creditor, ahead of the UK and just behind Russia. No sooner had the story leaked out from the Italian lakes region last week than it sparked a panoply of conspiracy tales. BUT ONE RESOUNDED MORE THAN THAN ANY OTHER: THAT THE MEN WERE AGENTS OF THE JAPANESE FINANCE MINISTRY, IN THE COUNTRY FOR THE G8 MEETING, MAKING A SURREPTITIOUS JOURNEY INTO SWITZERLAND TO SELL OFF ONE SMALL CHUNK OF THE MASSIVE MOUNTAIN OF US BONDS STACKED UP IN THE JAPANESE TREASURY VAULTS.

Read more: http://www.telegraph.co.uk/finance/economics/5586543/Is...



http://www.reuters.com/article/bondsNews/idUSN194636042...

Despite the Reuters story Friday reporting the U.S. Treasury Department's statement that the seized bonds are fake, many questions remain. Why haven't the smugglers been named? Why have they not been charged? Are they still in custody? Where is the accompanying documentation showing how the Treasury Department made its determination that the bonds were forged? Where are the bonds themselves? If they're fake, wouldn't they be evidence in some future proceeding? If they're not, won't the Japanese Finance Ministry be wanting their $134,000,000,000(billion) back?

Given the sovereign amount of the value of these bonds, why didn't the alleged counterfeiters forge these instruments inside Switzerland instead of undertaking a risky smuggling operation? Would sophisticated counterfeiters really forge instruments of such outlandish face value with any kind of reasonable expectation they could pass them off? Who conceivably would be in the market for a single $500,000,000(million) bond, let alone more than two hundred of them?

I suspect the bonds are authentic and will be quietly returned to the Japanese.

For more on Dollarmageddon, view the following thread:

http://www.democraticunderground.com/discuss/duboard.ph...

ETA:

To wit, the Japanese were apprehended trying to be the first ones out of the gate. And why wasn't this hushed up through diplomatic channels? Because Tokyo is happy to send a very stern warning to America to which they know all of her creditors will be very receptive.

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RandomThoughts Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 11:46 AM
Response to Original message
1. Just the entertainment value alone of going through every vault
In Switzerland and the offshore Islands, would be worth it. Why would someone need to keep what they 'earned' secret anyway? What purpose that is not criminal could their be for secret assets?

I think governments cracked down on average people by tracking secret bank accounts, many criminals are found that way.

Why not clean up big business and government the same way?

Just think what will be found.
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robcon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 11:47 AM
Response to Original message
2. A nothing story.
Edited on Sun Jun-21-09 11:47 AM by robcon
"I suspect the bonds are authentic and will be quietly returned to the Japanese."

And they were being sold cash-and-carry style?? :wtf:

Laughable - an analysis worthy of Drudge
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 12:14 PM
Response to Reply #2
4. Hi Drudge! n/t.
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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:07 PM
Response to Original message
3. I can see some reasons to back this story up
Edited on Sun Jun-21-09 12:08 PM by customerserviceguy
If the Japanese Government were to openly sell this dollar volume worth of bonds, it would lead to staggering losses as the price of other US Treasury securities went down in value. That would be harmful both to the Japanese Government (which would still be holding a lot of our bonds) and to the eventual buyer of these bonds, who may well be getting a discount on them, but doesn't want that known.

I'll be watching this story closely to see what happens. I wouldn't put it past Geithner to pass off a phony "counterfeiting" story as a way to allow the Japanese to save face in this situation.
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jschurchin Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:18 PM
Response to Original message
5. K&R
This is a story that shouldn't die here, but for whatever reason OUR media won't touch it. This is but one example of how our media has been compromised by the D.C./Industrial complex, and why our nation is truly FUCKED.
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CynicalObserver Donating Member (157 posts) Send PM | Profile | Ignore Sun Jun-21-09 10:57 PM
Response to Reply #5
14. This is arguably the biggest untold story of the year in the US.
Amazingly, the 2 japanese-presumed gentlemen are reported as NO LONGER IN CUSTODY. I do suspect this means either turned over to a friendly government OR turned over to non-public custody of a different sort.

No matter how you view the authenticity of some or all of the bonds (do you believe Treasury on this?), this is a huge event and we may never know what is going on.
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 11:42 PM
Response to Reply #14
15. Hi, Can You Provide A Link To Some Credible Report...
saying the smugglers are no longer in custody? I've only seen rumors to this effect. I absolutely agree this is a huge story with a near impenetrable layer of fog obscuring the details. That in itself tells us something.
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CynicalObserver Donating Member (157 posts) Send PM | Profile | Ignore Mon Jun-22-09 12:23 AM
Response to Reply #15
16. best I can come up with on short notice is
http://www.businessinsider.com/the-japanese-bond-smuggl...

however I have seen a UK paper say the same IIRC.

I do find the pic of the kennedy bond with the space shuttle just bizarre. Master counterfeit work with an anachronism like that?
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Mon Jun-22-09 06:44 AM
Response to Reply #16
17. Thank You Very Much! The Comments On The Story Are All...
over the map and speculation is rampant. TARP money, Monopoly money, one of the bearers is the brother-in-law of one of the Bank Of Japan's former deputy governors (this from a Japanese blog), etc. One thing for sure, until the powers that be provide definitive answers to the questions swirling around this story they are only fueling the strain in the long bond market. Why do they permit this to go on?
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Mon Jun-22-09 08:38 AM
Response to Reply #16
19. Hi, "hapax" (Commenter) At The Bottom Of The Story U Linked...
Edited on Mon Jun-22-09 09:01 AM by Fainter
directs our attention to the following posts by the financial blogger Karl Denninger on the bond saga:

1114
1119
http://market-ticker.denninger.net/archives/1142-The-Bo...

1142 is the latest update (6/21) to his blog. Denninger's instincts tell him the bonds are authentic instruments issued by the Treasury OFF-THE-BOOKS. WOW!
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GoesTo11 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:21 PM
Response to Original message
6. Yep. So just send me your dollars at address below:
...
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 12:56 PM
Response to Original message
7. Delete.
Edited on Sun Jun-21-09 12:57 PM by Fainter
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robcon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:58 PM
Response to Original message
8. The idea that someone would carry $134 billion to Switzerland in order too sell them is ridiculous.
Edited on Sun Jun-21-09 12:59 PM by robcon
This thread, trying to put some credibility into the idea that this is how the Japanese government would sell bonds, is absurd.

Pathetically naive.
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 01:28 PM
Response to Reply #8
9. It Does Sound Preposterous, I Agree, But customerserviceguy Post #3...
Edited on Sun Jun-21-09 01:31 PM by Fainter
offers a very compelling reason why Japan wouldn't sell these bonds in the open as to do so would harm their interests as well as the seller's, and likely precipitate a stampede away from the dollar worldwide. In the absence of any firm answers to the questions posed in the OP, there is room to speculate.
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robcon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 02:26 PM
Response to Reply #9
10. How in the world do you "hide" $134 billion
by selling it on a cash-and-carry basis, instead of through the markets? Who would clear the payments? Would one person/organization get a suitcase of t-bills? Do you REALLY believe this wouldn't depress the price of the bonds (if someone with $134 billion to spend on bonds spent it on a cash-and-carry transaction instead of through the markets?

I think the rationale and method in the post you referred to could account for the sale of a few million of some retiree's U.S. bonds, but not $134 billion. Preposterous idea just made for Drudge-like headlines.

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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 04:12 PM
Response to Reply #10
11. I Believe The Idea Is That These Are Bearer-Bonds That Would...
Edited on Sun Jun-21-09 04:32 PM by Fainter
be sold at considerable discount to individual BLACK-MARKET buyers to be used as collateral for legitimate loans or other less savory purposes--there would be no payments to be cleared. As for a "suitcase"-full, why must the Seller or his designate dispose of the bonds in one or several mega-transactions? We are speaking of more than two hundred individually negotiable instruments here (and yes, quanta at $500,000,000 each would have a very limited clientele even at a very substantial discount).

If the bonds are authentic, the Japanese Finance Ministry would have as much incentive to minimize their losses against par on the BLACK-MARKET as in the open market, so it would not be in their interest to flood the BLACK-MARKET either, but rather to sell this allotment of bonds discretely and gradually if they wish both to maximize their return and to preserve this surreptitious avenue for future off-the-book transactions involving additional dollar holdings. I wouldn't be able to quantify it, but I am guessing the open market factors in the opportunity cost presented by off-the-book transactions of subscribed bonds when setting bond prices, or takes no notice of these illicit sales at all. If this is correct then one would then have to suppose that the Japanese have concluded the Black Market is more liquid than the open market for the incremental sale of these bonds. Such a strategy permits them to diversify their currency holdings without driving down the value of the remainder of their dollar reserves to the same degree entailed by a foray into the (oversold) open market.

Game Theory suggests ALL our creditors have an interest in pursuing this sub rosa strategem.
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Fainter Donating Member (499 posts) Send PM | Profile | Ignore Sun Jun-21-09 05:06 PM
Response to Reply #10
12. Drudge Is A News Aggregator, The Story Is From The Telegraph...
and is four pages long. The rumour long predates Drudge's "reporting" of it.
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BlooInBloo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 05:07 PM
Response to Original message
13. Is the sky falling where you're at?
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Name removed Donating Member (0 posts) Send PM | Profile | Ignore Mon Jun-22-09 07:59 AM
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