More information is coming in about the discovery of various bonds on the border of Switzerland and Italy. Namely, there is a tremendous paucity of information. This is one of several mysteries of life we would like to see resolved. At least the news is making the news, ever so slightly. It came to Bloomberg News, for example! So let’s look at the latest developments:
Here a a photo of the bonds taken by the border police:
My opinion: they look quite new. If they were kept in a safe, they shouldn’t have yellowed like this, the paper used for these sorts of bonds usually was not the acid-based paper materials because these deteriorate rapidly over time. But I am only guessing because this hasn’t been investigated yet, by experts. There are ways of verifying the nature of these paper products using modern technology. Then, we have to verify the identity of the ‘Japanese’ gentlemen, too.
Japan is investigating reports two of its citizens were detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland.
“Italian authorities are in the midst of the investigation, and haven’t yet confirmed the details, including whether they are Japanese citizens or not,” Takeshi Akamatsu, a spokesman for the Ministry of Foreign Affairs, said by telephone today in Tokyo. “Our consulate in Milan is continuing efforts to confirm the reports.”
An official at the Consulate General of Japan in Milan, who only gave his name as Ikeda, said it still hasn’t been confirmed that the individuals are Japanese. “We are in contact with the Italian Financial Police and the Italian Public Prosecutor’s Office,” Ikeda said by phone today.
Well, this is one story that wasn’t a fake story. It is very hard to confirm stories online, there are lots and lots of fake stories inserted into the news in hopes this will confuse people and embarrass news reporters. I have learned to be very, very careful about ‘breaking’ these sorts of stories which is why I didn’t give this one a high rating when I first mentioned it.
Now, it looks like a real mystery and one that should be solved, pronto. I look forwards to learning more information. Some posters online are speculating along the same lines I suspect, namely, since this is probably a true story now [Japan and Italy confirmed this today] then, the list of possible culprits is not very long. Namely, North Korea is at the head of the line, big time:
bertoldo at 03:06 AM JST – 12th June
weird, definitely. I’m italian, and I confirm that the sum is correctly translated (“miliardi” stays for billions). the story is covered mainly by blogs, conspiracy sites,local swiss newspapers, but it is on some italian mainstream media as well and on the police site, without great emphasis though (in the “strange but true” sections, so no analysis at all).
a blog published an interview to a police officer in which he confirms the fact, and that the police is collaborating with some Us secret agents to establish whether the bills are false or not: http://crisis.blogosfere.it/2009/06/96-miliardi-di-bond-intervista-al-col-mecarelli.html
the two men apparently tried to reach switzerland mixed with ordinary commuters on a train.
nothing more, very few links on the international sites. it’s usual that people crossing the border are asked if they have something to declare, and there can be a search, but not always and not in so accurate way.
bdiego at 06:20 PM JST – 12th June
Consider these background facts: * North Korean faced international sanctions over institutional counterfeiting of US $100 bills. The country has no qualms about mass producing counterfeit money. * North Korea has repeatedly manufactured fake passports, such as the Dominican Republica one used by Kim Il Jung’s son to repeatedly enter Japan (where he was caught wearing a diamond encrusted watch). He claimed he was visiting Disneyland, but witnesses say he went straight to the red light district. The country has no qualms about mass producing counterfeit passports and claiming fake citizenship. * There are a million ethnic Koreans in Japan who are otherwise Japanese, about a third of whom identify with North Korea and have supported North Korea’s policies including kidnapping, murder, and international terrorism. North Korea has in fact admitted to these allegations, which are the crux of Japan’s stance in six-way talks. North Korea has no qualms about terrorism, murder, kidnapping, or any crimes in general. * North Korea’s counterfeiting, missile sale, and opium production are all designed to generate hard currency it desperately needs to survive. It will do anything to get money. * One of the few safe havens in the world for North Korea is Switzerland due to its strong neutrality. Kim Il Jung’s heir went to school there and Switzerland serves as a repository for much of North Korea’s currency and banking needs. * North Korea has been known to use its small fleet of ships to transport agents into various countries for its crimes – as demonstrated by their use in kidnapping operations off Japan. Agents prefer to disembark by ship and cross borders by land. * As only China, Japan, and Russia even possess this amount in bonds these are the only nationalities any smugglers would claim. Alas, such denominations of bonds do not exist in this amount and would be accounted for in any case, and they are almost definitely forgeries. * North Korea has a colorful history of organized crime dating back decades – not many years have to pass for another bizarre pattern of crimes to emerge and it was only a couple of years ago they were caught for mass counterfeiting of dollars.
The other day, I posted information about high-denomination Treasury notes. Here is some more information about them:
The End of Very-High Denominations
The last issue of very-high-denomination Treasury notes occurred in October 1969. After that, the maximum denomination returned to the earlier high of $1 million. It was the drive for further cost savings in debt administration that led to the disappearance of very-high-denomination Treasury notes. While very-high denominations saved on the costs of handling coupons and printing securities, they could not eliminate these costs or decrease the costs of safe-keeping and transferring bearer securities.
The movement of paper certificates and their filing and refiling, increased the chances of them being lost, and the losses from theft were rising. While the losses of Treasury securities due to theft amounted to less than $4 million in 1966 by 1969 they had skyrocketed to over $30 million. 7 By late 1970, insurance companies were refusing to cover holders of Treasury securities against loss, threatening the functioning of the government securities market.
Amongst the most hard-pressed by these developments were the Federal Reserve banks. Federal Reserve banks performed numerous transfers and held securities for numerous entities, including the Federal Reserve’s System Open Market Account. In the early 1960s, the Federal Reserve began to investigate whether the securities held by member banks and Federal Reserve banks could be held in book-entry form or managed electronically, eliminating the need for physical documents. Beginning in January 1968, a book-entry option was offered by the Federal Reserve to member banks. And by January 1970, the bearer securities held in the Federal Reserve’s System Open Market Account were converted into book-entry form. This last action converted almost a quarter of all outstanding marketable debt into book-entry form. The combination of the conversion of System Open Market Account securities with securities converted to book-entry since January 1968 brought the amount of outstanding marketable debt in book-entry form to some 40% of the total in January 1970. It was at this point that the Treasury stopped offering very-high-denomination Treasury notes as there was no longer be any need for them.
The maximum denomination was now reduced to $1 million. Very-high-denomination Treasury notes just were no longer necessary or cost-efficient. Large buyers of government securities now had the option of holding paper certificates or having the securities electronically entered into their accounts at their Federal Reserve bank. Such investors were eager to take the cost-saving book-entry option. For the Treasury, the book-entry system was also a cost saving development. The Bureau of the Public Debt could track securities and their semiannual interest payments electronically. Interest payments became lump sums transferred electronically and did not involve the shuffling of paper coupons and money back and forth. More electronic securities also meant fewer paper securities and less work for the Bureau of Engraving and Printing. Thus, book-entry procedure was a cost saving for both the Treasury and the large investor, obviating the need for very-high-denomination Treasury notes.
In conclusion, very-high-denomination Treasury notes arose from the Treasury’s need to use Treasury notes as the primary vehicle for refunding the public debt. Treasury notes became the primary method of refunding the public debt because they were the only viable way, at the same time, to lengthen and consolidate the debt, as the government securities market did not support the marketing of long-term Treasury bonds. With the vast increase in the amount of notes sold came increasing administrative costs both for investors and the Treasury. Keeping, tracking, and servicing billions of dollars of Treasury notes quickly became burdensome in the early 1950s. The costs and administrative difficulties were reduced by the issue of very-high-denomination Treasury notes in fiscal year 1955. A further reduction in servicing costs was made possible with the introduction of book-entry procedures in early 1968. Electronic record keeping ended the need for the very-high-denomination Treasury notes, and they were no longer offered for sale.
Due to theft, these bonds were stopped. And there is no way North Korea could have nearly $200 billion in such notes if they were from the pre-1974 era. Even if the stolen bonds from back then rose terrifically in value, it wouldn’t be this much. On top of this, these bonds are unconvertible in present forms. Unless someone unscrupulous were to gradually feed them into world financial markets, slowly, one by one?
Quite possible. Using fake bonds and getting them to slither though the system via selling them to gullible third world DRUG dealers, anxious to turn profits into legitimate bonds? Quite possible.
The other problem is, when the Fed went electronic in 1974, guess what happened next? INFLATION TOOK OFF! Duh! And frankly, to me, this is the REAL crime, the BIGGEST HEIST ON EARTH. We should have forced them to stick to paper bonds.