The Bearer Bond Saga: It Gets More Odd

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Italy Seizes $135 BILLION Of US Bonds: Smuggling Or Counterfeit-Printing?


Well, just when you thought that the Bearer Bond story was finished, it gets twisted yet again.

Remember, this was the claim:

“They’re clearly fakes,” said Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington.

Uh, Bloomberg….. how about an accurate quote?

Based on the photograph we’ve seen online, they are clearly fake. And not even good fakes,” said Stephen Meyerhardt, a spokesman for the Treasury’s Bureau of the Public Debt.

Online? You mean that the Treasury Department hasn’t been sent a high-resolution digital photo of what was seized? A week after the fact?

I don’t believe you Stephen.

In the last two years, Italian authorities have seized some $800 million of U.S. bonds in the Como area in northern Italy.

Those would be real bonds, I assume? But I thought Stephen said….

He added that there is only $105 million in Treasury bearer bond securities outstanding, so the $134 billion amount seized far exceeds the universe of outstanding securites.

Wait a second…… $800 million in real bonds have been seized, but there are only $105 million outstanding? There may be some confusion here as to whether all these bonds are “bearer” instruments or not, but even if not, a registered paper bond is worthless if stolen, as its purchaser is known and before anyone is going to redeem it for you they’re going to verify not only its authenticity but that you’re the rightful owner.

Another U.S. official said the seized bonds were purported to be issued during the Kennedy administration in the early 1960s, but the certificates showed a picture of a space shuttle on it — a spacecraft that first flew in 1981. Some of the bonds were purportedly issued in a $500 billion denomination that never existed.

If there’s a picture of a shuttle on the bond with an issue during the Kennedy Administration, its definitely fake of course. But… where are the actual pictures of these seized bonds?

And are they still seized? That’s an even better question; there appear to be (at least) two different stories there too:

Under Italian law when law enforcement agencies seize fake bonds or counterfeit money they are under the obligation to arrest the bearers. And in order to avoid misappropriation, the agency seizing the material, in this case the financial police, must quickly proceed to its destruction (i.e. incineration).

However, in case of real securities, after the securities holders are identified, the financial police must release them immediately after issuing a statement of confiscation and imposing a fine valued in this case at € 38 billion (US$ 53.4 billion). In this case, why were the two men released right away without any fine imposed?

It doesn’t end there:

If what Meyerhardt says is true, some major financial institutions have been deceived by the securities carried by the two Asian men. This would be a bombshell and raise serious questions as to how many bank assets are actually made up of securities that for Meyerhardt are “clearly fakes.”

If counterfeit securities of such high quality are in circulation the world’s monetary system, let alone that of the United States, is in danger. International trade and exchanges could come to a halt.

Hmmmm… sensationalist conclusion without foundation? Maybe.

Now for the somewhat-tin side of things – or maybe, a LOT of tin. Warning – this “source” isn’t someone I’d trust to bring me a cup of coffee. Read and believe at your own risk:

(Turner Radio Network) — Two Japanese men arrested by Italian Police while trying to smuggle $134 Billion in U.S. Treasury Bonds concealed in suitcases, out of Italy into Switzerland, are employees of the Finance Ministry of Japan.

Turner Radio Network has now confirmed the two men arrested by Italy were trying to secretly dump Bonds that were previously held by the nation of Japan. The men arrested have told Italian police they were ordered to move the Bonds by the government of Japan because the Japanese government has lost faith in the ability of the U.S. government to repay its debts.

And attached to this post are a few pictures and a Youtube link, all but one of which I’ve seen before. The close-up I have not, but unfortunately the detail is insufficient for me to do anything more than observe that it looks rather odd compared to what I’ve seen as specimens, and does NOT match the apparent paper on the table picture. Heh, whatever. IMHO Turner has nothing and may have been fed a bunch of garbage (which he immediate regurgitated); certainly his “pictures” and “video” are NOT a scoop.

It gets even more strange (back from the tin brigade – I think?) – this time with a claim that the mafia (yes, the real one over in Sicily) is involved, and the bonds are fake:

Whether the men are really Japanese, as their passports declare, is unclear but Italian and US secret services working together soon concluded that the bills and accompanying bank documents were most probably counterfeit, the latest handiwork of the Italian Mafia.

….

The mystery deepened on Thursday as an Italian blog quoted Colonel Rodolfo Mecarelli of the Como provincial finance police as saying the two men had been released. The colonel and police headquarters in Rome both declined to respond to questions from the Financial Times.

What?

So let’s see if we can try to sort out what we’re “learning”:

  • The bonds are declared fake by the Treasury, stating that there’s only $100 million outstanding and obviously $134 billion have to be fake.
  • Italy claims to have seized $800 million in real US Bonds in the last year.
  • The last legitimate issue of paper US Treasuries (that is publicly admitted to) was in the early 1980s when bearer instruments were outlawed. All are now stated to be electronic (just a serial number and amount.)
  • The two gentlemen are allegedly Japanese, and there are various stories about who they really are – from notorious counterfeiters who have served hard time for previous offenses to Japanese finance officials. Most notably, there has been no public statement from Italy about these gentlemen’s actual identities.
  • It appears from all reports that these two were detained but not arrested, with some reports that they were not only released but took the allegedly-fake instruments with them, even though Italian law precludes both your release and return of your fake instruments if you are caught with fake securities or currency.

This is stuff out of a Tom Clancy novel, and the longer it goes on and the more twisted the “explanations”, the less sense it makes.

I find it incomprehensible that the Italian government released these two if they were actually caught in a massive counterfeiting operation with $134 billion in fake US Securities.

I find it equally incomprehensible that there was not an immediate indictment out of a US Prosecutor coming from such an event and a demand for extradition back to the United States.

And further, I find it equally incomprehensible that if the securities are in fact real, and Treasury is lying, that Italy would not impose the fine.

Only the latter scenario, however, covers what apparently has happened – the two “couriers”, whoever they are, have been released and, according to some accounts, they took the allegedly “fake” instruments with them, and there has been no US indictment issued for counterfeiting the instruments.

Uh, can we have some truth here folks, because none of what is being reported adds up and my BS detector is ringing off the hook.

Sunday, June 21. 2009
Posted by Karl Denninger in Editorial at 00:39

Source: The Market Ticker

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