Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?
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.
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.
This tale has gotten little attention in markets, perhaps because of the absurdity of our times. The last year has been a decidedly disorienting one for capitalists who once knew up from down, red from black and risk from reward. It almost fits with the surreal nature of today that a couple of travelers have more U.S. debt than Brazil in a suitcase and, well, that’s life.
……Let’s assume for a moment that these U.S. bonds are real. That would make a mockery of Japanese Finance Minister Kaoru Yosano’s “absolutely unshakable” confidence in the credibility of the U.S. dollar. Yosano would have some explaining to do about Japan’s $686 billion of U.S. debt if more of these suitcase capers come to light.
……Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void.
Glenn Beck weighs in:
……Our Bureau of Public Debt suggests they’re bogus and here’s the quote from the Treasury: “Based on the picture we’ve seen via the Internet, the securities are crude fakes.”
The Internet? Possibly the biggest scam in history and the best you can do is a Google search? Please, don’t work too hard on this one, guys — geez.
The apparent lack of investigating in this story is leaving all the questions unanswered. Questions like: If these bonds were so obviously fake, why would it take two weeks for that information to come out?
This isn’t just a run-of-the-mill scam. This is huge. Why are they ignoring it? This makes Bernie Madoff look like a petty thief. If economies were for sale, these two guys could buy Slovakia, Croatia and Mongolia.
……Our researchers couldn’t find any wires or major dailies carrying official word on whether these two men are still in custody. Reports from the Financial Times and at least two credible Japanese papers suggest they were released.
If you make a mistake on Turbo Tax, the IRS is at your door in 10 minutes (unless you’re Tim Geithner). But if you get caught with $134 billion in U.S. bonds, the reaction seems to be: “Whatever. If you guys have to go, that’s cool. No need to stay in jail. We’ll talk about this later.”
Where the heck are these guys? Why doesn’t anyone know? Why aren’t the Italian police releasing any information or at least verifying that they know?
With so many questions left unanswered, we’re left with speculation.
There’s talk of four possible scenarios:
• It’s just a couple of dopey schlubs acting alone
• The mob and Venezuela are working together. Venezuela hates the U.S. government and wants to collapse the economy. And the mob (not necessarily the Italian mob, but maybe a Russian or Japanese syndicate) wants money to do it
• Another government, such as China, Japan, Great Britain or Russia, wants to dump their money quietly, but don’t want to collapse the dollar
• Our government is double-dealing. They are personally dumping debt, because they know about the possible deflation of the dollar. Could they be running a separate set of books? I mean, other than the ones we already know about.
Conspiracy theories aside, those two slugs had no business being in possession of $134 Billion in U.S. Bonds.
I’d like to know how they got them.