Suitcase With $134 Billion Puts Dollar on Edge

June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.

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.

GDP Carriers

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.

Clancy Bestseller

You can almost picture Tom Clancy sitting in his study thinking: “Damn! Why didn’t I think of this yarn and novelize it years ago?” He could have sprinkled in a Chinese angle, a pinch of Russian intrigue, a dose of Pyongyang and a bit of Taiwan-Strait tension into the mix. Presto, a sure bestseller.

Daniel Craig may be thinking this is a great story on which to base the next James Bond flick. Perhaps Don Johnson could buy the rights to this tale. In 2002, the “Miami Vice” star was stopped by German customs officers as he was traveling in a car carrying credit notes and other securities worth as much as $8 billion. Now he could claim it was all, uh, research.

When I first heard of the $134 billion story, I was tempted to glance at my calendar to make sure it didn’t read April 1.

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.

‘Kennedy Bonds’

Counterfeit $100 bills are one thing; two guys with undeclared bonds including 249 certificates worth $500 million and 10 “Kennedy bonds” of $1 billion each is quite another.

The bust could be a boon for Italy. If the securities are found to be genuine, the smugglers could be fined 40 percent of the total value for attempting to take them out of the country. Not a bad payday for a government grappling with a widening budget deficit and rebuilding the town of L’Aquila, which was destroyed by an earthquake in April.

It would be terrible news for the White House. 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.

On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years.” Adds Denninger: “Let’s hope we get those answers, and this isn’t one of those ‘funny things’ that just disappears into the night.”

This is still a story with far more questions than answers. It’s odd, though, that it’s not garnering more media attention. Interest is likely to grow. The last thing Geithner and Federal Reserve Chairman Ben Bernanke need right now is tens of billions more of U.S. bonds -- or even high-quality fake ones -- suddenly popping up around the globe.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

Views: 40

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by TheLasersShadow on June 18, 2009 at 7:17am
You can be sure that this wasn't the only movement of that amount of money. I'll bet that this shipment was the only one to get caught.

When governments are moving this type of money in suitcases, better put on the survival gear and make sure it still works cause there's a bad ass storm coming.
Comment by Jeff on June 18, 2009 at 12:09am
Yes, well, who knows, but I sure am anxious to hear the explanation for this one. However, it's more likely it'll be forgotten, like Rumsfeld's 2 trillion dollar Pentagon mistake, buried with the 9/11 debris.
Comment by Marklar on June 17, 2009 at 11:40pm
This is not good and no doubt will trace back to some kind of government sponsored scheme - maybe they'll flood the world market with counterfeit bonds and devalue all US bonds due to not being able to tell the fake from the genuine?

Yep, definitely more questions than answers here though.

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Burbia favorited tjdavis's blog post The Dems Love Their Demons
8 hours ago
John Miller commented on tjdavis's photo
Thumbnail

Comprehensive Coverage

"That car needs an exorcism, not an oil change."
12 hours ago
John Miller commented on tjdavis's blog post The Dems Love Their Demons
"If the Dems are dating demons, then that AI romance shoot was basically engagement photos."
12 hours ago
John Miller replied to cheeki kea's discussion Would-Be Trump Assassin Ryan Routh Gave Many Interviews with Mainstream Media
"Wouldn't be surprised if there's a whole lot more buried under the surface here."
12 hours ago
Less Prone favorited rlionhearted_3's photo
15 hours ago
Less Prone left a comment for John Miller
"Welcome John."
15 hours ago
Doc Vega posted a blog post

The Saga of Ape Canyon Revisited

 In the years that I’d written for the Plano Star Courier I got several invitations to go on…See More
16 hours ago
John Miller is now a member of 12160 Social Network
19 hours ago
Less Prone favorited tjdavis's photo
19 hours ago
tjdavis posted a photo
yesterday
Burbia posted a video

The lIIumlnatl Stallions: MethyIene Bluecifer & Mind-Control Horses [ FULL DOCUMENTARY ]

🐴🦄🐸 Get the NEW "lIIumlnatl Animal Coloring Book!" 🐴🦄🐸NOW AVAILABLE ON AMAZON - CLICK HERE: https://amzn.to/3SYgAkC🔑 Get MORE Access to the Secret Vid...
yesterday
Doc Vega commented on Doc Vega's blog post Memorial Weekend Getaway Horror Story
"Less Prone thanks for your support Buddy! "
yesterday
Doc Vega replied to cheeki kea's discussion Would-Be Trump Assassin Ryan Routh Gave Many Interviews with Mainstream Media
"cheeki kea, I really appreciate the reporting of Sky News. I think they've done a great…"
yesterday
Doc Vega posted a blog post

When

 Sad blue eyed poet rehearses his craftJust took a salvo in the compartment aftHis chances of…See More
yesterday
cheeki kea replied to cheeki kea's discussion Would-Be Trump Assassin Ryan Routh Gave Many Interviews with Mainstream Media
"You're damn right there Doc V. but we may never know exactly where all the funding came from…"
yesterday
cheeki kea commented on tjdavis's photo
Thumbnail

Me-Again

"Oh Look a new version of Megan, can't say the old version looked to flash either. Seems like…"
Friday
Doc Vega replied to cheeki kea's discussion Would-Be Trump Assassin Ryan Routh Gave Many Interviews with Mainstream Media
"This asshole had an incredible number of overseas connections and incoming money from unnamed…"
Wednesday
rlionhearted_3 posted photos
Wednesday
cheeki kea replied to cheeki kea's discussion Tartaria
"It's been interesting reading the comments from the Hungarian Tartaria fans on social media…"
Tuesday
Burbia's blog post was featured

James Comey appears to call for the assassination of President Trump

I'm sure these are the kind of shells Comey is implying here. …See More
Tuesday

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted