I am more convinced now, as I wasn’t when Paul Kennedy wrote about the rise and fall of great powers, that the West has gone over the tipping point in its terminal decline. That intelligent people, or people who claim to be intelligent, (I have in mind the talking heads in the U.S. media such as Chris Matthews or Fareed Zakaria) cannot make the difference between the sham of the Muslim Brotherhood talking about freedom and democracy and the generic thirst in man to be free. These are the people who have like the Bourbons learned nothing and forgotten nothing. They are glibly about to put the Lenins of our time into trains heading for Moscows of our time, they find nothing odd that they are pushing for the Muslim Brotherhood to be taken into governing when everything needs to be done to keep the Muslim Brotherhood out even as one carefully negotiate the long historic transition of Arab societies from tribal autorcracy and military dictatorships to representative rule and constitutionally limited government.
For a dose of GET REAL, have a listen to this lady:
Hat tip to Market Ticker: As Denninger suggests, some cracks may be appearing in the facade of the mainstream press.
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Here is John Ziegler’s take on Sarah Palin’s resignation. He notes that it’s not the first time she has resigned her post out of principle:
Big Hollywood » Blog Archive » The Truth About Sarah Palin’s Resignation by John Ziegler:
However, when I started my new Los Angeles radio show and Palin graciously agreed to be my first guest, I did make sure to ask her point blank whether she ever considered walking away from public office because of the attacks on her family and the dastardly attempts to destroy her ability to do her job. Her response at the time startled me with its honesty (she’s the only national politician with whom I have ever had that experience). Looking back, I strongly believe her answer is important to providing the full context as to how and why she made this decision, as well as how she views her future. You can hear the remarkable interchange here:
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Here’s how Buzz Aldrin deals with Apollo mission “trufers”. I agree with Anthony Watts .. anybody care to call him a climate change “denier” to his face?
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If they were fake why did it take two weeks for the Treasury Department to determine if they were fake or not? Pamela Geller at Atlas Shrugs wonders ..
Last week I reported on the silence of this explosive news story: Italy’s financial police Seize $134.5 billion US Bonds on the Border between Italy and Switzerland: Smuggling Or Counterfeit.
The relevant question was the authenticity of this mind boggling bust, $134 billion – larger than the GNP of many a small nation.
I speculated that if the bonds were fake (which it is now being reported that they are) that it was the work of the North Koreans. This is what the NORKS do. Counterfeit. And they are bloody good at it. So good, in fact, that it took two weeks to determine that they were fakes. Asia News wonders the same thing:
Italy’s Guardia di Finanza has a reputation for being a highly specialised and expert financial police agency. How could it be so easily duped! And if the bonds are “clearly fakes” why did it take US authorities two weeks to find out.
Another discrepancy is the fact that, along with the securities, original and recent bank documents were seized as proof of their authenticity.
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.U.S. Says Bonds Seized in Italy Are ‘Clearly Fakes’ Bloomberg (hat tip Rut)
June 18 (Bloomberg) — U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland are fake, a Treasury spokesman said.
“They’re clearly fakes,” Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington, said yesterday. “That’s beyond the fact that the face value is far beyond what’s out there.”
Italy’s financial police last week said they asked the U.S. Securities and Exchange Commission to authenticate the seized bonds, with a face value of $134 billion. Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said the securities, seized in Chiasso, Italy, were probably forgeries.
Meyerhardt said Treasury records show an estimated $105.4 million in bearer bonds have yet to be surrendered. Most matured more than five years ago, he said. The Treasury stopped issuing bearer bonds in 1982, Meyerhardt said.
Had the notes been genuine, the pair would have been the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.
According to the Italian authorities, the seized notes included 249 securities with a face value of $500 million each and 10 additional bonds with a value of more than $1 billion, as well as securities purported to be “Kennedy” bonds. Meyerhardt said no such securities exist.
Karl Denninger at The Market Ticker had this to say about the caper:
Yes and no.
First, the “yes” part. Treasury says they’re fakes:
June 17 (Bloomberg) — U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland are fake, a Treasury spokesman said.
“They’re clearly fakes,” said Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington. “That’s beyond the fact that the face value is far beyond what’s out there.”
Ok, let’s accept both parts of that statement (yes, there are two) at face value:
- The “bonds” seized in Italy are fake.
- “The face value is far beyond what’s out there.”
The latter is exactly what I noted is out there in authorized issuance in my second story on the matter:
Mr. Holmes would be initially puzzled by such a caper. On the one hand we have the impossibility of the bonds being real, because there simply isn’t $130 billion of issues remaining outstanding.
As it turns out, the Bloomberg update tells us something surprising:
Meyerhardt said Treasury records show an estimated $105.4 billion in bearer bonds have yet to be surrendered. Most matured more than five years ago, he said. The Treasury stopped issuing bearer bonds in 1982, Meyerhardt said.
$105 billion? Uh, that’s a lot more than the DTC estimates I’ve seen, which were in the area of $3.5 billion outstanding! Suddenly there’s thirty times that on deposit with the DTC out there according to Treasury?
This also leaves the second part of the question open:
On the other hand we have the impossibility of negotiating a fake $500 million bearer instrument, making the exercise of counterfeiting one expensive and futile.
Finally, what happened to the two gentlemen caught with them?
The latter is a rather important question, I’d think. See, counterfeiting is a serious offense. Just try printing up some fake $100s or $20s and see how amused the Secret Service is (hint: don’t try this at home unless you are interested in a free stay at Club “This Ain’t Fun” Fed.)
There are conflicting reports: Some that the two individuals were not arrested or charged. Detained briefly, but not charged, with some sources claiming that an Italian lawyer is involved and essentially sprung them (whether on their own recognizance or via bail is unreported, and if on bail, how it was posted.) Others, particularly a recent article out of the UK, simply says they were “arrested.” I have seen nothing from a credible news stream stating that they are being held at the present time. And then there’s this:
We can’t read Japanese, and Google Translate isn’t particularly helpful, but a reader informs us that the gist of this story is that a newspaper sent a reporter to Como, Italy and found that the men had been released, with their whereabouts unknown.
Uh, do you really let two counterfeiters (suspected felons under American law and I suspect Italian as well) go without having any idea where they are and, it would appear, without retaining their passports?
The new questions that have now arisen are:
Why did it take Treasury six days to issue a statement that these bonds are “clearly fakes”? Does it really take more than one business day for the Italians to email someone a photo of the faces of the bonds, showing serial numbers and such? Either they’re real or they’re not – was Treasury hoping the story would “just die”?
Exactly who are the two who got caught with these things and where the hell are they? There’s an English-language news report out of Japan that states:
Italian police say the 2 Japanese passport holders, one in his 50s, and the other in his 60s, were caught on July 3rd at the Swiss-Italian border on a train from northern Italy. They say one man is a resident of Kanagawa Prefecture, central Japan, and the other is from Fukuoka Prefecture, western Japan.
If they’re not under indictment from the US side with an extradition request to Italy, why not? After all, counterfeiting $134 billion in alleged bonds is rather more serious than the usual guy who gets caught printing up a bad $20 or two, right?
And oh, by the way, America seems to get justifiably angry when an American counterfeits Japanese bonds:
The Commission alleges that, since at least October of 1997, the Northeast defendants have been engaging in an apparent scheme to defraud U.S. investors through the offer of fraudulent Japanese treasury bonds.
How many more bad bonds are out there? One would assume the answer is “not many”, given that the US hasn’t issued bearer-form debt since 1982. But then again the assumption by virtually everyone (myself included) was that the ~$3.5 billion that the DTC has in their vaults was the majority of outstanding issue in these instruments. Now we find out that Treasury itself says the number – just for Treasuries – is in fact $100 billion – 30 times that number. Hmmm…
Do we have a Treasury confidence problem? Maybe. The latest data released Monday shows that China was a net seller of Treasuries in April. Given that we think we can issue $2 trillion of new ones over the next year or so to pay for our profligate government spending programs……
There’s still things that make you go “hmmmmmm” in this story.
Let’s hope we get the rest of the answers.
CNBC has asked me to appear at 1:40 PM Eastern on Power Lunch in relationship to this topic; if you’re around a TV at that time tune in! It should be fun considering Dennis Kneale’s “lead” for it last evening….
Update: CNBC has preempted the 1:40 segment for Geithner’s rambling; they MAY reschedule for this evening.
Update #2: Bloomberg has now updated its story to $105 million in outstanding Treasury Bearer bonds. That’s in-line with what one would expect given the DTC data; as such (assuming the Bloomie article was simply in error) we can strike the questions related to that.
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