Friday, June 19, 2009

The Italian Job: Border Police Seize $134-Billion In US Gov’t Securities

Although the story is being widely reported across Europe and Asia, it’s received scant media coverage in the US.

AsiaNews, along with other major media outlets outside the US are reporting that Italy’s financial police, the Guardia Italiana di Finanza, seized US government bonds worth US$134.5-billion from two Japanese nationals at Chiasso, located less than 50 miles from Milan on the Italian-Swiss border.

Other than a sceptical piece at Bloomberg News Wednesday, the seizure hasn’t been reported on in the US.

This is surprising because the haul includes 249 Federal Reserve bonds worth US$500-million each plus ten Kennedy bonds and other US government securities worth one billion dollar each.

The question business reporters should be asking is whether the bonds are real, meaning a foreign government is trying to quietly dump US Fed securities? Or are they counterfeit, a scheme to destabilize the American economy and currency during a period of economic crisis? But, so far, US financial journalists are as inquisitive about the suitcase full of bonds as they were about, oh, AIG’s dodgy underwriting practices, the sub-prime market, toxic assets in banks and Bernie Madoff before the lid on each was blown sky high.

Pyongyang’s Game?

In the 1990s, North Korea was caught running a huge and highly sophisticated counterfeiting scheme, printing what the Secret Service described at the time of the bust as excellent quality US$100 bills printed on undetectable yet not quite genuine paper, distributing the money mostly in Macao but also around Asia.

The counterfeit ring was shut down as was at least one Asian bank found to be active participants in the scheme. But it shows that the North Koreans have the capability to print superb if fake bank notes that are almost undetectable. With the United Nations’ new sanctions choking off Pyongyang’s access to hard currency, it’s entirely possible that the North Korean government hatched another counterfeit scheme to generate cash.

“We’re working with the Italian financial police to determine whether the securities are genuine or are part of a counterfeiting operation,” is all a US Treasury spokesperson tells me today before declining further comment because the matter is under investigation.

Privately, a source in the intelligence community says that if the notes are fakes, it makes sense that they would originate in North Korea.

“Pyongyang is smart enough to not try shipping nuclear or other material it knows we’re all looking for coming out of the country,” the source tells me. “We know they can print fake money no one other than experts can spot so why not print fake bonds?”

The source estimates that $134.5-billion in counterfeit bonds would produce a fast US$500-million to $1-billion in hard currency for North Korea when sold “and maybe a little more if they’re willing to shop around and wait a bit.”

Calling George Smiley

The Bloomberg article’s lead correctly says the news sounds like a plot straight out of a John Le Carre novel.

A rogue state is hemmed in on all sides and even its best friend, in this case China, is staring it down. Nuclear technology, its one exportable cash commodity, is suddenly on everyone’s black list. There’s a leadership crisis in the capital and hard-liners in the military are demanding money to pay for extremely costly nuclear tests and missile launches. Moderate elements need hard currency to buy black market food and medicine for the nation’s starving population.

And then everyone remembers the printing press sitting over in the corner, unused for a while but fully functional. All that’s required is obtaining three or four of the real bonds, spring the country’s best engraver from a dank political prison cell, and run off a few hundred billion of the US bonds.

All that’s missing is Connie Sachs, Le Carre’s alcoholic research expert with the world’s deepest memory rummaging through old files, passing notes to the mad Hungarian, Toby Esterhase, and George Smiley up in his pepper pot room on the fifth floor of the Circus pulling the strings.

The trouble is that the Italian border seizure isn’t fiction.

If the bonds are the real deal, then which government is fire saleing its stash of US debt obligations? If they’re fakes, who is trying to flood the market with counterfeit American government obligations?

And why aren’t Americans being told about this?

Walter Cronkite Is “Gravely Ill”

Former CBS News anchorman and broadcast news great Walter Cronkite is said to be gravely ill and nearing death.

Cronkite, once The Most Trusted Man In America according to a Gallup Poll at the time, is 92 and TVNewser reports that CBS began updating his bio last week. The network is said to be preparing a special on his life to be broadcast when he dies.

Cronkite, who anchored the CBS Evening News for 19 years until Dan Rather’s political manoeuvring inside the network’s news division forced him into retirement in 1981, brought America good news and bad, knitting the nation together during times of stress as well as happy times. He’s also the single most-important reason I decided to become a television news reporter when I was still in my early teens.

Uncle Walter, as he was affectionately called by friends and total strangers, always seemed to be there for us. When he told us about the Kennedy Assassination, he struggled to keep his composure because he knew if he lost his cool, the country would as well.

And, a few years later, it was Walter who again told America about another tragedy, the assassination of Martin Luther King.

Walter shared joyous times with us, as well, like when he became almost giddy at the moon landing.

Cronkite’s reporting from Viet Nam absolutely turned the tide of public opinion about the folly going on interminably in Southeast Asia. When he told America the truth about how badly the war in Viet Nam was going, and said Washington was lying about it, Pres. Lyndon Johnson turned to then-aide Bill Moyers to say, “If I’ve lost Cronkite on this, I’ve lost the nation.”

If Edward R. Murrow invented TV news reporting, then Walter Cronkite made it a force in America’s daily life. It was because he gave everyone who toiled in the fertile, green vineyards of broadcast reporting a compass, a direction, a role model to aspire to become. During the course of his nearly 20 year reign behind the anchor desk, television news – network and local – achieved its peak, not just of influence but, more importantly, of credibility.

He was a giant and, for countless reasons, his likes will never be seen again. Instead, we have nincompoops like Bill O’Reilly, Chris Mathews, Joe Scarborough and Sean Hannity bringing disgrace, disrepute and despair to a profession that Walter Cronkite made honourable.

And that’s the way it is.

h/t to Hoffmania