Two Japanese Carrying $134 Billion in US Bonds Detained

"Thursday 11th June, 06:18 AM JST
ROME —

"Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. . . ."

More at Japan Today; and some helpful analysis at Blue Sky Sunshine. The two men were also carrying a considerable amount of "original bank documents." It should be mentioned, it's uncertain at this point whether they're really Japanese.

Speculation's rampant (about this incident, that is; you knew it's rampant elsewhere). The main theories seem to be: (1) China and Japan hold large amounts of US bonds, and one of them is nervous about the dollar and want to unload the bonds without panicking other holders or depressing the price – an interpretation that bodes ill for the US economy – but per Bloomberg, "[i]f the notes are genuine, the pair would be 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"; (2) they're fake, possibly counterfeited by North Korea, and the Italians happened to stumble across a really ambitious counterfeiting operation (but not the most ambitious; apparently a similar, much larger attempt's been busted before) – and the counterfeiters could have been trying to capitalize on the current plausibility of alternative (1), an interpretation that also does not bode well for the US economy; and (3) it relates to ill-gotten gains or tax evasion (considered least likely; the amount's too big).

Another theory notes ties between the Bush family and the Yakuza, Japanese crime syndicates with a significant Korean constituency. For now, I think I vote for alternative (2) above.

As jberryhill said, "Dang . . . NOW I know what happened to my luggage."

As proteus_lives said, "They f---ed up a deal worth $134 billion!?! Sepukku time."

UPDATE: See Denninger, inferring that the circumstances suggest the bonds are real and represent off-book issuances by the U.S. to the Japanese or Chinese. This keeps getting odder.

FURTHER UPDATE: Per Bloomberg, according to Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, the securities were purportedly issued in 1934. "The seized notes include 249 securities with a face value of $500 million each and 10 additional bonds with a value of more than $1 billion, the police force said on its Web site. Such high denominations would not have existed in 1934, the purported issue date of the notes, Mecarelli said. Moreover, the 'Kennedy' classification of the bonds doesn’t appear to exist, he said. . . . Mecarelli said he expects a determination from the SEC “'within a few days.'”

The bonds were seized on June 3; I'm writing this on June 18; so we're over 2 weeks in and the Feds haven't yet confirmed whether these bonds in the highest denominations ever issued – some allegedly never issued – are the real thing?

FURTHER FURTHER UPDATE: Per the WSJ, the Feds say the bonds are fake.

FURTHER FURTHER FURTHER UPDATE: I understand that per a Japanese publication, Mainichi Shimbun (translated at cryptogon), the two Japanese men involved have been released by Italian authorities without being charged with any crime –– curiouser and curiouser.