US to allow spy agencies to monitor citizens' finances

RT: March 14, 2013

Washington is reportedly considering opening all US financial records to national intelligence agencies in order to prevent future crimes. Only the FBI has had unlimited access to such databases; other agencies had to file case-by-case requests.

The Obama administration is preparing legislation to enable the country’s numerous security and intelligence agencies to spy on the accounts of US citizens, Reuters has revealed. The scheme’s stated aim is to help to identify and track terrorist cells, expose money-laundering schemes, trace criminal syndicates and curb corruption.

"It's a war on money, war on corruption, on politically exposed persons, anti-money laundering, organized crime," Amit Kumar, the UN advisor on Taliban and a fellow at the Democrat-established Center for National Policy think tank told Reuters.

The plan, dated March 4, is in its early stages but appears to have no judicial obstacles, as US legislation does not prohibit the exchange of information between government bodies. However, human rights activists have already criticized the plan

The planning document obtained by Reuters that the US Treasury’s financial database, which previously was only fully accessible by the FBI, will soon be integrated with national criminal, intelligence and other databases to become accessible to “law enforcement, counter-terrorism agencies, financial regulators and the intelligence community.”

Today, the US Treasury's Financial Crimes Enforcement Network (FinCEN) does not only collect data on clients of financial institutions, it also gathers reports of so-called ‘suspicious client activity’.

An estimated 25,000 financial institutions operating inside US territory – like banks, money transfer agencies, securities dealers and casinos – are obliged to report any activity considered suspicious, such as large (over $10,000) cash transfers, strangely account structures, computer hacking, counterfeiting and suspected money laundering.

The system is arranged so that if a bank is revealed to have not reported its clients’ suspicious activities, it risks of paying severe fines. Many banks err on the side of caution, and file reports on any activity deemed even slightly unusual: Every year, 15 million ‘suspicious activity reports’ are filed to the US Treasury, which allocates considerable resources to deal with them all.


If the Obama administration’s financial spy plan is enacted, US government agencies will have access to virtually all financial information on citizens or foreigners doing business in the US.

Currently, investigating a financial crime involves unraveling a tangle of evidence that could lead to a certain person, such as demanding a specific financial dossier from FinCEN. Once agencies like CIA, NSA or Counter Terrorism Center are allowed unrestricted access to FinCEN data, it would become possible for them to target an individual and arrest them for a crime for which they are not currently under investigation.

A US Treasury spokesperson vowed the agencies will adhere to safeguards outlined in both the Bank Secrecy Act and the US PATRIOT Act: “Law enforcement and intelligence community members with access to this information are bound by these safeguards.”

But Michael German, the senior policy counsel for the American Civil Liberties Union, told Reuters that “the intelligence community simply ignores the rules” when it comes to how sensitive information is used.

German recalled Congress had refused to approve a similar plan a decade ago, but now “the guidelines were subsequently loosened… It’s in a black hole.”

‘Citizens caught up in financial crosshairs’


The new plan will do little in increasing the efficacy of “keeping America safe,” while potentially increasing, at least partially, the risk of an innocent or “wrongly-profiled” individual being caught through a misreading of banking information, Margaret Bogenrief, a founding partner of ACM Partners financial advisory firm told RT.

“The continued efforts to 'keep its citizens safe,' the US government seems be to struggling to walk that line between protection and invasion of American citizens’ privacy,” Bogenrief said. “More citizens could end up being caught up in the financial crosshairs.”

Considering that financial institution are already over-reporting on questionable activity this new plan of enforcement and power “almost guarantees an abuse, whether intentional or not,” she added.

The true unintended tragedy of this plan is that it won’t bring a significant increase in arrests of high-profile criminals, Bogenrief believes.

“Truly sophisticated criminals – whether they be members of organized crime, gangs, or terrorist groups – will already have the structures and teams in place that will assist these criminal groups in both skirting these rules and avoiding prosecution.”

The Obama administration’s financial spying plan is a shocking attack on personal freedom, independent journalist and founder of Wide Awake News, Charlie McGrath says.“Sold as an effort to stop international terror groups, the proposed measure pushes us ever closer to a complete Orwellian Police State where you are guilty without cause, evidence, or even accusation,” McGrath told RT.

A Sign That Obama Will Repeat Economic Mistakes

Friday, December 7, 2012 by TruthDig.com
by Robert Scheer

Please don’t tell me that these reports in the business press touting Sallie Krawcheck as a front-runner for chairman of the SEC or even a possible candidate to be the next Treasury secretary are true. Who is she? Oh, just another former Citigroup CFO, and therefore a prime participant in the great banking hustle that has savaged the world’s economy. Krawcheck was paid $11 million in 2005 while her bank contributed to the toxic mortgage crisis that would cost millions their jobs and homes. Sallie Krawcheck.

Not that you would know that sordid history from reading the recent glowing references to Krawcheck in the New York Times, the Wall Street Journal and Bloomberg News that stress her pioneering role as a leading female banker—a working mother no less—but manage to avoid her role in a bank that led the way in destroying the lives of so many women, men and their children. Nor did her financial finagling end with Citigroup, as Krawcheck added a troubling stint in the leadership at Merrill Lynch and Bank of America to her résumé.

A woman who would be an excellent choice as the most experienced as well as principled candidate to head the SEC or Treasury is Sheila Bair, former head of the FDIC, who labored to protect consumers rather than undermine them. Indeed, her outstanding book “Bull by the Horns,” chronicling her fight in the last two administrations to hold the banksters accountable, should be required reading for the president and those who are advising him on selecting his new economic team.

The SEC is supposed to supervise the banks rather than abet them in their chicanery. And although the Treasury Department has been a captive of Wall Street lobbyists for most of the modern era, one would expect something better from the second coming of Barack Obama. Those are key appointments in determining whether the president can turn around the still-moribund economy by channeling the spirit of Franklin D. Roosevelt. Or will he continue to plod along on the course set by George W. Bush, bailing out the banks while ignoring beleaguered homeowners and the many other victims of this banking-engineered crisis?

Obama was given a pass on the economy by voters only because Mitt Romney was an even more craven enabler of Wall Street greed. But the outlines of the Bush Wall Street payoff remain in place, with the Federal Reserve continuing to bail out the banks with virtually free money and the purchase of $40 billion in toxic mortgage-based bonds every month to add to the more than trillion dollars in that junk that the Fed previously had taken off the banks’ books.

The money printing by the Fed is at the heart of the massive debt crisis. But it has been great for the bankers, with compensation at the 32 largest banks slated to hit an all-time high of $207 billion this year, according to a Wall Street Journal estimate. This reward for ripping off the public is almost three times the amount the federal government spends on education. Once again the bankers are blessed for their failures, receiving such wildly excessive compensation despite the fact that banking revenue is down 7.2 percent over the last two years.

A prime example is Krawcheck’s old bank, Citigroup, whose new CEO this week announced that the company has been forced to engage in a major retrenchment, eliminating 11,000 jobs and closing 84 branches. The bank has been deeply troubled ever since the housing meltdown it helped trigger first began, and it was saved from bankruptcy only by a direct infusion of $45 billion in taxpayer money and a commitment of an additional $300 billion in underwriting of Citigroup’s bad paper.

The ugly tale of America’s Great Recession is inextricably entwined with the deplorable practices of Citigroup, the too-big-to-fail bank made legal by Bill Clinton’s signing off on reversing the Glass-Steagall law that prevented the merger of investment and commercial banks. The first beneficiary of the revised law was the newly created Citigroup, saved from bankruptcy a decade later by the taxpayers.

I shouldn’t be surprised that Krawcheck would be considered a viable nominee for a central position in managing our economy. After all, her colleague in the top ranks at Citigroup during the years of financial depravity, Robert Rubin, is considered a significant adviser to the Obama administration, and his protégés, led by Treasury Secretary Timothy Geithner, are still directing policy. It was Rubin who pushed through the reversal of Glass-Steagall, an act of betrayal of the public interest that was rewarded with obscene amounts of money when he ultimately took the job of leading the bank he made legal.

The very fact that these folks remain influential, as witnessed by Krawcheck being considered to head the SEC rather than being the subject of one of its much-needed investigations, gives further evidence of the enduring but ultimately terminal illness of crony capitalism.

Stolen: $1.1 Trillion in Financial Instruments Intended to Support Humanitarian Purposes

( As far as "conspiracy theories" go, this one is pretty wild. The fact that 2 Japanese nationals were arrested in Italy with $134 billion in US bonds is legitimate. Other than the "usual suspects" common to most conspiracy theories--which this one has some of them--it doesn't seem too farfetched. I lean to the opinion that the bonds are counterfeit. Don't know how that would affect the trillion dollar lawsuit, however. Of course, I'm just a simple blogger trying to maintain during these troubled times. Give it a read and see what you think. I'd love to find some sort of cross reference, and if I do, I'll post it. If anyone else does--the 4 or 5 of you who read this blog regularly--hit me with it. Cheers! Oh, and Happy New Year! A little late, but hey!--jef)

~~(o)~~

Bizarre Claim for $1 Trillion

By DAN MCCUE- Courthouse News Service


MANHATTAN (CN) - An American expatriate in Bulgaria claims the United Nations, the World Economic Forum, the Office of International Treasury Control and the Italian government conspired with a host of others to steal more than $1.1 trillion in financial instruments intended to support humanitarian purposes.

     The 111-page federal complaint involves a range of entities common to conspiracy theorists, including the Vatican Illuminati, the Masons, the "Trilateral Trillenium Tripartite Gold Commission," and the U.S. Federal Reserve.

     Plaintiff Neil Keenan claims he was entrusted in 2009 with the financial instruments - which included U.S. Federal Reserve notes worth $124.5 billion, two Japanese government bonds with a combined face value of $19 billion, and one U.S. "Kennedy" bond with a face value of $1 billion - by an entity called the Dragon Family, which is a group of several wealthy and secretive Asian families.

     "The Dragon family abstains from public view and knowledge, but, upon information and belief, acts for the good and better benefit of the world in constant coordination with higher levels of global financial organizations, in particular, the Federal Reserve System," Keenan claims.

     "During the course of its existence over the last century, the Dragon family has accumulated great wealth by having provided the Federal Reserve Bank and the United States Government with asset assignments of gold and silver via certain accounts held in Switzerland, for which it has received consideration in the form of a variety of Notes, Bonds and Certificates such as those described ... that are an obligation of the Federal Reserve System."

     Keenan says that with accrued interest the instruments are now worth more than $1 trillion. He says the family designated him as its principal in an effort to select certain registered and authorized Private Placement Investment Programs (PPPs) for the benefit of unspecified global humanitarian efforts.

     In his remarkable complaint, Keenan claims that the U.S. government stole enormous amounts of money - delivered in gold and other precious metals - from the Dragon Family many years ago, and that the money was placed into the Federal Reserve System for the benefit and underwriting support of the dollar, "which was to become and currently remains the global reserve currency."

     Keenan claims the conspiracy began with the illegal detention of two Japanese citizens, Akihiko Yamaguchi and Mitsuyoshi Watanabe, and the seizure of $134.5 billion in bonds they were holding in Italy, in June 2009.

     Yamaguchi can best be described as Keenan's predecessor in trying to place Dragon Family instruments in legitimate PPPs to advance the group's humanitarian aims, according to the complaint.

     Keenan says he came to know both Yamaguchi and the Dragon Family through the Japanese man's efforts on the group's behalf, and that he introduced them to a bank in Cyprus with which they could do business.

     Keenan says that in gratitude, Yamaguchi sought and was granted approval to execute a special power of attorney, whereby Keenan would also act on behalf of the Dragon Family to place their assets in PPPs.

     It was then, he says, that he took possession of the instruments that are the heart of the lawsuit. For his assistance, Keenan says, he was to receive a profit share amounting to 30 percent of any particular PPP he arranged.

     A month after the Japanese men were detained, an man named Leo Zagami, "a self-described 33rd degree Free Mason, who, as of April 2008, had reportedly claimed to be the leader of a breakaway faction of the Knights of Templar and high-level Free Masons centered around the elite of the Masons P2 (propaganda Due) Lodge in Monte Carlo," arrived on the scene, according to the complaint. (Parentheses in complaint.)

     Zagami claimed to be a representative of the Vatican Illuminati and other European sect societies and "had been looking to make contact with certain Asian Secret Societies," the complaint states.

     During a meeting in Japan, he says, he told a contact that Yamaguchi and Watanabe had been "set up" and that he had inside information about the seized instruments.

     Subsequently, he introduced his contact in Japan to defendant Daniele Dal Bosco, a Vatican banker and associate of the P2 Masonic Lodge, who "would be able to 'cash the bonds seized by the Italian Treasury Police,'" according to the complaint.

     The complaint alleges a complicated history with many moving parts and scores of internationally known and unknown characters, the sum of which is that Keenan claims he was entrusted with billions of dollars in bonds by the Dragon Family.

     He claims that soon, he and Dal Bosco were in daily contact via Skype and they arranged to meet in Italy. During these conversations, Dal Bosco represented that he was not only financial advisor to Zagami, but also to the Vatican, Vatican City, Rome, and the treasurer for the P2 Masonic Lodge.

     As a result, Keenan said, although he tried keep personal possession of the financial instruments with which he was entrusted, he nevertheless came to trust Dal Bosco, and turned the bonds over to him for "temporary safekeeping and custodianship".

     Dal Bosco absconded with the bonds and sought assistance in selling the instruments "in the global marketplace through stealth, conversion and bribery," Keenan claims.

     He claims that as the conspiracy continued to unfold, various high level officials repeatedly offered him a bribe of $100 million to "release" the instruments without disclosing their theft to the Dragon family, and to allow the instruments to be converted to a so-called UN "Sovereign Program" wholly under the auspices, protection and umbrella of the sovereign immunity enjoyed by the defendants.

     Other defendants include UN General Secretary Ban Ki-Moon, Former Italian Prime Minister Silvio Berlusconi, Giancarlo Bruno, who is identified as head of the banking industry for the World Economic Forum, Italy's ambassador to the UN Cesare Maria Ragaflini, Ray C. Dam, president of the Office of International Treasury Control, and David A. Sale, the deputy chief of the council for the cabinet of the OITC.

     Keenan seeks the return of the stolen instruments, punitive damages and court costs on multiple claims of fraud, breach of contract and violation of international law.

     He is represented by William H. Mulligan Jr., with Bleakley, Platt & Schmidt of White Plains, N.Y.

~~(o)~~

6/08/2009
ASIA – ITALY

US government securities seized from Japanese nationals, not clear whether real or fake, bonds worth US $134.5 billion. This is the largest financial smuggling case in history. But are they real? Concern over ‘funny money’ or counterfeit securities is spreading in Asia. The international press is silent.

Milan (AsiaNews) –  Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US $134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US $500 million each, plus ten "Kennedy" bonds and other US government securities worth a billion dollar each. 
 
Italian authorities have not yet determined whether they are real or fake, but if they are real, the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are indistinguishable from the real ones.

What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only sovereign states handle such amounts of money.

The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
In order to stop money laundering Italian law sets a ceiling of €10,000 per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.

If the certificates were real, for Italy, it would be like hitting the jackpot. The fine alone would amount to €38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.

If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.

As soon as the seizure was made, the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.

Some important international financial newspapers had already reported on the existence of ‘funny money’ circulating on parallel, i.e. unofficial, financial markets.

For AsiaNews a few points need considering:

1. When it comes to Italy, the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.
2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.
   
3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.

~~(o)~~

Japan Probes Report Two Seized With Undeclared Bonds

By Shunichi Ozasa and Makiko Kitamura - June 12, 2009

June 12 (Bloomberg) -- Japan is investigating reports two of its citizens were detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland.

“Italian authorities are in the midst of the investigation, and haven’t yet confirmed the details, including whether they are Japanese citizens or not,” Takeshi Akamatsu, a spokesman for the Ministry of Foreign Affairs, said by telephone today in Tokyo. “Our consulate in Milan is continuing efforts to confirm the reports.”

An official at the Consulate General of Japan in Milan, who only gave his name as Ikeda, said it still hasn’t been confirmed that the individuals are Japanese. “We are in contact with the Italian Financial Police and the Italian Public Prosecutor’s Office,” Ikeda said by phone today.

The Asahi newspaper reported today Italian police found bond certificates concealed in the bottom of luggage the two individuals were carrying on a train that stopped in Chiasso, near the Swiss border, on June 3.

The undeclared bonds included 249 certificates worth $500 million each, the Asahi said, citing Italian authorities. The case was reported earlier in Italian newspapers Il Giornale and La Repubblica and by the Ansa news agency.

If the securities are found to be genuine, the individuals could be fined 40 percent of the total value for attempting to take them out of the country without declaring them, the Asahi said.

The Italian embassy in Tokyo was unable to confirm the Asahi report.

~~(o)~~

(Though not a fan of the Beck, I will give credit where it is due. None of the other networks felt the need to report on this story. The irrefutable fact is that two Japanese nationals were arrested with $134 billion in US bonds. That part is true. How it pertains to the lawsuit in the first story in this post remains to be seen.--jef)

from David Wilcock

Notice that Beck says FOX contacted the Treasury Department about this case, and received an official blow-off letter in response -- basically saying they had "no comment" on this 134 billion dollars in US bonds, seized at the Italian border, as it was "evidence in an ongoing investigation."

Beck then goes on to put up the numbers of which countries hold the largest numbers of US bonds. In order, they are China at $763.5 billion, Japan at $685.9 billion, the United Kingdom at $152.8 billion, Russia at $137.0 billion and Brazil at $126.0 billion.

Based on the public, unclassified numbers, $134.5 billion in US bonds could only have been produced by Russia, the UK, Japan or China... no one else. The amount of money is so huge that if Russia produced it, they would only have 2.5 billion dollars in US bonds left.

Joe Wiesenthal, the editor of BusinessInsider.com, said that whether this was a government dumping its bonds or a counterfeit operation, it was "gigantic" in scope and "unlike anything we've ever seen -- not just in size but also in sophistication."

According to Wiesenthal, in order to counterfeit these bonds, "it would be the kind of technology you would expect only a government to have." Wiesenthal also believes the 1934 issuance date on the bonds suggests they may be elaborate forgeries.

~~(o)~~

Sunday, June 14, 2009
An Open Letter To The Secretary Of The Department Of The United States Treasury

Posted by Marla Singer, ZeroHedge.com

 

Dear Mr. Geithner:

No doubt you are already aware of the wild stories circulating in response to the news that two Japanese nationals were caught trying to smuggle some $134 billion in US Government bearer bonds into Switzerland from Italy. Since the Secret Service seems a bit slow in addressing the issue (What's the problem? Haven't you hired an undersecretary of Secret Service motivation yet? Couldn't you get Agent Frank Horrigan out of retirement and send him on special assignment or something?) and the Italians change their story about the instruments almost as often as they change governments, we thought you might benefit from some of our analysis.

Obviously, with respect to authenticity, there are three options:

1. All the documents are fake.
2. Some of the documents are fake.
3. None of the documents are fake.

Taking these in order-

1. All the documents are fake. (Likely)

If all the documents are fake then the possibilities narrow to some degree:

Perhaps the work of a technically sophisticated but socially inept counterfeiting operation that is most likely attempting to dupe gullible private citizens or low-level managers. As of today an Italian Colonel in the Guardia di Finanza was complimenting the workmanship of the documents and speculating some of them might be authentic (at least to the European press). Leaving aside for a moment the rather dire career consequences such pronouncements might have, one assumes the Italians have some experience with forged documents. Admittedly, however, such expertise might not readily flow up to an officer politically focused enough to reach the rank of Colonel in any Italian organization. (I think I met one at a party in Miami once).

It would be a short-lived game once someone tried to pass one to an institution of any note. One assumes any bank large enough to accept such instruments into anything other than a safe-deposit box has best-practices methods to authenticate them, the key portion of which would be contacting the issuer (since the Fed doesn't issue/hasn't issued bonds like this, this would have to be the Treasury). Obviously, the Treasury would maintain specimen copies and make these available via facsimile transmission for a first-blush gut check. Still, Swiss institutions are highly unlikely to accept even authentic bearer instruments from a U.S. issuer without a very detailed provenience investigation. Further, even bearer bonds are serialized, meaning that it should be a trivial matter to establish if the securities these documents purport to be were actually issued. As technically sophisticated as such forgeries might be, absent access to authentic originals, details like issue dates and proper serial numbers would be hard to obtain.

Some support for this theory:

None of the coupons on the various documents appear to have been clipped. Since the Treasury has not issued bearer bonds since 1982 or 1985 (depending who at Treasury you ask) if these documents were authentic someone has taken a serious inflation beating on the deferred interest payments. (Turns out that high denomination instruments weren't printed after late 1969).

The Treasury claims that less than 1% of "marketable securities" are in bearer form. $134 billion in bearer bonds would imply some $13 trillion in marketable securities (assuming that class includes these bonds). This conflicts with the amount of "Total Marketable U.S. Treasury Securities Outstanding" for November 2008, as reported in Table B-87 of the 2009 "Economic Report of the President." That document lists total Marketable U.S. Treasury Securities Outstanding" as $5.82 trillion. All outstanding Treasury securities are listed in the same table as $10.66 trillion with "Unmarketable Securities" taking up $4.83 trillion. Note that in the category of "Marketable Securities" "Treasury Bonds" are listed at a "mere" $594.6 billion.

Even if we choose to discount the Treasury's offhand "1%" figure, it is difficult to imagine that a huge portion of the outstanding treasury securities would be in the form just a few, similar documents that somehow found their way into a single briefcase on the Swiss-Italian border.

High quality counterfeit "Federal Reserve Bonds" and the like are apparently common and seem to originate from Indonesia and other places where unrest has permitted high quality presses to fall into nefarious hands.

2. Some of the documents are fake. (Possible).

This would be quite possible if our two Ninja Smugglers were delivering a sample original document and a set of fake duplicates to show a buyer the quality of the forgeries. In this case you are still dealing with a technically competent counterfeiting operation, but now you have one with access to at least one of the originals. That begins to feel like a state sponsored operation, or, at the very least, a rather amazing theft story. One wonders why the theft of a $500 million bearer bond (the smallest possible denomination according to the Guardia di Finanza) would not be reported, but stranger things have happened behind the walls of an embarrassed bank.

The Treasury did in fact issue $500 million denominated instruments between 1955 and 1969, starting in early 1955 along with $100 million instruments. In fact, all of the Treasury bonds printed in the early 1950s were bearer instruments with coupons. Imagine processing half a million coupons and you start to understand why the larger denominations were attractive. The last were apparently printed in late 1969. It seems clear that $1 billion instruments were never issued. Those would appear to be forgeries.

Taking the "theft" example, having no hope of passing the document (provenience investigation) one could still maximize value by counterfeiting it and, as before, selling the result to foreign intelligence services, governments, or just gullible American/Japanese/French tourists in Italy/Switzerland.

It is also entirely possible that this is the work of a government. (Foreign or domestic). There is quite a great deal of precedent here The German Operation Bernhard, named for SS Major Bernhard Krüger, forged a huge number of small and medium denomination Bank of England pound notes during World War II, to provide their agents with currency, to pay for war material from foreign sources and to destabilize the British economy. At its peak the work was of such high quality that the Bank of England itself readily accepted the currency. Over GBP 100,000,000 was printed just in 1945. The Germans actually planned... wait for it... wait for it... to drop the currency from airplanes over England (apparently the very few helicopters that existed at the time had insufficient range) but the Luftwaffe, badly weakened by then, did not have the air power. Examples of the notes still occasionally turn up though the Bank of England invalidated several series of the relevant currency denominations in response to the counterfeits.

More recently, the origins of high quality forgeries of $100 notes, the "PN-14342" family, have been attributed to Iran (which printed its own currency on Intaglio presses prior to the revolution) North Korea, Russia and even the CIA (permitting it to evade congressional budget oversight).

Motives for foreign counterfeiting of such notes should be obvious. They are less so, perhaps, for high denomination bearer bonds. This is the hitch in this "fake" bit. That's a lot of bonds to have in the same place and one assumes even a Guardia di Finanza Cadet would notice if the serial numbers were all the same and not bother to pester the American Secret Service for authentication. Why print more than one serial number with such high denominations? Lot of work, that. Could it really be that no one noticed this? (Well, it is Italy, after all).

3. None of the documents are fake (unlikely).

For the purposes of amusement, and delving for a moment into (REALLY into) the realm of aluminum foil (Haven't you ever stopped to wonder who it was who pulled real tin-foil off the market and forced everyone to move to the aluminum variety? And why?) there is the (slim) possibility that you printed the damn things. That splits us into a number of alternatives:

Some foreign government (no corporate entity or individual has $134 billion laying around) has been holding the things to use as portable cash in emergencies. (This would explain the lack of coupon clipping- who cares about interest when you are just looking for portable wealth?) Or perhaps they haven't even been holding them for a long while, but exchanged them recently to facilitate their clandestine cross-border movement- perhaps even with the acquiescence/assistance of the Treasury. (After all, it would look pretty bad if that much U.S. debt was moved around openly). Here ya go [China (~$760 billion)/Japan (~$680 billion)/Russia (~$140 billion)] a bunch of bearer bonds we had laying around in the archives so you can smuggle the things into Switzerland.

Technically the difference between a valid and invalid Treasury bond is the willingness of the Treasury to accept it. Excellent deniability here. If anything at all happens you can just disavow the documents, reissue some other ones, or not, whatever. This would answer the question "how did anyone think that any bank would accept such large denominations?" The Treasury would validate the documents, of course. This would, however, not answer the question as to why two individuals traveling on Japanese passports would be attempting to slip into Switzerland in the best amateur hour smuggling operation since the guy who dropped two kilos of cocaine on the floor while standing at the immigration counter at JFK.

What might answer that question in this highly unlikely but entertaining scenario is the fact that this sort of rank incompetence is quite characteristic of the Japanese generally and Japanese Intelligence (Naikaku Jōhō Chōsashitsu) specifically. Hardly a month goes by without news of some executive with a case filled with brand new U.S. hundred dollar bills in Tokyo. At one point in 1998 a briefcase with $50 million in negotiable instruments was left in the Tokyo subway by an intoxicated bank executive.

Perhaps Japan wants to move capital offshore in preparation for general hostilities related to North Korea's increasingly evident mental deficiency.

We have heard a few reports that the individuals weren't arrested (though these aren't well sourced) and the Japanese consulate doesn't seem to know (or want to tell anyone) if they are actually Japanese nationals. (What's the hold up? You've got passports and passport numbers. Should be a matter of hours to get that figured out).

We would be remiss if we did not point out the (fanciful) possibility that this was the Treasury's doing entirely. Why?

Perhaps you intentionally orchestrated the discovery of the instruments which you will now rule counterfeit to cast doubt on similar instruments you would prefer not to redeem. (Play rough with us, China, see what happens).

Perhaps you were establishing credit with a foreign financial institution from which you could buy more Treasuries (hah) or otherwise buoy the market (S&P 500 futures are a popular theory for manipulation these days) without tipping the Treasury/Fed's hand in the process. (Credit Suisse and UBS both have enough AUM to conceal a "mere" $134 billion).

Perhaps you wanted an easy way to tip the debt crippled Italy 40% of $134 billion (the forfeiture fine for failing to declare) without congressional oversight. That buys a lot of Fiats. China or Japan will probably be blamed for the "incident" and no one will be surprised if it is hushed up. Instead everyone will assume that the remaining 60% went back to the original holder and Italy gets $53 billion without a lot of questions. Clever, Mr. Geithner, JamesTim Geithner.

Of course, any of these "they're real" options brings up a rather serious question:

Since these securities appear to have been off the books, and none of the Treasury disclosures about foreign or domestic holdings would seem to support this many bearer instruments (much less this many in the same place) how do we (does anyone) ever believe any statements about the size of outstanding U.S. debt again?

Whatever the case you have to admit that it is a sad state of affairs when, under your stewardship of the Department of the Treasury, an incident like this stirs up even the slightest suspicion rather than being immediately relegated to pages of "Treasury Debt of Honor," the latest Tom Clancy pulp to be found in the "thriller" section of one of LaGuardia's HMSHost owned bookstores.

We challenge you to do the right thing. That, of course, is to come out with a clear, concise statement ending the sort of speculation that, while currently confined to fringe financial blogs, has begun to creep into major outlets. (Handelsbaltt, for instance). Be careful, though. If someone suddenly notices that Italy has gone on a spending spree (Dodge Vipers for EVERYONE!) we hope you have a good lawyer. (Though, after the Turbo Tax Teflon, we suppose that's not really an issue).

_____________________________________________

The Strange Inconsistencies Behind the $134.5 Billion Bearer Bond Mystery
June 16th, 2009

Here’s yet another huge financial story that has been virtually blacked out by the US financial media. Although on the surface, this story appears to be a non-event, if we consider some of the released facts about this case, you will understand why I consider it to be a huge story. On June 8th, the Asia News reported the following story:

“Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollars each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.”

Here are just a few fascinating facts about this case (at least they are being reported as “facts” at this current time):

(1) Though the smugglers have been identified in the press as “Japanese nationals” there has yet to be any confirmation if the smugglers were indeed Japanese or of some other ethnicity. How difficult is it to confirm the ethnicity of the smugglers and why is this information being kept secret?

(2) According to a brief Bloomberg article regarding this story, the seized bearer bonds allegedly were dated as of 1934. Since bearer bonds in denominations of $500 million did not exist in 1934, the bonds were deduced as fake, though the Italian police are still waiting for a declaration regarding the bonds’ authenticity from the SEC. There is something truly “off” about this declaration. How can the quality of the forged bearer bonds be so meticulous that they “are indistinguishable from the real ones”, yet the people involved in the alleged forgery so ill-informed as to not date the bearer bonds with a more recent year that would not immediately identify them as fraudulent? How hard would it have been to date the bearer bonds with a more recent year? An equivalent analogy would be if an expert art forger meticulously re-created a Picasso oil canvass and then erroneously signed the work with the wrong artist’s name. This story just does not add up.

(3) The Bloomberg story also reported that there is no known existence of the alleged 10 Kennedy bonds that were discovered in the smuggler’s suitcases, each with a denomination of $1 billion. Again, this discovery defies any logical explanation. Why would expert counterfeiters make 249 bearer bonds with denominations of $500 million apiece, each undistinguishable from the real thing, and then instead of just making 20 more such bonds, decide to make 10 bonds in denominations of $1 billion a piece in a bearer bond design that has never existed? Were the alleged counterfeiters just too lazy to confirm if Kennedy bearer bonds were ever a legitimately issued security? Again, this story makes no sense.

(4) On March 30, 2009, the US Treasury Department announced that USD $134.5 billion remained in its Troubled Asset Relief Program (TARP). The stated amount of seized bearer bonds was $134.5 billion. Coincidence?

(5) The two well-dressed Japanese men opted to travel to Chiasso on a local train normally full of Italian manual laborers commuting to Switzerland. If they were really intent on successfully smuggling these bonds, counterfeit or real, why would they not take more care to select a travel route in which it was literally impossible for them not to stick out like two sore thumbs? Again, this part of the story defies all logic.

(6) The bearer bonds were discovered in a hidden briefcase compartment after a customs inspection. Again, if the bonds were indeed authentic and owned by a nation state, they could have been transported in a diplomatic pouch exempt from customs searches that would have guaranteed transport without detection.

Thus, all of the above irreconcilable and illogical points, other than the coincidence of the amount of the bearer bonds exactly matching the remaining TARP fund amount declared on March 30th, seem to indicate that not only were the seized bearer bonds counterfeit, but also that the smugglers were intent on being caught.

Before I continue, let’s review the purpose of bearer bonds.

Here is the Wikipedia definition of bearer bonds: 

“A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument. This is useful for investors who wish to retain anonymity. The downside is that in the event of loss or theft, bearer bonds are extremely difficult to recover.” 

If you recall the Michael Mann movie “Heat”, starring Robert DeNiro and Al Pacino, during a daring daytime armored car robbery, the criminals specifically targeted millions of dollars of bearer bonds for theft precisely because of the above qualities of bearer bonds that make them very difficult to trace. Again, due to the properties of bearer bonds, it seems highly unlikely that $134.5 billion of bearer bonds would be transported, if they were real, by two men with no security, since theft guarantees that they would be lost forever.

Thus far, about the only piece of information that appears to be reliable as reported by various news sources regarding this huge mystery is the remarkable authenticity of the 249 seized bearer bonds in denominations of USD $500 million. If any of the other facts, as they are being reported, are remotely accurate, then the bearer bonds were likely counterfeit. Still, the interesting part of this story, at least to me, is that the smugglers seemed intent on being caught with the counterfeit bonds. This leads me back to my previous question. What possible reason would the smugglers have for wanting to be caught? One of the quickest ways to sabotage and usher in the death of a currency is to raise legitimate questions about its ability to withstand counterfeiting efforts. Prove that counterfeiting is not only possible but highly likely, and the world’s confidence in the sabotaged currency will undoubtedly plummet. 

In fact, this very tactic was applied during World War II when the Nazis launched Operation Bernhard in an attempt to crash the British economy by producing, by 1945, 132 million expertly counterfeited British pounds, a figure that represented roughly 15% of all real British pounds in circulation at the time. The counterfeit pounds were produced by expert printers and engravers supervised by an SS officer named Bernhard Krueger. As well, historical evidence exists that the Allies considered launching a counter-counterfeit plan against the Nazis as well. During this time, it was also alleged that the Bank of Italy counterfeited their own money by issuing the same securities twice with identical registered numbers and codes in order. The purpose of this counterfeiting was to secretly expand monetary supply without public transparency or accountability. Perhaps then, this $134.5.billion bearer bond mystery was an attempt of a nation state to shake the world’s confidence in the position of the US dollar as the world’s reserve currency.

There should be little debate that the world’s emerging economies in Russia, Brazil, China and certain Gulf Nations are at economic war today with the world’s Western nations and their economic allies. The currency war being fought today is sure to get much uglier in the foreseeable future, in both open tactics as well as secretly executed tactics. Currently, if the currency war were the world series of poker, the US and the UK would be holding a pair of 2s and relying on nothing but bluffs to keep the rest of the world at bay. Conversely, the Chinese and other emerging nations with large surpluses would be holding straight or royal flushes, and likely quietly maneuvering to go “all in” at some point. 

Given that the discovery of $134.5 billion of bearer bonds in the suitcases of two Japanese nationals in Chiasso, Italy on the border of Switzerland qualifies as one of the largest smuggling operations in history, and given the various implications of such an act and the possible players involved, the silence regarding this huge story is simply stunning. It is not a huge story, per se, because of the counterfeiting operation, because accusations and revelations of massive money counterfeiting operations have occured in the past. It is a huge story, rather, due to all the inconsistencies of the story and the potential explanations that could explain these inconsistencies. The larger story at hand is, who are the players (nations) involved, and what was the intention of this likely counterfeiting operation? Maybe the future will reveal the answers to these questions. But maybe not.

(This article above raises some good points. The article below is very dismissive and says the Treasury Dept claims the bonds are fake, which when you consider the questions raised by the article above, it doesn't make sense.--jef)

_____________________________________________

Smuggled $134 billion in T-bonds are fakes, U.S. says

June 18, 2009 |  

Speculation about the Italian smuggling case involving $134 billion in purported U.S. Treasury bonds may have been fun while it lasted, but the Treasury Department says today the bonds are bogus.

"They’re obvious fakes," said Steve Meyerhardt, a spokesman for the Treasury's Bureau of Public Debt in Washington.

Two Japanese men were detained by Italian authorities last week after they were caught trying to enter Switzerland with what appeared to be $134 billion in U.S. Treasury bonds in a suitcase.

As I noted in this post on Wednesday, conspiracy theories have run wild in the blogosphere based on the few details that had emerged about the case -- and because mainstream media had largely ignored the story.

Meyerhardt said Treasury authorities could see immediately from photos of the bonds that they were doctored.

What’s more, the package of bonds was said to include "Kennedy" bonds worth $1 billion each. "There is no such thing as a Kennedy bond," Meyerhardt said.

Most important, the total of Treasury paper "bearer" bonds outstanding is a mere $105 million, he said. The Treasury has been issuing bonds solely in electronic form since 1986, although a relative handful of investors never bothered to convert their bearer bonds to electronic form.

And yes, I realize that there’s probably nothing Treasury can say to satisfy people who believe that there’s something more sinister going on here. (douchebag!--jef   ;| )

The big question, still, is what the apparent forgerers hoped to do with the paper.

(Well, I'm not satisfied. That goes without saying, since this is a 2.5 yr old story that I just found out about. I will continue to post more as I find it. Admittedly, many of this info came care of links posted by David Wilcock.--jef)

The Used Car Salesman, a Mexican Drug Cartel and the Saudi Ambassador

An Anatomy of Sanctioning Iran's Central Bank

by SASAN FAYAZMANESH

 

When on October 11, 2011, the Obama Administration claimed that the Iranian Revolutionary Guard Corps-Qods Force (IRGC-QF) had attempted to kill Saudi Arabia’s ambassador to the US, many commentators expressed skepticism. Why would IRGC-QF, supposedly a professional organization, hire a used-car salesman, with a dubious background, to carry out such a delicate task on the US soil, knowing full well that if the plot is uncovered, there would be severe consequences for Iran? Why would those involved in the plot converse on the phone, knowing full well that such phone calls might be monitored? Why would they wire money for the plot via a foreign bank to a US bank, knowing full well that Iran is under severe US financial sanctions and any transaction originating from Iran will be scrutinized? These and a number of other anomalies made the story hard to believe.

Indeed the story was so bizarre that in announcing the case FBI Director Robert Mueller stated that it “reads like the pages of a Hollywood script” (Reuters, October 11, 2011).  Others, of course, saw it more as a Keystone Kops script.

The comical nature of the case made it appear so implausible that President Obama became defensive when he was asked about the issue in a press conference on October 13, 2011. In answering the question, Obama referred to the Attorney General’s “specific set of facts” and stated: “those facts are there for all to see.  And we would not be bringing forward a case unless we knew exactly how to support all the allegations that are contained in the indictment.”

Even though comical, it is difficult, at least in the short run, to prove or disprove the US allegation against Iran. After all, when invading Iraq in 2003 the US government showed a set of evidence that at first was hard to disprove. It was only later that the set of evidence was shown to be fabricated.

In the absence of evidence to prove or disprove the US allegation, one might approach the issue from a different angle. If the plot was somehow concocted by the US—for example, the used-car salesman was entrapped—what was the US motivation? This question is much easier to answer.

On the same day that the US Attorney General and FBI Director went public with the alleged plot, the Department of Treasury issued a press release announcing the “designation” of not only the used-car salesman but four “senior” IRGC-QF officers connected to the plot. Among the four individuals was IRGC-QF commander Qasem Soleimani. As the press release stated, the Treasury Department had designated Soleimani twice before, once for “his relationship to the IRGC” and again for his connection to “human rights abuses in Syria.”

Soleimani’s name was also mentioned as a “key person” involved in “nuclear or ballistic missile activities” in the United Nations Security Council Resolution 1747, issued on March 24, 2007. In addition, on June 23, 2011, the European council had announced that it is banning travel and freezing the assets of some Syrian individuals and companies and targeting three commanders of IRGC for supporting the Syrian government. Among these was Qasem Soleimani. Thus, it appears that the US was connecting a high profile character, such as Soleimani, to the assassination plot in order to make the case more significant and ominous. But why was the Treasury Department involved in what appeared to be a criminal case in the first place?

There was a partial answer to the above question in the Treasury Department’s announcement. The press release quoted David S. Cohen, Under Secretary for Terrorism and Financial Intelligence, as saying: “Iran once again has used the Qods Force and the international financial system to pursue an act of international terrorism, this time aimed against a Saudi diplomat. . . The financial transactions at the heart of this plot lay bare the risk that banks and other institutions face in doing business with Iran.” In his press conference on October 13, 2011, President Obama also gave a hint as to why the Department of Treasury was involved in dealing with the alleged terror plot and what the US intended to do about it. He stated that we will “apply the toughest sanctions [against Iran] and continue to mobilize the international community to make sure that Iran is further and further isolated and that it pays a price for this kind of behavior.”

A more specific answer became available on October 13, 2011, when Cohen gave his testimony before the Senate Banking Committee. Cohen announced that the Department of Treasury is “weighing more sanctions against Iran’s central bank to tighten the financial screws and deepen the country’s estrangement from the international financial community” (Reuters, October 13, 2011). After this testimony, many news sources correctly realized that the US Treasury Department was intent to use the alleged plot to sanction Iran’s Central Bank or Bank Markazi. Some also realized that such a sanction might paralyze the Iranian economy, since Bank Markazi is the bank of banks in Iran, and sanctioning it is equivalent to immobilizing the US Federal Reserve System.  Indeed, one AFP headline on October 14, 2011, read “US mulls Iran ‘sanction of mass destruction’”. 

The news report correctly pointed out that after “three decades of blanket US sanctions against Iran, it has become received wisdom that the United States has few financial tools left to bend Iran’s will.” One of those tools, the report went on to say, was sanctioning “Bank Markazi—which sits at the center of Iran’s financial and energy interests.” The report quoted Avi Jorisch, a former advisor at the Treasury Department’s office of terrorism and financial intelligence, as saying: “Essentially financial institutions around the world would have to choose between doing business with the United States and with the central bank [of Iran].”

What was missing from the above reports, however, was the history of the attempt by the US to sanction the Central Bank of Iran. Also missing, was the host of characters and institutions behind the attempt. Below, I will provide a brief account of the missing pieces.

After decades of sanctioning Iran and not bringing about the intended “regime change,” the neoconservatives, Israeli lobby groups and their conduits in the US government came up with a novel idea: sanctioning the Central Bank of Iran. In late May and early June of 2008, two resolutions were introduced in the House and Senate, which effectively called, among other things, for a US blockade of Iran and sanctioning of Bank Markazi. The American Israel Public Affairs Committee (AIPAC) summarized the two resolutions on its website under “Stop Iran’s Nuclear Program” and called for action:

Members of the House and Senate have introduced resolutions (H. Con. Res. 362 and S. Res. 580) calling on the administration to focus on the urgency of the Iranian nuclear threat and to impose tougher sanctions on Tehran. The resolutions, introduced in the House by Reps. Gary Ackerman (D-NY) and Mike Pence (R-IN) and in the Senate by Sens. Evan Bayh (D-IN) and John Thune (R-SD), urge the president to sanction Iran’s Central Bank and other international banks and energy companies investing in the country. They also demand that the United States lead an international effort to increase pressure on Iran by curtailing Iran’s ability to import refined petroleum products. Please urge your representatives to cosponsor this critical resolution.

The Bush Administration, however, realized that the rest of the world would not go along with sanctioning Iran’s Central Bank. Instead, the Administration relied on the Treasury Department to sanction major banks in Iran and prepare the ground for sanctioning Bank Markazi at some later date. Stuart Levey, the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, who was well known for his connection to Israeli lobby groups and his personal war against Iran, was given the task [1].  Levey did succeed, and under his tenure, which lasted well into the Obama Administration, major banks in Iran were sanctioned. Yet, the neoconservatives, Israeli lobby groups and their conduits in the US government wanted more.

Sanctioning Bank Markazi became a campaign issue in the 2008 presidential election.  As I mentioned in my pre-election essay, “What the Future has in Store for Iran,” in spring of 2008 John McCain, who was being advised by the neoconservatives, delivered a speech at the AIPAC conference in which he mentioned sanctioning Bank Markazi. “Central Bank of Iran,” McCain stated, “aids in Iran’s terrorism and weapons proliferation.”

He further stated that the Europeans “can help by imposing targeted sanctions that will impose a heavy cost on the regime’s leaders, including the denial of visas and freezing of assets; as a further measure to contain and deter Iran, the United States should impose financial sanctions on the Central Bank of Iran which aids in Iran’s terrorism and weapons proliferation. We must apply the full force of law to prevent business dealings with Iran’s Revolutionary Guard Corps.”

The push to sanction the Central Bank of Iran continued during the campaign season, and just prior to the presidential election of 2008 Senator Charles Schumer pressed the Bush Administration to impose financial sanctions on Bank Markazi (AP, November 6, 2008). Yet, the Bush Administration remained unconvinced that other countries would go along with the sanction and left the matter to be handled by the next administration. Stuart Levey, who stayed in his post in the Obama Administration, continued to lead the sanction campaign against the financial sector of Iran and waited for an opportunity to sanction Bank Markazi.  Once he left office in March of 2011, the campaign was carried on by Levey’s deputy, David S. Cohen.

On August 8, 2011, the Wall Street Journal reported that more “than 90 U.S. senators signed a letter to President Barack Obama pressing him to sanction Iran’s central bank, with some threatening legislation to force the move, an outcome that would represent a stark escalation in tensions between the two countries.” This, as the report noted, would be a drastic action, a “nuclear option” that if implemented, “could potentially freeze Iran out of the global financial system and make it nearly impossible for Tehran to clear billions of dollars in oil sales.”

The letter, as the report stated, was co-sponsored by Senators Mark Kirk and Charles Schumer.  It told the President:

We must do more to increase the economic pressure on the regime. In our view, the United States should embark on a comprehensive strategy to pressure Iran’s financial system by imposing sanctions on the Central Bank of Iran (CBI), or Bank Markazi. If our key allies are willing to join, we believe this step can be even more effective.

As you know, the Iranian regime continues to pursue avenues to circumvent both U.S. and multilateral sanctions. In the banking sector, the Central Bank of Iran lies at the center of Iran’s circumvention strategy. In May, Under Secretary of the Treasury for Terrorism and Financial Intelligence David Cohen stated that “the activities of the Central Bank of Iran (CBI) have been, and continue to be, a focus of the Treasury Department. Treasury has noted previously that the CBI and Iranian commercial banks have requested that their names be removed from international payment messages to make it more difficult for intermediary financial institutions to determine the true parties to the transaction, and we remain concerned that the CBI may be facilitating transactions for sanctioned Iranian banks.”

The time has come to impose crippling sanctions on Iran’s financial system by cutting off the CBI. There is strong bipartisan support in Congress for the imposition of sanctions on the CBI. As recently as consideration of the FY10 National Defense Authorization Act, the Senate unanimously supported an amendment urging you to impose such sanctions. We urge you to strongly consider imposing U.S. sanctions against the CBI and to encourage key allies to join us in this important action.

According to the above report, in an interview Kirk stated that “he would introduce a law by year’s end to enforce sanctions on Bank Markazi if the White House doesn’t move independently.” The report quoted Kirk as saying: “The administration will face a choice of whether it wants to lead this effort or be forced to act.” It also quoted Schumer as saying: “It’s time for the administration to use the tools Congress has provided and choke off the money spigot.”

The pressure was on and Under Secretary David S. Cohen had to find a plot to push for sanctioning the Central Bank of Iran. The used-car salesman, hired by IRGC-QF to arrange for the assassination of Saudi Arabia’s ambassador, was just that plot. It was now time to bring on board the rest of the world.

Immediately after the alleged plot, US officials, particularly Under Secretary Cohen, were travelling around the world, trying to convince other countries, especially those that were reluctant to sanction Bank Markazi, that the plot was real. On October 14, 2011, Harakah Daily reported from Ankara that a “US team will travel to Turkey soon to brief Turkish authorities on what the US says a clumsy plot to assassinate the Saudi ambassador to the United States on American soil.” On October 21, AP reported that following the visit by two US officials to Turkey to “brief the country on evidence they have in the alleged plot,” Turkey’s foreign minister urged Iran to cooperate with the US. On October 24, 2011, the headline of a news item published by Radio Free Europe/Radio Liberty read: “Top U.S. Treasury Official [Cohen] in Europe for Talks on Sanctioning Iranian Central Bank.” After his stop in London, the report stated, Cohen will take his message to Berlin, Paris and Rome. On the same day, AP reported the same news and quoted Cohen as saying: “Iran needs to be held accountable for this plot. . . We are going to continue to look at those financial institutions that are involved with proliferation activity for Iran and continue to try to isolate them from the international financial sector.” According to the report Cohen added: “Any further sanctions would also be part of efforts to deter Iran from pursuing nuclear capabilities . . . and could target the country’s central bank.”

In sum, the bizarre story of the used-car salesman, Mexican drug cartel, and the Saudi Ambassador is inextricably linked to the US-Israeli desire to sanction Bank Markazi. It is expected that this “sanction of mass destruction,” or “nuclear option,” will do the trick and will help to paralyze the Iranian economy. Down the line, it is hoped, the shattered economy will create the right conditions for the overthrow of the “Iranian regime” and its replacement by a US-Israeli friendly government.

What a way to bring about regime change!

Notes. 
[1] On Levey’s connection to the Israeli lobby groups and the role that he played in sanctioning Iran in the Bush Administration see my book: The United States and Iran: Sanctions, Wars and the Policy of Dual Containment, Routledge, 2008.

US Government Asset Seizures on the Rise

By Simon Black - 08/26/11  

The Wall Street Journal published a disturbing article earlier this week entitled “Federal Asset Seizures Rise, Netting Innocent With Guilty.”

You can already imagine the crux of the article.

In the United States, there are hundreds of regulations which authorize dozens federal agencies to confiscate private property — homes, cars, bank accounts, gold, company shares, and even personal effects.

Ironically, most Americans still think that they live in a country where you’re innocent until proven guilty. Nothing could be further from the truth, and it’s just another clear example of how the US Constitution has become a worthless piece of toilet paper for the federal government.

The Fifth Amendment states that “No person shall be…deprived of life, liberty, or property, without due process of law.” Tell that James Lieto, a New York businessman who was relieved of $392,000 when the armored car company used by his check-cashing firm was taken down by the FBI.

Lieto was innocent and not implicated in any wrongdoing, but the FBI took his money regardless as it just happened to be in the wrong place at the wrong time.

Last October, another businessman named Raul Stio was suspected of wrongdoing by the Treasury Department. The government seized over $150,000 from his account, yet in the 10-months that followed, Stio has still not been charged with a crime.

According to Justice Department statistics, the total value of confiscated property exceeded $2.5 billion in 2010, more than double from five years ago. The average take per case? $166,000…and the vast majority of cases were non-criminal.

It’s truly staggering to think about how much can be taken away from you in the blink of an eye, all without any judicial oversight or right to a hearing.

The reason could be anything. Maybe you violated some arcane, meaningless regulation among the hundreds of thousands of pages of US Code (ignorance of the law is NOT an excuse!). Maybe you were at the wrong place at the wrong time. Or maybe they had no real reason at all other than mere suspicion.

One minute you have money, the next you’re completely locked out of your wealth and livelihood. They force YOU to prove to them that you aren’t guilty, but they take away any means you had to defend yourself.

Look, this is the new reality in America. The entire country has become a nation of criminals — there isn’t a single man, woman, or child alive who is not in violation of some obscure regulation or cannot be ‘suspected’ of wrongdoing.

This is really just a form of cannibalism — a government feeding on its own citizens in order to keep the party going just a little bit longer. They’ll raise taxes, seize assets, take over pension funds, erode freedoms, start wars and send people to die — whatever it takes to maintain the status quo.

I’ve long advocated for an internationalization strategy: diversifying various assets and interests overseas so that no one single government has total control over your livelihood.
Store your gold in Switzerland. Open a bank account in Hong Kong. Register your company in the BVI. Establish a ‘backup’ residency in Chile. Expand your business in Brazil. Get a better job in Singapore. Obtain a second passport in Malta. Open a brokerage account in the Cayman Islands.

This approach is NOT just for the super rich. In fact, I’ve helped all kinds of people to internationalize, young and old, rich and poor.

Taking some simple steps to protect yourself will give you extraordinary peace of mind. You’ll know that, without doubt, you have some savings socked away that NOBODY can touch. You’ll know that you have a solid emergency backup plan. You’ll know that everything you’ve worked for won’t vanish in an instant.

Regards,
Simon Black,
for The Daily Reckoning

Disastrous Outcomes From an Orchestrated Crisis

Will the Ceiling Fall In?
By PAUL CRAIG ROBERTS

With the world concerned about US financial credibility and the poor outlook for the US economy, now is not the time for the Republicans to grandstand on the public debt. The debt ceiling needed to be quietly raised. Instead, the Republicans started a fire and then threw gasoline on it, creating an inferno that could burn up the US social safety net or the US Treasury’s credit rating and the US dollar’s role as reserve currency or what remains of the separation of powers.

Consequently, world financial markets, currency markets, commodity markets, central banks, and mutual fund money market and bond funds are on pins and needles.

This level of irresponsibility is seldom seen even from American politicians.

Republicans have created a totally unnecessary crisis and turned it into compelling political theater. Will the US default? Will entitlements be slashed? Will Obama seize the power of the purse from Congress in order to save the dollar and the US credit rating? None of these questions needed to arise.

While the world media fixates on the orchestrated debt ceiling crisis, the US government continues to bomb civilians in Afghanistan, Libya, Iraq, Pakistan, Yemen, and Somalia and continues with preparations to do the same thing to Syria and Iran.

The violations of other countries’ sovereignties, the naked aggressions that constitute war crimes, the murder of noncombatants, and the horrible moral and economic expense inflicted by the maximization of the military/security complex’s profits are somehow not a crisis. These are just routine, normal, everyday necessary events. Nothing to notice or to become upset about.

The offshoring of US jobs, GDP, tax base, and consumer demand that has eroded away the US economy and the government’s tax base, thus elevating the deficit, is somehow not a crisis. These are just the imperatives of globalism and the routine maximization of shareholders’ profits and management’s performance bonuses.

The US has become such a ridiculous collection of fools that no real crisis can be recognized. Instead, the country is mesmerized by a fake crisis.

The fake orchestrated crisis can easily turn into a real one. If income support programs are slashed, so will be consumer demand, and the US economy will decline further, widening the budget deficit and national debt.

If the Republicans force the country into default, the dollar will suffer. At the least, import prices will rise and the trade deficit with them. At the worse, the dollar will lose its reserve currency role, and the US will no longer be able to pay its oil bill in its own currency. With its balance of payments deep in the red, it has no foreign currency with which to purchase oil.

If Obama has to seize the power of the purse in order to prevent a new financial crisis from landing on top of the ongoing financial crisis, democracy will take another big hit.

Americans need desperately to ask themselves why they put into political office such utterly irresponsible and incompetent people capable of creating such a totally unnecessary crisis loaded with such disastrous potential outcomes. It would appear that the American population is too insouciant to use the vote with any care.

Little wonder that the president is becoming a Caesar.

Obama Worse Than Herbert Hoover?

Obama's Wrecking Crew
By MARSHALL AUERBACK

It’s actually a bit over the top and unfair to compare Barack Obama with Herbert Hoover – unfair that is, to the memory of Herbert Hoover. The received image of the latter is the dour, technocrat who looked on with indifference while the country went to pieces. This is actually an exaggeration. As Kevin Baker convincingly argued in his Harper’s Magazine piece, “Barack Hoover Obama”, President Hoover did try to organize national, voluntary efforts to hire the unemployed, provide charity, and sought to create a private banking pool. When these efforts collapsed or fell short, he started a dozen Home Loan Discount Banks to help individuals refinance their mortgages and save their homes. Indeed, the Reconstruction Finance Corporation, which became famous for its exploits under FDR and Jesse Jones, was actually created by Hoover. Often tarred with the liquidationist philosophy of his Treasury Secretary, the establishment of the RFC was, as Baker suggested, “a direct rebuttal to Andrew Mellon’s prescription of creative destruction. Rather than liquidating banks, railroads, and agricultural cooperatives, the RFC would lend them money to stay afloat.”

Hoover’s tragedy lay in the fact that whilst he recognized the deficiencies of the prevailing neo-classical laissez-faire nostrums of his day, he could not ultimately break with them and accept that the economic tenets which he had grown up with were deficient in terms of dealing with the huge unemployment challenges posed by the Great Depression. By contrast, Roosevelt was himself instinctively a fiscal conservative throughout much of the early stages of his political career (and campaigned as a gold standard man during the election of 1932), but ultimately had the vision (or, at least, excellent political instincts) to recognize the need to cut himself off from the dogma of the past and try something new in a persistent spirit of experimentation. Not everything FDR did worked, but his lack of rigid ideology and his bold spirit of economic experimentation ultimately did much to reduce the scourge of unemployment, though of course such policies brought him into significant conflict with the economic royalists of his day.

Barack Obama’s style of governing largely reflects an acceptance of the status quo. His “economic experts” also reflects this preference. As Baker argued, “it’s as if, after winning election in 1932, FDR had brought Andrew Mellon back to the Treasury.”

To the extent that he displays any kind of radicalism, it is to roll back the frontiers of the New Deal and Great Society, in effect gutting the Democratic Party of its core social legacy. This assertion will no doubt inflame the dwindling band of Obama supporters, who insist the president would never cut Social Security or Medicare, that he's merely been exploring every possible route to a deal with the GOP. But the evidence increasingly suggests otherwise.
Perhaps the president sincerely believes that the intense polarization of American politics isn't merely a symptom of our problems but a problem in itself – “and thus compromise is not just a means to an end but an end in itself, to try to create a safe harbor for people to reach some new common ground”. One finds further support for this view within Barack Obama’s own writings. A major theme of his 2006 book The Audacity of Hope is impatience with “the smallness of our politics” and its “partisanship and acrimony.” He expresses frustration at how “the tumult of the sixties and the subsequent backlash continues to drive our political discourse,”

There appears little question, then, that the President values compromise, indeed appears to enshrine it as the apex of all great Presidencies (ironically citing Lincoln’s compromise on slavery as a perfect illustration of this ideal). But the problem is that the President’s accommodation with his political enemies, his apparent infatuation with a “third way”, suggests that he is being forced to compromise on a particular set of ideals and principles which he has hitherto embraced dearly.

But what is this President's ideal? The only time in our national discussions where Obama has evinced any kind of passion has been during the debt ceiling negotiations. He has, since the inception of his presidency, elevated budget deficit reductions and the "reform" of entitlements as major transformational goals of his Presidency (rather than seeing deficit reduction as a by-product of economic growth). As early as January 2009, before his inauguration (but after the election, of course), then President-elect Obama pledged to shape a new Social Security and Medicare "bargain" with the American people, saying that the nation's long-term economic recovery could not be attained unless the government finally got control over its most costly entitlement programs.

In other words, Obama has been on about this since the inception of his Presidency. Recall that it was Barack Obama, NOT the GOP, who first raised the issue of cutting entitlements via the Simpson-Bowles Commission. The President has also parroted the line of most Wall Street economists as he has persistently characterized our budget deficits and government spending as “fiscally unsustainable” without ever seeking to define what that meant. One of his earliest pledges was to cut the deficit in half by the end of his first term, in effect paying no heed to the economic context when he made that ridiculous assertion.

In essence, the debt ceiling dispute is not forcing a compromise on this President, but is instead is viewed by him as a golden opportunity to do what he's always wanted to do. That also explains why he won't ask for a clean vote on the debt ceiling, why he has ignored the coin seignorage option, and why he has persistently avoided the gambit of challenging its constitutionality via the 14th amendment, even though his Democrat predecessor has already suggested that this is precisely what he would do: Bill Clinton asserted last week that he would use the constitutional option to raise the debt ceiling and dare Congress to stop him.

It also explains why President Obama remains infatuated by bigger and bigger "grand bargains", which seem to take us further away from averting the immediate economic catastrophe potentially at hand, which is to say national default. The Administration, then, is not going for a bipartisan compromise, but going for broke on something which the President apparent holds sacrosanct. In reality, true compromise would start with the notion of a clean vote on the debt ceiling or, at the very least, a minimal series of spending cuts that would avert the immediate risk of a default, whilst creating less deflationary pressures.

Have you actually seen the President ever get angrier than he was at his press conference announcing the collapse of the negotiations on the debt ceiling extension? Not even on health care "reform" can we ever recall seeing Obama this engaged, and manifesting something close to real emotion as he has here. That does suggest something beyond mere political calculation; it hints at core beliefs.

And to what end? Neither he, nor the Congress appear to recognize the downward acceleration in GDP triggered when the spending limits are reached if the automatic stabilizers are disabled because they are no longer funded as a consequence of the debt ceiling limitations (again, a legal, rather than operational constraint – the debt ceiling reflects an unwillingness to pay, rather than an inability to pay).

So spending will be further cut, debt deflation dynamics will intensify, sales will go down more, more jobs will be lost, and tax revenues will collapse even further. Which will set the whole process off again: more spending is cut, sales go down more, more jobs are lost, and tax revenues fall more, etc. etc. etc. until no one is left working. All are radically underestimating the speed and extent of the subsequent damage.

Unlike President Hoover, who inherited the foundations of a huge credit bubble from the 1920s and found himself overwhelmed by it, this President is worse. He is, through his actions, creating the conditions for a second Great Depression because of his misconceived belief that too much government spending “crowds out” private investment, and takes dollars out of the economy when it borrows. And therefore, goes the perverse logic, when the government stops borrowing to spend, the economy will have those dollars to replace the lost federal spending.

And so after the initial fall, Obama believes, it all come back that much stronger.

Except, that as my friend Warren Mosler insists , he is dead wrong, and therefore we are all dead ducks.

As Warren notes, have you ever heard anybody say 'I wish they'd pay off those Tsy bonds so I could get my money back and go buy something.'?

Of course not! Warren:

“Treasury borrowing gives dollars people have already decided to save a place to go. Dollars that came from deficit spending- dollars spent but not taxed. If they were spent and taxed, they'd be gone, not saved.

“Treasury bonds provide a resting place for voluntary savings. They are bought voluntarily. They don't 'take' anything away from anyone.

“For example, imagine two people, each with $1 million. One pays a $1 million tax. The other doesn't get taxed and decides to buy $1 million in Treasury bonds. Pretty obvious who's better off, and who's still solvent and consuming.”

Someone please explain this basic economic tenet to the President so that he can effect a genuine compromise, not a destructive “grand bargain” which will suck trillions of demand out of a still fragile economy. The predictable result is of his current stance is that, even as he claims to recognize the interlocking nature of the problems facing us and vows to “solve the problem” once and for all via a “grand bargain”, Obama is in fact tearing apart most of the foundations which were tentatively initiated under Hoover, but which came to full fruition under FDR. If he continues down this ruinous path, $150 billion/month in spending will be cut. Such economic thinking isn’t worthy of Mellon, let alone Herbert Hoover.

Treasury To Plunder Another $45 B From Retirement Funds While Issuing $110 B More Debt

Treasury Prepares To Plunder Another $45 Billion From Retirement Fundsby Tyler Durden on 05/19/2011


Now that it has finally been made clear that in order to accommodate the debt ceiling by adding marketable debt, the Treasury has no choice but to literally plunder retirement accounts, we now know that in order to fit in the just announced $110 billion in new bond issuance over the next week, Tim Geithner will have to reduce US retirement funding (the bulk of which, the Social Security Trust Fund already lost $1.1 trillion in the past year) by at least $45 billion. That is the net result of $60 billion in net new cash and $15 billion in bill paydowns which will settle between May 19 and May 31. What remains to be seen is just how much cash the Treasury will bleed as it seeks a parallel track of under-rolling maturing Bills, in order to keep its previously disclosed intentions of issuing just $142 billion between April and June. Keep in mind almost two thirds of this period has passed, which means that somehow the Treasury has to not only stop but in fact reverse its net issuance. We are not sure how this will actually happen.Net cash in/out flow over the next two weeks:

Next week's upcoming auctions:

• $35 billion in 2 Years: Link
• $35 billion in 5 Year: Link
• $29 billion in 7 Year: Link
• $11 billion in TIPS: Link

And as a reminder this is what the Treasury's latest Sources and Uses table looks like: