Socio-Economics History Blog

Socio-Economics & History Commentary

U.S. Authorities Probing $100 Billion of Bonds Seized in Italy

  • This is not the same as the earlier US$134.5B of treasury bonds smuggling also in Italy. (See: Is the Japanese Government Dumping US$134.5B of Treasury Bonds?) The word in the street is that countries are dumping US treasury bonds because they know it is becoming worthless pieces of toilet paper. The rumour is that if you need to move US$1B of bonds through ‘unofficial’ channels, you need to take a 40% haircut. Imagine: US$400M discount to move US$1B of bonds. I am not sure whether this is true. But if it is, then, we are close to the next financial tsunami. Countries who have huge holdings of treasury bonds need to dispose of them quietly. Otherwise, they will trigger a panic and the bond price will collapse.
     
  • Bloomberg reports :
      
    The U.S. Secret Service is examining more than $100 billion of U.S. government bonds confiscated in northern Italy in August, just two months after $134 billion of allegedly fake securities were seized in a nearby town. The Secret Service is analyzing whether the bonds taken in August may be counterfeit, said a spokeswoman for the U.S. embassy in Rome. Italy’s financial police in Varese, north of Milan, arrested two individuals carrying the securities in a briefcase, according to a person involved in the case.
     
    The two men currently are in custody as prosecutors in the town of Busto Arsizio carry out their investigation, the person said. The seized notes include securities with face values of $500 million and $1 billion, Italian daily     MF reported today, without saying where it got the information. “There must be a well-organized group behind these alleged crimes,” Fabio Polimeni, a Milan lawyer specializing in counterfeiting cases, said.
     
    Italian authorities seized U.S. treasuries on June 4 with a face value of more than $134 billion from two Japanese travelers attempting to cross into Switzerland. The two men later disappeared and the case is still under investigation. The U.S. government bonds found in the false bottom of a suitcase carried by the men were fake, a U.S. Treasury spokesman said June 18.
     
    “As financial markets become more sophisticated, creative and bigger, we can expect criminal activity to go with it and it’s happening everywhere,”     Livia Oglio, a Milan lawyer, said. “The amount seized is phenomenal.”
     
    Since the beginning of the year the police at border stations in Italy have seized 1.7 million euros of genuine money and bonds, and have confiscated more than 100 million euros of bonds that have been determined to be false, according to an Italian finance police statement in July.

end

September 21, 2009 Posted by | Economics | , , , | Comments Off

Government of Canada’s H1N1 Plan – Send Body Bags!

end

September 21, 2009 Posted by | Medicine & Health | , , | 2 Comments

Putin: US Dollar Issuance ‘Uncontrolled’, Calls for Diversified Reserves

  • The writing is on the wall for the USD. People who think that no change is coming is deluding themselves. There are major moves behind the scenes to end the USD hegemony. When it comes, unfortunately, it will cause alot of damage to America. Think hyper-inflation and shortages. All the talk in the MSM about the G20 discussing how to control bankers’ pay, is propaganda. The true agenda IMO is the USD. Canadian Press reports :
      
    Russia’s Prime Minister Vladimir Putin on Friday said other currencies besides the dollar should be used as global reserves to reduce the risks posed by swelling U.S. debt.
     
    Putin, who spoke at an international investment forum in the Black Sea resort of Sochi, chided the United States for “an uncontrolled issue of dollars” and said the American currency’s dominance had been “one of the triggers” of the global crisis.
     
    Putin renewed Russia’s call on the U.S. administration and global community to give the green light to alternative reserve currencies: “If there are several reserve currencies, this will not harm the U.S. economy in any way.”
     
    President Dmitry Medvedev’s economic advisor, Arkady Dvorkovich, said Thursday that Russia would at next week’s G20 summit in Pittsburgh press for more follow-through on measures to confront the global downturn and to change Western-dominated international financial institutions.
     
    Russia and China have pushed for alternative reserve currencies, but being the world’s largest holders of U.S. dollar assets – such as Treasuries – they are unlikely to abandon it. Dvorkovich stressed on Thursday that Russia is not out to replace the dollar, but only diversify.
     
    Putin, meanwhile, also promised to encourage foreign investment in Russia by removing bureaucratic hurdles. “Russia’s economy is totally underinvested,” and state spending alone is not enough to support a recovery, Putin said in Sochi, which is hosting the 2014 Winter Olympics.

end

September 21, 2009 Posted by | Economics | , , , , , , | Comments Off

United Nations Calling for Global Currency to Replace the US Dollar

  • The current engineered crisis will lead to a global currency and a global supra national central bank. My suspicion is that it will be a gold back currency. So who has the most gold in the world? The privately owned central banks. 
     
    UN: Global Currency Should Replace Dollar
    An article in the The Telegraph (UK) summarizes a the latest UNCTAD (UN Commission on Trade and Development) Trade and Development Report calling for:
     
    … a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.
     
    The proposals would also imply that surplus nations such as China and Germany should stimulate their economies further in order to cut their own imbalances, rather than, as in the present system, deficit nations such as the UK and US having to take the main burden of readjustment.
      ….. 
    Without having read the report, the explanation does not make a lot of sense to me. The article seems to suggest that imbalances between nations would be addressed by a central authority mandating the amount of inflation that must occur in each country.
     
    In the present international monetary system, or “non-system” as James Grant refers to it, countries try to address, or more often, create, changes in purchasing power parity by inflating their own currency at a greater rate than that of their trading partners. The virtue of fixed exchange rates is that it imposes some discipline on the propensity of central banks to inflate. Imbalances in purchasing power parity between nations are corrected through trade in goods rather than money printing. Under the classical gold standard, the international price system coordinated the movement of gold and goods to accomplish this. It’s not clear how having a global authority mandate the amount of inflation in each nation would be an improvement over the current system, nor how that is compatible with fixed exchange rates.
     
    Another problem with this proposal is the idea that surplus countries, e.g China, have surpluses because their economy is not sufficiently “stimulated” and that this could be fixed by more stimulus. The imbalances in China have been caused by their policy of pegging their currency below the market rate against the dollar. By doing this, they were in effect required to import the Fed’s inflation. Their capital structure became excessively mal-adjusted toward producing goods for export to American consumers. Domestic inflation, of which there has been plenty, could not move the exchange rate so it showed up entirely as asset bubbles. More stimulation (inflation) would only introduce more distortions in their domestic economy. What is needed is an exchange rate adjustment, something which would have been accomplished by an flow of gold from the US to China under the gold standard. Some questions I have:
     
    - What is the nature of the central authority that would mandate the amount of inflation in each country? A global central bank?
     
    - The report talks about a single global currency but also about fixed exchange rates which only make sense if national currencies continued to exist. If national currencies still exist and trade at fixed exchange rates, then how does the global currency fit in? Would the national currencies have fixed parities against global currency?
     
    - When the anchor currency was gold, redemption enforced the fixed ratios of national currencies against gold. Unless the global currency was a tradeable currency, what price mechanism would force the national currencies to maintain parity against the global currency?
     
    - How would such a system avoid the problems that sunk the first Bretton Woods system, namely competing currency devaluations and excessive inflation of the anchor currency (which was the dollar)
     
    - How is any of this an improvement over the classical gold standard with national currencies defined as fixed quantities of gold?

end

September 21, 2009 Posted by | Economics | , | Comments Off

Controlled Demolitions Caused the Collapse of the World Trade Center (WTC) buildings on September 11, 2001

end

September 21, 2009 Posted by | GeoPolitics, History | , , | 17 Comments

   

Follow

Get every new post delivered to your Inbox.

Join 292 other followers