Billionairie Smugglers?

In a wild and crazy financial story (no… really!), two Japanese citizens were caught by Italian border patrol agents while on a train at Chiasso headed to Switzerland with an unusual amount of foreign bonds. To be clear, by “foreign bonds” in this case I mean American. And by “an unusual amount”, I mean $134,500,000,000 – potentially making the two Japanese citizens the wealthiest individuals on the planet.

In such a case, the natural reaction would be to suspect that the $134.5 billion in bonds is counterfeit. However, in the few days since the story has broken, the Guardia italiana di Finanza has determined that the bonds are indistinguishable from genuine bonds. To make the story a little sweeter, the bonds were hidden within a false bottom of a briefcase, and the denominations are all $500 million or $1 billion – the kind of bonds that nations normally buy, not individuals.

The story is so unbelievable, that it was days before the American financial press mentioned the story, when Bloomberg gave in and reported the story. It has yet to hit non-financial media outlets, but the ramifications from the resolution of this story are immense.

So many tantalizingly horrible questions are raised by this story that’s it’s hard to stop your mind from guessing. Just who were these two Japanese citizens? Why were they trying to get into Switzerland? Is it “better” if the bonds are real, or fake? Who were the buyers if the bonds were real? If they were fake, who were the patsies?

Now, we are talking about so very much money, that we can’t actually expect the truth to come out in the end. The bonds could be deemed forgeries even if they are real, or real even if they are forgeries, if it’s what the American authorities wanted – provided the real truth doesn’t slip out. Secret international deals and intrigue should rule the day.

For example, if there are hundreds of billions of dollars in forged bonds floating around the world, a panic could be set off by bond holders resulting in tremendous selling pressure. On the other hand, maybe the authorities are more concerned about there truly being $134.5 billion being snuck across the border in a brief case. Why was someone trying to get their money to Switzerland? It was likely on behalf of say… the Japanese government. What do they know that we don’t? Did they have a buyer lined up? Were they converting their bonds to say, Swiss Francs and gold? Is there even that much gold in all of Switzerland?

But just when you thought it couldn’t get any wilder, it turns out that Italy has certain rules against smuggling “currency” outside of its borders – there is a €10,000 limit. And – guess what? The Italian government gets to take 40% of the amount above the limit. How much money is that? Let’s just say it’s more than the State of California is in debt – and that’s a lot of money.

Oh, and just for fun, it just so happens that Geithner reported that $134.5 billion was left in TARP funds. Worse, it sounds like some of these bonds may be federal reserve bonds – which aren’t supposed to exist. Is this part of some shadow banking system? Were the Japanese moving money off shore in case of a North Korean nuclear attack? Are fake bonds floating around Europe? How many Japanese didn’t get caught by the border patrol? If the bonds are fake, could this be an economic attack?

So many questions. Seeking Alpha just picked up the story and has even more questions.