2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy

[Peter Lemkin]

Pete, bond lending is a well established method whereby the owner of securities can "rent" same to another party. An example in the bond market is where an entity sells short bonds they don't own as a speculative transaction. Effectively they are betting that the price of the bonds will sharply fall. They therefore rent bonds from an owner, deliver them against cash in settlement of their sale transaction, pocket the money -- and pay the rent. The bond price crashes, they buy back (go long) the bonds, take delivery of them, pay over the cash, return said bonds to the lender and pocket the profit. The variations on this "plain vanilla" transaction are marked and varied.

It could be a case of taking in assets for an audit, although in my experience it's more likely to be "window dressing" by reducing assets for an annual audit, by engaging in a "bed and breakfast" transaction --- a twin transaction where you sell and asset today with an agreement to buy it back tomorrow (or at some future date) at a set price, thus reducing your profit-asset ratios.

My take on moving the assets by train is that secrecy was the key, but so was moving them at arms length (not using a diplomatic pouch or other above board means). I don't imagine the risk is really that great as these types of collateral assets cannot be cashed or transacted by mere individuals - or mafia - or even unauthorized banking groups (whereas sovereign treasury to sovereign treasury is more likely I think - although doing so may be breaking the terms of the hypothetical underlying collateral agreement), so stealing them is not really a factor.

The only risk is being found out and where that might lead to we just don't know.

****ing bankers with their crazy instruments! Thanks for the explanation on bond transfers. Don't you agree that two Japanese or Japanese-looking men in suits would look LESS like sore-thumbs on a first class flight than a local worker's train. Also, someone seems to have tipped-off the Italian Border Police [spoil the 'deal']? I agree they are real and secret and we'll likely never know for sure...but will get bits and pieces and can speculate. My question: for each of these that surface, how many stay sub rosa and secret? WE little people haven't a clue as to what is what in moneyland!...or what our $, Euro, Yen, Pengo, Gold - whatever - is really worth!