“The plan was to sell loans, collect commissions, and then walk away when the loans defaulted and let the bank fail. (The mafia calls this technique a ‘bust out.’)”

Clark M. weighs in on America’s financial crisis:

The collapse of the financial system is not an unfortunate by-product of deregulation; it was a cold and calculated criminal enterprise.

The conspirators had a dry run in Chicago in 2001. Close to 1,500 people lost much of their life savings when Superior Bank of Chicago went bankrupt with a billion dollars in deposits. The bank sold bonds secured by subprime mortgages. The plan was to sell loans, collect commissions, and then walk away when the loans defaulted and let the bank fail. (The mafia calls this technique a “bust out.”) In 2002 when this scheme was rolled out nationally, all 50 attorneys general pleaded with the George W Bush administration to stop the predatory lending practices they knew would lead to the collapse we see today. Instead of helping, in 2003 Bush invoked a clause from the 1863 National Bank Act nullifying all state predatory lending laws. The Office of the Comptroller of the Currency (OCC) also created new rules that prevented states from enforcing any of their own consumer protection laws against national banks.

- Clarke M. @ Gather.com: Link.

See also:

Superior Bank of Chicago @ Wikipedia

“The things you and I depend on in the real world became investment vehicles. Homes, oil, resources … the costs of all these things went up not because of any real laws of supply and demand, but because they had become new classes of investment.”

Douglas Rushkoff recently posted some interesting thoughts about money:

Our highly corporatized society was really forged during the Renaissance. Aristocrats were losing power just as a new merchant class was gaining it. So they made a series of deals through which merchants’ companies were granted monopoly charters from the monarchs in return for a sweet cut of the proceeds. Merchants got to lock in their status as newly rich, while monarchs stopped their own descent. Merchants supported the monarchs whose charters granted them exclusive access to new territories or industries, and monarchs got to do colonial expansion once-removed.

The invention of centralized, national currency was meant to support all this. Where localities had previously been free to mint their own currency based on the crops they had grown, now they were forced to borrow money from a central bank. This allowed the issuer of currency — the crown — to extract value from every transaction. Anyone who wanted to buy anything from anyone else had to run it through the central authority — coin of the realm — one way or the other.

- Douglas Rushkoff @ Boing Boing: Link.

“Americans came back from their Independence Day holiday … and found their Empire of Debt in worse shape than ever — $1.6 trillion in potential losses from the credit crunch!”
- Bill Bonner

Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) are to America’s great empire what the East India Company was to the British Empire in the 19th century … and the Louisiana Company [see John Law] was to France in the 18th. Huge, stupid, and probably fatal.

Freddie and Fannie are huge government-chartered mortgage lenders. In 18th century France, speculators bet on the riches of Louisiana, through the government-chartered Louisiana Company. In the 19th century, they wagered their money on the riches of India, through the government-chartered East India Company. And in the 20th century, they gambled on rising housing prices through Fannie and Freddie.

- Bill Bonner @ GoldSeek.com: Link.

What more fitting name for the man “said to be the father of finance, responsible for the adoption or use of paper money or bills in the world today” than … John Law??

“It’s like a permit to spill.”

Twenty years after Exxon Valdez slimed over one thousand miles of Alaskan beaches, the company has yet to pay the $5 billion in punitive damages awarded by the jury. And now they won’t have to. The Supreme Court today cut Exxon’s liability by 90% to half a billion. It’s so cheap, it’s like a permit to spill.”

Supreme Court Justice David Souter wrote that Exxon’s recklessness was ‘’profitless'’ - so the company shouldn’t have to pay punitive damages. Profitless, Mr. Souter? Exxon and its oil shipping partners saved billions - BILLIONS - by operating for sixteen years without the oil spill safety equipment they promised, in writing, under oath and by contract.

The official story is, “Drunken Skipper Hits Reef.” But don’t believe it, Mr. Souter. Alaska’s Native lands and coastline were destroyed by a systematic fraud motivated by profit-crazed penny-pinching.

- Greg Palast: Link.

“This recession is going to be a bad one.”
- Gary North

Mises’ theory of the business cycle:

The central bank inflates. This creates a boom. This creates sectoral bubbles. Then the central bank ceases to inflate. The bubbles will pop. The economy will go into a recession.

… This recession is going to be a bad one …. I think your first line of self-defense is your job. If you lose your job, you are in big trouble. You will have to sell your assets in a fire sale economy.

You need to do whatever it takes to increase your value to your employer.


- Gary North @ LewRockwell.com: March 22, 2008: Link.

Thanks, EB.

“Backing paper money with mortgages is nothing new. The French tried it in the late 18th Century, and it lead to hyperinflation.”
- Peter Schiff


Peter Schiff makes some interesting — and alarming — observations about the mortgage crisis in America:

This week, as the financial sector began to give way under the unbearable weight of bad mortgage debt, the Federal Reserve stepped in to save the day. At least that’s what it says in the script.

In a surprise move, the Federal Reserve announced its intention to swap $200 billion of treasury debt for $200 billion of potentially worthless mortgage-backed securities. The Fed may have been partially spurred to take the step as a result of the rapid collapse of Carlyle Capital Corp. a publicly traded private equity firm that is a subsidiary of the Carlyle Group. The Dutch firm could not meet margin calls on its depreciating collateral of AAA-rated mortgaged-backed securities guaranteed by Fannie Mae and Freddie Mac. On Friday, the Fed then took the unusual step of providing emergency “non-recourse” funding to Bear Stearns, collateralized by that firm’s similarly worthless mortgage debt. Apparently the Fed now stands willing to assume any mortgage-related risk that no other private entity would touch.

… According to the Fed, its new plan does not amount to buying mortgages but simply accepting them as collateral for 28-day loans. However, will the Fed really return these ticking time bombs to their true owners in 28 days, inciting the very collapse its actions were originally designed to postpone? Why does the Fed believe that the mortgages will be marketable next month; or the month after that?

… The problem with these mortgages (other than the borrowers lacking any means or desire to repay them) is that the underlying collateral is worth a fraction of the face amount. With recent foreclosure recovery rates amounting to less than 50 cents on the dollar, it is no wonder that no one wants them. The real estate bubble allowed borrowers to leverage themselves to the hilt using inflated home values as collateral. However, now that the bubble has burst, mortgage balances far exceed current property values. It is a trillion dollar time bomb that no one can possible defuse.

Paper dollars are technically Federal Reserve Notes, which means they are liabilities of the Fed. When it puts newly minted notes into circulation it does so by buying assets, usually U.S. treasuries, which it then holds on its balance sheet to offset that liability. By swapping treasuries for mortgages, the Fed effectively alters the compilation of its balance sheet and the backing of its notes.

… Backing paper money with mortgages is nothing new. The French tried it in the late 18th Century, and it lead to hyperinflation. Assignats, which were first issued in 1790 to help finance the French revolution, were backed by mortgages on confiscated church properties. Although the stolen underlying collateral did have some value, the revolutionaries saw no reason to limit how many Assignats were printed, which resulted in massive depreciation. Within three years, price controls were introduced and failure to accept Assignats, initially an offence subject to six years in prison, was made a capital crime. By 1799 the currency was completely worthless.

- Peter Schiff @ For Sou 15 Mar 2008: Link.

- Prise de la Bastille by Jean-Pierre Houël: Link.

“There’s something perverse about a member of Congress having one of the people who is trying to persuade him what the right answer is raise $100,000 for his campaign.”
- Lawrence Lessig

Stanford professor Lawrence Lessig hates corruption. And he’s trying to do something about it:

I don’t want a world where there are no lobbyists — I think lobbyists are essential. I think the message of lobbyists and the training of lobbyists is essential. Just like I think that what lawyers do before the Supreme Court is essential. But just as I think everybody would think it weird if a lawyer before the Supreme Court would send $100,000 to the Justice Roberts Retirement Fund or $100,000 to the Renovate Justice Roberts’s Office Fund, I think we better recognize there’s something perverse about a member of Congress having one of the people who is trying to persuade him what the right answer is raise $100,000 for his campaign. That’s the link we’ve got to break.

- Lawrence Lessig, interview by Mark Hemingway @ National Review Online: March 7, 2008: Link.

Via Slashdot: Link.

Lawrence Lessig blog: Link.

Wikipedia states:

Lawrence Lessig (born June 3, 1961) is an American academic. He is a professor of law at Stanford Law School and founder of its Center for Internet and Society. He is founder and CEO of the Creative Commons and a board member of the Electronic Frontier Foundation and of the Software Freedom Law Center, launched in February 2005. He is best known as a proponent of reduced legal restrictions on copyright, trademark and radio frequency spectrum, particularly in technology applications.

At the iCommons iSummit 07 Lessig announced that he will stop focusing his attention on copyright and related matters, and will instead work on corruption in the political system.

- Wikipedia: Link.

“Contemporary art auction houses can barely keep up with each other as they continue to set and then break price records for contemporary artists … “

Streetscape makes some interesting observations about the contemporary art market:

Even as worldwide economic markets face the reality of a potential downturn, one market has continued to flourish at a mind-boggling pace: the contemporary art market. In New York and London, the three major contemporary art auction houses can barely keep up with each other as they continue to set and then break price records for contemporary artists — approximately one billion dollars of contemporary art was exchanged at the most recent New York auctions alone.

- Streetscape, Accessibility: Link.

Via Art Crimes .

Pyramids Crumbling: observations by Bill Gross on the modern banking system –

Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever.

… The withdrawal of deposits from our new age shadow banking system has frightening potential consequences because a thinly capitalized banking system is always at risk relative to its more conservative counterpart. Visualize, as does Chart 1, in crude yet understandable form, today’s shadow system versus that of two decades ago.

- Bill Gross, Investment Outlook January 2008 @ PIMCO Bonds: Link.

Observations by Jon Taplin, from his blog:

I don’t mean to be chicken little about the coming recession, but Bill Gross, the largest bond buyer in the US (PIMCO) has just published his January Investment Commentary. He writes about “The Bank Of Shadows” the unregulated banking system born of the Reagan era where reserve requirements are quite lax. Its a truly frightening piece.

… This is simply unsustainable. As a country we are going to have to live within our means. Mrs. Clinton was out today proposing the government loan a great deal of money to homeowners to stave off the inevitable foreclosure. This is not a solution, this is a political prank. It was the financial deregulation signed by her husband that allowed Investment Banks and Money Center Banks to merge, from whence the explosion in financial derivatives sprang.

- Jon Taplin, January 11, 2008: Link.

Comment by Joseph Urla @ Jon Taplin’s Blog:

Thank God I found this website. I have been screaming about this stuff. The otc market is totally out of control, with total notional amounts of outstanding trades at roughly $600 trillion by now, and criminally under the radar. Many of the participants don’t even have to be registered financial entities. This is a failure of fiduciary responsibility of the highest order.

- Joseph Urla @ Jon Taplin’s Blog: Link.

Via Boing Boing’s Cory Doctorow:

For the past couple weeks, one of my favorite blog-reads has been Jonathan Taplin’s blog. I got to know Jon when I lived in LA last year when he was co-faculty with me at the USC Annenberg Centre: he’s a smart polymath with a background as a music and film producer (Bob Dylan, Mean Streets, others), Democratic party shaker, financier, high-tech startup entrepreneur, and good thinker on diverse issues related to media, politics and technology.

Taplin’s blog is as eclectic as he is, a straight-up analysis blog that rips into the headlines, illuminating everything from economic news to the writers’ strike to heavy weather to democratic politics. I keep finding myself returning to Taplin’s posts as I read the news and talk with friends.

- Cory Doctorow @ Boing Boing: Link.

Advertising campaign throws away money:

Carlsberg dropped around £10 and £20 notes in the streets of London with a removable sticker that read “Carlsberg don’t do litter. But if they did it would probably be the best litter in the world”.

- The Hidden Persuader

BusinessWeek uncovers that the cable channel’s own design flaw may be behind the investigation into its million-dollar stockpicking contest

In the past few months, Jim Kraber became more than a little obsessed with CNBC’s “Million Dollar Portfolio Challenge.” At the peak, the 42-year-old was spending 12 hours a day on the contest, using three computers in his Greenwich Village apartment to trade 1,600 different portfolios, all in an effort to win the $1 million grand prize. He even dropped his studies for the chartered financial analyst (CFA) exam, given once a year, so he could have more time for the financial news channel’s game.

He made it into the group of 20 finalists, but in mid-May, as the last round of trading opened, he noticed an unusual pattern in the picks of other contestants. One trader had a stream of near-perfect picks, consistently placing huge bets on shares that soared in after-hours trading. Kraber suspected the trader and perhaps others were getting help from someone who was changing their picks after the stocks’ increases—and he quickly notified CNBC. “I went back and looked at his trades and thought, ‘This is pretty much statistically impossible,’” says Kraber, who holds master’s degrees in business and statistics from New York University.

Kraber says CNBC rebuffed him at the time, but now it looks like he may have been right. Several contest participants have told BusinessWeek that there was a flaw in the design of the CNBC game that allowed certain players an unfair advantage. As many as four of the top contestants in the million-dollar contest may have exploited the flaw, according to the participants interviewed by BusinessWeek. On May 30, two weeks after Kraber says he notified the cable channel, CNBC posted a notice on its Web site that there have been allegations of trading strategies “in violation of the contest rules” and that it is investigating the issue. It has not disclosed the nature of the alleged problems.
“An Aggressive Investigation”

… Now, the channel, which is part of General Electric (GE), may have to publicly acknowledge mismanagement of the contest and could face potential lawsuits from disgruntled participants.

… CNBC declined to comment specifically on Kraber’s allegations. A spokesman for the cable channel says, “Once these issues were raised, we launched an aggressive investigation immediately. The integrity of the contest is very important to us.” CNBC, run by President Mark Hoffman, has been a money machine for GE, even as NBC overall has struggled (see BusinessWeek.com, 2/5/07, “Jeff Zucker Takes Charge at NBC Universal”).

The performance of some participants does look unbelievable, literally unbelievable. Over the first nine trading days of the final round, the top five stockpickers tallied average returns of 45%, according to a BusinessWeek review of their trading portfolios. If that kind of performance was stretched out over a year, it would work out to an annual return of more than 1,200%. “Obviously if you have knowledge of what’s happening with the stock, that would really skew the results,” says Lubos Pastor, a professor of finance at the University of Chicago, who is speaking generally and has not studied the trading in the CNBC contest.

… According to several participants, the technique was relatively simple, but not obvious to all participants. A trader could go to the CNBC Web site and select a number of stocks to buy, but hold off on executing those trades. If you made the selection before the close of regular trading at 4 p.m. EST and left your Web browser open, you could execute those trades after hours and still receive the 4 p.m. closing price. For example, if a company whose stock closed at $20 a share rose to $25 in after-hours trading, you could buy the stock at $20, even though it was already worth 25% more (see BusinessWeek.com, 6/8/07, Slide Show: “How to Game CNBC’s Stocks Contest”).

The allegation is that certain traders may have used the technique with companies that were reporting earnings and other important news after the market’s close. They could select as many as 50 stocks and then execute trades for only the one or two best performers.

[Tim Catts: June 7, 2007: Business Week]

Via SlashDot.

America and the Dollar Illusion — Gabor Steingart comments on America’s place in the global economy:

• The US foreign debt grows by about $1.5 billion every weekday and has now reached about $3 trillion
• Private household debt, both at home and abroad, has reached $9 trillion — and 40 percent of these debts has been incurred since 2001
• Almost no one is saving money in the United States today
• The Americans are enjoying the present at the cost of selling off ever larger chunks of their future

US economic growth, in fact, is fueled by ever-increasing consumer spending — puzzling given that American wages are dropping as is industrial output. Still, everyone knows the answer to this riddle. The rise in consumption isn’t based on an expansion of production, a rise in wages or even an increase in exports. To a large extent, it’s based on the growing debt. But why do banks keep issuing credit? Because they accept the ever-increasing prices of stocks and real estate as a kind of collateral. A closed circuit of miraculous money minting has been created.

Self-delusion

The extent of this self-delusion can be read in the balance sheets of the banks: Almost no one is saving money in the United States today. The US foreign debt grows by about $1.5 billion every weekday and has now reached about $3 trillion. Private household debt, both at home and abroad, has reached $9 trillion — and 40 percent of these debts has been incurred since 2001. The Americans are enjoying the present at the cost of selling off ever larger chunks of their future. Arguably, the imminent economic crisis is the most thoroughly predicted one in recent history. Rather than refuting the crisis, the current US economic boom merely heralds it.

Biologists have observed similar phenomena in plants contaminated by toxins. Before they wither, they produce one last batch of healthy shoots — to the point that they can hardly be distinguished from healthy plants. Some speak of a panic bloom.

[Gabor Steingart: Spiegel Online]

Glossary

• US economic growth
• ever-increasing consumer spending
• debt
• miraculous money minting
• panic bloom

If you want to succeed in business, you sooner or later have to deal with trickster gods.

Loki, Hermes, call them what you will — they’re practically everywhere, whenever commerce flows and men make deals.

You may be somewhere else at the time, but if your somewhere else has any potential for dough-ray-me, you can assume that a trickster god is on the way, right now.

Trust me, these guys are relentless. Not to scare you, I’m just saying. If they want a piece of the action, might as well open the front door, because they’ve already cased the back.

But then — who can tell with trickster gods? They may not want a cut of the action. Sometimes they’re just curious. And often enough, they’re good people to know: trading on their tips can bring windfall profits.

What they insist upon is knowing about the action: knowledge is the currency of trickster gods.

PS, anyone who says “Trust me” is cutting a deal, somehow or another. Mark my words.

PPS, image = detail from coin: infant Hermes stealing Apollo’s cattle. Clever lad ….

September 14, 2006:
Russian Central Bank reformer Andrei Kozlov gunned down —

Andrei Kozlov, who had spearheaded the campaign against fraudulent banks and money laundering as the No. 2 official at the Central Bank, died of gunshot wounds early Thursday.

Kozlov, 41, the bank’s first deputy head, and his driver, Alexander Semyonov, 54, were shot by two gunmen with automatic pistols Wednesday evening as Kozlov was exiting the Spartak sports complex.

… A longtime Central Bank official, Kozlov oversaw the closure of 44 banks accused of improper activities this year alone. He had also pushed for mandatory deposit insurance for banks, which was particularly important to millions of Russians who lost their savings in financial crises in the 1990s.

Most recently, he had lobbied for a permanent ban on those convicted of tax evasion from working in the banking sector.

Kozlov’s killing has raised concerns among many in the banking sector that these reforms and others could be stalled.

While the investigation has just begun, several senior government officials and banking sector experts said Kozlov died because of his work.

“He was a very brave and honest man, and through his activity he repeatedly encroached on the interests of unprincipled financiers,” Finance Minister Alexei Kudrin said in a statement Thursday.

Born in Moscow on Jan. 6, 1965, Kozlov, started his career at the State Bank of the Soviet Union in 1989. He joined the Central Bank after the 1991 Soviet collapse, reaching the bank’s highest echelons by the mid-1990s and becoming first deputy head in 1997.

From 1999 to 2001, Kozlov took a break from government. During that time, he served as board chairman of the Russky Standard bank and also worked for a subsidiary of Aeroflot.

Kozlov is survived by his wife, Yekaterina, and three children.

[Moscow Times: Link]

Andrew Osborn reports from Moscow –

Russian President Vladimir Putin has warned that his country’s battle with organised crime has entered a dangerous new phase after the assassination of a top anti-money-laundering official.

Putin called [Kozlov’s] murder “a manifestation of the intensifying situation in the struggle against crime” and ordered a special task force be established to staunch the rivers of dirty money that flow through Russia every day.

… It is no exaggeration to say that Kozlov’s slaying was the most high- profile murder of a senior official since Putin came to power six years ago; his rank was close to that of a government minister. Senior politicians called the attack an assault on the government itself and said it shattered an unspoken truce between the Kremlin and the Russian mafia, a catch-all phrase for scores of highly organised criminal groupings that have sprung up since the collapse of the Soviet Union.

In the chaotic 1990s, the Mafia routinely “eliminated” awkward politicians and officials, but since the tough- talking Putin took the reins of power it had backed away from such terror tactics and was thought to have opted instead for a veneer of respectability.

That “truce” now appears to have been torn up overnight.

Kozlov … had shut down dozens of “dirty” banks after revealing that they were fronts for money launderers.

Perhaps more significantly, he planned to shut down dozens of others in the months and years ahead and kept a blacklist of financial institutions he suspected were “compromised” which he was working his way through.

… Kozlov had become adept at “following the money” and closing down such banks by withdrawing their licences and publicising their wrongdoing.

His most high-profile case came in 2004 when he took on the aptly named Sodbiznesbank, ironically a large contributor to Putin’s re-election campaign.

Kozlov accused the bank of accepting ransom money to the value of $1m (£532,000) from a well-known criminal group. The money was purportedly extorted from a Russian truck-maker called Kamaz, whose general director Viktor Faber was kidnapped along with the company’s chief economist Natalia Starodubtseva.

The kidnapping went badly wrong: both were abducted in May 2003 and found dead in September but the hostage-takers got their money nonetheless.

Kozlov suggested that the bank was implicated in the crime, said over 80% of its capital was fictitious, and ordered it to hand back its banking licence.

Sodbiznesbank’s defence mechanism was crude. It blocked access to its central Moscow office for two weeks during which time it allegedly spirited away millions of dollars of assets. In the end, Kozlov ordered in the riot police who stormed the offices ending the standoff.

Powerful vested interests were clearly upset though and the affair caught up with Alexander Slesarev, the 37-year-old owner of Sodbiznesbank bank, last October.

He was executed with his wife and daughter in a contract drive-by shooting just outside Moscow.

[Sunday Herald: Link]

Flashback 1997:
Business Week praises Andrei Kozlov for creating “Russia’s most liquid, clean, and efficient securities market” –

In 1992, Russia’s economy was in chaos. Inflation was 2,000%. Industrial output was falling. Trust in Boris N. Yeltsin’s radical reformers was nil.

But in the bowels of the Central Bank of Russia, Andrei A. Kozlov, 32, saw a way out. A staffer in the securities department, he heard a group of American bankers, including then New York Federal Reserve Bank President Gerald E. Corrigan, describe how the U.S. government finances its operations by borrowing money on capital markets. Kozlov vowed to develop Russia’s own government securities program. Says Kozlov: ‘’The attitude of the majority of higher-level government officials was, ‘Let these young guys play with their toys.”’

Five years later, Kozlov, is First Deputy Chairman of the Central Bank, and his ‘’toys'’ are bringing billions of dollars to the Russian budget. Using Corrigan’s advice, he created Russia’s most liquid, clean, and efficient securities market. Now, Russian and foreign investors feel confident enough to put over $50 billion in Russian Treasury bonds. Russia qualified for an international rating in September, 1996. Since then, Russians have sold more than $6.5 billion in Eurobonds. Says David Boren, Salomon Brothers’ emerging- markets research president: ‘’Kozlov was there early, he’s going to stay around a long time, and he’s clean.'’

[Link]

Interpol holds ‘Supernote’ summit to address US dollar counterfeiting –

LYON, France (26 July 2006) - Representatives from the US Secret Service, law enforcement and security printing industries met at Interpol’s General Secretariat in Lyon on 26 July to discuss how to deal with a highly-deceptive form of counterfeit US currency known as the ‘Supernote’.

Reported to be manufactured in the Democratic People’s Republic of Korea (North Korea), the Supernote is a high-quality counterfeit of the 50-dollar and 100-dollar note, also known as a Superdollar. The notes are produced using similar processes and materials as genuine US currency.

First detected back in 1989, concerns over the Supernote have increased recently with media reports, law enforcement publications, and industry journals indicating that the government of the Democratic People’s Republic of Korea was responsible for the production and distribution. The US National Security Council has indicated that government officials from North Korea were engaged in distributing the notes.

The notes are highly deceptive, but are detectable. They circulate mostly outside the United States.

Of the $753 billion dollars worth of banknotes in circulation, some 60% circulate overseas. To date, some $50 million of this family of false notes have been found.

[Link]

Slate: “What Are Supernotes? The best fake money that money can buy” –

Supernote production requires uncommon equipment and skilled engineers. At first, investigators thought they originated in Lebanon. Another theory from the 1990s held that Iran produced them on equipment purchased by the Shah two decades earlier and then shipped the bills to Lebanon via Syria. The real source of the bills has not been found, but a member of the Congressional Research Service reported that the government of North Korea produces millions of dollars a year with intaglio presses. In the meantime, the government ordered an extensive redesign of U.S. currency in 1996. (Supernote versions of the new $100 bills have been discovered.)

[Daniel Engber @ Slate: Link]

U.S. Treasury, How to Detect Counterfeit Money –

The public has a role in maintaining the integrity of our currency. You can help guard against the threat from counterfeiters by becoming more familiar with United States currency.

Look at the money you receive. Compare a suspect note with a genuine note of the same denomination and series, paying attention to the quality of printing and paper characteristics. Look for differences, not similarities.

[Link]

Nova: Secrets of Making Money (October 1996) –

ROBERT LEUVER: Ninety percent of the presses that are used to print security paper come from one company, De la rue Giori in Switzerland. And, Iran has these presses. They obtained them in the 1970s, as many other countries throughout the world. Anybody that has this equipment has the same equipment the United States has, so it’s not unthinkable that another country has these presses and is capable of using them if they want to subvert the US economy. Whether that’s Iran or some other Middle Eastern country, I don’t know. But the possibility exists.

STACY KEACH: In the world of money making, even a paper mill is a fortress guarding national secrets. Crane & Co. has made special paper for US currency since 1879, and has never before allowed cameras to document this process. Their paper is unlike any other in the world. And for the new currency, Crane redesigned it to be even more secure against counterfeiting.

[Nova: Link]

De La Rue Giori –

De La Rue is the world’s largest commercial security printer and papermaker, involved in the production of over 150 national currencies and a wide range of security documents such as travellers cheques and vouchers. Employing over 6,000 people across 31 countries, the company is also a leading provider of cash handling equipment and software solutions to banks and retailers worldwide helping them to reduce the cost of handling cash. We are also pioneering new technologies including tailored solutions to protect the world ’s brands through to government identity solutions in secure passports, identity cards and driver’s licences.

[Link]

KBA Acquires De La Rue Giori to Consolidate Pole Position in Security Printing –

Lausanne/Würzburg. On 30 May [2001] KBA in Würzburg acquired a 100% interest in Lausanne-based De La Rue Giori S.A., a leading supplier and consultant in the international security printing industry. Renamed KBA-GIORI S.A. with effect from 11 June, the company will progressively adapt its corporate image to the new ownership structure.
[Link]
[KBA-Giori: Home Page]

Unrelated to counterfeiting, but an interesting look at the power of wealth –
Indian Airlines Flight 814: Roberto Giori’s ordeal [December 1999]

At one point during the eight-day hijacking of Indian Airlines Flight 814, the abductors demanded $200 million from the Indian government. Little did they know that one of the hostages sitting in economy class could have effortlessly written them a check for that amount. Roberto Giori, owner of the Lausanne-based company De La Rue Giori, boarded Flight 814 after a holiday in Katmandu with his companion Cristina Calabresi. De La Rue Giori, which Giori inherited from his father, happens to control 90% of the world’s currency-printing business. The 50-year-old Giori, who holds dual Swiss and Italian nationality, is one of Switzerland’s richest men.

After the plane landed in Kandahar, southern Afghanistan, where it would remain for seven days, Switzerland sent a special envoy to the airport to deal with the abduction of its “currency king,” his companion and two other Swiss nationals. It also put pressure on New Delhi to come to a solution that ensured their safe release.

[Time Asia: Link]
[See also Wikipedia: Indian Airlines Flight 814]