The ECB recently launched a review of the €500 bill. In all likelihood, the €500 bill is about to vanish. Is this a first step in a war on cash or is this a war on money laundering?
ECB president Mario Draghi says Review of €500 Bill Not a War on Cash.
“The 500-euro note and this objective of limiting cash have nothing to do” with each other, the ECB president told European Union lawmakers in Brussels on Monday. “There is a pervasive and increasing conviction in world public opinion that high-denomination bank notes are used for criminal purposes.”
“The 500-euro note is being viewed as increasingly an instrument for illegal activities,” Draghi said. “It’s in this context that we are considering action on that front. Of course, we have to do it very carefully and in the best possible way.”
“500 euros is a huge number and we’re on a trend to make sure that we discourage fraud, that we discourage corruption and that we combat terrorism,” Luxembourg Finance Minister Pierre Gramegna said last week.
Even if the ECB withdraws the 500-euro note, people will still be able to hoard the next-highest denomination of 200 euros if they want, Draghi told the lawmakers.
War on Cash or War on Money Laundering?
Is this move by the central bank a war on cash or a war on money laundering?
To be sure, people and businesses hide cash for fraudulent purposes. But the primary reason behind fraud is insanely high taxes. The system itself openly encourages fraud.
Draghi’s move is also an attack on cash. People do not trust banks, and rightfully so. It’s easier to stash a stack of high denomination bills than lower ones.
“People will still be able to hoard the next-highest denomination of 200 euros if they want,” Draghi told the lawmakers.
He left off “until they can’t“. €200 bills will be the next to go.
For more on digital currencies and the pending ban on cash, please see Reader Asks About “Fedcoin”: Should the Fed Issue Its Own Bitcoin?
Mike “Mish” Shedlock
Werner Sinn has the opinion that the ECB negative deposit rate of -0.3% is floored because banks will instead hold cash if it is increased, because that is their cost of doing so. By removing the 500 euro note the cost of vaulting increases to – 0.75% interest eq., so allowing lowering of rates.
Yancey Ward said:
Yes, that is exactly the reason for the discontinuation of the 500 Euro note. The real danger of NIRP is that banks themselves will at some point go for conversion of electronic balances subject to NIRP to increasing amounts of physical currency. It is simply a version of a bank run convertibility crisis in the age of book-keeping money.
My opinion is that once started, NIRP is never-ending and never-reversing. Today it is the 500 Euro note, and tomorrow the 200, etc. As the ECB goes deeper into NIRP, each removal of a note buys them a little bit of room to lower rates right up until the banks start choosing some other physical means of evasion. It is no coincidence that Larry Summers has just advocated for the discontinuation of the 100 dollar bill.
Ron J said:
“There is a pervasive and increasing conviction in world public opinion that high-denomination bank notes are used for criminal purposes.”
I have not heard of anyone expressing that, other than banking or political elitists. They obviously have an ulterior motive for eliminating those bills. In the U.S., a 100 dollar bill is not high denomination, but there are elitist comments that it as well as the 500 euro note should be eliminated for that same reason.
Ron J said:
“500 euros is a huge number and we’re on a trend to make sure that we discourage fraud, that we discourage corruption and that we combat terrorism,” Luxembourg Finance Minister Pierre Gramegna said last week.
Oh, here is another political/banking elitist making the same corrupt, fraudulent case. Goebbels X 2.
Michael Surkan said:
“Is this a first step in a war on cash or is this a war on money laundering?”
Is there a difference?
I almost put in that exact question
Dick M said:
They just want all of the $100 notes to be deposited in the banks so that they can confiscate them when they do their bank bail-in’s.
Just trying to make it harder on the 50% of Europeans who do their shopping on the black market to avoid VAT.
TIME WILL TELL IF DRAGHI IS TELLING THE TRUTH ABOUT MONEY LAUNDERING. BUT YA GOTTA SAY HIS TIMING IS PROPITIOUS. THEN IT IS SAID THE HELLFIRE MISSISLE ENDED UP IN CUBA SO THAT THE CUBAN AIR FORCE COULD SHOOT DOWN AIRPLANES CARRYING DRUGS. STRANGE WORLD WE ARE LIVING IN, HUH?
Marine general closes career defending the organization carrying out the war on drugs
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By Dan Lamothe January 14
Joint Chiefs Chairman Gen. Joseph Dunford, Jr., left, and outgoing Commander of the U.S. Southern Command, Marine Corps Gen. John F. Kelly, share a laugh during a change of command ceremony at U.S. Southern Command, Thursday, Jan. 14, 2016, in Miami. (AP Photo/Wilfredo Lee)
DORAL, Fla. – Marine Gen. John F. Kelly stepped down as the chief of U.S. Southern Command on Thursday, marking the end of a 45-year career that included commanding Marines during the invasion of Iraq, overseeing the military’s controversial prison at Guantanamo Bay, Cuba, and becoming a high-profile Gold Star parent after his son was killed in Afghanistan in 2010.
Kelly was replaced by Navy Adm. Kurt Tidd while standing alongside his close friend and fellow Marine, Gen. Joseph F. Dunford, the chairman of the Joint Chiefs of Staff. The transition period comes as the White House and Pentagon grapple with whether to close the prison, which holds dozens of detainees captured in America’s long war against terrorism since the attacks on Sept. 11, 2001.
Kelly defended his organization on Thursday, saying that Southern Command, based in a Miami suburb, does the best it can to stem the flow of drugs from Central and South America with the assistance of the CIA, the FBI, the DEA and other U.S. organizations. The organization has generally received far fewer resources, including aircraft and ships, than other U.S. military organizations, particularly as wars were waged in Iraq and Afghanistan.
[Guantanamo general: ‘Foolishness’ to say U.S. has lost the moral high ground on human rights]
“As Americans, you should be proud of JTF,” Kelly said of the joint task force performing the work in Central and South America. “We can all disagree about whether it should be there or somewhere else, but you should be proud of JTF.”
Defense Secretary Ashton B. Carter credited SOUTHCOM with helping to improve security in Latin America. But he added that Tidd will need to not only continue that work, but also will play a part in closing the Guantanamo military prison. The issue has dogged the President Obama, who promised early in his administration to shut down the military prison but has been unable to thus far.
Carter said an alternate location will be needed to hold the most dangerous detainees after Guantanamo is closed. He also announced that the U.S. government has just authorized the transfer of 10 Yemeni detainees to the government of Oman, dropping the detainee population at Guantanamo to 93.
“Like every transfer that came before it, the decision to transfer these detainees happened only after a thorough review by me and other senior security officials of the government,” said Carter.
Carter added that the retiring Kelly came of age at a complicated time for the country, and enlisted in the Marine Corps in 1970 when it became clear he was about to be drafted to serve in Vietnam. He’d previously served as a merchant Marine and hitch-hiked from his hometown of Boston to Washington state, and took industrial rail lines to get back home. Kelly returned to military service as an officer after graduating from the University of Massachusetts-Boston in 1976.
The death of Kelly’s son Robert, a first lieutenant, was mentioned a few times during the ceremony. Carter said that the general’s strength, experience and counsel has served to inspire other military families.
“Few can describe service and sacrifice more eloquently and more passionately than John,” Carter said. “Few have a deeper appreciation for the magnificence of the young people who step forward to serve our country.”
The secretary continued: “John, as you once said about those under your command—and I quote—’These were good and decent young men and women who every day performed remarkable and most often unsung acts of bravery and selflessness to a cause they decided was bigger and more important than themselves.’”
Dan Lamothe covers national security for The Washington Post and anchors its military blog, Checkpoint.
The Wall Street Journal
Missing U.S. Missile Shows Up in Cuba
Inert Hellfire missile sent to Europe for a training exercise makes mysterious trip, sparking concerns over loss of military technology
It isn’t clear how an inert Hellfire missile wound up in Cuba. Above, a Hellfire missile in 2009. ENLARGE
It isn’t clear how an inert Hellfire missile wound up in Cuba. Above, a Hellfire missile in 2009. PHOTO: ETHAN MILLER/GETTY IMAGES
By DEVLIN BARRETT and GORDON LUBOLD
Updated Jan. 7, 2016 8:17 p.m. ET
An inert U.S. Hellfire missile sent to Europe for training purposes was wrongly shipped from there to Cuba in 2014, said people familiar with the matter, a loss of sensitive military technology that ranks among the worst-known incidents of its kind.
The unintended delivery of the missile to Cuba has confounded investigators and experts who work in a regulatory system designed to prevent precisely such equipment from falling into the wrong hands, said those familiar with the matter.
For more than a year, amid a historic thawing of relations between the U.S. and Cuba, American authorities have tried to get the Cuban government to return the missile, said people familiar with the matter. At the same time, federal investigators have been tracing the paper trail of the wayward Hellfire to determine if its arrival in Cuba was the work of criminals or spies, or the result of a series of blunders, these people said.
Hellfires are air-to-ground missiles, often fired from helicopters. They were first designed as antitank weapons decades ago, but have been modernized to become an important part of the U.S. government’s antiterrorism arsenal, often fired from Predator drones to carry out lethal attacks on targets in countries including Yemen and Pakistan, said people familiar with the technology.
This particular missile didn’t contain explosives, but U.S. officials worry that Cuba could share the sensors and targeting technology inside it with nations like China, North Korea or Russia, these people said. Officials don’t suspect Cuba is likely to try to take apart the missile on its own and try to develop similar weapons technology, these people said. It is unclear whether a U.S. adversary has ever obtained such knowledge of a Hellfire.
U.S. officials said the case of the missing missile, while highly unusual, points to long-standing concerns about the security of international commercial shipping and the difficulty of keeping close tabs on important items.
“Did someone take a bribe to send it somewhere else? Was it an intelligence operation, or just a series of mistakes? That’s what we’ve been trying to figure out,” said one U.S. official.
The government response to the missing missile has been two-pronged. First, it has tried to get the missile back. Second, officials want to determine who, if anyone, intentionally sent it off course. That effort has gone slowly, the people familiar with the probe said, in large part because the most important clues are in Europe, where evidence-gathering is subject to transnational diplomatic requests that can take years to complete.
The missile was sent from Orlando International Airport in early 2014 to be used in a North Atlantic Treaty Organization military exercise, said the people familiar with the case. As with other sensitive military gear, the shipping crate was clearly marked as containing material subject to rigorous export controls, and that shipping information would have made clear to anyone handling it that it wasn’t regular cargo, these people said.
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The missile was sent by its manufacturer, Lockheed Martin Corp., after the company got permission from the State Department, which oversees the sharing of sensitive military technology with allies.
A Lockheed Martin spokeswoman declined to comment on the matter, referring queries to U.S. government officials.
State Dept. spokesman John Kirby said the agency “is restricted under federal law and regulations from commenting on defense trade licensing and compliance issues.”
The people familiar with the case said the missile was sent to Spain and used in the military exercise. But for reasons that are still unclear, after it was packed up, it began a roundabout trip through Europe, was loaded onto a truck and eventually sent to Germany.
The missile was packaged in Rota, Spain, a U.S. official said, where it was put into the truck belonging to another freight-shipping firm, known by officials who track such cargo as a “freight forwarder.” That trucking company released the missile to yet another shipping firm that was supposed to put the missile on a flight originating in Madrid. That flight was headed to Frankfurt, Germany, before it was to be placed on another flight bound for Florida.
At some point, officials loading the first flight realized the missile it expected to be loading onto the aircraft wasn’t among the cargo, the government official said. After tracing the cargo, officials realized that the missile had been loaded onto a truck operated by Air France, which took the missile to Charles de Gaulle Airport in Paris. There, it was loaded onto a “mixed pallet” of cargo and placed on an Air France flight. By the time the freight-forwarding firm in Madrid tracked down the missile, it was on the Air France flight, headed to Havana.
Attempts to reach Air France were unsuccessful.
When the plane landed in Havana, a local official spotted the labeling on the shipping crate and seized it, people familiar with the case said. Around June 2014, Lockheed Martin officials realized the missile was missing, was likely in Cuba, and notified the State Department, said those familiar with the matter. Immigration and Customs Enforcement agents, as well as prosecutors with the Justice Department are now investigating to see whether the redirection of the missile was a crime.
Several of those familiar with the case said the loss of the Hellfire missile is the worst example they can recall of the kind of missteps that can occur in international shipping of sensitive military technology. While there are instances in which sensitive technology ends up getting lost in transit, it is virtually unheard of for such a shipment to end up in a sanctioned country like Cuba, according to industry experts.
Peter Singer, a senior fellow at the New America Foundation, said it is likely some foreign nations would like to reverse-engineer parts of a Hellfire, such as the sensors or targeting technology, to develop countermeasures or to improve their own missile systems.
“Now it’s a proliferation concern—someone else now understands how it works and what may have been cutting edge for us is deconstructed and packaged into what other players sell on the open market—and possibly provided to countries that we wouldn’t sell to,” said Mr. Singer.
The Defense Department’s Joint Attack Munitions Systems project office asked officials at the Defense Intelligence Agency to provide an assessment of the security impacts of the lost munition to determine the risks associated with its loss. An official at DIA declined to comment. But a defense official confirmed that DIA has reviewed the implications of the lost missile.
The Cuban Embassy in Washington didn’t respond to multiple messages seeking comment. Representatives at the embassies of Spain and France didn’t immediately comment, while attempts to contact the German Embassy were unsuccessful.
Several officials and industry experts said what was most baffling about the case was how so many shipping-company workers who should have noticed the labeling on the shipping crate and—at a minimum— asked questions about why it was going somewhere else apparently allowed it to proceed along a circuitous route until it ended up in Cuba.
If someone intentionally sent it astray, that could constitute a violation of the Arms Export Control Act, as well as a possible violation of Cuban sanctions laws. There are more than 25 countries to which U.S. military exports are generally prohibited. Cuba was added to the list in 1984.
The State Department’s office of Political-Military Affairs, which oversees exports of military hardware, regularly finds companies to be in violation of the Arms Export Control Act for a variety of reasons. Each year, there are about 1,500 disclosures of potential violations to the Arms Export Control Act. Many of those violations are because of mis-shipments, said a State Department official, but the official said the government doesn’t track the specific number each year.
“Mis-shipments happen all the time because of the amount and volume of the defense trade,” the official added. But no official could recall an instance when a U.S. missile was sent to a sanctioned nation.
The Hellfire missile has been missing during the most sensitive time in U.S.-Cuba relations in more than a generation. In June 2014, when the U.S. first realized the missile was in Cuba, the State Department was engaged in secret negotiations to normalize relations with Cuba, ending a standoff dating back to the 1950s.
That rapprochement culminated in a December 2014 announcement that the two nations would normalize relations, re-establish embassies and exchange prisoners.
If it turns out that the Hellfire was lost because of human error, the criminal probe would end and the State Department would have to determine whether to pursue a settlement with Lockheed Martin over the incident.
Companies that violate export-control laws can be fined millions of dollars and be required to address whatever issues contributed to the problem, the State Department official said. Large defense firms like Northrop Grumman Corp. and Boeing Co. have entered into consent agreements over the years, according to the State Department. Lockheed Martin has been cited in the past by State, including in 2000 and 2008 for a total of 16 violations. In another instance, another defense company, BAE Systems PLC, paid the Treasury $79 million in 2011, the highest amount ever paid. Lockheed Martin, which voluntarily disclosed the missing missile, is cooperating with investigators, U.S. officials said.
“This is a complicated business, mistakes are inherent in complicated businesses,” the official said. “Mistakes are a part of any human endeavor. Mistakes are made.”
Write to Devlin Barrett at firstname.lastname@example.org and Gordon Lubold at Gordon.Lubold@wsj.com
Sarah – Can you please make an effort to hold the size of your replies down
Those who have “eyes to see” have no problem with what this is really all about. Cash, gold, silver, etc, give people, like you a me, freedom. Our rulers HATE our freedom. They want it all.
How to have complete control? You only have to do 2 things: Prevent the stupid peasants from any means of self defense (gun control) and control all aspects of “money”. (“666”). This will come about since there are so few who “see” and so few willing to be called conspiracy nut-jobs.
Welcome to One World Global Slavery.
FIRST PART OF THIS INTERVIEW SPELLS OUT DEUTSCHE BANK’S GROWING PROBLEMS AND WHERE THEY CAME FROM.
Another point: When a “few” Muslims slaughter people we are told not to judge all Muslims. When a few Syrian “refugees” rape 100 German women, we are told not to judge all Syrian “refugees”.
When a few nut jobs shoot up a movie theater, we are all responsible
When a few drug dealers sell for cash, we are all responsible
When a White police man shoots someone trying to kill him, all White people are racists.
This is not going to end well. The removal of the 500 Euro and the $100 is for mass people control. The rulers don’t give a damn about drugs. A doped up, drugged society is best for them. They are driving us to digital “cash” where ever transaction can be taxed.
B Carroll said:
Mish, do you agree with the ‘German plan to impose “haircuts” on holders of eurozone sovereign debt?’
There should be haircuts on sovereign debt – yes
Surely I’m not alone in seeing the natural segue into the precious metals discussion?…..
The beatings will stop when morale improves.
And I’m sure that some one, somewhere is working on a way to make it “For the children”
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The quickest way to combat money laundering would be to legalize dope. But that would eliminate about 70% of the jobs in the justice system and put many Fortune Global 500 banks out of business.
But if the currency is near worthless, you need a large denomination. A 100 dollar bill gets you 1/2 a decent meal a decent restaurant. Or movie for a family of 4. If you need a wheelbarrow to pay for shit, then you need a higher denomination…unless its all about tracking all transactions. Which is probably true since the governments of the world all are racketeering outfits
Proof that it’s NOT primarily about crime:
Why Larry Summers wants to kill the $100 bill
Eliminate JUST $100 bills and you have eliminated MOST of the ability to store SAVINGS in cash:
There is a total of $1.380 Trillion of cash in circulation. $1.082 Trillion is in $100 bills.
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