The Oil Drum

A new Round-Up has been posted at TOD:Canada.

Today's Round-Up focuses on disappearing acts. First, out of $12 billion in $100 bills that were physically flown from the New York Fed to Baghdad, $9 billion are missing. Second, more of life on Earth is vanishing - the updated Red List of endangered species shows a large increase in species in critical condition.

In the world of finance, the next month is full of key moments, where debts will have to be covered, paper of various sorts matures, hedge funds will need to fork over lots of cash to investors who want out, and take-over deals will come under scrutiny. It looks like trillions of dollars could disappear from the markets before the end of the year.

And Greenspan had no idea. None. Now there's a mystery.

Billions over Baghdad

_{Illustration by John Blackford. By Peter van Agtmael/Polaris (desert), Konstantin Inozemtsev/Alamy (money)}

Between April 2003 and June 2004, $12 billion in U.S. currencymuch of it belonging to the Iraqi peoplewas shipped from the Federal Reserve to Baghdad, where it was dispensed by the Coalition Provisional Authority. Some of the cash went to pay for projects and keep ministries afloat, but, incredibly, at least $9 billion has gone missing, unaccounted for, in a frenzy of mismanagement and greed. Following a trail that leads from a safe in one of Saddam's palaces to a house near San Diego, to a P.O. box in the Bahamas, the authors discover just how little anyone cared about how the money was handled.

Hidden in plain sight, 10 miles west of Manhattan, amid a suburban community of middle-class homes and small businesses, stands a fortress-like building shielded by big trees and lush plantings behind an iron fence. The steel-gray structure, in East Rutherford, New Jersey, is all but invisible to the thousands of commuters who whiz by every day on Route 17. Even if they noticed it, they would scarcely guess that it is the largest repository of American currency in the world.

On Tuesday, June 22, 2004, a tractor-trailer truck turned off Route 17 onto Orchard Street, stopped at a guard station for clearance, and then entered the eroc compound. What happened next would have been the stuff of routine procedures followed countless times. Inside an immense three-story cavern known as the currency vault, the truck's next cargo was made ready for shipment.

With storage space to rival a Wal-Mart's, the currency vault can reportedly hold upwards of $60 billion in cash. Human beings don't perform many functions inside the vault, and few are allowed in; a robotic system, immune to human temptation, handles everything. On that Tuesday in June the machines were especially busy. Though accustomed to receiving and shipping large quantities of cash, the vault had never before processed a single order of this magnitude: $2.4 billion in $100 bills.