EPA’s Playbook Unveiled: A Story of Fraud, Deceit and Secret Science
Part 1 :: How This Phony CIA Agent Pulled Off a ‘Scam’ to Impose Environmental Regulations on Americans
Kevin Mooney / @KevinMooneyDC / February 10 2015
Remember the EPA bureaucrat who got caught receiving $900,000 in pay without working because he claimed he also was employed by the CIA?
According to a report from the Senate Environment and Public Works Committee, the man, former climate policy expert John Beale, “retired” when questions arose about his spotty attendance and expense records.
Only he didn’t file his retirement paperwork and continued to draw an active-duty salary for some time after. His boss at the time in the EPA’s Office of Air and Radiation, now-EPA Administrator Gina McCarthy, knew this for about seven months and did nothing to stop it.
>>> This is the first of a two-part series.
“On March 29, 2012, an OAR official raised concerns about Beale’s retirement when he informed McCarthy that Beale was still on payroll,” the report stated.
“Despite being aware of the fact that one of her subordinates was collecting a paycheck without providing any work product, this arrangement continued for seven more months before McCarthy ever contacted Beale.”
In December 2012, McCarthy met with Beale for the first time in nearly 15 months, and he informed her that he was no longer planning on retiring. Two more months passed before concerns with Beale were officially reported to the inspector general. On April 30, 2013, McCarthy had cause to fire Beale, but instead elected to allow him to voluntarily retire with full benefits.
Liz Purchia, press secretary for McCarthy, told The Daily Signal in an email: “[McCarthy] believed he was retired, and [that] was the reason he was not in the office.”
How Did He Do It?
According to the Senate report, Beale’s career at the EPA was marked by relentless dishonesty on matters large and small and a cadre of supervisors who, like McCarthy apparently in the matter of his retirement pay, enabled his self-dealing behaviors.
He claimed an injury so he could ride first-class on flights for government business, which in one case drove the ticket price from $1,000 to $14,000. He forged expense forms, claimed to be away on CIA business for 2½ years worth of work days and flew to Los Angeles and stayed in posh hotels on the EPA’s tab for family visits that had nothing to do with agency work.
Few even attempted to question Beale’s frequent absences, enormous expense reports, exorbitant salary—he retired as the agency’s highest-paid employee—and lack of accountability. He was personally popular, well-connected and believed to be among the agency’s most effective employees.
But Beale’s greatest deception has nothing to do with first-class flights and fancy hotels.
Beale, who is serving a 32-month sentence in the federal prison in Cumberland, Md., for pleading guilty to felony theft of government property, spent most of his career devising regulations under the Clean Air Act that are justified by science few have seen and no one has peer-reviewed, according to the Senate report.
“We should all question how John Beale became a senior official at the EPA and played a major role in long-lasting policy decisions while pulling off a scam I thought only Hollywood could make up,” Sen. David Vitter, R-La., told The Daily Signal.
“But this egregious case helped us successfully reveal how EPA has wasted taxpayer resources and mismanagement in a manner that is far too common.”
John Beale and the Clean Air Act
Beale’s penchant for bilking the EPA out of money eroded the trust Americans place in their government and EPA employees place in their superiors and coworkers. But it was the role he played beginning in the mid-1990s in creating and implementing regulations pursuant to Clean Air Act that continues to reverberate and linger at the expense of the American people.
Staffers with the Senate Environment and Public Works Committee set out last year to probe the relationship between “sue-and-settle” arrangements and evidence they had uncovered that pointed to the manipulation of scientific data.
What they discovered, as detailed in their report, titled “EPA’s Playbook Unveiled: A Story of Fraud, Deceit and Secret Science,” was how agency officials concealed and misled about the science that underpinned its most significant initiatives and silenced and marginalized their own internal watchdog offices, which enabled the agency to greatly overstate the benefits and underestimate the costs of its Clean Air Act rulemaking.
Under the Clean Air Act, the EPA is required to create National Ambient Air Quality Standards for particulate matter and ozone. The American Lung Association sought to jumpstart this process with a so-called “sue-and-settle” suit filed in 1995.
The idea behind “sue-and-settle” is for friendly plaintiffs to sue a government agency, work out agreeable terms—perhaps even beforehand—and emerge with a court order to implement rules or regulations that could not have been achieved through the democratic or even regulatory process.
The American Lung Association suit resulted in a consent decree that called for the EPA to propose final standards for particulate matter by Nov. 29, 1996, and issue the standards by July 19, 1997. The decree set no deadline for ozone standards because they had been reviewed in 1993 and were not up for another review until 1998.
But Beale and Robert Brenner, his best friend and erstwhile boss, made what documents called a “policy call” and seized on the urgency to produce new particulate matter standards to rush through a new ozone standard as well.
This put the agency in the position of advancing two regulatory standards simultaneously, which it had never done. And it put the agency and those charged with reviewing such regulations, including the Clean Air Scientific Advisory Committee, under impossible deadline pressure.
Why Beale Was Emboldened
The EPA admitted in court papers filed pursuant to the American Lung Association lawsuit that any period shorter than Dec. 1, 1998, for promulgation of the particulate matter standard “would require the EPA to reach conclusions on scientific and policy issues with enormous consequences for society before it has had an adequate opportunity to collect and evaluate pertinent scientific data” and that further time was needed to reach a “sound and scientifically supportable decision.”
Beale had no time for that. He needed an ally to move things along and found one in Carol Browner, the Al Gore acolyte and former staffer who served as administrator of the EPA through both terms of the Clinton administration. Beale formed a close relationship with her and met with her multiple times per week to discuss his progress on this.
The urgency, as well as his influence with the boss and an unwillingness of others at EPA to block him, gave Beale “the mechanism he needed to ignore opposition to the standards.”
Beale’s efforts to include ozone in the new regulations proved expensive for Americans.
The EPA estimated the cost at $2.5 billion, but its estimate was based on receiving the full benefits of cutting ozone but achieving only a partial attainment of the standards, which the law did not permit. The Council of Economic Advisers also measured the cost and found it to be $60 billion—24 times the EPA estimate.
Indeed, as was the case with him getting away with not showing up for work and submitting exorbitant expense reports, succeeding in this regulatory sleight of hand only emboldened Beale to go further.
‘Hidden and Unverified’
That first round of standards, which regulated coarse particulate matter, such as pollen and dust, became known as PM10. But Beale wanted more.
In 1997, with the backing of his superiors, he sought to engage the agency in regulating fine particulate matter—particles a fourth the size of those regulated under PM10 and too small to be visible to the human eye.
But to enact these regulations, EPA first had to produce scientific research that established these smaller particles posed a threat to humans.
To accomplish this, Beale pulled data from two controversial studies—the Harvard Six Cities Study and an American Cancer Society study known as ACSII. The data was not trusted. The air advisory committee pointed out it had not been peer-reviewed, and others indicated Beale was exaggerating the findings for his desired result.
Further undermining those studies’ credibility is that even now, 20 years later, EPA still refuses to release the data, despite McCarthy’s promise to do so during her confirmation hearings.
Though Beal is out of the picture and in prison, his rulemaking techniques he employed to advance the 1997 National Ambient Air Quality Standards for ozone and particulate matter remain firmly entrenched.
“This effort codified EPA’s now customary practice of using fine particulates (PM2.5) to inflate the benefits of nearly all regulations issued under the Clean Air Act,” the Senate report concludes. “Yet the science supporting nearly all of EPA’s alleged benefits remain hidden and unverified.”
Part 2 :: EPA Under Fire for Concealing Controversial Scientific Data, Silencing Skeptics
Kevin Mooney / @KevinMooneyDC / February 11, 2015
For more than 15 years, the Environmental Protection Agency has resisted releasing data from two key studies to the general public and members of Congress. Government regulators used those studies to craft some of the most expensive environmental rules in U.S. history.
When skeptics within the federal government questioned and challenged the integrity of the studies—the Harvard Six Cities Study and an American Cancer Society study known as ACS II—they were silenced and muzzled.
That’s when the Republican staff on the Senate Environment and Public Works Committee stepped in to shine light on the situation, revealing the scope of the scandal in in a report titled, “EPA’s Playbook Unveiled: A Story of Fraud, Deceit and Secret Science.”
>>> This is the second of a two-part series. Read the first part: How This Phony CIA Agent Pulled Off a ‘Scam’ to Impose Environmental Regulations on Americans
The key player in the scandal is John Beale, who was sentenced to serve 32 months in federal prison on Dec. 18, 2013, after pleading guilty to stealing almost $900,000 from U.S. taxpayers.
It was in 1994 that Beale first began to beguile EPA employees and supervisors into believing he worked for the CIA. When he failed to report for work, Beale would enter “D.O. Oversight” on his calendar, which meant he was a director of operations responsible for covert operations at the CIA.
But it was the role Beale played beginning in the mid-1990s in creating and implementing regulations pursuant to Clean Air Act that continues to reverberate and linger at the expense of the American people.
Two Allies at the EPA
Over the past decade, evidence has emerged to reveal the Six Cities and ACS II studies did not support enacting one of the most controversial, far-reaching and expensive regulations in American history. Otherwise, the agency would have provided access to the data without a fight.
The political appointees who led the EPA at the time feared the consequences of enacting such a regulation without being able to offer scientific evidence of its necessity.
Beale needed an ally. He needed someone to explain the problems with the research and the reasons the data could not be released. Someone who could run interference with various actors in Washington. He found one in top EPA official Robert Brenner.
Brenner had recruited Beale, his former Princeton University classmate, to the EPA as a full-time employee in 1989.
Brenner, then deputy director of the EPA’s Office of Policy Analysis and Review within the Office of Air and Radiation, hired his friend despite Beale’s lack of legislative or environmental policy background. He also placed Beale in the highest pay scale for general service employees—a move typically reserved for those with extensive experience.
He then allowed Beale to collect retention bonuses, which go to only the most highly qualified employees to keep them from jumping ship—an unlikely scenario for a man who had picked apples and worked in a small-time law firm in Minnesota before joining the agency. Employees are supposed to be eligible for such bonuses—potentially worth as much as a fourth of the employee’s annual salary—for only three years, but Brenner helped Beale receive them for more than 10.
The two would work together at the EPA for 25 years—during which time the Office of Policy Analysis and Review would grow “in both scope and influence” as Beale and Brenner worked in tandem to muzzle dissenting voices within the White House Office of Information and Regulatory Affairs (OIRA) and the EPA’s Clean Air Scientific Advisory Committee.
‘Beale Memo’ Details Regulatory Agenda
At the crux of their agenda—the initiative that would build their legend within the agency—was implementation of a fine particle standard regulating air pollution.
The formula had been set with the American Lung Association sue-and-settle agreement and codified in a confidential document known as the “Beale Memo,” which described how Beale pressured regulatory and clean air bodies to back off criticisms of EPA rulemaking both within the agency and in correspondence with members of Congress.
The EPA attempted to conceal this document from Sen. David Vitter’s committee investigators, but a conscientious whistleblower “turned it over surreptitiously,” the report said.
The memo outlined how Beale and Brenner would work to compress the time the Office of Information and Regulatory Affairs and the voluntary Clean Air Scientific Advisory Committee had to review regulations so they could get away with using “secret science.”
The Clean Air Scientific Advisory Committee opposed from the start the move to regulate fine particulate matter. Members claimed there was no precedent or court order to establish these regulations, that research had not distinguished between dangers posed by PM 10 particles and those a fourth that size under PM 2.5, and that the PM 2.5 target was arbitrary and tied to no known science. (PM stands for particle matter, a term “for particles found in the air, including dust, dirt, soot, smoke, and liquid droplets,” according to EPA.)
Further, the committee, known as CASAC, complained it was being asked to do the work that took eight years on the previous air quality review in 18 months.
“The Beale memo is interesting in that it provides evidence of Beale’s direct role in ensuring concerns raised by other agencies, CASAC members and OIRA were not considered in the final rulemaking,” wrote Luke Bolar, spokesman for Vitter, in an email to The Daily Signal.
“While there were major concerns with the science and the cost-benefit analysis as outlined in comments filed on the rule, the Beale memo was written to push back against OIRA publicizing those concerns,” Bolar added. “They didn’t have to directly ‘blunt’ criticism, as Beale got his way through his close ties to Mary Nichols (then head of the Office of Air and Radiation) and Carol Browner (EPA administrator.”
Efforts to slow Beale, Brenner and their highly charged regulations failed. As a result, today the “co-benefits” of PM 2.5 are used to justify almost the entirety of the Obama administration’s air quality initiatives even though the immediate benefits still have yet to be proven.
“There is no watchdog now inside the EPA,” laments Steve Milloy, the former editor of JunkScience.com, which has posted a fact sheet that debunks the EPA’s PM 2.5 claims. “Whatever the EPA wants it gets. The agency is allowed to run rampant. There was a time when OIRA use to have stopping power, but now it’s just ignored. OIRA has become a rubber stamp.”
This is especially true of PM 2.5, Milloy says. “There is no real world evidence” PM 2.5 has caused sudden or long-term death, he said. “The claim that PM 2.5 kills people is at the heart and soul of how the EPA is selling these regulations. But it’s a claim that’s not supported by the facts or evidence. The EPA has rigged the whole process.”
Indeed, the purported co-benefits have become the benefits, according to Vitter’s report.
“Historically, EPA used co-benefits in major rules as one of several benefits quantified to justify a rule in the RIA,” the report says. “Yet, at the beginning of the Obama administration, there was a ‘trend towards almost complete reliance on PM 2.5-related health co-benefits.’ Instead of being an ancillary benefit, EPA started using PM 2.5 co-benefits as essentially the only quantified benefit for many CAA regulations.”
The Senate report claims all but five air pollution rules crafted between 2009 and 2011 listed PM 2.5.
Lack of Transparency at EPA
The Clean Air Act requires EPA to set air quality standards to protect public health with an “adequate margin of safety.” In its review of the National Ambient Air Quality Standards, the EPA considers factors such as the nature and severity of health effects, the size of the at-risk groups affected and the science.
Several exhaustive scientific reviews prior and subsequent to the 1997 standards were conducted following open, public processes that allowed for public review and comment prior to updating the standards.
EPA press secretary Liz Purchia told The Daily Signal in an email that the process is open enough.
The National Ambient Air Quality Standards are bolstered by “sound science and legal standards,” she said, and “several exhaustive scientific reviews prior and subsequent to the 1997 standards were conducted following open, public processes that allowed for public review and comment prior to updating the standards.”
Beale’s involvement in no way undermines the rational basis for the agency’s decisions nor the integrity of the administrative process. Reducing the public’s exposure to ground-level ozone and PM protects millions of Americans from costly and dangerous illness, hospitalization, and premature death.
All that may be true, but the EPA still won’t provide the underlying data to put the matter to rest.
Vitter and his team say this is because the EPA can continue to overstate the benefits and understate the costs of federal regulations—just as Beale did in the 1990s.
“This technique has been applied over the years and burdens the American people today, as up to 80 percent of the benefits associated with all federal regulations are attributed to supposed PM 2.5 reductions,” the report states.
This Fight Is for You
September 24, 2013 by Jim DeMint
The Heritage Foundation has been talking about defunding Obamacare for some time now, and people may be wondering why. Why did we put up a billboard in Times Square warning Americans that Obamacare will be hazardous to their health? Why won’t we give up this fight?
Because we are fighting for you.
We’re fighting for the grandmother who is counting on her trusted physician to guide her through the challenges of aging. Because Obamacare means you can’t necessarily keep your doctor if you like him, and it’s cutting down on the health care choices available to seniors.
We’re fighting for the couple who’s raising their own children while wondering how they’re going to care for their aging parents. Their premiums are going up and they’re wondering how they’ll afford it.
We’re fighting for the waiter who’s going to school and working full-time. Obamacare is causing many employers to cut back on workers’ hours so that they don’t have to provide them with health insurance. For many people, that means losing income and losing health insurance at the same time.
We’re fighting for the single mom who needs a steady job to support her kids. Obamacare is making jobs tougher to find, because a lot of businesses are saying they just can’t hire anyone new. The burden of the law’s mandates and regulations is making it too costly.
Every one of you is working hard to support your family, stay healthy, and make the best choices you can make. Obamacare is only getting in the way.
So no matter what anyone says, we’re going to keep fighting. Harry Reid is threatening to use all sorts of procedural gimmicks to keep Obamacare going. But Americans are catching on that this law is the reason their spouses don’t have health insurance any more, or their kids’ doctor isn’t in their network any more. They’re seeing how unfair and harmful it is.
And we can’t just sit by and let Obamacare take away the health plans we like, the doctors we like, and the freedom to make our own health care choices.
We won’t stop fighting. You can count on it.
Read the Morning Bell and more en español every day at Heritage Libertad.
Executive Order 13629: A National Security Hybrid
November 5, 2012 By Lee DeCovnick
B.H. Obama has issued 139 executive orders since becoming president. Some are fairly benign; many are deeply troubling, specifically as to the wholesale consolidation of emergency powers into the office of the presidency. The newest executive order is a breathtaking assault on entire sections of Constitution and the rights, freedoms, and liberties of all Americans, carefully hidden within the stultifying and banal language of bureaucratic doublespeak.
On October 26, 2012, eleven days before our national election, with tropical depression Sandy bearing down on thirteen East-Coast states and the Libyan disaster still a smoking morass of obfuscation, cover-ups, and unanswered questions, the White House’s Friday news dump included EO 13629. Titled “Establishing the White House Homeland Security Partnership Council,” this EO should chill the freedom-loving souls of all Americans.
Not surprisingly, the MSM has not mentioned EO 13629 — not anywhere. No mention in the NY Times, the Washington Post, or on any of the alphabet news and cable networks. The blogosphere, liberal and conservative (except Hannity), has had almost no mention of EO 13629. This EO was purposefully buried by the White House and ignored by the alternative press.
Have I got your attention? Then I’ll invite you to leave American Thinker for a couple of minutes and read the EO for yourself (only 1,232 words), and then return here.
All right, show of hands — who almost fell asleep digging through the tons of gravel to find the nasty gems? Yeah, me too. It takes a very close reading of this EO to understand what is actually going on here.
Let’s first look first at paragraph three:
The National Security Strategy emphasizes the importance of partnerships, underscoring that to keep our Nation safe “we must tap the ingenuity outside government through strategic partnerships with the private sector, nongovernmental organizations, foundations, and community-based organizations. Such partnerships are critical to U.S. success at home and abroad, and we will support them through enhanced opportunities for engagement, coordination, transparency, and information sharing.” This approach recognizes that, given the complexities and range of challenges, we must institutionalize an all-of-Nation effort to address the evolving threats to the United States.
A couple of things stand out. The EO quotes “The National Security Strategy,” an Orwellian document released by the White House in May of 2010 that advocates, in so many words, the end of American sovereignty and the ascendancy of a U.N.-based “transnational government.” It’s most famous line includes “We are now moving beyond traditional distinctions between Homeland and National Security.”
What to make of the line “… we must institutionalize an all-of-Nation effort to address the evolving threats to the United States”? What an eerie phrase: “all-of-Nation.” A Google search shows that phrase was also used in the “National Strategy For Biosurveillance,” a tyrant’s Christmas wish list, that was a July 2012 White House document, and Presidential Policy Directive 8, a FEMA directive on National Preparedness from March of 2011. Odd and troubling coincidences, to say the least.
Bottom line: the National Security Strategy encourages partnerships with non-governmental organizations, foundations, and community-based organizations. Got it.
So what exactly is the EO plan for these partnerships?
There is established a White House Homeland Security Partnership Council (Council) to foster local partnerships — between the Federal Government and the private sector, nongovernmental organizations, foundations, community-based organizations, and State, local, tribal, and territorial government and law enforcement — to address homeland security challenges.
The actionable clause: “to address homeland security challenges.” We’ll get to the chest-beating 900-pound gorillas in the room in a moment, but two significant items immediately demand our attention.
Did you notice that “homeland security” was not capitalized? It is usually referred to as the “Department of Homeland Security.” The usage in the EO of homeland as noun, but not a proper noun, is not a mistake. Yellow-highlight that line; we will return to it later. Also, the nongovernmental organizations (NGOs) are not specified as necessarily being of American origin or even of a pro-American outlook. They could also refer to foreign NGOs, as these are prominent progressive political activist groups that are strongly supported by the American-hating Byzantine bureaucracies of the U.N. and EU.
Let’s move on. Membership of this Council is quite specific and requires a surprisingly narrow skill set:
… the Council shall be composed of Federal officials who are from field offices of the executive departments, agencies, and bureaus (agencies) that are members of the Steering Committee established in subsection (c) of this section, and who have demonstrated an ability to develop, sustain, and institutionalize local partnerships to address policy priorities.
So Council members must come from the field offices of the executive departments and have demonstrated an ability to develop, sustain, and institutionalize local partnerships. Council members, except those whose agency already deals with security issues, evidently are not required to have a background in security, law enforcement, criminal justice, or the judiciary system; all that is required is an ability to develop and institutionalize partnerships. Is the council carefully recruiting government bureaucrats who can train, mold, and imprint a bureaucratic mindset onto these partners for the Council’s purposes? If not, what is meant by “institutionalize”? And why are the recruited members supposed to be selected from “field offices” rather than the usual Potomac swamps?
Closely reading this EO feels like putting together a jigsaw puzzle, blindfolded. Perhaps that was that the intent.
Let’s go on. Okay, these White House Council members are selected by the Steering Committee. Huh? What Steering Committee?
The Steering Committee shall include a representative at the Deputy agency head level, or that representative’s designee, from the following agencies:
(i) Department of State;
(ii) Department of the Treasury;
(iii) Department of Defense;
(iv) Department of Justice;
(v) Department of the Interior;
(vi) Department of Agriculture;
(vii) Department of Commerce;
(viii) Department of Labor;
(ix) Department of Health and Human Services;
(x) Department of Housing and Urban Development;
(xi) Department of Transportation;
(xii) Department of Energy;
(xiii) Department of Education;
(xiv) Department of Veterans Affairs;
(xv) Department of Homeland Security;
(xvi) Office of the Director of National Intelligence;
(xvii) Environmental Protection Agency;
(xviii) Small Business Administration; and
(xix) Federal Bureau of Investigation.
Notice that this Steering Committee and thus the Council has no congressional or judicial representation — i.e., no representation from the other co-equal branches of government. No constitutional checks and balances. The EO sets no term limits, no overview process, and no restraints on policies, authority, and structures. Is it normal for the government to tightly integrate such group into the structure of government itself? Well, yes — on some social and political issues such as voter registration or global warming, as examples. But this EO goes far beyond the accepted governmental role in integrating such organizations because the purpose of this bastardized conglomeration is homeland and national security, not a typical social or political issue. This EO is simply a blank check to build an executive-branch bureaucracy that actually plans to transform and integrate selected extra-governmental NGOs, foundations, and community-based organizations into a robust and unaccountable national security hybrid.
Americans need to be continually vigilant — this EO could swiftly metatasize and do untold damage to our nation and its people. Anyone else think that this EO is flagrantly unconstitutional? It gets worse.
The Council shall be chaired by the Assistant to the President for Homeland Security and Counterterrorism …
That would be John Brennan, a veteran CIA apparatchik, Obama’s loyal terrier, and America’s current “terrorism and drone” czar. Brennan supports reaching out to the “moderate elements” of Hezb’allah and has an exceptionally rocky relationship with the truth and reality in discussing this administration’s Middle East policies.
And more bad news:
At the invitation of the Chair, representatives of agencies not listed in subsection (c) of this section or other executive branch entities may attend and participate in Steering Committee meetings as appropriate.
That is Washington bureaucratese for the Obama czars. So, will the Steering Committee be well-represented with Obama’s hand-picked czars? Why not? No one will be looking.
Finally, what is the stated mission of the Council?
… advise the Chair and Steering Committee members on priorities, challenges, and opportunities for local partnerships to support homeland security priorities, as well as regularly report to the Steering Committee on the Council’s efforts …
And what are the homeland security priorities this Administration seeks to implement? In web searches through some nasty swamps, using homeland with a lowercase h, I stumbled on this site. An answer, not surprisingly, was found in a report from a George Soros-supported foundation, the Center for American Progress. This all but forgotten February 2008 report, “Homeland Security Policy Priorities for the Next Administration and Congress,” includes this “Key Action” item that was pretty interesting.
Create a civilian homeland security corps.
Finally the penny drops.
We recall this quote from Obama’s July 2, 2008 speech:
We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set. We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.
Let’s turn our attention to the pair of 900-pound gorillas sitting in the room, and why they are important.
First, our immediate concern should reflect that this EO’s bastardized security hybrid is hardly unique in modern history. The German Schutzstaffel, the infamous SS, and the Soviet KGB, Committee for State Security, both began as hybrid security organizations. They were deliberately created outside traditional governmental roles, exclusively for the consolidation and implementation of power on behalf of a single individual. We should not forget that Americans and their forefathers have experienced and soundly rejected such authoritarian abuses, such as the Salem witch trials and McCarthyism. But only the naive can believe that such a breakdown could not happen here in 21st-century America.
Second, the list of NGOs, foundations, and community-based organizations ripe for “institutionalization” would likely read like a Democratic who’s-who of hard-left organizations. Is there any doubt that this administration and its czars would seek partnerships with La Raza, ACORN and its renamed offshoots, Move On, PETA, the Center for American Progress, Media Matters, CAIR and other Islamic organizations, the Sierra Club, AFL-CIO, the SEIU, and the AFT and CTA?
As these groups may become institutionalized into a national security hybrid, new orders will come down from the council, and information will flow up to Washington.
The new homeland security corps primary mission would likely become the monitoring and reporting of unacceptable political and social activities — city by city, neighborhood by neighborhood, block by block, house by house.
Could this corps become a latter-day Gestapo, heavily armed with cell-phone technology, linked databases, personal tablets, and bio-identification card readers?
We all can read this EO. Some may have different interpretations of what they have read. Considering the well-established trend of B.H. Obama’s cold disregard of constitutional checks and balances, and both the longstanding desire and a short-term need to create a White House framework for a domestic-security apparatus, EO 13629 may be forever linked in history with such infamous documents such as the Wannsee Protocol and the recently revealed files of the Spanish Inquisition.
Federal Reserve’s Attack on Gold & Silver A Warning Sign All Patriots Should Heed
April 24, 2013
By Paul Craig Roberts
For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.
When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than eight months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the United States dollar losing value so rapidly compared to the world standard for money, the Federal Reserve’s policy of printing $1T annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver?
The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Fed was concerned that large holders of U.S. dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in U.S. bond and stock prices.
Intelligent people could see that the U.S. government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from off-shoring millions of U.S. middle-class jobs for the sake of executive bonuses and shareholder capital gains. They could see what was in the cards, and began exiting the dollar for gold and silver.
Central banks are slower to act. Saudi Arabia and the oil emirates are dependent on U.S. protection and do not want to anger their protector. Japan is a puppet state that is careful in its relationship with its master. China wanted to hold on to the American consumer market for as long as that market existed. It was individuals who began the exit from the U.S. dollar.
When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington’s propaganda. “Gold looking a bit bubbly” declared CNN Money on August 23, 2011.
The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Fed was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3 drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus it has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.
For the Russians and Chinese, whose central banks have more dollars than they want, and for the 1.3B Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Fed has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.
The Fed’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.
The Fed is creating 1T new dollars per year, but the world is moving away from the use of the dollar for international payments and, thus, as reserve currency. The result is an increase in supply and a decrease in demand. This means a falling exchange value of the dollar, domestic inflation from rising import prices and a rising interest rate and collapsing bond, stock and real estate markets.
The Federal Reserve’s orchestration against bullion cannot ultimately succeed. It is designed to gain time for it to be able to continue financing the federal budget deficit by printing money and also to keep interest rates low and debt prices high in order to support the banks’ balance sheets.
When the Fed can no longer print due to dollar decline which printing would make worse, U.S. bank deposits and pensions could be grabbed in order to finance the federal budget deficit for a couple of more years. Anything to stave off the final catastrophe.
By its obvious and concerted attack on gold and silver, the U.S. government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt.
How the Fed Tanked Gold & Silver
By Paul Craig Roberts
I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the U.S. dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.
A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big to fail” balance sheets. The financial system would be in turmoil and panic would reign.
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price, trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
According to bullion trader and whistle-blower Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can significantly drive down the market price.
A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal. In other words, with naked shorts, no physical metal is actually sold.
Consider the 500 tons of paper gold sold on April 12. At the beginning gold price that day of about $1,550, that 500 tons comes to $24.8B. Who has that kind of money?
What happens when 500 tons of gold sales are dumped on the market at one time or on one day? It drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1.2B. [Over the next two days it dropped $200 per ounce. That equals a $3.2B fall.—Ed.]
Who can afford to lose that kind of money? Only a central bank that can print it.
Paul Craig Roberts is a former assistant undersecretary of the U.S. Treasury and former associate editor of The Wall Street Journal. He is the author of many books including The Tyranny of Good Intentions, Alienation and the Soviet Economy, How the Economy Was Lost and others.
- The Assault On Gold – Paul Craig Roberts (paulcraigroberts.org)