Here's That Pentagon "Financial Terrorism" Report Glenn Beck And Maria Bartiromo Are Talking About

We published this yesterday, but since both Maria Bartiromo and Glenn Beck covered it today, we figured we'd run it again.

Well, we'll just state up front that we don't buy this, but since US tax dollars payed for it, you should know it exists.

A Pentagon-sponsored report from consultant Kevin D. Freeman claims that foreign bad actors are taking down the US economy in three simple steps. (via Washington Times).

What's ominous is that we've only seen two of the steps.

The first phase: Speculators bid up the price of oil, filling the coffers of "Shariah Compliant" sovereign wealth funds.

The second phase: "Bear raids" took down our financial institutions.

The third, and yet-to-come phase: The dumping of Treasury bonds.

Anyway, the report is embedded here. Might be good for a lolz.

Pentagon Contractor Blames Financial Crisis On Terrorists

Posted By: majestic Mar 2, 2011

Pentagon financialDoes the author of this report really expect anyone to believe that the never-ending financial crisis was caused by “outside forces” rather than the very obvious culprits on Wall Street and in Washington? The Washington Times has obtained a Pentagon contractor report suggesting exactly that, however unlikely it may seem:

Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government’s Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.

Suspects include financial enemies in Middle Eastern states, Islamic terrorists, hostile members of the Chinese military, or government and organized crime groups in Russia, Venezuela or Iran. Chinese military officials publicly have suggested using economic warfare against the U.S.

Michael G. Vickers, assistant secretary of defense for special operations, said the Pentagon was not the appropriate agency to assess economic warfare and financial terrorism risks. (Associated Press)

In an interview with The Times, Mr. Freeman said his report provided enough theoretical evidence for an economic warfare attack that further forensic study was warranted.

“The new battle space is the economy,” he said. “We spend hundreds of billions of dollars on weapons systems each year. But a relatively small amount of money focused against our financial markets through leveraged derivatives or cyber efforts can result in trillions of dollars in losses. And, the perpetrators can remain undiscovered.

“This is the equivalent of box cutters on an airplane,” Mr. Freeman said…

Want to Cut Government Waste? Find the $8.5 Trillion the Pentagon Can’t Account For

Pentagon financial

If you thought the botched rollout of Obamacare, the government shutdown, or the sequester represented Washington dysfunction at its worst, wait until you hear about the taxpayer waste at the Defense Department.

Special Enterprise Reporter Scot Paltrow unearthed the “high cost of the Pentagon’s bad bookkeeping” in a Reuters investigation. It amounts to $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996 that has never been accounted for. (The year 1996 was the first that the Pentagon should have been audited under a law requiring audits of all government departments. Oh, and by the way, the Pentagon is the only federal agency that has not complied with this law.)

We talk to Paltrow in the accompanying video about his findings.

Here are some some highlights he found among the billions of dollars of waste and dysfunctional accounting at the Pentagon:

  • The DOD has amassed a backlog of more than $500 billion in unaudited contracts with outside vendors. How much of that money paid for actual goods and services delivered isn’t known.
  • Over the past 10 years the DOD has signed contracts for provisions of more than $3 trillion in goods and services. How much of that money is wasted in overpayments to contractors, or was never spent and never remitted to the Treasury is a mystery.
  • The Pentagon uses a standard operating procedure to enter false numbers, or “plugs,” to cover lost or missing information in their accounting in order to submit a balanced budget to the Treasury. In 2012, the Pentagon reported $9.22 billion in these reconciling amounts. That was up from $7.41 billion the year before.
  • The accounting dysfunction leads the DOD to buy too much stuff. One example: the “vehicular control arm” to supply Humvees. In 2008, the DOD had 15,000 parts -- a 14-year supply (anything more than three years is considered excess supply). Yet from 2010 to 2012, it bought 7,437 more of these parts and at higher prices than they paid for the ones they already had.

The Defense Department’s 2012 budget was $565.8 billion. Paltrow points out that’s more than the annual defense budgets of the next 10 biggest military spenders combined. He tells us the Pentagon “almost certainly is” the biggest source of waste in the government based on his reporting.

Looking forward, defense spending in the fiscal 2014 budget is set to be cut $20 billion from 2013 levels due to the sequester. In response, military officials, including Defense Secretary Chuck Hagel, have raised an alarm over the impact of these cuts. Hagel told a conference the cuts are “too steep, too deep, and too abrupt.”

The Wall Street Journal reports Marine Corps Commandant Gen. James F. Amos told a House panel in September the “abruptness and inflexibility of sequestration…could erode our readiness to dangerous levels.”

Does Paltrow think that’s true?

“So much of that could be cut, that the impact of the sequester would be much less than [what] Pentagon officials are claiming.” He adds that officials are basing their budget requests on their own priorities, rather than firm knowledge of what’s needed because leaders don’t know what money is slushing around.

The good news is that because of arguments over the deficit and the budget, Paltrow sees signs that members of Congress are getting serious about waste at the Pentagon.

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More from The Daily Ticker

Chuck Grassley report questions accuracy of Pentagon financial statements

Pentagon financial

Iowa Republican Sen. Chuck Grassley, the ranking minority member of the Senate Committee on the Judiciary, believes DOD's Defense Finance and Accounting Service is producing error-ridden financial statements. (AP Photo/J. Scott Applewhite, File)

Is the Pentagon's inspector general turning a "blind eye" to inaccuracies produced by the Department of Defense's chief accounting agency?

Iowa Republican Sen. Chuck Grassley, the ranking minority member of the Senate Committee on the Judiciary, believes DOD's Defense Finance and Accounting Service is producing error-ridden financial statements.

These statements, which were given "clean" opinion audits by an outside certified public accounting firm, were in turn ignored by DOD's IG, according to an oversight report prepared by the Iowa senator's staff.

The CPA firm "rubber-stamped" DFAS' flawed practices by using a defective audit method, the report said.

"Audits are a primary oversight tool for rooting out fraud and waste in the government. To protect taxpayers, these government audits must be as good as they can be," Grassley wrote in a letter to Secretary of Defense Chuck Hagel and DOD's IG, Jon T. Rymer.

The report also asked if DFAS is getting other things incorrect:

"If DFAS is unable to accurately report its own internal 'housekeeping' accounts of $1.5 billion, then there are grave concerns about DFAS’s ability to accurately report on the hundreds of billions DoD spends each year."

Recommendations in the Grassley staff report include the IG getting an independent audit of DFAS' financial statements to find errors.

The report also urges the IG to address allegations of misconduct involving DFAS officials.