Sounds like the U.S. after WWII. The government had us seeing Communists in our cereal. 
Having grown up with communism and working at the "Front Lines" of the Cold War, I can assure you that we did in fact have communists in our backyard. Maybe not in our cereal but close enough to reach out and touch someone.
For the better part of 40 years, the Silent Service, skilled "Spooks" and nearly every asset the Navy had at it's disposal were working to make sure that didn't happen. Eventually, the Soviets realized that they couldn't leave Polyarny or Petropovlosk without us knowing about it....
As to Napolitano? Four words...
f..k You Madam Secretary!