Monthly documentary screening in a series entitled Confluence at Icicle Creek announced.

Posted By CotoBlogzz

Leavcenworth, WA - In a partnership with local community leaders, Icicle Creek will be offering a monthly documentary screening in a series entitled Confluence at Icicle Creek. 

Cofluence is designed to foster critical thinking and moral deliberation on the issues of the day and each month will highlight films in varioud categories such as Nature & Environment, Outdoor Adventure, Arts & Culture, Food & Farming, Social & Economic Justice and  Health and Personal Journeys. All screenings at Snowy Owl Theater on the first Thursday of each month, starting at 7:00 pm, November 7, 2013 with the film titled, A farm for the future. A featured area non-profit and subject experts will be featured in a post-showing discussion session.

In A Farm for the Future, wildlife film maker Rebecca Hosking investigates how to transform her family's farm in Devon into a low energy farm for the future, and discovers that nature holds the key. With her father close to retirement, Rebecca returns to her family's wildlife-friendly farm in Devon to become the next generation to farm the land.   The Featured  Guest Speaker  is the local non-profit Leavenworth Community Farmers Market’s Grant Gibbs .

The public and join in the post-film conversation with local farmer Grant Gibbs and Farmer’s Market Director, Eric Lind for a discussion about this film’s relevance to farming issues in Leavenworth and the Wenatchee valley.

Tickets - $10 General Admission

Also This Month at Icicle Creek:

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Tosca (Live in HD) - Saturday, November 9, 9:55AM & 7PM (Snowy Owl Theater)

Puccini’s enduring favorite features a jealous diva and her lover, the painter Cavaradossi, in a dramatic tale of murder, lust, and political intrigue.
Run time - 3:35


Opera for Breakfast! 
: Live in HD at Snowy Owl! Mimosas are back by popular demand! And we'll be offering a light breakfast plate during the show.

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Black Lillies - Thursday, November 14, 7PM (Snowy Owl Theater)

Tapping into the new Knoxville, Tennessee music scene, the Black Lillies bring their effusive blend of progressive bluegrass deeply rooted in the richest veins of Americana music. A little bit country, lively picking and strumming, and delicious vocals -see show.

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Icicle Creek Youth Symphony Fall Concert - Monday, November 18, 7PM (Snowy Owl Theater)

Under the direction of Dan Jackson, the young artists of the Icicle Creek Youth Symphony perform in this favorite Fall concert!

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Icicle Creek Chamber Players- Saturday, November 23, 7:30PM(Canyon Wren Recital Hall)

L. van Beethoven: Sonata for Violin and Piano in A Major, Op. 47 (“Kreutzer”) Featuring: Maria Sampen, violin and Oksana Ezhokina, piano.

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Box Office

 Call the box office Wednesday-Saturday, 12pm -5pm at (509) 548-6347 x47. 

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½ of Irvine Attorneys Duo pleaded guilty to having school parent volunteer arrested and imprisoned by planting drugs

Posted By CtoBlogzz

Rancho Santa Margarita,  CA - Jill Bjorkholm Easter,  peaded guilty today to one felony count of false imprisonment by violence or deceit. She was sentenced to one year in jail and three years of formal probation.

Jill Easter's co-defendant and husband Kent Wycliff Easter, 40, Irvine, is charged with one felony count each of conspiracy to falsely charge a crime, false imprisonment by violence or deceit, and conspiracy to commit a crime. Opening statements in the jury trial are anticipated to begin sometime next week.

The duo, both attorneys from Irvine, were  indicted Oct. 25, 2012,  by the Orange County Grand Jury for conspiring to have an elementary school parent volunteer arrested and imprisoned by planting drugs in her car.

On June 19, 2012, the Orange County District Attorney’s office released a press release with the following information on this case:

In 2010, Jane Doe was a parent volunteer at an elementary school in Irvine, where Jill and Kent Easter’s son was a student. Jill Easter is accused of becoming angry with the victim because the defendants believed Jane Doe was not properly supervising their son.

In February 2011, Jill and Kent Easter are accused of conspiring to have victim Jane Doe arrested in retaliation.

At approximately 12:30 a.m. on Feb. 16, 2011, Kent Easter is accused of driving to the home of Jane Doe and placing a bag of Vicodin, Percocet, marijuana, and a used marijuana pipe behind the driver’s seat of her unlocked vehicle. He is accused of intentionally leaving the drugs in plain sight in a conspicuous location, where it would be easily visible from outside the vehicle. Jill and Kent Easter are accused of being in constant cell phone and text message contact as Kent Easter drove to and from the victim’s home.

At approximately 1:15 p.m. on Feb. 16, 2011, Kent Easter is accused of calling the IPD non-emergency number and giving a false name and phone number. He is accused of telling the dispatcher that he was a concerned parent who had witnessed an erratic driver park at the elementary school. He is accused of claiming to have witnessed Jane Doe, whom he identified by name, hide a bag of drugs behind her driver’s seat in her car. He is also accused of providing a description of and license plate number to Jane Doe’s vehicle. Jill and Kent Easter are accused of calling and texting each other on the cell phone immediately before and after the call to IPD was placed.

IPD officers arrived at the school parking lot and identified the vehicle described by Kent Easter. Officers immediately observed the bag of marijuana upon looking through Jane Doe’s car window. The responding police officer contacted Jane Doe on the school campus and the victim consented to a search of her vehicle. The victim adamantly told the officer that the drugs did not belong to her and she did not know how they ended up in her car.

Jane Doe was detained for approximately two hours as IPD investigated the case. It was determined that the victim was in a classroom at the time Kent Easter claimed to have seen her hide drugs in her car. Jane Doe consented to a search of her home, which showed no evidence to support drug use or possession and did not support a link to show that Jane Doe was knowingly in possession of the marijuana or prescription pills found in her vehicle.

Based on their investigation, IPD officers began investigating whether the evidence had been planted in Jane Doe’s car. Subsequent investigation by IPD led detectives to identify Kent and Jill Easter. Kent Easter is accused of making the Feb. 16, 2011, phone call to IPD from a phone in the business center of a Newport Beach hotel near where he worked. He is accused of being recorded on hotel video surveillance. 

Kent Easter has been an active member of the State Bar of California (Bar) since 1998. Jill Easter was also admitted to the Bar in 1998, but her license has since expired.

Senior Deputy District Attorney Chris Duff of the Special Prosecutions Unit is prosecuting this case.

Democrats Desperately Seeking Election Bailout

Democrats Need an Election-Bailout 

By Chriss Street

With Congressional budget talks heating up, the left wing of the Democrat Party is already bellowing for more government economic stimulus.  .

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This demand comes despite last year’s $970 billion of deficit spending and a 27% increase in Fed money-printing producing virtually no job growth above the 1.7% rate of population growth.  But with Obamacare cost over-runs, taxes, rapidly escalating premiums and employment conversions to part-time becoming a major drag on the economy, the Democrats fear a potential rout in next year’s elections.  The Democrats are getting desperate for another $100 billion in “targeted” spending or more monetary stimulus to produce election year jobs

For the first time is history, Democrats did not advocate for higher taxes during the recent budget and debt ceiling battles, because the Republican were the first to define the issues of the debate as Obamacare and the deficit.  General voter polling indicates that support for Obamacare is somewhat negative and raising the deficit is negative at 72%+.  But “Big Data” predictive analysis is flashing that Obamacare support is in free fall and public opposition to raising the deficit is hardening.

Until recently, Secretary of Health and Human Services Kathleen Sebelius had claimed that the $100 billion initial cost of Obamacare would act as a stimulus to the American economy by claiming: “Health Care Innovation Challenge, a competitive program that will award up to $1 billion in taxpayer-funded grants to applicants who will implement the most compelling new ideas to deliver better health, improved care, and lower costs to people enrolled in Medicare, Medicaid and CHIP…“  She also stated, “Efforts like these to improve the health of communities and reduce cost while sparking the economy are a priority of the Obama administration.”  But with the disastrous administrative start-up and low sign-up rate, Obamacare’s $100 billion estimated budget cost ready to double to over $200 billion.

With Obamacare stimulus failing, Democrats will increase pressure on the Federal Reserve to stimulate the money supply.  But the Fed has shown no capability to create jobs, because it cannot stimulate investment in new plant and equipment, which drives the economy and gives workers the growing incomes to increase their consumption.  The Fed’s efforts have been very successful at inflating new asset bubbles, with housing prices up another 13.5% and the stock market up 26% this year.  Demanding the Fed blow even bigger bubbles runs the risk that those bubbles eventually pop and is preventing the banks from focusing on lending that creates jobs.

The Federal Reserve’s prints money to investment in bonds.  The Fed’s investment portfolio averaged about $700 billion for the ten years leading up to 2007.  When the financial crisis hit in 2008, the Fed immediately began buying bonds to increase cash in the hands of the public and prevent any panic.  This type of intervention was not unusual and had happened over 20 times since the Fed was founded just over 100 years ago.  But what is not “business as usual” is that the Fed is continuing its crisis purchases and now holds over $3.5 trillion of bonds.

Banks historically paid interest to recruit deposits from senior citizens living on the income from their savings, and then lent money to businesses at higher rates to make profit spread.  But between 2009 and 2010, the Fed made $9 trillion in overnight loans directly to the major banks and brokers at a rate of 0.1%.  The Fed’s cheap money drove down the interest rates paid to bank depositors.  Seniors’ income collapsed and many were forced to spend their savings to survive.  As seniors’ consumption shrank, businesses curtailed new invest and employment stagnated.

Despite an average of almost $1 trillion in annual deficit spending and the Fed’s massive money-printing, over the last two years employment has been treading water by growing at the same 1.7% rate as the annual population growth.  But failing to grow jobs faster than new entrants join the labor force, has caused the duration period of unemployment in America to leap from an average of 10-20 weeks from 1980 to 2009, to 35-40 weeks over the last two years.

Just five years after being bailed out by the American taxpayers, the U.S. banking system is generating record profits thanks to the Fed’s generosity.  All the legislation Congress passed to supposedly reduce bank risk taking has had the perverse effect by reducing lending and expanding leveraged derivative speculation.  No one is exactly sure how much risk banks are taking in derivatives; but the world’s economy is only $72 trillion and the outstanding derivatives have been leveraged up to $700 trillion.

Powered by the Fed’s cheap money, JP Morgan’s trading and investment banking activities now generate more than forty per cent of the firm’s net profits.  After JP Morgan reported a jaw-dropping annual profit of $24.4 billion in July, the bank began a national layoff of thousands of lending officers in August.  The size of U.S. banks was once a competitive edge to spur American investment and sustain job growth.  But the Federal Reserve’s continuing money printing has caused banks to restrict lending and focus on trading activities.  By inflating asset bubbles with cheap money the Fed’s actions have been great for a few investors and bankers, but the Fed cheap money policies actually continue to hurt American job growth.

As the budget talks begin to dominate the political news for the next couple months, the left will scream that somehow government “austerity” is holding back the economy and employment.  But with big cost over-runs from Obamacare hammering the budget deficit and the Fed monetary expansion hurting employment, the Democrats better start screaming even louder for their own election bail-out.

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Condo owner's heirs caught off guard by foreclosure

A trust might have eliminated confusion and helped heirs stay on top of payments to avoid foreclosure.

c)2001-2013  D.VANITZIAN. All rights reserved. The Associations and Common Interest Living articles and columns may not be reprinted or retransmitted in any form without the express written consent of the copyright holders. The authors take no position regarding any documents or accompaniments that may be enclosed with, attached to, or alongside said article reprints or distribution.  Los Angeles Times, Real Estate Section, "Associations," October 27, 2013 Condo owner's heirs caught off guard by foreclosure by Donie Vanitzian, Special to The Times

By Donie Vanitzian

October 27, 2013, 5:00 a.m.

QUESTION: Last year a reclusive relative, who owned and lived in a condominium, died. Still grieving over his death, the family tried to get organized in dealing with his belongings and the life he left behind. It was overwhelming, but his mortgage was paid off decades ago so our family assumed we didn't have to worry about the condominium because the bank couldn't take it. We learned too late, the reason he wasn't receiving any mail was someone with an illegible signature had put in a forwarding order sending his mail into the ether.

The homeowner association foreclosed on the condo. It proved it had the right to do so. We have another family member on a fixed income who lives in a townhome and we want to prevent this from happening to them. What should we do?

ANSWER: Homeowner associations are a serious business, and their power and authority should not be underestimated. Whether your common-interest development is comprised of single-family homes, townhomes, condominium units or co-operatives, owners whose properties are in such developments might have a little more asset protection if those properties are mortgaged. In the event of an imminent foreclosure, the association would have to serve notice to the titleholder, mortgagee and all lien holders. In a common-interest development, "free and clear" property, which is a property that is mortgage-free and lien-free, could be vulnerable to a variety of mechanisms or machinations available to a homeowner association board of directors that could subject that owner's assets to great risk.

Business and Professions Code section 11018.1(c) explains that "your ownership in this development and your rights and remedies as a member of its association will be controlled by governing instruments [and] the provisions of these documents are intended to be, and in most cases are, enforceable in a court of law.... In order to provide funds for operation and maintenance of the common facilities, the association will levy assessments against your lot or unit. If you are delinquent in the payment of assessments, the association may enforce payment through court proceedings or your lot or unit may be liened and sold through the exercise of a power of sale."

Under Civil Code section 1367.4(c), the association seeking to collect delinquent regular or special assessments of $1,800 or more may use judicial or nonjudicial foreclosure as its remedy. (The $1,800 in delinquent assessments can't include any accelerated assessments, late charges, fees and costs of collection, attorney's fees, interest or any assessments that are more than 12 months delinquent.) Civil Code section 1367.4(c)(1) to (4) sets forth guidelines that boards must follow to foreclose.

Pursuant to Civil Code section 1367.4(c)(3), if the board votes to foreclose on an owner's property interest, it shall provide notice by personal service in accordance with Code of Civil Procedure section 415.10 to the owner of a separate interest or to the owner's legal representative. The board shall provide written notice to the titleholder who does not occupy the property by first-class mail, postage prepaid, at the most current address shown on the association's books. In the absence of written notification by the owner to the association, the address of the titleholder's property in that common-interest development may be treated as the owner's mailing address.

If someone owns assets worth $150,000 or more in his or her name alone, the estate will go into probate. The probate process ensures all creditors are notified of the death, all debts are resolved in a timely way and the estate is distributed to the beneficiaries named in the will or in accordance with the laws covering asset distribution when someone dies without a will. Establishing a trust and funding title to real property into the trust would avoid probate and could assist with the orderly payment of debts and distribution of assets in accordance with the trustor's wishes.

A good way to protect an estate from probate is to have a comprehensive estate plan in place that would include such documents as a revocable trust, a will and property powers of attorney. In all these documents, you name the individuals or institutions who are to manage your assets for you if you cannot do so because of incapacity or death.

In every trust, there are three important roles:

•The trustor. Also known as the settlor or grantor, this is the person who sets up the trust and funds assets into the trust.

•The trustees, or managers of the assets in the trust. The trustor is generally the primary trustee of a revocable trust and names other individuals or institutions to manage the assets if the primary trustee is incapacitated or dies.

•The beneficiaries. The trustor is generally the primary beneficiary of a revocable trust, but has named who is to receive the assets of the trust after the trustor's death.

As trustor of your own trust, you should set forth all of your assets and any ongoing debt associated with those assets, such as recurring payments for homeowner association dues, insurance, taxes and special assessments, on a separate document referenced in your trust. That way, your successor trustees would easily know what assets and liabilities you have and would know what to look for before it is too late.

Whether an estate goes through probate or is structured to avoid probate, there are many important steps that must be taken to wind up a decedent's affairs. When there is a death in the family, make sure you seek timely legal advice to avoid assets being foreclosed upon or otherwise lost.

This column was co-written by Joel J. Loquvam, an attorney who specializes in estate planning, probate and trust administration. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian JD, P.O. Box 10490, Marina del Rey, CA 90295 ornoexit@mindspring.com.

Stop Yellen’s Appointment, Stop Cronyism: Rand Paul

 Rand Paul’s Goal in Holding up Janet Yellen’s Appointment

Senator Rand Paul woke up the Washington political scene on October 25^th by leaking a story that he intends to place a “Senatorial hold” on the upcoming Presidential nomination of Janet Yellen to be the next Chairperson of the U.S. Federal Reserve; unless Senate Majority Leader Harry Reid allows his “Audit the Fed” bill to go to a Senate floor vote.    

 By Chriss Street

Since its 1913 founding, the U.S. Federal Reserve has been allowed to operate in such relative secrecy it has been described as “like a hall of mirrors and the Fed is that big one at the end that makes everything else look like its upside-down.”  Rand Paul’s goal is to unite conservative Tea Partiers, Liberal Progressive and Millennials in a grand coalition to restrain the crony capitalism between Washington DC lobbyists and Wall Street money interests.

The Dodd-Frank Wall Street Reform Act’s one-time mandated audit of emergency lending activities during 2008 Financial Crisis is the only published glimpse into the secretive financial dealings of Fed.  The audit divulged that the Fed had directly loaned over $16 trillion to selected banks and corporations.  Few doubt the importance of the Fed providing temporary liquidity to stabilize markets after the huge investment firm of Lehman Brothers filed bankruptcy on September 15, 2008.  But for the last five years the Fed has continued to use its money printing capability to dramatically subsidize bank big profitability with artificially low interest rates; causing small banks to shrivel and seniors who rely on the income from savings deposits to suffer badly.

Current Federal Reserve Chairman Ben Bernanke has vigorously opposed annual audits of the Fed by claiming that any transparency might hamper the Fed’s ability to quickly and creatively spur an economy that is teetering on recession.  But many Left, Right and Libertarian economists believe the Fed’s discretionary actions only serve the interests of the powerful and are often counter-productive to small business and American workers.

Five years after the banks were bailed out by the American taxpayers; the U.S. banking system is generating record profits thanks to $3.6 trillion of the Fed’s generosity.  But despite the Fed money printing, over the last two years employment has been treading water by growing at the same 1.7% rate as the annual population growth.  Failing to grow jobs faster than new entrants join the labor force also caused the duration period of unemployment to rise from 10-20 weeks from 1980 to 2009, to 35-40 weeks recently.

The Fed also allowed a substantial increase in risk taking by financing bank’s dominate position in leveraged derivative speculation.  Powered by the Fed’s cheap money, trading and investment banking activities generated more than forty per cent of JPMorgan annual profit of $24.4 billion reported in July.  Without a Fed audit, no outsider can be exactly sure how much risk American banks are taking with derivatives.  But with the world’s annual economy of only $72 trillion and the outstanding derivatives having grown rapidly to $700 trillion; the leverage must be enormous.

Since the Federal Reserve System is officially owned by its member banks and its Board and Chairman are appointed by the Senate, the Fed supposedly acts as an “independent entity within government.”  However, the Federal Reserve’s activities have almost never been subject to any oversight by Congress.  Consequently, the Federal Reserve seems to be “independent of government.”

Perhaps the real reason Congress has taken a hands-off approach is the Fed is highly profitable and under Federal Reserve Act Section 7(b), a big cut of that profit is paid each year as a dividend to the federal government.  Although under law the Fed’s dividend is supposed to “supplement the gold reserve held against outstanding United States notes” and pay down the “outstanding bonded indebtedness of the United States”, Congress has been spending the Fed’s $80 billion dividend for many years.

Rand Paul under the Standing Rules of the United States Senate has the right to prevent a motion for the nomination of Janet Yellen from reaching a vote on the Senate floor.  Majority Leader Harry Reid has used the same Senate rules to prevent a vote on Paul’s “Audit the Fed” bill, introduced with 25 bipartisan sponsors in February 2013.

Over 70% of the American public has favored Auditing the Fed for years, but it was Rand Paul’s octogenarian father, Congressman Ron Paul, that became a rock star on college campuses championing a millennials’ revolt to force the audit and eventual abolishment of the Federal Reserve for debasing the dollar and crony capitalism.

By forcing Harry Reid and his Senate allies who secretly oppose “Audit the Fed” to go on record with a very unpopular roll call vote, Senator Paul is demonstrating his principled leadership and the building a powerful new coalition of American voters.

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Obama Administration's Depraved Indifference

 Failing to Build Keystone Pipeline is Criminal Negligence

By Chriss Street

 An eyewitness noted when thirteen railroad tanker cars carrying propane and crude oil across Alberta, Canada exploded after derailing early on October 20th, “the fireball was so big, it shot across both lanes of the Yellowhead (Highway)… there’s fire on both sides.” Only two Canadian National Railway workers were injured and no deaths have been reported in this latest “pipeline on rails” calamity, but the horrific accident comes just 3 months after a similar oil train disaster in a populated area took 47 lives in Lac-Megantic, Quebec.

It is too early to determine the cause of the latest accident, although Canadian investigators believe the Quebec carnage appears to be due to the train operator’s criminal negligence. But the real criminal negligence is that oil from fracking operations in booming North Dakota must be shipped by trains over a thousand mile to refiners in Nova Scotia, because U.S. regulators and their crony allies have fought building pipelines to protect and subsidize the profits of railroads, such as the Burlington Northern Railway Company that controls half the business. Given the huge risks of catastrophic loss of life and property, the Obama Administration will soon be pressured to approve the Keystone XL Pipeline.

Every day, an average of ten trains with up to 100 tank-cars leave North Dakota carrying 3.35 million gallons of raw crude oil to journey over a thousand miles to refineries in Nova Scotia and Texas. Railroads carry 75% of North Dakota oil and are the prime reason oil hauled by tank cars in the U.S. rose over the last three years by 2,000% to a total of 6.5 billion gallons. Berkshire Hathaway’s CEO, Warren Buffet, announced that profit jumped 7.8% to $2.37 billion on strong railroad profits at their Burlington Northern subsidiary.

Railroads are designed to transport freight where people are, whereas pipelines carry toxic products and go to refineries that are specifically located at safe distances away from populated areas. Some media stories have repeated public relations statements from the oil industry that they prefer a mix of pipeline and rail transport of crude oil. But only good fortune prevented the Alberta “pipeline on wheels” accident from killing thousands and costing tens of millions in damages in a metropolitan area.

Railroads claimed to average only thirteen spills per year for the last ten years, but 60% of oil shipments by rail were in the last two years. There have been many serious oil train derailments this year.  In June, four Canadian Pacific (CP) rail cars carrying flammable petrochemicals used to dilute oil derailed on a flood-damaged bridge spanning Calgary’s Bow River.  In May, five tankers containing oil on another CP train derailed in rural Saskatchewan spilling 575 barrels of crude, the Toronto Sun reported.  In April, 22 CP rail cars jumped the tracks near White River, Ontario and leaked 17,000 gallons of crude. In March, 14 cars on a mile-long train derailed spilled 14,000 gallons of crude near Minneapolis.

The fallout from the Quebec disaster was expected to begin having a negative impact on growth of moving petroleum by freight trains, which was on trend to double this year from 2012. After the accident, Moody’s credit rating service warned: “The Quebec derailment — likely North America’s worst rail accident since 1918 — will inevitably lead to increased US and Canadian government scrutiny and permitting delays, along with higher costs for shippers,” the credit rating agency said in a note Wednesday. Moody’s revised its ratings to “credit negative” for North American railways, which have relied on the boon in moving crude by rail to offset declines in coal shipments, it added.

Canadian Prime Minister Stephen Harper described the aftermath of the Lac-Megantic disaster as a “war zone”.  Investigators believe the likely air brake failure allowed the train normally creeping downhill at 15 miles per hour to accelerate to 63 miles an hour and vaporize the little country town when it crashed and exploded.

But while Montreal, Maine & Atlantic Railway (MM&A) Chairman Ed Burkhardt said his company would do “everything within its capacity” to aid in environmental remediation as the train’s operator, both the U.S. and Canadian branches of the railway filed for bankruptcy protection. According to Maine District U.S. Bankruptcy Court documents, MM&A’s U.S. arm only has between $50 million and $100 million in assets.

The Lac-Megantic cleanup costs are estimated to be over $100 million and there is potential for hundreds of millions of dollars more in personal injury lawsuits. MM&A has no capacity to foot the entire bill for the disaster. The company carried multi-million dollar liability insurance with XL Group PLC before the crash. XL Group immediately deployed representatives to the scene after the Quebec derailment. If the insurer can demonstrate negligence by the railroad operator, they will deny the claim.

America in 1970 had 315 refineries sprinkled across the nation and the U.S. imported 72 million gallons of crude oil per day, but by 2006 environmental restrictions had shrunk America’s number of refineries to 105 and we were importing 587 million gallons per day. In percentage terms of U.S. supply, imports grew from 20% to 65%. In 2006, almost a third of U.S. total supply of oil was imported from the unstable Persian Gulf.

Since the beginning of 2006, the drilling process known as hydraulic fracking has made commercially profitable petroleum deposits that were historically too costly to exploit. North Dakota Bakken production has grown from about 220,000 gallons a day to 46.5 million gallons today. Wayde Schafer of the Sierra Club that had been predicting U.S. oil and gas production peaked in the 1980s and was in terminal decline said: “The oil development has happened so rapidly, it’s ahead of the infrastructure to deal with it.”

Pipelines are the safest and most cost-effective transport for crude oil. Legislative and regulatory veto of projects like the Keystone XL pipeline pushed oil shipments onto to the more dicey rails. Rapidly expansion of shale oil and natural gas production is making American “energy independence” a reality. I believe Congress and the Administration now know they are morally just as criminally negligent as the train operators if they do not ensure public safety by green-lighting up to $5 trillion in new domestic pipeline and refinery capital investment.

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Why China Wants to Dump the Dollar

By Chriss Street

China’s Dagong credit rating agency on October 17^thdowngraded its United States sovereign credit rating to A- and maintained its negative outlook on America’s solvency.  Dagong warned that despite Washington’s last-minute resolution of the debt ceiling deadlock: “The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged.”  China’s official state-run news agency, Xinhua, reiterated its statements  that because of the continuing risk of a U.S. debt default, it is “a good time for the befuddled world to start considering building a de-Americanized world." 

This language is code for Chinese want to abandon the U.S. dollar as the world’s “reserve currency” move international financial transactions to therenminbi, the currency of the People’s Republic of China.  Having benefited for twenty years from their under-valued currency importing manufacturing jobs and exporting lower priced products, China’s comparative advantage is being destroyed by America’s oil and natural gas fracking boom.  The Chinese communist authorities are terrified their loss of competitiveness will cause unemployment and the social consequences that flow from it.

But with the terms of trade now substantially against China, convincing the world to dump the U.S. dollar as reserve currency and switch to the Chinese “renminbi” is their best hope to try to save tens of millions of manufacturing jobs.

When the Soviet Union collapsed in the early 1990s, China’s economy began to implode and inflation skyrocketed from 10% to 25%.  The United States, Europe and Japan saved the Chinese economy by allowing China to devalue their currency by 68% and gain tariff free export to world’s largest markets.  Under this new communist form of capitalism from 1993 to 2008, China’s economy quadrupled, U.S. economy doubled, Europe rose by half and Japan stagnated.

Contract manufacturing is a very competitive business and historically had an average profit margin of only 3.5%.  This assumes uncontrollable costs of about 75-80% for purchased inputs and 13.5% for energy.  The companies primarily compete over managements’ ability to get more or less productivity from an average of 8.5% in labor cost.  But China’s labor rates were initially 75% cheaper than the U.S.  But with China’s labor rates initially 75% cheaper than the U.S., by moving production to China manufacturers could often double their profit margins to 7% of sales.  Once in China, manufacturers could also discount their sales prices to wipe out U.S. competition.

U.S. trade “experts” in 1993 expected Chinese workers’ total factor productivity (TFP) would be less than a quarter of American workers’ 1.25% annual productivity gain.  This may not sound like allot, but over a 15 year period Chinese manufacturers would produce a unit for 95% of original cost and U.S. manufacturers would be producing the same unit for 82% of cost.  The “experts” predicted few jobs would be lost to China and America would gain new markets for high tech manufactured goods.

Over the next 15 years, China grew the number of assembly workers involved in manufacturing for export to over 200 million workers.  America lost about eight millionmanufacturing jobs to China, 40% of our 20 million production jobs.  But even more damaging, every manufacturing job also lost four service jobs and another 1.58manufacturing jobs from sub-assembly manufacturers who locate near their customer.

China understood that as it sucked manufacturing jobs out of the U.S., the Chinese renminbi currency would be expected to rise in value and destroy their “cheap” labor advantage.  As a communist nation, they adopted a national policy of recycling a portion of their export sales revenue into the purchase of U.S. Treasury bonds to drive up the value of the U.S. dollar versus the Chinese renminbi.

Fearing that every 10% increase in the exchange rate of the renminbi to the dollar would cause the loss of 35 million manufacturing jobs, by 2008 China had purchased $1.2 trillion in U.S. Treasury Bonds.  China’s bond purchases drove down U.S. interest rates and caused a real estate building boom employing millions of Americans.  But when the real estate bubble burst, the “Great Recession” educated Americans on the pain of losing manufacturing jobs.

China’s labor costs became even more uncompetitive versus the U.S. after 2008 financial crash drove down U.S. wages.  In response, the communist nation began “administering” input costs by subsidizing the cost its state-owned export manufacturers paid to purchase energy.  As a country that imports 70% of its oil needs, subsidies preserved manufacturing employment.  But the subsidized prices increased the demand oil and drove the international price of oil from a recession low of $40 up to $100 barrel.

The financial crisis caused such scandal in the U.S. banks were forced to slash their leverage risk down from holding $25 to $13 of assets for each $1 of deposits.  The Chinese authorities directed their state-owned-banks to increase leverage from $35 to $48 of assets for each $1 of deposits.  China banks also increased infrastructure and commercial and residential property loans.  Policy lending created such huge new inefficiencies in the Chinese economy, that many bank loans can never be repaid.

“China’s steady growth in oil demand has led it to become the world’s largest net oil importer, exceeding the United States in September 2013” according to the U.S. Energy Information Administration.  China’s rising oil demand in September outstripped domestic production by 6.3 million barrels per day.  But U.S. imports continue to fall as fracking technology increased production to 7.8 million barrels per day, the highest level since early 1989.  Natural gas production is also rapidly increasing and America will soon be self-sufficient in this important industrial energy source.  The price for 1000 cubic feet of natural gas averages about $3.50 in the U.S., versus over $12 in China.

China remains an impoverished nation, where 900 million people have an annual per capita income around the same level as Guatemala ($3,000-$3,500 a year) and 500 million have an annual per capita income around the same level as Nicaragua ($1,500-$1,700).  China’s per capita GDP is around the same level as the Dominican Republic.  Stimulating the domestic consumer economy will not help manufacturers when the vast majority of Chinese cannot afford to buy the products they currently produce for export.

The Chinese benefited enormously from being allowed to devalue their currency and participating with the dollar as their reserve currency.  But if China continues aggressive lending to failing businesses, they will generate higher inflation and make Chinese exports more uncompetitive.  But allowing businesses to fail would cause unemployment and massive social and political problems.  If China sells their $1.6 trillion of U.S. public and private securities, the dollar will fall and America will become more competitive.  As China’s economic decline becomes obvious, it is doubtful they will convince the world to allow China to devalue and make the renminbi the world’s reserve currency.

China as the second largest economy in the world will continue to be a major international power.  But its days as the low-wage, high-growth center of the earth are over.  Their ability to project military power in Asia will also fade.  China’s future may be similar to what George Friedman of Stratfor famously said about the future of Japan after the end of its high-growth cycle: “it will play a different role.”

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