A few juicy China tidbits and water thievery


By Michael Raffety

I’ve written about the huge hoard of aluminum shifted from Mexico to Vietnam by

China’s Zhongwang Holdings Ltd., amounting to 14 percent of the aluminum in the world.

But the world’s biggest producer of aluminum is China’s Hongqiao Group Ltd. That company, employing 60,000, is facing fraud allegations from two short sellers and is feuding with its accountant over the fraud allegations. An April 15 article in the Wall Street Journal by Scott Patterson in London and Brian Spegele in Beijing refers to complaints by American companies of “unfair tactics” and “could also reinforce the broader concerns over what many view as questionable business practices by China’s industrial giants…”

Hongqiao complained to the Chinese Non-Ferrous Metals Industry Association, “saying the short sellers’ claims of inflated profits were forcing the company’s accountant, Ernst & Young ‘to adopt an extremely conservative and careful attitude,’” Patterson and Segele wrote.

“Conservative and careful?” That’s the very definition of accountants. Nobody, at least in America, wants an accountant to be wild and careless.

Ernst & Young suspended its 2016 audit, asking the company to commission an independent investigation of the short sellers’ claims. Without an audit Hongqiao could be investigated by the Hong Kong securties regulators and its credit rating has already dropped into junk status, putting at risk its $10 billion in debt, already $700 million of that facing default without relief from the creditors.

On Feb. 28 Emerson Analytics issued a report accusing Hongqiao of “abnormally high profits” resulting from underreporting producing costs.

. . .

Maybe China can control its bubble economy and maybe it can’t. Here’s an item from the April 1 Wall Street Journal: “Total credit in the Chinese banking system is now 106 percent of deposits, up from 80 percent in 2013. For midsize banks it’s 130 percent.”

From the March 30 WSJ comes the information that Chinese “banks and other financial institutions borrowed $6.4 trillion from each other last month.”

Uncollateralized interbank lending in China totaled $34 trillion last year. Chinese banks are selling “wealth management products” to customers that are backed by largely opaque bundles of debt and assets leveraging “everything from government bonds to garlic.” Now here’s a bet that will ward off vampires and the evil eye.

The nickel summary is Chinese businessmen and women work hard and take chances. Some of them pay off and some of them wind up being kind of shaky, even shady.

. . .

On a completely different subject, the state is trying to steal our water. It was only recently that the governor lifted the drought declaration. Never forget that Gov. Jerry Brown is a lawyer and a former monk. Only he could think of a way to get around the state Water Code and the state Constitution.

He is doing that by “making conservation as a way of life.” There are several bills that his minions in the Legislature are using to implement that scheme by empowering the state water board to impose permanent conservation on all of us by limiting our daily consumption to 55 gallons of water inside and 55 gallons outside.

Look at your EID bill and you will see where it identifies you daily water consumption. The only way I would get down to 55 gallons a day is to eat off paper plates and take out laundry to the laundramat.

That’s not the only way the governor is going to grab senior water rights, such as EID’s which date to 1850 and 1851. The State Water Resources Control Board wants water districts to release “unimpaired flows” from February through June. That would leave EID with not enough water to serve its customers.

For water purveyors throughout the state it is a year of living dangerously as they all battle back against the legislative onslaught.


Messing with sailors’ technical identity

Michael Raffety


Among the harebrained schemes from officials associated with President Obama’s administration was one cooked up by his Secretary of the Navy Ray Mabus.

Mabus thought it would be a wonderful idea for all 265,000 sailors in the Navy to drop their ratings. He thought sailors should have job titles like other military services.

If sailors wanted to look like the Air Force with just a bunch of stripes and only a piece of paper distinguishing a dog handlers from a sous chef they would have joined the Air Force or the Army.

For the general public it may seem mysterious as much as it may have to Mabus. But to sailors the rating insignia on the shoulder is a point of pride and also an important identifier on a ship. Everyone who achieves the rank of Petty Officer 3rd Class is entitled to display his or her rating with above his stripe and below an eagle.

The important ratings on a ship are Hull Maintenance Technician, Damage Controllman and Engineman. The elite ranks on a ship are Boatswain’s mate and Quartermaster. Boatswain’s mate is the senior rating in the Navy and Quartermaster helps steer the ship and plot its course.

Other ratings that are recognizable and unique are Musician and Journalist.

I was an Aviation Electronics Technician. My insignia featured electrons circling a bunch of protons with wings attached.

The Antarctic Development Squadron I was attached to my last two years in the Navy had an unusual collection of ratings. We had a Journalist’s mate, a whole photo lab full of photographer’s mates and a crew of parachute riggers.

The parachute riggers sewed colorful parka shells for all the officers and enlisted men. I don’t think there was anyone in our squadron below the rank of Petty Officer 2nd Class (E-5). The parachute specialists prided themselves on making the highest altitude drop over Antarctica and over the South Pole. Anyone one brave enough to make 10 jumps could get their parachute wings. I was not among group of daredevils. But the supply officer made 10 jumps out of a helicopter to get his parachute wings added to his aviator’s wings.

There were two contingents in Antarctica – the air crew and aviation mechanics who worked on the ski equipped C-130 Hercules. They lived in canvas Quonset huts down on the ice. I was with the group assigned to “The Hill” since I worked in the electronics shop doing bench repair work on equipment. We also maintained the H-34 helicopter, which was primarily used to drop off and pick up scientists.

On the hill we lived in metal Quonset huts. All the petty officers lived in the “Lifer’s Lounge.” The Chief petty officers had their own quarters. One of them was in charge of banging on frozen piss barrels at the back of the hut to see if they were full and needed to be replaced.

Not part of our squadron but part of the scene on the Hill were Naval Construction Battalions. Their rating insignias were everything from a bulldozer for an equipment operator to a hunk of steel on a hook for a steel worker.

Not that we saw any of their ratings in Antarctica. Everybody was bundled up in parkas, specialized sunglasses and big “bunny boots.” Later in the summer it got warm enough that the snow melted on the Hill and produced little rivulets and a water shortage.

Electricity came from a nuclear plant. It was run by an Electronics Technician with a nuclear specialty. Within each rating there are often specialties. Mine was ATR, meaning Aviation Electronics Technician Radar. I also was trained to work on communications equipment.

When I was sent to learn a specific kind of radar, which required a secret clearance, I was kind of surprised to find some of my fellow classmates were Jordanians and Israelies. I guess that airborne radar wasn’t that secret.

The order eliminating naval ratings was issued September 2016. By December 2016 they were reinstated by popular demand.

President Trump has not successfully nominated someone as naval secretary yet. His appointees for Naval and Army secretaries have withdrawn due to the difficulty of disposing of their wealth in a way that would satisfy the Ethics Office. Whoever wins appointment to naval secretary, it’s a good bet he or she won’t mess with naval technical ratings.







Rain records, North Korea and the USS Enterprise

Michael Raffety


March wasn’t as rainy as it usually is. Often it is referred to as a March Miracle. This year the Mountain Democrat only recorded 3.02 inches in March.

Nevertheless it boosted the total rain for the year to 59.40 inches, putting it in the top nine of rain years, with three months left to go before the rain year ends June 30. This is the 144th year of rainfall statistics compiled by the Mountain Democrat and PG&E.

PG&E abruptly stopped recording its weather stats in 2011.

The Mountain Democrat follows the National Weather Service definition of a rain year starting July 1. Water project managers use the U.S. Geological Survey’s hydrologic year that begins Oct. 1 and ends Sept. 30. The State Water Quality Control Board follows the latter water year, and therefore has different years it calls record water years and is more prone to call a year a drought when in the foothills we would merely call it a low rain year.

In El Dorado County the state gets its rain data from Pacific House. For a hint of what’s happening at Pacific House I look for George Osborne’s rain gauge. Osborne lives in the upper reaches of Camino’s Audubon Hills subdivision. As of April 7 he had recorded 80.92 inches of rain.

. . .

The administration diverted the aircraft carrier Carl Vinson from a port of call in Australia to the Sea of Japan off the Korean Peninsula. All aircraft carriers are nuclear powered. When I was in the Navy there was only one nuclear powered carrier – the USS Enterprise. It was inactivated Dec. 1, 2012, and decommissioned the same day my daughter gave birth, Feb. 3, 2017.

The Enterprise was the only aircraft carrier to have two nuclear power plants. I happened to bring up the Enterprise at the dinner table I was sitting at for the American Legion’s monthly dinner and meeting. That’s when I learned from someone who seemed personally knowledgeable who remarked that the Enterprise could go fast enough to outrun its destroyer escorts. Maximum speed was pretty fast, fast enough that I don’t think it would be wise for me to put it in writing.

. . .

I don’t know if the carrier group is going to do anything but look menacing. One of the most effective deterrents was when President George W. Bush cut off North Korea from banking. Bush later eased off the banking ban. The banking ban ought to be re-imposed. Even though North Korea has an isolated Internet, it has been able to reach out to the outside world with thievery and mayhem. I wrote in an earlier column about North Korea using Swift, the Society for Worldwide Interbank Financial Telecommunications, to try to steal $1 billion from Bangladesh’s Swift account at the New York Fed. It got away with $81 million. The Hermit Kingdom is also believed to have stolen money from Ecuador.

The April 11 Wall Street Journal reported that the state-owned Union Bank of India was infected with malware that allowed theft of $171 million. Investigators have linked the hacking modus operandi to the Bangladesh theft, and prosecutors are targeting North Korea. India blocked most of the transfer last July and recovered all money transferred to other countries within 24 hours. In recent months cyber attacks have targeted banks in Mexico, Poland, Great Britain and the U.S. Cyber experts have tagged North Korea for some of these. Remember that North Korea hacked and ruined the computers at Sony Pictures over a slapstick spoof of Kim Jong Un.

This is how the Hermit Kingdom makes its living – bank heists and counterfeit money, along with nuclear weapons and missile sales. The U.S. needs to disrupt North Korea’s hackers and its Internet.

. . .

The Enterprise has a long history beginning with a Revolutionary war sailing vessel on Lake Champlain. It was burned July 5, 1775, to prevent its capture by the British. Benedict Arnold commanded that navy and succeeded in preventing the British from using Lake Champlain to conquer New York State.

The more famous Enterprise was the schooner used in the first Barbary Pirates War. The first Enterprise carrier, CV-6, was built in 1938. It became the most decorated ship from World War II. The next Enterprise will be CVN-80, a Gerald Ford-class carrier due to begin construction next year and delivery due in 2025.

The aluminum caper

Michael Raffety

April 3, 2017

In 2015 someone flew over central Mexico and discovered a huge cache of aluminum stacked up and fenced in. The Mexico stash represented 6 percent of global inventories. After the stockpile was brought to light in the Wall Street Journal it was moved to Vietnam –- about 1.7 million tons has been stored there since 2015. It is valued at $5 billion.

The $5 billion aluminum cache belongs to Chinese aluminum magnate Liu Zhongtian, age 52. He is chairman of what the Wall Street Journal describes as an aluminum “behemoth” -– China Zhongwang Holdings Ltd.

To get around the limit of taking no more than $50,000 out of the country annually Liu has used different companies, including one run by his son to shift boatloads of aluminum out of the country.

In a Dec. 29, 2016 Wall Street Journal article by Scott Patterson, it was revealed that Liu’s real motivation is to see the aluminum stockpiles as his retirement plan. He already spent 650,000 Euros to buy citizenship from the Mediterranean island of Malta, a member of the European Common Market. Liu’s real plan is to retire in Switzerland. This was uncovered in some emails. Of course, Liu denies all this and denies he knows the law firm working on his retirement plan.

Trying to import some of his vast horde of aluminum to the U.S. from Mexico or Vietnam is a different matter. The Commerce Department found the company received illegal Chinese subsidies and was “dumping” the aluminum below market prices. That puts it in the category of a 374 percent tariff.

Chinese aluminum production in 2015 added up to 55 percent of global output, up from 24 percent a decade earlier. U.S aluminum output accounted for 2.7 percent from five aluminum smelters operating at the end of 2016, down from 23 smelters in 2000.

Just before the inauguration of Donald Trump the U.S. government seized a “vast aluminum trove,” according to the headline in the Jan. 14 Wall Street Journal. The value of the seized aluminum was $25 million. The aluminum belonged to a company founded by Liu’s son and now run by one of Liu’s “close business associates.”

Liu’s spokeswoman denied Zhongwang Holdings Ltd. had any connection to the company.

The Vietnam horde by this time amounted to 14 percent of global inventories, shipping records show.

The seized aluminum, in shipping containers, was actually aluminum pallets, something airline shippers use to reduce weight. And others use the aluminum pallets to hold heavy weight. The pallets are actually exempt from the anti-dumping law. Pallets are shaped aluminum welded together. Homeland Security released 164 containers but retained 552.

The aluminum pallets were shipped from Vietnam.

The seized shipping containers remain so, as far as I can determine. Also left hanging is Zhongwang Holdings Ltd..’s $3.5 billion bid to acquire an American aluminum company. President Obama’s Treasury secretary was set to do a review of this acquisition as detrimental to national security. Both the seized containers and the corporate acquisition are left hanging by the transition and Senate Democrats’ slow walking every Trump nominee.

Rain year and vulture spring


April 3, 2017

Michael Raffety

The San Jose Mercury wrote March 8 that this year’s rain broke a record that held for 122 years.

The actual record sounds puny to us in the foothills. The record for October 2016 through February 2017 is 27.1 inches. That figure is actually an average that comes from the National Centers for Environmental Information, part of the National Oceanic and Atmospheric Administration.

More specifically it’s a “weighted average of values observed at weather stations across the state,” Nina Oakley told the Mercury News. Oakley is a California climate specialist with the Western Regional Climate Center, also part of the National Oceanic and Atmospheric Administration.

By the way, the California average record for a rain year was 40.41 inches in 1982-83.

Here’s how Daniel Swain of the Weather West’s California Weather Blog put it: “Now that we’re more than 2/3 of the way through California’s wet season, it’s pretty clear that much of the state has experienced its wettest 3-6 month period on record. Virtually every corner of the state is above average to date, though anomalies have been much more impressive in the north. The Northern Sierra watersheds are currently sitting at just above 200% of average precipitation for the season to date–a rather extraordinary statistic. If California receives at least average precipitation for the rest of the season, 2016-2017 would become the state’s wettest Water Year on record.”

The state and federal water managers use a rain year that starts in October. The Mountain Democrat, using a more traditional rain year that begins July 1 and runs through June 30 of the following years. This is the rain year that Western States Power Co. and its successor PG&E used.

As of the end of February the Mountain Democrat has recorded 56.38 inches for the 2016-2017.

The 143-year average for the four months remaining in this rain year totals 10.79 inches. If every month hits its average, the rain year could end June 30 with 67.17 inches. That would be a lot of precipitation but not a record. Hitting 67 inches is doubtful at this point. March is not looking like it will even hit its average of 6.16 inches.

The state’s big rain year was 1982-83. In El Dorado County PG&E recorded 72.88 inches in Placerville in 1982-83. That followed 1981-82 rain year that saw 63.64 inches recorded. In 1983 a huge hillside gave way from the PG&E canal down. It was part of an ancient landslide that slid again. It blocked the South Fork of the American River, creating a lake, and it buried Highway 50 for 75 days. The lake is gone, but there is a real wide spot in the road there now. PG&E replaced that damaged flume section with a tunnel.

That rain year had real consequences, but it didn’t break the record. The biggest rain year was 78.13 inches in 1889-90.

This rain year, with 56.38 inches as of the end of February, puts it in the top 13 out of 144 complete rain years. By June 30 it could whittle that down to a smaller number of years.

This year with heavy and steady rain in January and February hitting almost 18 inches each of those two months, the damage has been substantial. El Dorado Irrigation District has a rough estimate of total damage of $15 million-$18 million. El Dorado County’s road and bridge damages are in the same ballpark, but I’m guessing it will be more like $20 million to $25 million for road and bridge damages.

Despite the mudslides and disappearing roads and bridges, it is spring. At our house that means vulture romance, which includes a lot of swooping low and perching in nearby trees.

What I did not expect to see was actual mating, an event that took place on a large rock about 20 feet away from our side deck.. After it ended the male flopped down the rock, looking exhausted. I half expected him to smoke a cigarette.

Monet: The Early Years

Michael Raffety


An art museum can never go wrong putting on a show featuring more than 55 paintings by Claude Monet.

The paintings on display at the Legion of Honor in San Francisco now through May 29 is the first of its kind by concentrating on his early years from 1858 to 1872. The latter is two years before the first Impressionist Exhibition.

Monet was 24 when he sent his first painting to the Paris Salon and it was accepted.

“By age 31 he was famous to a very small group,” said Max Hollein, director and CEO of the Fine Arts Museums of San Francisco.

The year 1872 is also when Monet completed the painting of the port of Le Havre called “Impression Sunrise.” Entered in the 1874 Impressionists Exhibit, it was ridiculed by an art critic as “impressionism,” but the sobriquet turned out to be a boon for Monet’s paintings.

This exhibit shows how he progressed from a standard scenic painter at age 18 to paintings more recognizable as having impressionist elements that were uniquely his by the age of 32. With the advent of the Franco-Prussian War of 1870-71, which included the siege of Paris, Monet decamped to England, where he continued to paint, including a side trip to Holland before it was safe to return to Paris.

“We believe Monet: The Early Years will be a revelation to our visitors, even to those who think they know Monet well,” wrote Hollhein.

This exhibit of these early Monet paintings was collected from museums and private collections around the world and was organized by George Shackelford of the Kimbell Art Museum in Fort Worth, Texas. In 2019 Shackelford will mount an exhibit of the last 10 years of Monet’s life when the artist reinvents himself. Shackelford will work with Jim Gantz, curator of the Achenbach print collection at the Legion of Honor.

“The paintings from Monet’s early career are profoundly daring and surprising,” said Esther Bell, Curator in Charge of European Paintings at the Fine Art Museums of San Francisco. “You see his mastery of light and texture everywhere -– in his depictions of large and small moments, with friends and loved ones, in the solitude of forests and fields and in the quiet scenes of everyday life. Every stroke commands our attention.”

This is Bell’s last exhibit in San Francisco. She is taking the position of senior curator at the Clark Art Institute in Williamstown, Mass.

While Monet was in London he established a relationship with art dealer Paul Durand-Ruel, who mounted exhibits of French painters and especially Monet, who continued to exhibit with him in London after Monet returned to France in 1872 and continued that through 1874.

The year 1872 was the artistic tipping point for Monet. Ten years later was his last group exhibit with the Impressionists. Thereafter he exhibited on his own and had won financial independence through his paintings.

UARP – a missed opportunity in the 1920s

By Michael Raffety


Three EID communications directors ago I was asked to research the founding of the El Dorado Irrigation District, which took place in 1925. Incidental to that research I came across a few stories about Congressman Harry Englebright.

Interestingly Englebright won a special election in 1926 when Congressman John Raker died in office. Raker, is most famous for the Raker Act, passed in 1913 and signed into law by President Woodrow Wilson. The Raker Act authorized damming the Tuolumne River in the Hetch Hetchy Valley to assure San Francisco of a water supply.

Before entering politics Englebright was a mining engineer, which meant he could recognize water projects. Englebright tried to convince El Dorado County to develop what is now known as the Upper American River Project.

The board then lacked the vision or chutzpah to follow his suggestion.

Instead the Sacramento Municipal Utility District won a federal power license 30 years later. It wasn’t until 1985 that the last dam and powerhouse was built. UARP, also known as the Stairway of Power, has 687 megawatts of power and impounds 430,000 acre-feet of water.

All El Dorado County got was contracts for 40,000 acre-feet of water by tapping into the White Rock Penstock on the South Fork of the American River. They are dated 1956 and 1961.

Now the El Dorado County Water Agency is trying to make good on those contracts for 9.3 percent of SMUD’s UARP water. Estimates it will cost $8 million-$10 million to win water rights from the state under the 1927 area of origin rights.

If El Dorado County had committed to bonding that much in the 1920s it could have laid claim to the whole URAP project from the Rubicon to the South Fork and all its related tributaries.

In the 1920s that money would have gone to engineering and dams. Today it goes to attorneys, consultants and environmental studies all aimed at convincing the State Water Resources Control Board to give El Dorado County the right to the water it contracted with SMUD for 60 years ago.

In 1941 The Army Corps of Engineers put Englebright Dam in operation. Its main purpose was to catch hydraulic mining debris. A concrete arch dam on the Upper Yuba River, it provides 70,000 acre-feet of recreation and 294 kilowatt hours of electricity.

Congressman Englebright was Republican minority whip from 1933 until his death in 1943. You can bet he got that dam authorized by Congress.

Raker, Englebright – Congressmen got real project accomplished. Too bad El Dorado County had to wait 90 years to actually try get some benefit from the Upper American River Project.

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