The Washington Post - 20.08.2019

TUESDAY, AUGUST 20 , 2019. THE WASHINGTON POST EZ SU A

Economy & Business

CRYPTOCURRENCY

Bitcoin founder claims

draw skepticism

Jeff Garzik used to exchange
emails with Satoshi Nakamoto
before the pseudonymous
creator of bitcoin disappeared
years ago. He doubts Satoshi is
about to resurface again.
When an Internet posting
Sunday claimed to come from
Satoshi and promised to reveal
his or her true identity on
Tuesday, Garzik read it. His
verdict: “The writing style does
not strike me as the same,” said
Garzik, co-founder of Bloq,
which develops blockchain
technology for use by
companies.
The post recounted a
backstory that led to the
creation of bitcoin. The
installment is supposed to be the
first in a three-part series that
will culminate with Satoshi’s
identity being revealed. The first
post contained only publicly
available information, said
Garzik, who says he hears from
would-be Satoshis on a regular
basis.
“I actually get this every
couple of months — a new fraud

every couple of months,” Garzik said. “Usually it’s either information, or it’s a common scam: ‘All my Bitcoins are locked up, send me some of yours.’ ” Multiple people have claimed to be Satoshi over the years, and many others have been pointed to as possible bitcoin creators. — Bloomberg News

AIRLINE INDUSTRY

Union case against Boeing can proceed

A federal official is making Boeing defend itself against charges it illegally fired workers for supporting a union at its South Carolina assembly plant. The regional director of the National Labor Relations Board ruled there’s enough merit to send the cases to an administrative law judge. The International Association of Machinists and Aerospace Workers claims six workers were wrongly fired and others disciplined at the plant in North Charleston, where employees build the Boeing 787. The federal official denied a union claim that Boeing has failed to bargain over a contract.

The union won a May 2018 election to represent about 176 inspectors and technicians. Although a small group, it was a rare labor victory in the state with the lowest percentage of union workers. Boeing is challenging the election. — Associated Press

FISHING INDUSTRY

‘Codfather’ banned from U.S. fisheries

The federal government has settled its civil case against a fishing magnate known as the “Codfather,” saying he will never be allowed to return to U.S. fisheries. The National Oceanic and Atmospheric Administration said Monday its settlement with Carlos Rafael and his fishing captains will clear the way for Rafael’s assets to be divested. NOAA Fisheries Assistant Administrator Chris Oliver said the settlement “accomplishes NOAA’s chief objective of permanently removing Mr. Rafael from participation in federal fisheries.” Rafael was based out of New Bedford, Mass., and was

sentenced to prison for shirking fishing quotas and smuggling profits overseas. His arrest sent shock waves through the East Coast fishing industry. He was owner of the one of the largest commercial fishing

operations in the country. — Associated Press

ALSO IN BUSINESS Germany’s central bank has issued a gloomy economic report suggesting that growth in the

summer continued to shrink, raising the possibility Europe’s largest economy may be entering a recession. A technical recession is defined as two consecutive quarters of negative growth, and Germany saw a 0.1 percent drop in the second quarter, from April to June. In its monthly report, the Bundesbank said, with falling industrial production and orders, it appears that the slump probably continued through the summer.

The Natural Products Association filed for bankruptcy protection, citing six straight years of losses and an arbitration with a former chief financial officer. Chief executive Daniel Fabricant said in a filing with the U.S. Bankruptcy Court in Delaware that the Chapter 11 case will provide a “breathing spell” for the D.C.-based trade group to focus on advocacy and adding members. Founded in 1936, the nonprofit said it has more than 1,000 members that account for over 10,000 retail, manufacturing, wholesale and distribution locations for natural foods, dietary supplements, and health and beauty aids. — From news reports

DIGEST

MLADEN ANTONOV/AGENCE FRANCE-PRESSE/GETTY IMAGES A woman buys food from a street vendor’s cart Monday in Bangkok. The Thai economy grew at its most sluggish pace in nearly five years in the second quarter, the country’s National Economic and Social Development Council reported.

BY JEANNE WHALEN AND FELICIA SONMEZ

The Trump administration added several dozen more Hua- wei affiliates to a trade blacklist Monday but also extended a temporary reprieve that will al- low some U.S. companies to con- tinue doing business with the Chinese tech company for at least the next three months. Commerce Secretary Wilbur Ross said the agency was extend- ing the reprieve to give rural U.S. telecommunications companies “more time to wean themselves off ” telecom equipment from Huawei, a company the United States has deemed a possible risk to national security. Rural telecom companies said the 90-day break won’t change the steep challenge they are facing: the increasing likelihood that they will have to replace their Huawei equipment with expensive gear from another sup- plier, because of several Trump administration actions against the Chinese company. “To them, the writing is on the wall,” said Carri Bennet, general counsel to the Rural Wireless Association, which represents companies in rural parts of Mon- tana, Wyoming, Alabama and other states. None are yet ripping out equipment, she said, but “they’re talking to other vendors about what that cost would be.” The companies operate on tight budgets and don’t have the funds for a wholesale overhaul, she said. “My members say, ‘We’re patriots. If you tell us it’s a national security issue, we’ll do it, but please provide us with the funding.’ ” At a hearing in June, Geoffrey Starks, a member of the Federal Communications Commission, estimated the cost could exceed $1 billion, “depending on what equipment needs to be replaced.” Starks said the government would need to help finance that work. “We cannot expect carriers to replace this insecure equipment alone. This is a national problem; it needs a national solution,” he said. “Mitigation of risk may be possible, but a rip- and-replace approach may be required.” The rural carriers serve many farming and ranching communi- ties and remote oil-field sites, Bennet said. “Some of the rural companies are dependent on Huawei. So we’re giving them a little more time,” Ross said in an interview with Fox Business Network on Monday. The White House originally added Huawei and many of its affiliates to the trade blacklist, known as the Entity List, in May. That move prohibited U.S. companies from exporting to Huawei without a special license from the

Commerce Department, hurting U.S. software and semiconductor makers that sell to Huawei. It also hurt rural U.S. telecom companies that buy Huawei equipment, because their purchase orders seeking such equipment are technically considered ex- ports, Bennet said. The Commerce Department said Monday it was adding 46 additional Huawei affiliates to the Entity List, to make it harder for Huawei to get around the sanctions. Ross also suggested U.S. tech companies that have applied for special licenses to sell to Huawei may not get them soon. “No specific licenses are being grant- ed for anything,” he said. In an emailed statement Mon- day, Huawei said the blacklisting of the additional affiliates “is politically motivated and has nothing to do with national security.” It added that the additional 90-day reprieve “does not change the fact that Huawei has been treated unjustly.” Rural wireless companies originally bought Huawei equipment because it was considerably cheaper than that offered by Ericsson, Nokia and other companies, Bennet said. Huawei’s blacklisting, and several other White House actions against the Chinese company, are undermin- ing those purchases. In May, President Trump issued an executive order prohibit- ing U.S. companies from pur- chasing telecom equipment from entities owned or controlled by a foreign adversary, or that are subject to the jurisdiction of a foreign adversary, if the purchase poses “undue risk.” The order didn’t name Huawei but was widely interpreted as a move against Huawei. U.S. offi- cials have expressed concerns that the Chinese government could force Huawei to use its telecom gear installed overseas to spy on Western countries, a claim Huawei has denied. The United States also has banned federal government agencies from buying Huawei gear. And last year, the FCC announced plans to block U.S. telecom and Internet carriers from using federal subsidies to buy foreign equipment that poses a security threat. Rural telecom companies of- ten receive federal subsidies to carry out their work and would be hit hard by the FCC rule, which has yet to go into effect. Aside from the cost of replac- ing equipment, rural companies also are facing a labor shortage, Bennet said. “Taking stuff off towers requires having someone to climb the towers to do it,” she said. With the biggest telecom companies scrambling to construct new high-speed wireless net- works known as 5G, “the labor force is really tight right now,” Bennet said. “If you’re a small carrier without a lot of market power, getting someone in a rural area... that’s hard.” [email protected] [email protected]

Huawei ban leaves rural

firms with few options

Wireless companies say Commerce Department’s reprieve is not enough

DOW 26,135. UP 249.78, 1.0%

NASDAQ 8,002. UP 106.82, 1.3%

S&P 500 2,923. UP 34.97, 1.2%

GOLD $1,511. DOWN $12.00, 0.8%

CRUDE OIL $56. UP $1.34, 2.4%

10-YEAR TREASURY DOWN $4.40 PER $1,000, 1.60% YIELD

CURRENCIES $1=106.64 YEN; EURO=$1.

SASCHA STEINBACH/EPA-EFE/SHUTTERSTOCK

Going whole hog on climate change Pigs at a fattening farm in Brueggen, Germany. Green and Social Democrat politicians want to raise the value-added tax on meat from 7 percent to 19 percent to discourage consumption and combat climate change. Agriculture Minister Julia Klöckner opposes the idea, citing its impact on farmers’ incomes. Other countries are considering similar measures.

BY JONNELLE MARTE

Most economists believe the
United States will tip into reces-
sion by 2021, a new survey shows,
despite White House insistence
that the economy is sound.
Nearly 3 out of 4 economists
surveyed by the National Associa-
tion for Business Economics ex-
pect a recession by 2021, accord-
ing to results released Monday.
The outlook reflects growing
skepticism among economists
and investors that the U.S. econo-
my will be able to withstand a
protracted trade war with China
without serious harm amid the
weakening global outlook.
Hedge fund manager Ray Dalio,
the founder of Bridgewater Asso-
ciates, told CNBC last week that he
now believes there’s a 40 percent
chance of a recession before the
2020 election. In February, he had
estimated that figure to be 35 per-
cent.
Stock markets gyrated last
week as investors grappled with
continuing U.S.-China trade un-
certainty and absorbed grim data
showing Germany and eight other
major economies are either in a
recession or on the verge of one.
On Wednesday, the bond markets
sounded their own warning when
the yields on 10-year Treasury
bonds briefly fell below those on
two-year bonds. The scenario,
known as an inverted yield curve,
has preceded every recession
since 1955 and offers a sign that
investors are piling into safer as-
sets.

President Trump and his advis- ers insist that the U.S. economy is strong and stable. “I don’t think we’re having a recession,” Trump said Sunday, according to the Associated Press. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut, and they’re loaded up with money.” Larry Kudlow, Trump’s economic adviser, made similar as- surances on the Sunday talk shows. “We’re doing pretty darn well in my judgment. Let’s not be afraid of optimism,” he said, adding that low interest rates could boost demand for houses and cars. Yet Trump recently acknowl- edged that his tariffs, which are taxes on goods imported to the United States, could affect consumers. Last week, he announced he would delay a portion of the tariffs that would affect popular items such as cellphones, laptops and toys until Dec. 15 to avoid any impact on the holiday season. All of the tariffs against China com- bined could cost consumers an average of $650 per household, according to estimates from Kathy Bostjancic, chief U.S. financial economist for Oxford Economics. Some businesses have scaled back their investments as they wait for the trade war to play out. The manufacturing sector is struggling as output declines and hiring shrinks. Commerce Secretary Wilbur Ross said the bulk of the tariff costs would be absorbed by companies and Chinese vendors.

“There’s very little inflation in the consumer economy,” he told Fox Business on Monday. He also played down the link between the yield curve and the probability of a recession. “Eventually there’ll be a recession, but this inversion is not as reliable, in my view, as people think.” Some analysts expressed optimism Monday, saying the longest U.S. economic recovery in history can be prolonged if politicians reach a trade deal. Even a short- term truce could encourage businesses to resume spending on equipment and other improve- ments, allowing the economy to “muddle along” at a slower growth rate of about 2 percent through next year, said Michael Skordeles, head of U.S. macro strategy for SunTrust Private Wealth Manage- ment. The Federal Reserve cut interest rates last month for the first time since 2008. Fed Chair Jerome H. Powell said the move didn’t signal the start of a rate-cutting trend. However, expectations are growing for more cuts, possibly as soon as September. The survey of 226 economists was conducted from July 14 to Aug. 1, before Trump announced the latest round of tariffs against China and before the last bout of market volatility. Still, the report found that economists were nearly as pessimistic this summer as they were earlier this year, showing that for many economists the question is not so much whether the U.S. economy will enter a re-

cession but when. Some economists delayed the timeline for when they expect a slowdown to start. The share of economists expecting a recession this year dropped to 2 percent from 10 percent in February. In addition, 34 percent now expect a recession in 2021, up from 25 percent in February. About 4 out of 10 economists expect a slowdown in 2020, roughly unchanged from the previous report. But the recession question may ultimately be determined by American consumers, whose spending accounts for roughly 70 percent of economic growth. That means the economy may be able to withstand near-term ob- stacles as long as people keep opening their wallets for goods and services. Despite the recent market volatility, the Dow Jones industrial average is off 4.5 percent from an all-time high reached in mid-July and is still up 12 percent for the year. That means consumers re- viewing their retirement accounts might still feel confident in their savings and may wait for more warning signs before they cut back, said Brian Rose, senior Americas economist at UBS Glob- al Wealth Management. The economy may grow more slowly overall as the bump from Trump’s tax cut begins to fade, but the growth may stay positive bar- ring a huge deterioration in trade negotiations or consumer confi- dence, he said. [email protected]

Economists see U.S. recession by 2021

Survey findings reflect skepticism over trade war with China and softening global economic forecast

The Washington Post - 20.08.2019

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