The Boston Globe - 31.07.2019

B8 Business The Boston Globe WEDNESDAY, JULY 31, 2019

If the nation’s first
major offshore wind
farm doesn’t get off
the ground, there will
be plenty of finger-
pointing to go
around.
Some may be
pointed at Rhode
Island’s congressional delegation.
The state’s two senators and two
representatives sent a letter on July 12
to the Bureau of Ocean Energy
Management, expressing concerns
about how the federal agency has
handled the review of offshore wind
development. In particular, they want
BOEM to be more sensitive to
potential conflicts with fishermen and
marine life. (They also want the
agency to open a regional office in
Rhode Island.)
The letter doesn’t mention the
Vineyard Wind project by name. But
the timing indicates Vineyard Wind

was on their minds: The letter went out the same week the developer learned that a crucial permit from BOEM would be delayed. Vineyard Wind, a venture owned by Avangrid and Copenhagen Infrastructure Partners, said it would need the permit within the next several weeks. If not, its 800-megawatt wind farm proposal for waters south of Martha’s Vineyard couldn’t proceed in its current form. Why the rush? Avangrid CEO Jim Torgerson spelled it out to investors on a call last week: To take advantage of an expiring federal tax credit, Vineyard Wind needs to be operational in 2021. And, the window to build this massive $2.8 billion, 84- turbineprojectgetssmallereveryday. The tax credit isn’t chump change: Torgerson said it would be valued at 24 percent of the project’s cost. Representative Bill Keating, who represents the Vineyard and much of the South Coast, says he only learned about the Rhode Island letter after inquiring at the Interior Department about the permit delay. There’s a new

interior secretary in charge who wants to give this project, the first of its kind in the US, a closer look. Keating and Representative Joe Kennedy are now racing against the clock to salvage the project — which would deliver a long-awaited economic boost to their districts — with help from other members of the Massachusetts delegation. Governor Charlie Baker is doing the same: He trekked to Washington to meet with David Bernhardt, the new interior secretary, on Monday to make the case. Vineyard Wind won its contracts in a state-managed contest last year to deliver enough power for about 400,000 homes, a process established in the state’s 2016 clean energy law. No one from the four Rhode Island congressional offices would speak to me about the letter. Instead, they issued a brief joint statement to me, referencing the five-turbine project that Deepwater Wind, now Orsted, built off Block Island. Rhode Island, they noted, is home to the country’s first offshore wind farm because it

worked through a “science-based process that included extensive consultation and compromise with stakeholders.” That’s the model, they said, that any developer should follow. Keating says he remains hopeful that Vineyard Wind can address the concerns raised by his Rhode Island colleagues — that more doors are opening instead of closing. And he says there’s room for Vineyard Wind to do more for the fishing industry. Vineyard Wind already agreed to a nearly $17 million mitigation package in Rhode Island. But it doesn’t look like that will be enough. The fishing industry still has many issues. For example, the Long Island Commercial Fishing Association is worried about the effect these giant towers could have on boat radar, and the impediments that transmission cables could cause. The Rhode Island delegation’s letter didn’t sit well with Hugh Dunn, the New Bedford official who leads the SouthCoast Development Partnership, or state Representative Pat Haddad from Somerset. Dunn says the delays

proposed in the letter could have far- reaching impacts, possibly jeopardizing Vineyard Wind’s work and scaring away investors from future offshore wind projects. And Haddad, a champion of wind energy at the State House, says she wonders why the Rhode Island lawmakers didn’t speak up sooner. Haddad has another issue on her hands, on Beacon Hill. The state’s 2016 energy law required that the next round of offshore wind contracts beat the price set in the winner of the first round – Vineyard Wind’s surprisingly low bid. The price-cap was modified in a state budget now in Baker’s hands. Haddad hopes Baker agrees this week to lift the cap, at least for the next round of bids, due in mid- August. After all, the developers might be scrambling to beat a price that could prove to be too good to be true — if Vineyard Wind can’t solve its permit problem before time runs out.

Jon Chesto can be reached at [email protected].

R.I.lawmakersraisewindfarmworry

Jon Chesto

CHESTO MEANS BUSINESS

NEW YORK TIMES BEIJING — A little over two months after Huawei’s chief executive began comparing his embattled company to a bullet-riddled fighter plane, the Chinese tech giant said its sales for January through June grew by nearly a quarter from a year earlier, a sign the Trump administration’s clampdown has hardly brought the company crashing to the ground. “Neither production nor shipment has been interrupted, not for one sin- gle day,” Liang Hua, chairman of Hua- wei’s board of directors, said Tuesday. Still, Huawei’s troubles with Wash- ington have not left it unscathed. Its smartphone sales outside China plum- meted after the Trump administration restricted the company’s access to US technology in May, though Liang said they had since recovered somewhat. Revenue for the first half of the year came in at $58 billion. But second- quarter sales grew by less than 13 percent from a year earlier, compared to 39 percent growth in the first quarter. Huawei did not indicate this in its news conference Tuesday, highlighting only the combined figures for the first half of the year. Because it is not pub- licly traded, it can be selective about which financial results to release. Liangalsowarnedthesecondhalf of the year might be more challenging. Huawei’s future has been uncertain since Washington began ratcheting up efforts to undermine the company, saying its products are dangerously sus- ceptible to influence and disruption by the Chinese government. Huawei re- jects the insinuations. Its fate is now entangled in talks between the United States and China to end the tariff war. After US officials spent months warning about the risks of using Hua- wei’s equipment to build next-generation wireless networks, the Commerce Department took direct aim at the company in May, putting it on an ex- port blacklist. This meant US companies would need permission to sell Huawei the chips and other compo- nents that go into its products. The Chinese company’s founder and CEO, Ren Zhengfei, predicted in June that revenue this year would be $30 billion less than previously fore- cast. Before long, though, some US companies decided they could resume selling certain items to Huawei; their lawyers determined the restrictions did not apply to hardware made outside the United States that did not con- tain much sensitive technology. Huawei can’t breathe easy, though. The Commerce Department has not said exactly how it will decide who gets licenses to sell to the company. But Li- ang said Huawei’s ability to supply equipment for next-generation 5G networks had not been affected, because it had made adequate preparations in advance.

Huaweisales

surge,even

afterTrump’s

blacklisting

By David Yaffe-Bellany
NEW YORK TIMES
It has become a drearily fa-
miliar story: A data breach at a
major company exposes troves
of sensitive information, putting
millions of people at risk of on-
line fraud.
Last year, it was Marriott.
The year before, Equifax.
This time, it’s Capital One,
which said Monday that a hack-
er had compromised the person-
al information of more than 100
million people, in one of the
largest-ever thefts of data from a
bank. For the vast majority of
those consumers, the breach
probably exposed details like
names and addresses rather

than Social Security and bank account numbers. The bank said it was “unlikely that the information was used for fraud or disseminated by this individual,” and no credit card numbers or passwords were exposed. But the news of the hack — which came just a week after Equifax reached a $650 million consumer settlement stemming from the 2017 breach — high- lights the importance of digital security at a time when major leaks of consumer information are a fact of life. Here’s what we know so far about the hack: The suspect, identified in court documents as a 33-year-

old software engineer named Paige Thompson, is accused of stealing 140,000 Social Security numbers and 80,000 bank account numbers, as well as 1 million “social insurance” numbers, which are the Canadian equiva- lent of Social Security numbers. The information came from credit card applications that consumers and small businesses had submitted between 2005 and 2019, according to Capital One. It said the account numbers were linked to “secured” cards, which tend to be held by consumers with bad credit who are financially vulnerable. Capital One says it will “noti- fy affected individuals through a

variety of channels.” It’s unclear precisely what that means, but the bank has promised to make free credit monitoring and iden- tity protection available to any- one affected by the breach. Capital One has issued guide- lines urging consumers to moni- tor their credit card accounts for suspicious activity and forward suspected phishing e-mails to [email protected]. After the Equifax breach, the Times’ Tim Herrera wrote a four-part guide to protecting sensitive information, recom- mending that consumers set up fraud alerts, consider credit freezes, check their credit report, and take up credit monitoring.

WhatyouneedtoknowabouttheCapitalOnebreach

at the MIT Sloan School of Man-
agement. “Instead, it’s setting
the expectation that it will bail
out the economy at every little
sign of softness.”
Here’s a look at what’s at
stake for the Fed and for us reg-
ular folk.

The backdrop
The economy has been grow-
ing since 2009, but the pace
slowed in the second quarter of
this year to 2.1 percent from 3.
percent in the first three
months.Whilethat’sstillare-
spectable rate, some other re-
cent data have been worrisome.
Manufacturing and business
investment have waned; growth
in China and Europe is weak,
which saps demand for Ameri-
can exports; and long-term bond
rates are lower than short-term
yields, a reversal of the usual re-
lationship that is considered a
recession warning.
On the plus side, the job mar-
ket is strong, with unemploy-
ment hovering at 50-year lows,
and consumers remain upbeat.
Stocks are trading at record
highs.

The inflation mystery
Normally, the Fed would not
be lowering rates under such
relatively healthy conditions.
But these aren’t exactly normal
times.
First, the chaotic trade situa-
tion has hurt business confi-
dence and made life difficult for
automakers, farmers, and com-
panies reliant on Chinese cus-
tomers. The Fed has pointed to
global trade as a main area of
concern.
Second, inflation has not
picked up as would be expected
when the jobless rate stands at
3.8 percent. The Fed’s preferred
inflation gauge hasn’t consis-
tently hit its 2 percent target for
years. Last year, when it looked
like prices were finally picking
up, policy makers raised rates
four times and planned to con-
tinue the hikes this year to keep
costs from getting out of hand.

uEDELMAN
Continued from Page B

But after the fourth increase, in December — and a lot of criti- cism from investors and Presi- dent Trump — the Fed had a change of heart. Chairman Je- rome Powell pledged to be pa- tient and make future decisions based on the data coming into the Fed. The predicted uptick in inflation never came. The Fed has held rates steady since then. Why has such low unemploy- ment not driven up wages and other costs, as Economics 101 teaches it should? “Economists don’t under- stand it,” said Chester Spatt, a professor of finance at Carnegie Mellon’s Tepper School of Busi- ness and a visiting professor at the Sloan School. “I would have never thought you’d have the Fed cutting rates when unem- ployment is so low.” The Fed, like a ref who blew a call earlier in the game, may be trying to correct for that final rate hike. “Milton Friedman had his fa- mous saying that ‘inflation is al- ways and everywhere a mone- tary phenomenon,’ ” said Peter Ireland, a professor of economics at Boston College and a research associate at the National Bureau of Economic Research. “And if you believe that, it push- es you strongly toward thinking that the December rate increase was a misstep that ought to be reversed.”

Risky business The Fed has backed itself into a corner, putting its credibility

on the line. I defended Powell when Trump attacked him and his colleagues for raising rates last year. I don’t believe they are prepping to cut rates now just to please the president. I do think they’ve become too accommo- dating of big investors. Yes, a sustained market sell- off can have an impact on the real economy, which is one reason why the Fed paused its credit tightening after last fall’s stock rout. But now, acting withoutanyimminentthreats, policy makers seem too eager to avoid another market meltdown. I get it: Powell doesn’t want a recession on his hands. Low, even negative rates, in other countries complicate his job by driving up the value of the dollar, making US products more expensive overseas. But he’s setting the Fed up for potential problems down the road. “Not only will rate cuts leave the Fed with less room, it could destroy the Fed’s credibility just when the Fed needs it most,” said Megan Greene, an econo- mist and senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School. “If rate cuts don’t boost inflation and growth — and I don’t think they will — then no one will believe in the Fed’s tools when the next recession hits. A central bank without credibility is com- pletely ineffectual.”

What’s next? After Wednesday’s rate cut, the Fed could nudge rates down another quarter-point this year, perhaps at its September meeting. Barring an unexpected disaster — military confrontation with Iran, complete collapse of trade talks with China — investors will push stocks higher. And they’ll take increasingly more risk to make up for the lack of yield in safer bond investments. Savers will be squeezed once more. Dan Kern, chief investment officer at TFC Financial in Boston, doesn’t see the harm in the Fed trimming rates a couple of times this year, especially with inflation quiescent. He argues that while Powell hasn’t acknowledged this explicitly, the easing is designed not only to benefit the US economy, but other countries, too. The United States “is no longer insulated from the rest of the world,” he said. Very true. But as Kern told me, “There is a fine line between being sensitive to market dynamics and being reactive to market senti- ment.” Powell is walking that fine line. Let’s hope he keeps his bal- ance.

You can reach me at [email protected] and follow me on Twitter @GlobeNewsEd.

AFed

ratecut

won’tbe

risk-free

NATI HARNIK/ASSOCIATED PRESS/FILE 2019

AFP/GETTY IMAGES Capital One said a hacker had compromised the personal information of more than 100 million people, in one of the largest-ever thefts of data from a bank.

The chaotic trade situation has hurt business confidence and made life difficult for farmers, among others.

ANDY WONG/ASSOCIATED PRESS US-China trade talks could affect policy regarding Huawei.

The Boston Globe - 31.07.2019

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