Doing Analysis

On January 1st, 2019, Romania took over the presidency over the European Union, and it will hold it for the next six months, even though the Romanian government has not been in the EU’s good graces for a while due to corruption, nepotism, separation of powers and the rule of law. The Romanian people have occasionally been organizing demonstrations in protest of the government wanting to protect its politicians.

According to the latest United Nations estimates, Romania has a current population of almost 19,531,000, which is the equivalent to 0.25% of the entire world population. The Romanian population is forecasted to drop to 19,388,000 in 2020 and almost a million more in 2030.

The unemployment rate in Romania fell to 3.9% in the third quarter with the highest unemployment rate of 16.4% registered among young people between the ages of 15 and 24. The unemployment rate for men was 4.3%, and for women, it was 3.3%.

Increasing emigration

One of the biggest potential problems for the country’s economy is emigration. Over 500,000 young people, including those aged 20-22 emigrated between 2007 and 2017, and this trend is still ongoing. According to some statistics, during the same period, almost 2.6 million Romanians emigrated, and 20% of them were youngsters – pupils and students namely. The principle reason behind their leaving Romania was the increasing number of scholarships and researches outside the country.

The greatest threat to the Romanian economy is the fact that the majority of emigrants are those who belong to the active workforce group, aged 20-29, and 30-39. This will, in time, lead to major problems in the pension system and the labor market. The structure of the population is also changing because of this, since the median age is going up.

Steady economic growth in 2018

Despite this, Romania experienced a powerful economic growth in 2018. The economy did not reach the record level from 2017 because the effects of wage increases and tax breaks slowly began fading, but the growth remained robust nevertheless. The banks in Romania recorded record profits in the first nine months, and the financial sector continued to thrive. However, the government was faced with many challenges while attempting to keep the budget deficit under control.

The Romanian GDP is expected to be $225 billion by the end of this quarter, and it is projected to trend around $265 billion in 2020. During each of the first three quarters of 2018, the GDP growth rate was above 4% due to the private demand for consumption, as well as the continuing build-up of inventory. However, both of these factors are not sustainable, and there could be a potential negative impact of the inventory cycle as soon as the first couple of quarters of 2019. The European Commission forecasts that the Romanian GDP growth rate would go below 4% per year in 2019 and 2020, as entire Europe experiences a slowdown, and the fiscal stimulus fades away.

Although the sustainability of the growth has been somewhat weakened and there are definitive signs of deceleration, the figures are still showing some progress: GDP increased by 4.3% in Q3 of 2018 in comparison to the same period of the previous year, having actually accelerated by 0.1% and 0.2% from Q2 and Q1, respectively. The GDP contribution breakdown shows signs of concerns, though: households’ consumption and inventory build-up contributed most of the percentage points, while agriculture and industry made positive, but much less significant contributions to the overall GDP. Investments, on the other hand, made a negative contribution.

Stable inflation and wage increases

The consumer price inflation in November decelerated to 3.4% from 5% in September and 4.3% in October, showing signs of stabilization, despite some upward risks originating from supplementary taxes passing to the end prices of products and services. The energy price capping which is currently in effect, on the other side, will probably require a significant revision of the emergency order issued on the 21st of December, which addressed both of these issues. In the latest show of confidence in the proper outcome of the upcoming revision of the emergency order, the central bank has forecast the inflation to decline even further towards 2.5%.

Several administrative moves have caused the average net wage to increase by 7.8%. The overall increase of 8% over 12 months ending in October 2018 is still way below 12.6% over the previous 12-month period, or 14.7% of the period before. There are, however, wage hikes scheduled for 2019 which will affect the entire public sector, as well as the minimum statutory wage. Growing at mostly double-digit rates over the past decade, the average wage, currently sitting at 580 EUR, has made an overall increase of around 178% since 2009. The minimum wage has been growing at a similar rate, and as of December 7th, it is being increased according to the level of education the employees received for the first time.

The financial sector, banks, and public debt

The banking system’s aggregate net profit increased by an outstanding 57% in Q3, showing performance second only to the EUR 0.5 billion in Q4 of 2015. The profit in the first nine months of 2018 surpassed the profit of the entire year of 2017, with six of the largest banks (out of the total number of 35 banks in operation) taking as much as 80% of the profit. This is not good news, except for the financial sector, as it indicates an increase in debt – the volume of new consumer loans over the 12 months showed a 14% increase, and the new mortgage loans accounted for more than one-quarter of these.

In the past year, Romania has added EUR 2 billion to its public debt, bringing it to a total of around 67 billion, according to the report written by the Finance Ministry. The figures are still low and represent 34.7% of GDP, the ratio between the public debt and GDP that did drop at the end of August. However, the methods used to calculate it do not account totally for inertial effects. This is why the growth deceleration will undoubtedly affect the ratio, and the debt should continue to grow in the years to come.

The Swedish central bank, the Riksbank, increased interest rates for the first time since 2011, which led to the Swedish krona experiencing a significant climb against the euro and the dollar. This surprised many in the market because it showed that the Swedish monetary authority decided to focus on low unemployment, as opposed to uncertainty over global trade conflicts.

The Stockholm-based Riksbank added 0.25% point to its repo rate, which was minus 0.25%. The bank said in a statement that since inflation and inflation expectations were established around the bank’s 2% target, there was a decrease in the need for a highly expansionary monetary policy. The Riksbank leaders and policymakers said that the next increase is likely to come in the second half of 2019, which was why many experts believed that this decision was, in fact, a compromise. The Swedish krona was trading about 0.8% higher against the euro one hour after the announcement, as it managed to par some of its gains.

This latest development concerning the Swedish principle currency came after a few months of significant political disability in the country.

Still no government

The Swedes continue to live in a country without a formed government after the elections which took place in September 2018. These elections proved inconclusive, and no viable coalition has been formed by the leaders of both blocs. This is why one of the leaders of the Riksbank warned that the political stalemate in the country could potentially hurt Sweden’s economic prospects.

The longer the country goes on without the government, the harsher effects on the economy would be. After a slight economic boom in the first two quarters of 2018, the economy entered a phase of a significant slowdown. However, some experts believe that this impact is unlikely to be immediately visible, as the output gap forecast is to stay positive for two more years.

Sweden has a population of about 10,019,000 and its unemployment rate fell to 5.5% in November 2018, with the employment going up by 119,000. The average unemployment rate in Sweden has been 5.96% for the last 28 years. It is expected to be 5.8% by the end of this quarter, and to go around 5.6% in a year. The Swedish unemployment rate is also projected to be 6.5% in 2020.

Even though employment growth is going to slow down, the labor market is expected to remain strong according to the National Institute of Economic Research (KI). In its last report, the KI also wrote that the wages in not only the business sector but the economy as a whole are expected to pick up in the months to come.

For the last few years, the most significant driving factor behind the positive economic changes has been a high demand for new housing. But ever since the investment has begun falling, this trend is expected to continue in the next few months and years, which will, in turn, be a critical factor for slower GDP growth. The interest rates are also expected to be raised gradually. By the end of this quarter, the Swedish GDP is expected to be $555 billion. The KI expects the GDP to grow only 1.3% in 2019 (as opposed to earlier predictions of 1.9%), and to trend around $600 in 2020.

At the end of 2018, the manufacturing in Sweden slowed sharply due to declining production and hiring, falling to the lowest level since February 2016. The purchasing managers’ index was 55.4 in November, and it fell to 52 in December, and this was the lowest level in last three years. This was the first sign of the impact of last month’s interest rate increase. This can cause some concern throughout the European Union given the fact that the Swedish PMI is frequently seen as a leading indicator for a slowdown in European manufacturing in general.

The opposition budget adopted

The opposition’s tax-cutting budget was adopted in December when the Parliament rejected the caretaker government’s budget, thus deepening the political crisis in the country.

Stefan Löfven, the acting Prime Minister, had already suffered another loss when attempting to win the parliament’s approval to form a government. Löfven had presented a politically neutral and transitional budget which was rejected, and instead the opposition budget proposed by the Alliance parties Moderates and Christian Democrats, backed by the far-right Sweden Democrats was adopted.

Even though the spending items and taxes in this budget were mostly unchanged, the new government won’t be able to change the budget when it takes power. It will be obligated to respect the $2.2 billion (20 billion kronor) in income tax cuts envisioned by the 2019 budget which was passed (10 billion kronor for income tax cuts, 4 billion for raising the threshold for state income tax, and 5.2 billion for pension tax reductions). The spring budget can undergo some changes, and parliament can be asked for some adjustments as early as January, but the taxes can be changed only once a year.

This budget contains 17 billion kroner more in spending, including additional outlays on defense and police. The two parties which envisioned it also want to remove housing construction subsidies, increase childcare and cleaning tax subsidies, reduce the “over indexation” of the tax on petrol and remove the aviation tax which was introduced by the previous government.

The new year in Sweden will also bring some changes to existing laws, and the introduction of new ones, which will affect the everyday lives of Swedes, so in order to avoid repeat elections taking place, the new government needs to be formed immediately to start tackling the problems the country is facing from the very beginning of the year.

All of this has happened before, and will happen again – every single experienced crypto-enthusiast out there probably thinks of this quote from either Peter Par or Battlestar Galactica each time a sudden drop in the price of a top cryptocurrency happens, just like it did on December 6th. On said date, around 6 AM UTC, a yet unexplained blip occurred, plunging the price of Ethereum from $100 to $13 for just a few seconds before arbitrage makers corrected the price back.

Although this was not a global event, but instead only an anomaly that took place on Coinbase Pro and affected the ETH/USDC trading pair, it still caused quite a stir and meant enormous immediate profits of up to 770% for those lucky enough or smart enough having placed low orders.

The Occam’s Razor sentencing

Later that evening, Coinbase addressed the issue on Twitter, stating that “over the past 24 hours, all Coinbase platforms had operated as planned”. No further statements have been issued since and the matter is currently considered resolved.

The simplest solution tends to be the correct one – although not an irrefutable logical doctrine, this principle can be helpful in most non-scientific occasions, and regarding this incident, it offers a straightforward explanation. Apparently, some poor soul probably forgot to add a zero in the process of making a sell order, and the market responded swiftly, without hesitation and without mercy.

This, however, is not the first time such weird events took place – the previous occurrence was way more extreme.

In June of 2017, Ethereum was trading at around $300, when suddenly a flash-crash happened, dropping the price to $0.1 – you saw it right, TEN cents! As it so happens, there were those smart enough to place low orders, even at $2 and $1, but a guy that hit a real jackpot bought 3809 ETH for $380. Three and a half minutes later, the price went back to $300, making this person 299,899.99% richer or, effectively, a millionaire. This incident was also limited to GDAX, run by Coinbase.

Is $13 or $0.1 perhaps too much to pay for ETH?

So far we’ve established that the human factor was the most probable cause for both flash-crashes. But as we mourn with those who mourn, the gargantuan improbability that the exact same thing would happen in the exact same place, twice in 18 months, still leaves room for one dreadful doubt: could it be that something is seriously wrong at the core of the Ethereum network? The answer is: it might likely be so, but it’s not what you think.

While neither Ethereum Foundation nor Coinbase has confirmed any „suspicious“ actions which might address stability and vulnerability of the Ethereum blockchain, a completely different type of problem might lead to an absurd situation in the nearby future: ETH might succeed beyond expectations, while the asset itself – the coin – might become worthless.

Let’s say you want to create a DApp. Every transaction on this DApp pays for gas in ETH. The „gas“ is just a different name for fees on the Ethereum network: if you imagine the network as a shared car, depending on how much you want to use it, you pay for gas more or less. However, there is a catch: an Ethereum contract does not specifically require gas! This means that, instead of paying for gas in ETH, which means dependency and risks that come with it, you could use your own DApp’s ERC-20 token, making it functionally independent of ETH. The community refers to this as „economic abstraction.“

While the economic abstraction is a logical upgrade to the ETH essentials, there are many counter-arguments with some valid points. Without going into too many technical details, the two things that most investors would probably be interested in are the price of a token and the wallet software.

First of all, the current version of the software does not nearly support the full implementation of abstraction. It eventually might but at the cost of increased complexity for both portions of the code dealing with contacts and transactions, as well as the wallet software, which would have to manage balances for both ETH and the DApp tokens.

The market price of a token, or ETH for that matter, would be much more difficult to determine, as the software would have to take into consideration many different aspects of an ecosystem to create a unified perspective and calculate the correct price. This is extremely difficult to implement, yet it is required as miners need projections to calculate their profits against mining difficulty, hardware and electricity costs.

Closing thoughts of wisdom

Suffice it to say, placing very low buy orders is probably a prudent thing to do. Of course, it is highly improbable that you’ll ever get ETH or BTC for $0.1 again, not to mention the questionable morality of getting rich off someone’s tragic mistake, but one of the basic principles of crypto trading is: if you won’t, someone else will. So, it might as well be you.

While extremely low buy orders are probably never going to get filled, setting the price reasonably low increases your chances dramatically. This, however, requires some special care, as crypto markets are still volatile and such orders might lead to situations in which your reasonably low orders abruptly become much higher than the current market price, decimating your portfolio. So, if you’re into crypto, always have a smartphone ready by your side and install one of the hundreds of apps which sound an alarm when things start going south.

The good news: the same rule can be applied to any trading pair, just letting you know, in case you have your own fears about ETH. The bad news, though: it is the same as rolling an apeirogonal prism, as this could happen to just about any trading pair, at any time, on any exchange.

János Áder, the Hungarian President, signed the controversial new bill on labor law, despite thousands of Hungarians organizing a massive protest in Budapest against it. This new reform allows employers to seek up to 400 hours of overtime work annually. The draft of this law on labor was submitted to parliament earlier last week, which caused the most massive protest that Hungary had seen in more than a year, with people calling this law the “slave law.”

The far-right Hungarian Prime Minister, Viktor Orbán, dismissed the opposition to this reform as “hysterical shouting,” even though there were more than 5,000 demonstrators on the streets for days. Orbán re-entered the office in 2010 and has made a number of moves since then causing concern among both Hungary’s EU allies and people in Hungary itself, but none have brought about such anger as the latest changes to the labor law.

Why is the new labor law so controversial?

The latest changes to the Hungarian labor law, passed by the governing majority in Hungarian Parliament, nearly double the amount of time employees can work overtime – from 250 to 400 – and at the same time give the companies the opportunity to delay the payment for three years, instead of one.

In some instances, the new law also allows the companies to avoid paying extra for overtime work, by compensating some employees at their regular rate per hour.

The President, however, stated that the new provisions were similar to other regulations about overtime work in other members of the European Union – the employees are required to give written consent for overtime work, and they would not be penalized for refusing to work extra hours. Additionally, a government representative stated that overtime work would be optional for all employees.

However, experts believe that outside Budapest workers are at the mercy of their employers since there are few alternative forms of employment, which means that they are not in a position to refuse to work overtime, which puts them at a significant disadvantage.

Moreover, according to an analysis by the Organization for Economic Cooperation, the people in Hungary already work longer hours than the majority of their western neighbors. In Austria, employees worked an average of 1,613 hours in 2016, whereas Hungarian employees spent 1,740 hours working and receiving half the pay, on average.

A new opposition

Balázs Bárány, a member of the left-winged party MSZP (The Hungarian Socialist Party), said that these protests helped to create of a new opposition, as they managed to unite rival political fractions for the first time. Some of those who participated included the members of Jobbik, a radical right movement rebranding itself as a “peoples’” party, the most prominent liberal and left opposition parties, trade unions and supporters of Soros’ Budapest University.

Those who opposed the new labor law had been trying to stop its passage by sounding sirens and blowing whistles in Parliament meetings a few weeks ago. This initial protest set off the protests on the streets as well, with several thousand people marching from the Parliament building to the presidential palace in freezing temperatures, and smaller rallies happening throughout the country in other cities. Protesters blocked two major road bridges flanked by the police.

Why the new labor law?

The government believes that these longer hours are necessary because Hungary is running out of workers. There are estimated 350,000 Hungarians (more than 5% of Hungary’s working-age population), who are currently working in other countries of the EU. Due to such a high number of emigrants, and not an equally high number of immigrants, the country is faced with a great labor shortage.

According to research by the Boston Consulting Group, more than half of young Hungarians would rather work abroad than in their own country. There is even a projection by the United Nations according to which there would be 15% fewer people in 2050 in Hungary than there are today.

The low number of immigrants is mainly due to Orbán’s policy of discouraging immigration by a number of xenophobic campaigns and physical barriers on the borders themselves. These actions have increased his popularity in Hungary, but at the same time created an impression that emigrating to Hungary might not be the best idea.

Some experts also believe that the government made a grave mistake by placing about 200,000 unemployed people on workfare programs run by the government when it should have encouraged them to seek jobs in the private sector. This stopped a significant number of potential workers to enter the primary job market.

According to the latest United Nations estimates, Hungary has a population of around 9,673,000. The unemployment rate was 3.7% in October 2018, and it is expected to be 4.2% by the end of this quarter, slightly higher in one year (4.5%), and to trend around 5% in 2020.

Hungary also has a relatively low birthrate. On average, a Hungarian woman gives birth to 1.45 children, which is not enough to maintain the population at the current level.

What’s to come

In 2014, the Hungarian government caved under pressure of massive protests over a proposed tax on Internet usage with Orbán canceling the tax. However, this time around it might not be so easy. The internet tax from 2014 was one way to get more money, but this new labor law aims at fixing the labor shortage so that major foreign investments could potentially happen.

One thing that Hungary can do is loosen its anti-immigration policy to deal with its aging population and a shortage of young workers. However, Orbán has been very vocal about his views on immigrants with his border barriers, and the country will obviously have to find another way to deal with this labor law crisis.

Bruno Le Maire, French Minister of Finance, said on December 4th, 2018, that France will introduce a tax on digital giants on the national level from 2019 even if the European Union members fail to reach an agreement on the issue.

Digital tax for tech giants

In March 2018, The European Commission revealed a proposal to tax firms such as Google, Amazon, Apple, and Facebook on their revenue, which could reportedly bring €5 billion per year.

According to this proposal, the profits of these international companies working in the digital space would be taxed inside the borders of the EU countries. They currently pay 9.5% effective tax rate in the EU, while traditional businesses pay 23.2%.

This announcement initially received the support of five biggest economies in Europe – France, Germany, Italy, Spain, and the United Kingdom. However, France emerged as the leading proponent of this proposal, while the other countries seemed to gradually back away.

Germany continued to show support for France but advised caution because, just like other EU countries, Germany feared that the introduction of this digital tax could cause the USA to retaliate, and this would affect the German automobile industry. This meant that it would be very difficult to get the unanimous approval from all the members of the EU for the tax proposal (as it is required).

According to some sources, the USA would accept a temporary levy on its digital companies under only one condition – that the EU commits to overhauling global corporate tax rules. This meant that companies would not be taxed based on where they book profits, but on where they make money. Germany worried that since its industry is primarily export-based, its business abroad would be subjected to new taxes, and other countries would start issuing new levies on their cars, as well.

Germany’s finance minister, Olaf Scholtz said that the policy on digital tax should be coordinated internationally, and experts agreed that this meant Germany would avoid an open division with Paris, but would not lobby on its behalf actively.

The opposition

However, a group of countries strongly opposing the introduction to digital tax was formed, led by Ireland, the Czech Republic, Sweden and Finland in support of digital companies claiming that they would be taxed twice on the same revenue. Ireland led this group firmly opposing the taxation as it feared that trade tensions with the USA might arise and the European competitiveness might be damaged.

Current corporate tax in Irelands is very low (12.5%), and this country is the host to a great number of tech firms, such as LinkedIn, Adobe, Airbnb, Google, and Facebook.

On December 4th, France and Germany presented a revised plan for the proposed digital tax reforms, abandoning plans for imposing a wide-range digital tax on digital companies, in favor of a levy on advertising sales, which is likely to exclude Apple and Amazon from its scope.

Both German and French Ministers of Finance agreed on this proposal, and the initiative is set to come in force in 2021 if an agreement is reached on an internationally implemented digital tax regime. The other finance ministers should reach a consensus before March 2019.

Many member states, including Spain, Slovakia, and Italy, criticized this plan for not being ambitious enough, and the UK and Spain representatives said that their countries would move forward with their plans on digital taxes while the talks on a broader, international level, are stalled.

The “Yellow Vests” protest

At the same time, France is faced with massive protests lasting several weeks against the government’s decision to increase taxes on fuel to move away from fossil fuels.

Last week, the government canceled a planned tax rise on petrol and diesel in an effort to defuse the situation after four weeks of protests which turned radical.

The movement of “gilets jaunes” (“yellow vests”) first started as an online protest against the rise of fuel prices, but it quickly spread to a broader anti-Macron rebellion, with demonstrators blocking major French roads and violent protests occurring in some of Paris’ elite arrondissements.

The protest started as the French people believed that the potential increase of tax on diesel which is commonly used by French motorists, and the carbon tax, would primarily affect those who commute every day.

According to transport experts, this hike in fuel prices happened due to a rise in crude oil prices that this year has seen. In October 2018, a little more than €80 was wanted per barrel, and due to euro being weak in regards to the dollar, the motorists were the ones most affected by this increase.

Additionally, there was an increase in the carbon tax, which was introduced in 2014, in an effort to limit greenhouse gas emissions. This tax affects a part of the domestic consumption taxes, and the government came forward with a plan to increase it even more next year (from current €39 to €47.5).

If that was not enough, the adjustment of the tax on diesel and the tax on petrol made diesel prices increase, meaning that the tax on diesel went up by 7.6 cents per liter, and the petrol tax went up by 3.9 cents per liter.

The government officials said that the carbon tax needed to be increased so that the country could continue on its path of fighting the climate change, and the alignment of diesel and petrol taxes had to happen because researches pointed out that diesel was just as much polluting as petrol. The additional revenues that the taxes would bring were supposed to be used for eco-friendly projects.

The year 2018 is at its end. For the cryptocurrency market, it is the time of trouble, such as never has been since … well, the last time of trouble. Long-time Bitcoin and other crypto adopters are really used to this kind of situation; those with more experience deal with it by holding their assets, eventually buying some more each time a dip occurs, and making nice profits during the next bull run.

This time, however, the situation is somewhat different. It’s not JUST about the price of Bitcoin, or mining profitability, of those forks upon forks which cause hash wars. Yes, people are losing money or, at the very least, not making substantial profits, but there is much more to be lost.

2018 is the year of … mining software?!

Despite the 84% decline so far, 2018 is still the year of crypto mining software, says Kaspersky Labs. Their security bulletin released in November this year states that crypto mining malware is still being heavily distributed by botnets, and even accelerating again after a small decline. So why, you may wonder, would anyone distribute software which generates so little profit? The answer is a really simple one, and the plan ingenious.

Of course, the current disaster may be yet another blip instead of a bubble burst – we simply don’t know. Each previous downfall, except a 3-day anomaly back in August 2012, was followed by a major bull run, with a few hick-ups on the way, and a huge price increase. In case this happens again, to what new highs could Bitcoin jump from its current ATH of $19,891? The answer is the same: we simply don’t know.

When there is no viable way to predict the turn of events, making an investment in something is no different than simply rolling a dice. In the case of miners, using kilowatts to even megawatts of power to generate only a fraction of the total cost of the operation means being forced to shut down business. Or could anything ever be simply black and white in this shady business?

What if someone else “provided” resources?

To make it simple: if you use someone else’s hardware and someone else’s electricity, and take all the crypto for yourself, that’s even better than having a private fusion reactor. It’s a dream come true for every legitimate businessman out there – doing business in which you invest nothing, yet reap profits. Currently, these profits may not seem all that significant, but if BTC made another huge leap in a couple of years, making thousands of computers mine a couple of Bitcoins for you could easily make you a millionaire in, say, 2025.

Some evil people with good programming skills came up with the plan to do just that, and possibly more.

What’s even more interesting is that more users were infected in September than in January making the threat still current. The collapse of 2018 seems to have no negative impact on the infection rate.

Wait, there’s more?

As if things weren’t bad enough already, some people have come up with an even more sinister plan: to pack various spyware and ransomware components or keyloggers inside the mining software, hoping unsuspecting employees would infect servers of corporations or banks. This is social engineering in its purest form: using the acquisitive nature of the people to acquire even more yourself.

Although infecting a server of a large corporation while making it mine crypto for you would probably be a dream come true for botnet operators, their primary penetration vectors are usually small to mid-sized corporations which have a loose security policy. An employee thinks much like a botnet operator, but on a much smaller scale: it can’t possibly hurt to use an idle CPU or GPU at work to make a little “side profit.” At the same time, there is a chance that an inexperienced sysadmin does not see the real threat mining software poses, and only takes low profits it currently generates into consideration, thus enforcing a loose security policy which allows the software to be installed and run.

What happens next is pretty much what any other malware does, aside from momentarily starting to generate profits for the botnet operator: it tries to spread and infect more machines from within the private network. This is an easy part of the task, as computers inside the private network usually trust one another by default. As the number of miners grows, the malware starts logging passwords, stealing emails, application data, and databases and sending them back to the operator.

Finally, the ransomware component kicks in, demanding a crypto transfer and threatening with data disclosure in case the transfer doesn’t take place, all the while still mining and hogging the CPU and GPU. And since the BTC price is currently low, the demand could go as high as 5-10 BTC instead of “just” one back in February of 2018.

Now multiply this by thousands, because that’s how many networks botnets are able to attack at any given moment. The likelihood of success may be low, but the sheer number of attacks makes even a 1% success rate a huge number, which is translated into huge profits. To make things awkwardly funny, these misdeeds are actually a favor to the Bitcoin blockchain and community, because they artificially keep the number of miners at a relatively high level, making transactions cheaper and allowing the Bitcoin to survive.

What can be done about this?

Not much wisdom here: apply a strict security policy. Do not allow users to install software themselves – yes that means not even simple browser add-ons. Configure the firewall to allow communication only on necessary ports and close all the others. Thoroughly scan all the incoming email traffic. Just your usual sysadmin stuff, and you should be safe. Oh yes, one more thing – update the firmware on all your active network equipment, because if it owns a CPU, it can be turned into a miner.

The news is not good for Asian stock markets these days. Most major indexes plunged from 1 to 2 percent owing to escalating frictions between two of the world’s leading economies, China and the USA, and increasing concerns over growth.

Just hours after Chinese economic data was released over the weekend, the rapid sales of global equities in Asia happened, signaling an even deeper weakening of not only domestic but also international demand in November. Furthermore, the friction increased after the arrest of Meng Wanzhou, the chief financial officer of Huawei, who was apprehended in Canada for alleged US sanctions braking on Iran and is faced with extradition to the US. Apart from this diplomatic issue, the ongoing trading war between the USA and China has had an impact on many China’s neighbors, as well.

One devaluation after another

However, this tension between the USA and China hanging over the entire region can be a blessing in disguise for Pakistan, the country struggling with a massive economic crisis.

Pakistan experienced the sixth currency devaluation by the central bank since December last year. The rupee devalued by the central bank in December and March by 5% respectively, 4% in June, and then 15% In July due to parliamentary elections. The most recent devaluation happened when the value of Pakistani rupee fell sharply to 142 per dollar from 133.3 in just one day, or close to almost 6%. Since the first devaluation happening in December 2017, the rupee has lost around 35%, as the officials tried to establish control over the soaring current deficit threatening to initiate a balance of payment crisis.

Additionally, the Pakistan Stock Exchange 100 index fell by 700 points (from the current 40,000 points) in the early day trading.

This fall occurred at a time of financial crisis in a country that is considering a package of assistance from the IMF worth $8 billion. The IMF and Pakistan failed to come to an agreement on this bailout package when the IMF delegation visited Islamabad in November, so Pakistani officials set the middle of January as the target date for obtaining this second assistance package (the IMF loaned $6.7 billion to Pakistan in 2013 for the first time).

Economic experts say that the State Bank of Pakistan’s reserves are below critical level, which also causes the currency to be under enormous pressure. The country is currently faced with great economic challenges, due to high current-account and budget deficits, diminishing growth, and low foreign exchange reserves. The State Bank of Pakistan says that the latest plunge is due to the current account dynamics and a gap in demand and supply in the foreign exchange market, and rising oil prices, which have increased the cost of imported oil and put pressure on the country’s large trade deficit.

When it comes to the economic situation in Pakistan, things are far from positive. The country’s GDP was worth almost $305 billion in 2017, and it is expected to go to $315 billion by the end of this quarter and rise to $360 billion in 2020. In this fiscal year, the economy registered a 13-year high GDP growth rate of 5.8%, but the economy shrunk in relation to the dollar due to the rupee devaluation. Even though the GDP rate increased, the country of Pakistan and its developing economy need growth of at least 7% to be able to keep up with the increasing unemployment and create new jobs.

The Pakistani unemployment rate was the same in 2016 and 2017 – 5.9%, and by the end of this quarter, it is expected to be 6%. When it comes to long-term forecasts, it is projected to trend around 5.7% in 2020.

According to the latest UN estimates, Pakistan is the fifth most populated country in the world and has a population of almost 202,498,000, which is the equivalent to 2.63% of the total world population.

China to the rescue

Some experts believe that Pakistan can benefit from the ongoing trade war between China and the USA and their battle on trade tariffs, and consequently boost the economy. Razaq Dawood, the advisor to the Pakistani PM, said that these tensions were good for Pakistan because they could put Islamabad in a better negotiating position.
China and the USA have been engaged in this trade war and imposing tariffs on one another over the last few months, and Pakistan has been trying to deepen ties with China since the relations with the United States have been on tenterhooks. The Pakistani Prime Minister, Imran Khan, visited China in November and had talks with Chinese officials related to improving trade partnership between the two countries. Islamabad was hoping to negotiate increasing the imports from Pakistan to China to at least $2 billion.

Beijing wants to invest $60 billion in Pakistan for infrastructure for the “Belt and Road Initiative.” This project is described as the ”21st century Maritime Silk Road,” and it is a strategy which was adopted by the Chinese government involving the development of infrastructure and investments in countries in Asia, Africa, and Europe. China-Pakistan Economic Corridor (CPEC) is a number of “Belt and Road Initiative” infrastructure projects which are underway throughout Pakistan, with investments in energy, transportation, and maritime structure.

The CPEC encompasses an enormous network of railways and highways which are going to be built throughout Pakistan. The government estimates that the country’s dilapidated transportation network, which causes a lot of inefficiencies, brings a loss of almost 4% of Pakistan’s annual GDP. This project will, among other things, connect seaports in Karachi and Gwadar with northern Pakistan, and points which are further north in Central Asia and Western China.

The CPEC is the greatest investment that the country has ever attracted and it is considered to be vital for Pakistani economic growth.

For the first time in history, the people of Georgia elected a woman president. Salome Zurabishvili, a former French diplomat, was elected the first woman president of Georgia and will be taking office on December 16th,2018 for the next six years.

Zurabishvili won with 59.6% of the ballot or 1,147,701 votes during the second round of elections held on November 28th, 2018, as no candidate received the support of 50% or more voters in the first round. These presidential elections were the last ones when the president was chosen by voting. The next president of Georgia will be elected by a college of electors consisting of 300 members who are lawmakers and regional officials.

The first woman to become the president of Georgia was backed by the ruling party, Georgian Dream, founded by the richest man in the country – a billionaire banker, Bidzina Ivanishvili. Zurabishvili is expected to avoid further antagonization of Moscow all the while trying to balance pro-Western aspirations.

From diplomacy to presidency

Salome Zurabishvili, 66, was born in Paris because her parents left Georgia as political emigrants in 1921 after it was annexed by Soviet forces. Her father was the chairman of the Georgian Diaspora in Paris. He was the grandson of an eminent Georgian social democrat and a member of Georgian liberal intelligentsia.

Zurabishvili joined the French foreign service and took up the career of a diplomat having worked in Rome, the UN, Washington, Brussels, etc. She was then appointed French ambassador to Georgia in 2003.

From 2004 to 2005 she was appointed the Minister of Foreign Affairs in the new government of Mikhail Saakashvili, the president of Georgia. She was the principal negotiator in the agreement about the withdrawal of Russian military bases from Georgia’s territory in 2005. After many disputes with the Parliament members, Prime Minister Noghaideli dismissed her from the government and she decided to stay in Georgia, and go into politics.

In 2006, Zurabishvili founded a new political party, Georgia’s Way, which did not receive the support of the public in the elections that year. One of the reasons why she was not accepted by some Georgians is the fact that she was born in France. Her party joined the United Opposition alliance in October 2007, which nominated her as a prospective PM in case their candidate won the presidential elections in January 2008.

In 2010 she left Georgia’s Way and publicly endorsed Georgian Dream before the 2013 presidential elections. She was denied registration as a presidential candidate for these elections because she had dual Georgian-French citizenship. This is the reasons she had to renounce her French citizenship in order to register this year.

In the 2018 elections, she was running officially as an independent candidate, but Georgian Dream was heavily supporting her campaign. Her principal opponent, Grigol Vashadze, was supported by the former President who appointed Zurabishvili his Minister of Foreign Affairs – Saakashvili.

These elections are seen by some experts as an indicator of what’s in store for the parliamentary elections in 2020. Georgia wants to become a member of both NATO and the European Union, but these ambitions are thwarted by the presence of Russian troops in Georgia’s breakaway regions of South Ossetia and Abkhazia.
One thing is certain – Ms. Zurabishvili is faced with many challenges in the country with plenty of issues related to the economy.

Georgia is situated at the border of Eastern Europe and Western Asia in the Caucasus region of Eurasia. Its population is estimated to be 3.9 million at the end of 2018, according to the latest UN estimates. The capital and the largest city – Tbilisi – has a population of about 1.5 million people. More than 1.5 million Georgians left the country after the Soviet Union dissolution, and it is estimated that there are more than one million Georgians living in Russia today.

The unemployment rate in Georgia was just below 14% in the previous year when it was the lowest since 2004. This is somewhat below the average unemployment rate for the past 20 years, which averaged at 14.8%. The unemployment rate is expected to be around 13.8% by the end of this quarter, and to continue the trend and drop to 13.5% in 2020.

During the last year, the Georgian GDP was worth $15.1 billion, and it represents 0.02% of the world economy. The GDP is forecasted to be $15.9 billion by the end of this quarter and to increase to around $21 billion in 2020. The economy advanced 5.5% year on year in Q2 of 2018 due to gains in wholesale and retail trade, transport, financial intermediation, real estate activities, mining and quarrying, and manufacturing.

Expectations by the public

Before the presidential elections, the majority of citizens (69%) participating in the poll by the National Democratic Institute expressed their dissatisfaction with the direction the country was heading primarily when it came to the economy – prices, employment, and poverty. Only 3% felt that the economy was “good,” and as many as 59% said that they had not worked a single day during the last month.

Georgians who participated in this poll believed that there was an improvement when it came to the freedom of speech, rights of women and minorities, and affordable healthcare, but they would also like to see pensions, educations, healthcare and social assistance as the government’s priority in spending. Even though there were claims that the economy had grown in recent times, the majority of Georgians did not see any benefits of this. The people wanted this growth to be translated into specific improvements such as higher employment and greater economic outcomes, as well as reforms when it came to education and healthcare.

The new President-elect, Salome Zurabishvili, is expected to address all these issues now that the people have chosen her to lead the country, and it remains to be seen what she is going to prioritize once she formally takes office in a few days. Some experts believe that the presidency is, in essence, a ceremonial function and that the main political powers will still be in the hands of Mamuka Bakhtadze, the Prime Minister.

Belgium has one of the most advanced free-market economies in Europe, which is based on both service and industrial sectors. It relies significantly on international trade and the majority of its economic sectors are oriented towards exporting products. Belgian exports equal almost two-thirds of its GNP. When it comes to a per capita basis, Belgium exports are five times as much as Japan’s and two times as much as Germany’s. The country’s economy is currently strongly affected by the events surrounding Brexit, and the ongoing migrant crisis.

The statistics

According to the latest United Nations Estimates, Belgium has a population of almost 11,526,000, which is the equivalent to 0.15% of the entire world population. As much as 96.2% of the population lives in urban areas.

The unemployment rate in Belgium was at 6.2% in October 2018, which was a slight decrease from 6.3% in September. On average, the Belgian unemployment rate has been 8.31%, and it is forecasted to be 6% by the end of this quarter, go to 6.12% in a year, and trend around 6.5% in 2020.

The Belgian GDP was worth $492.68 billion in the previous year, and it is expected to grow to $495 billion by the end of this quarter. Consequently, the GDP rate is forecasted to be 0.5% by the end of this quarter, and to stand at the same value in 12 months’ time. When it comes to long-term forecasts, the Belgian GDP growth rate is also expected to trend around 0.5% in 2020.

Brexit’s effect on the Belgian economy

A start-up founder and the President of the Microsoft Innovation Center’s Executive Committee in Brussels, Juan Bossicard has recently said that Brexit has helped create 3,500 jobs in Brussels when they were moved to Belgium from the UK, owing to the prospect of Brexit.

He said that thousands of staff had been moved to Brussels from London, as their tech companies had moved there as well, which was a significant boost to the country’s start-up culture and the economy. Even more jobs are expected to come to the country once Brexit officially happens.

Bossicard sees Brexit as an enormous opportunity for Belgium, especially after March 29th when Britain officially leaves the European Union. Between 3,500 and 12,000 jobs in financial-services are expected to move from Britain to the EU in the short term, and some companies have already announced that they are going to relocate their offices and jobs to Brussels. Lloyd’s of London will be moving 100 jobs from London to Brussels, and Moneygram will be moving its EU headquarters there as well.

The predictions that there would be hundreds of thousands of jobs leaving the UK on the day Britain left the EU were terrifying, but fortunately the estimates have since then been downgraded to little more-easily acceptable tens of thousands. Several companies such as Bank of America, Unilever, and HSBC have already moved their headquarters to Dublin, Rotterdam, and Paris, which also means that a few thousands of jobs have moved out of the UK following the Brexit referendum.

In order to attract businesses in financial services and insurance currently based in the UK and requiring an EU base of operations after Brexit, the Brussels Capital Region has recently launched a campaign with this goal.

The Brussels Capital Region wants to bring UK-based businesses to Brussels since it feels that the city offers a very lively financial and fintech environment, a variety of brokerage firms and banks, and credit institutions and leasing companies. One of Brussel’s key advantages is the fact that it is situated only two hours from London on the Eurostar train, and it is excellently connected to both Europe and the rest of the world.

To offer additional encouragement, the Brussels Business Support Agency is at the disposal not only for solutions and advice for start-ups which are free of charge but also for services with a focus on finance, internalization, strategy, and clustering.

When it comes to a major downside that Brexit can bring to the Belgian economy, we have to mention the fact that the United Kingdom is one of Belgium’s top five export partners. The most important Belgian exports are textiles (4.2%), chemicals (20%), food and beverages, vehicles (14.5%), the machine industries and synthetic materials.

Flanders will be affected the most, as it produces 80% of the country’s exports that go to the UK. Once Britain leaves the EU, it remains to be seen what’s in store for one of its biggest trading allies.

The migrant crisis

Even though the current migration crisis is not considered to be economically generated, it still has a significant effect on the country’s economy. The migrants coming from the Middle East to Belgium mainly see it as the best place from which they can slip into Britain and do not intend to make Belgium their permanent residence, but they are faced with many legal complications. They are required to register and seek asylum where they first land, and they refuse to do so hoping to move onward. Belgium has toughened its policy on migrants which has resulted in a significant drop of official asylum seekers. The official number of those seeking asylum in 2017 in Belgium was 19,688, which was significantly fewer than 44,760 in the previous year.

In an attempt to tackle the situation with migrants, Belgian authorities issued a statement saying that they plan to begin a social media campaign with the purpose of discouraging potential migrants from coming to Belgium. This campaign would point out the dangers of illegal immigration, but it has already been met with a lot of criticism.

Those who disagree with this campaign fear that it would discourage genuine asylum-seekers who need legal help and protection in Belgium from coming into the country.