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By Tom Cassauwers
Sam Bankman-Fried was the darling of the cryptocurrency world, then he became its black sheep. In November of this year, the cryptocurrency company he founded, Futures Exchange (known widely as FTX), collapsed in a spectacular way.
The exchange, a digital platform where users can buy and sell cryptocurrencies, filed for bankruptcy after allegedly mishandling customer funds. Bankman-Fried had previously been well-liked by investors and media, which applauded his generous donations to charity and for calling out unethical practices in the industry. The bankruptcy destroyed that image. The collapse also came on the heels of a massive crash of cryptocurrency prices, and the failure of several big players in the industry.
Behind this crash and claims of fraud, companies remain surprisingly optimistic about the potential of blockchain.
One of those is Motoblockchain, a small start-up from Malaga, Spain. They created a system where all the relevant information about a motorcycle (its parts, usage and repairs) can be stored on a blockchain. Everyone, from mechanics to riders wanting to buy a second-hand bike, can access the records in this system to verify the origin and history of a motorcycle.
‘Having a trustworthy way to show the provenance of a product, or its parts, is really important in a lot of industries,’ said João Fernandes, analyst at the Portuguese investment fund Bright Pixel Capital, which supported Motoblockchain through the EU-funded project BlockStart. ‘It’s also something blockchain excels at. It gives an extra layer of credibility to information in an ecosystem.’
This trust is one of the many advantages that blockchain technology might offer the European economy. It is keeping start-ups like Motoblockchain hopeful about blockchain despite the spectacular boom and bust cycles of crypto. Stimulating their growth, and convincing European companies to use the technology, might be crucial for the long-term success of blockchain.
‘The impact of blockchain will only be fully fulfilled if we convince SMEs to use it,’ said Fernandes. ‘Over 90% of the economy is composed of these businesses. And plenty of those companies can really benefit from using blockchain-based technologies.’
No intermediary
Blockchain allows cryptocurrencies to digitally register transactions without one party controlling the currency. In contrast to regular databases, which are generally controlled by one party, it’s decentralised.
What’s most important is that blockchain technology (distributed ledgers) can be used to record anything of value without an intermediary – not only financial transactions.
This is a concept with applications far beyond cryptocurrency. For example, it is useful to track the history of a motorcycle, as Motoblockchain does. The motorcycle might pass through dozens of inspections, visits to the mechanic and sales throughout its lifetime. A range of actors, such as users, motorcycle companies and repair shops, need to pass along this information. Which is hard using centralised systems. A motorcycle company might not want to use a centralised tracking system owned by one of its competing motorcycle manufacturers. A decentralised, neutral blockchain offers an alternative here.
‘Blockchain shines when there are multiple different stakeholders that need to access the same system and share information in a decentralised way,’ said Robert Richter who coordinated the EU-funded Blockpool project at the Frankfurt School of Finance & Management. ‘It creates a system where you don’t need an intermediary.’
In this way blockchain might underlie some of the software regular people rely on in the future, without knowing it.
‘Look at the internet,’ said Richter. ‘Today everyone uses it without understanding how it works. But in the past, it was something new that had to be developed. The same thing is happening now with blockchain.’
For that to happen, start-ups will need to develop blockchain applications that make the complex technology accessible for regular companies, like SMEs. A problem that BlockStart and Blockpool worked on for several years. Both projects set up programmes that selected interesting blockchain start-ups, gave them funding and mentoring, and linked them to possible clients. On top of that, they educated existing companies about the potential of blockchain.
‘We found that one of the key hindering effects to the success of blockchain is that business executives don’t have enough knowledge about the potential of the technology,’ said Richter. ‘Which is why educating SMEs, and other companies, is so important.’
BlockStart supported 60 start-ups, linked them up with 67 SMEs, and also gave €20 000 to the start-up finalists. Blockpool did something similar, 25 start-ups went through their programme, during which they each received up to €30 000 in equity-free investment.
One of the SME’s that participated in BlockStart is AlBicchiere, an Italian company that offers a “Nespresso for wine” device to customers. The company wanted to be able to chart the journey of their wine, from the grape grower to the customer, and a blockchain system was built by Datarella, one of BlockStart’s start-ups, for this purpose.
Crypto winter
Surviving crypto winter won’t be easy. Most of these start-ups now need to deal with a technology market that is in upheaval. Even regular technology companies are in trouble, with large players such as Meta, Amazon and Spotify announcing mass layoffs. This might put a damper on the growth of the start-ups supported by BlockStart and Blockpool.
‘The current crypto winter will, I believe, delay the implementation of blockchain,’ said Fernandes. ‘Some projects will have a tougher time raising investment, and finding customers.’
But for the wider blockchain and cryptocurrency space, this crash might be a blessing in disguise, according to Richter and Fernandes. For instance, it could weed out the weaker companies, in favour of the ones with the biggest potential.
‘There are some blockchain projects and cryptocurrencies out there that don’t really serve a purpose,’ said Richter. ‘That’s always the first question I ask: does it have a use-case?’
Fernandes agrees. ‘The blockchain space was too crowded before. Now, only the best projects will survive. The survivors of this winter will be the first movers of the future. In five to 10 years they will become the winners.’
Research in this article was funded by the EU. This article was originally published in Horizon, the EU Research and Innovation Magazine.
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2023 shapes as a very interesting year for the real estate markets of the USA and the rest of the world. We are faced with very unique economic conditions where inflation is quite high and many central banks are working to reduce inflation through the increase of interest rates.
But this is having a negative impact on low and middle-income people’s ability to enter the housing market. This article will explore a variety of issues that are influencing the real estate market that will play a significant role in the ultimate real estate trends throughout 2023.
Economic conditions have a significant impact on real estate market trends. Specifically, things such as levels of employment, trends in wage growth, and the confidence of consumers are all very influential.
The impact of employment on the real estate market is easy to understand as people that are employed and making a good amount of money with a reliable income track record are going to be eligible to buy a property and thus likely to be looking.
Whereas if unemployment reaches very high levels, people that would have been looking to buy a home will no longer be able to because they will not be able to meet lending requirements.
Trends in wages will also be very influential in the current environment, where inflation is significant, and the cost of living is increasing at a rapid rate. The cost of living is incorporated into a lender’s assessment of your ability to service a loan so if the wages you make are not keeping up with the increase in the cost of living, this could decrease your potential to borrow, making it a lot harder to get into the market, which could lead to a downtrend in the real estate state market.
Combining both of those issues is consumer confidence. If the general public is having fears about the nature of economic conditions throughout the next 12 to 24 months, and if they are suspecting there may be a downtrend in the real estate market, then potential buyers may choose to strategically hold off from purchasing in the event that they do not purchase something that goes down in value.
The supply and demand of housing also have a very big impact on the trends of real estate markets. The theory is that if there are more houses available than there are people that are wanting to buy a house, then there is too much supply, and thus house sellers will keep lowering the price of their property in order to try and attract a buyer.
When this happens at scale, this leads to a downtrend in the real estate market. Whereas when there are more people that want to buy a house, than there are houses available this is a demand-side issue and leads prices of a real estate market to increase on average.
Though there might be some global trends in terms of housing supply and demand. It tends to be more of a local issue as different governments have different policies to try and influence supply and demand, and some of these policies are more effective than others. The supply and demand dynamics of the market you are looking to buy into could be very different from the supply and demand dynamics of a different geographic location.
Interest rates impact how much it will cost you to borrow money. As interest rates increase, so do your loan repayments, which ultimately decrease your borrowing power.
In current market conditions around the world, many central banks in many of the Western countries tend to be increasing interest rates in a bid to hold inflation at its current level and preferably bring inflation down. The central banks understand that increasing interest rates decreases the amount of money people will have to spend in general, which tends to slow down the economy which is their target strategy for trying to reduce levels of inflation.
Experienced lenders find ways to assist buyers in any market, but the increased rates can make things tricky for many.
Political events refer to policies and regulations set by the government that has an influence on the real estate market. Governments tend to try and influence the real estate market and will be either trying to help the market grow when they feel the economy is slow and they are wanting to try and speed it up.
Whilst in other times they will try and slow down the market to try and make housing more affordable for more people. There are many different ways governments can enact policies to influence the real estate market.
One of these ways they can influence the real estate market is by the taxation rules levied upon real estate investment. If there are many deductions that make real estate investment a tax-efficient activity and a great way for people to store and grow their wealth with minimal taxation impact then this will drive more buyers to the market, which will feed the demand side of the supply and demand equation. The impact of this will be that prices will likely go up.
Another way that governments can influence the housing market is by opening up more land for housing to be built on. By reducing the number of barriers and red tape that developers need to work with in order to develop and build more housing they can encourage housing development, which contributes to the supply side of the supply and demand equation, which will tend to decrease the price of houses.
There are many different ways they can both help the supply or the demand of houses depending on their current goals.
In many Western countries at this time housing is expensive for many middle and low-income earners so governments are looking at ways to make housing more affordable. But this is complicated by the fact that inflation is quite high and they are trying to restrain inflation by increasing interest rates, which has a counterintuitive impact on the ability of low and middle-income people to borrow money to buy a house.
Natural disasters can devastate a housing market overnight. If a highly populated area is subject to a significant weather event that causes significant damage to many homes, then this can decimate the local real estate market.
If an area has not had an adverse weather event for decades, then people tend to downplay the potential recurrence of a natural disaster, and areas can experience significant residential development as a result of this psychological tendency.
When a natural disaster hits, this can remind people how dangerous it is to live in a certain area which can lead a lot of people to leave that area which creates a significant supply of housing for sale, which can drive the value of those houses down dramatically.
However, this is not an ironclad rule because there are many luxury locations such as Florida that regularly experience natural disasters, but people like living in those areas so much that it does not seem to have a negative impact on the local real estate market.
Is very difficult to make a high-probability prediction regarding the likely real estate market trends throughout 2023. Though housing prices in many places are unaffordable for many this issue is complicated by the fact that inflation is high, so interest rates are being increased to try and combat that. This has a negative impact on people’s ability to borrow money and therefore enter the housing market.
Combining that economic contradiction with the fact that there is global turmoil in a political sense and an increased number of adverse weather events occurring all over the world, makes it a very challenging thing to predict the market with any degree of certainty. The best way to gauge the market will be to pay attention to particular regions that are of interest to you and monitor these factors closely.
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Two new World Economic Forum reports published today show how improved public-private collaboration can drive investment to build new markets and create high-quality jobs while making progress towards societal and environmental goals.
The research, based on a survey of 12,000 global executives, finds that agritech, edtech and energy-related technologies are seen by businesses as the most strategically important over the next 10 years in over 120 economies. It also finds that 76 million additional jobs are needed by 2030 in green and social sectors including agriculture, education, health and energy.
The reports – Markets of Tomorrow Report 2023: Turning Technologies into New Sources of Global Growth and Jobs of Tomorrow: Social and Green Jobs for Building Inclusive and Sustainable Economies – call on government and business leaders to double down on deploying technologies to create the markets and jobs of tomorrow.
From new technologies to markets of tomorrow
Markets of Tomorrow examines the technologies and sectors that are set to create new sources of growth. It draws on more than 12,000 responses from over 120 economies to the World Economic Forum’s Executive Opinion Survey.
It finds that agricultural technologies are considered the most strategically important technologies for economies in the next decade. Ranging from low-tech irrigation methods to precision agriculture and farming drones, emerging agricultural technology is unleashing efficiency gains, boosting agricultural output and creating new green jobs.
Education and workforce learning ranks second, where emerging digital tools and platforms, including metaverse learning, artificial intelligence and ubiquitous computing, are driving innovation. The sector is experiencing an accelerated rollout of education technologies after the COVID-19 pandemic caused a historic loss of education globally.
Finally, power storage and generation technology scored third in the global ranking, reflecting the increasing urgency of transitioning to low-carbon energy systems. Battery and other storage technology holds the key to integrating renewable energy generation at scale into energy grids globally and this represents a significant area of current innovation and investment.
These findings are generally consistent across low-and high-income economies, with four of the top five priority technologies shared across all income groups. However, climate change mitigation technology strikes a notable difference, ranking as the most important technology in high-income countries but eighth across all other income groups.
From markets of tomorrow to the jobs of tomorrow
In parallel, new World Economic Forum analysis, in collaboration with Accenture, finds that an additional 76 million jobs in green and social sectors are needed by 2030 across 10 economies alone: Australia, Brazil, China, Germany, India, Japan, South Africa, Spain, the United Kingdom and the United States. Highlighting the wider job-creating potential of proactively building the markets of tomorrow, Jobs of Tomorrowquantifies for the first time the number of green and social jobs needed to help create socially inclusive and environmentally sustainable societies.
Social jobs, defined as occupations within education, healthcare and care, represent 11% of the total workforce in the 10 assessed economies. But the report finds that countries will need to increase the number of social jobs by 37% by 64 million to make progress on inclusion and social mobility goals. Occupations with the greatest unmet need are personal care workers in health services (18 million), childcare workers, teacher aides and early childhood teachers (12 million) and primary and secondary education teachers (9 million), each sector with vast potential to be supported and augmented by technology while centralizing the role of deeply human skills and traits. Currently, the greatest unmet need is in South Africa, followed by Brazil and Spain.
To meet the goals of a green transition, a labour force with green skills will be essential. But green jobs, currently represent just 1% of the surveyed workforces. An additional 12 million green jobs are needed to make progress on environmental objectives, representing a 66% increase on current numbers. Green jobs with the greatest unmet need include agricultural, forestry and fishery workers (11 million), environmental construction roles (80,000), and environmental, civil and chemical engineers (70,000), with South Africa, China, the United Kingdom and Brazil experiencing the greatest shortfalls.
Rethinking investment, industrial policy and purpose-driven public-private cooperation
Skills and talent, infrastructure and initiative from the public sector are cited in as the three biggest bottlenecks to creating the markets of tomorrow. At the World Economic Forum Annual Meeting 2023, taking place on 16-20 January in Davos-Klosters, Switzerland, leaders will discuss how to create the investment needed across advanced, emerging and developing economies to build the markets of tomorrow and boost their job-creating potential.
“In the current economic and geopolitical context, a short-term and crisis-driven approach towards economic policy risks becoming permanent. Instead, to leap forward, leaders must align on a new growth and jobs agenda and governments must enable wider private sector interest and innovation towards these shared goals. Too many new technologies continue to serve niche markets – with the right investments and incentives they can unleash prosperity for those who need it most,” said Saadia Zahidi, Managing Director at the World Economic Forum.
Leaders will discuss public and private sector alignment on long-term strategic goals for purpose-driven market creation, good jobs and re-starting higher quality growth. Key coalitions at the Annual Meeting will include the Jobs Consortium, a coalition of leaders championing investment in “good jobs” for economic recovery and the Market Creators Alliance, a coalition of businesses and public sector leaders working together to design and pilot principles for fairer and more effective public-private partnerships for innovation and industrial policy.
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The world is today confronted with two nuclear threats of a proportion never previously seen in history. These threats are facing us at a time when the world economy is about to turn and decline precipitously not just for years but probably decades, writes in his in a detailed commentary Swiss financial analyst Egon von Greyerz, Founder and Managing Partner “Matterhorn Asset Management”.
The obvious nuclear threat is the war between the US and Russia which currently is playing out in Ukraine.
The other nuclear threat is the financial weapons of mass destruction in the form of debt and derivatives amounting to probably US$ 2.5 quadrillion.
If we are lucky, the geopolitical event can be avoided but I doubt that the explosion/implosion of the Western financial timebomb can be stopped.
In my estimation this is not a war between Russia and Ukraine but between the US and Russia. Russia found it unacceptable that the Minsk agreement of 2014 was not kept to. Instead, the bombing of the Donbas area continued, allegedly encouraged by the US. As Ukraine intensified the bombing, Russia invaded in Feb 2022.
I won’t go into the details here of who is at fault etc. But what is clear is that the US Neocons have a major interest for this war to escalate. For them Ukraine is just a pawn and the real enemy is Russia.
Most of Europe is heavily dependent on Russian oil and gas. Still Europe is shooting itself in the foot by agreeing to the sanctions initiated by the US. The consequences are disastrous for Europe and especially Germany which was the economic engine of Europe. Germany is now finished as an economic power. Time will prove this.
The global economic downturn started before the Ukrainian war but the situation has now severely deteriorated with the European economy weakening rapidly. Still, Europe is digging its own grave by sending more weapons and more money to Ukraine much of which being reported to end up in the wrong hands.
The Ukrainian leader Zelensky is skilfully inciting the West to escalate the war in order to achieve total NATO involvement.
The risk of a major escalation of the war is considerable. The US Neocons want to weaken Russia in a direct conflict. Major wars are often triggered by a minor event or a false flag.
The Neocons know that a defeat for the US in this conflict would be the end of the US dollar, hegemony and economy. At the same time, Russia is determined not to lose the war, whatever it takes. This is the kind of background that has a high risk of ending badly.
Since there is not a single Statesman in the West, dark forces behind the scenes are pulling the strings. This makes the situation particularly dangerous.
The risk of a nuclear war in such a situation is incalculable but still very real. There are 13,000 nuclear warheads in the world and less than a handful of these would wipe out most of the West and a dozen, a major part of the world.
Let’s hope that the West comes to its senses. If not, the consequences are unthinkable.
The other nuclear cloud which is financial will fortunately not end the world if it detonates but inflict a major global setback that could last many years, maybe decades.
The global debt expansion will end badly. This can be illustrated in a number of facts and graphs.
This one shows how global debt has grown 75X from $4 trillion to $300T since Nixon closed the gold window in 1971.
The graph also shows that the world could reach debt levels of maybe $3 quadrillion by 2030.
The US, the world’s biggest economy, is living on both borrowed time and money. In 1970 total US debt was 1.5X GDP. Today is is 3.6X. This means that in order to achieve a nominal growth in GDP, debt had to grow 2.5X as fast as GDP.
The conclusion is simple. Without credit and printed money there would be no real GDP growth. So the growth of the US economy is an illusion manufactured by bankers and led by the private Federal Reserve Bank. GDP can only grow if debt grows at an exponential rate.
The gap between debt and GDP growth is clearly unsustainable. Still with hysterical money printing in the next few years, in an attempt to save the US financial system, the gap is likely to widen even further before it is eroded.
There is only one way for the gap to narrow which is an implosion of the debt through default, both sovereign and private. Such an implosion will also lead to all assets inflated by the debt – including bonds, stocks and property – also imploding.
Temporarily the US has achieved this illusory wealth but sadly the time is now coming when the Piper must be paid.
The days of the dollar as reserve currency are counted. A currency that has lost 98% in the last 50 years hardly deserves the status of a reserve currency.
A combination of military might, petrodollar payments and history has kept the dollar far too strong for much too long. Since there is no immediate alternative, it is possible that the dollar temporarily will remain strong for a while as the Ukrainian conflict continues.
The days of the Petrodollar are also counted. Major moves are now taking place between the world’s biggest energy producers (excluding the US) which will gradually end the Petrodollar system.
But firstly let’s understand that in spite of the climate zealots, there will be no serious alternative to fossil fuels for many decades. Fossil fuels account for 83% of global energy.
Global growth can only be achieved with energy. Since renewables today only account for 6% and are growing very slowly, there will be no serious alternative to fossil fuels for many decades.
In spite of that, Western governments in Europe and the US have not only stopped investing in fossil fuels, but also closed down pipe lines, coal mines and nuclear power plants. This is of course sheer political and economic lunacy and a very rapid method to achieve a collapse of the world economy.
The GCC countries (Gulf Corporation Council) consist of Saudi Arabia, UAE plus a number of Gulf countries have 40% of the oil reserves in the world.
Another 40% of oil reserves belong to Russia, Iran and Venezuela all selling oil to China at a discount currently.
In addition there are the BRICS countries (Brazil, Russia, India, China and South Africa. Saudi Arabia also want to join the BRICS which represents 41% of the global population and 26% of global GDP.
Finally there is the SCO, the Shanghai Cooperation Organisation. This is a Eurasian political, economic and security organisation headquartered in China. It covers 60% of the area of Eurasia and over 30% of global GDP.
All of these organisations and countries (BRICS, GCC, SCO) are gradually going to gain global importance as the US, and Europe decline. They will cooperate both politically, commercially and financially.
As energy and oil is a common denominator for these countries, they will most likely operate with the Petroyuan as their common currency for trading.
With such a powerful constellation, minor hobbyist groups like Schwab’s World Economic Forum will dwarf in significance and finally disappear as the WEF members including the political leaders lose their power and the billionaires their wealth.
A full nuclear war between the US, Russia and China is the end of mankind and no one can protect against this kind of event.
To summarise, the risks today are greater than anytime in history, warns the Swiss financial analyst Egon von Greyerz.
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