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The US Elections and Geopolitical Flashpoints of 2024

By
Paul Ugbede Godwin
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1

The year 2024 will be a pivotal one for the United States and the world, as the presidential election will determine the direction of the country’s foreign policy and its role in global affairs. The election will also coincide with several geopolitical flashpoints that could escalate into major conflicts or crises, affecting the stability and security of the international system.

China: The US-China rivalry is arguably the most consequential and complex relationship in the world today, as the two powers compete for influence, resources, and leadership in various domains, such as trade, technology, security, human rights, and regional order.

The next US president will have to balance the need to cooperate with China on common challenges, such as climate change, nuclear proliferation, and pandemic prevention, with the need to confront and deter China’s assertive and aggressive behavior in areas such as the South China Sea, Taiwan, Hong Kong, Xinjiang, and cyberspace.

The next US president will also have to decide whether to continue or modify the current strategy of strategic competition and decoupling or pursue a more cooperative or confrontational approach.

Russia: The US-Russia relationship is at its lowest point since the Cold War, as the two countries disagree on a range of issues, such as Ukraine, Syria, Iran, North Korea, NATO expansion, arms control, election interference, human rights, and cyberattacks.

The next US president will have to deal with a resurgent and revisionist Russia that seeks to undermine the US-led international order and assert its interests and influence in its near abroad and beyond. The next US president will also have to decide whether to extend or renegotiate the New START treaty, which expires in 2026, or pursue a new framework for nuclear arms control that includes China.

Iran: The US-Iran relationship is fraught with tension and mistrust, as the two countries clash over Iran’s nuclear program, regional activities, ballistic missile development, and support for proxy groups. The next US president will have to decide whether to rejoin or renegotiate the 2015 nuclear deal (JCPOA), which was abandoned by the Trump administration in 2018 and has been violated by Iran since 2019. The next US president will also have to manage the risk of escalation and conflict with Iran in the Persian Gulf, Iraq, Syria, Yemen, and Lebanon.

North Korea: The US-North Korea relationship is unpredictable and volatile, as the two countries oscillate between dialogue and confrontation over North Korea’s nuclear and missile capabilities.

The next US president will have to decide whether to continue or abandon the diplomatic process that was initiated by the Trump administration in 2018 but has stalled since 2019. The next US president will also have to prepare for the possibility of a provocation or crisis from North Korea, which may seek to test or advance its weapons of mass destruction.

Afghanistan: The US-Afghanistan relationship is uncertain and fragile, as the US plans to withdraw its remaining troops from Afghanistan by May 2021 as part of a peace deal with the Taliban.

However, NATO faces internal divisions and doubts about its unity and resolve, especially after the US withdrawal from Afghanistan in 2021 and the controversial Nord Stream 2 pipeline project between Germany and Russia. The next US president will have to decide how to reassure and strengthen NATO’s collective defense and deterrence against Russia, while engaging in dialogue on issues of common interest such as arms control and counterterrorism.

These are just some of the major challenges that the US will face in 2024 and beyond. The outcome of the elections will depend on many factors, such as the state of the economy, the public health situation, the domestic political climate, and the performance and popularity of the incumbent president.

The candidates’ positions and policies on foreign affairs will also matter, as they will reflect their vision and values for America’s role in the world. The voters’ choice will have significant consequences for global peace and prosperity.

Nigeria’s Economic Austerity Amid Lavish Spending: A Comparative Look at Argentina, Turkey, and Costly Governance

By
Samuel Nwite
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0

For nearly a decade, Nigeria has been grappling with economic turmoil that has called for stringent austerity measures to tame. This backdrop which has resulted in a high unemployment rate, high inflation rate, and mass exodus of professionals seeking a better life abroad, mirrors the situation in some other countries like Argentina and Turkey.

Nigeria, coming from a general election in February that produced a new president, Bola Tinubu, has unleashed a plethora of policy reforms aimed at revamping the economy. However, the reforms, which include the removal of the petrol subsidy and the floating of the nation’s currency, the naira, have only compounded the economic troubles.

Inflation in Africa’s largest economy climbed to 28.20% in November as the naira nosedives further to more than N1200 per dollar in the parallel market and above N800 per dollar in the official market. Although experts are projecting positive results from the reforms in the long term, the current economic situation in the country has fueled calls on the government, from both economists and opposition political leaders, to cut the cost of governance.

“The bloated size of government comes with high cost of public sector expenditure and its negative impact on the development process in the country,” African Development Bank President, Akinwumi Adesina said.

“The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development. Nigeria is spending very little on development,” he added.

Last month, Tinubu presented a N27.5 trillion budget to the National Assembly for approval. “The Budget of Renewed Hope” follows the assent of the N2.18 trillion 2023 supplementary budget in November.

However, the 2024 budget has a projected deficit of N9.18 trillion.

With the treasury empty, the government seeks to finance the 2024 budget deficit with new borrowings of N7.83 trillion, privatization proceeds of N298.49 billion, and a drawdown on multilateral and bilateral loans of N1.05 trillion.

Besides this mammoth challenge, which has built up skepticism about the government’s ability to fully implement the budget, gushes out criticism over the multi-billion naira lavish items that made up the budgets.

Both the 2023 supplementary budget and the 2024 budget are filled with extravagant components that include office and residential house renovation, the purchase of cars for public office holders, and travel expenditures amounting to billions of naira.

“The government’s overall attitude does not indicate that it is aware that the country is in a huge crisis, nor is the government in tune with the plight of the generality of our people,” Peter Obi, the Labour Party’s presidential candidate in the last election said about the budgets.

Before the budgets were announced with their lavish controversies, the government had approved N57.6 billion for Senators and members of the House of Representatives for the purchase of SUVs, stirring anger among a large section of Nigerians who deemed the action insensitive to the nation’s current economic predicament.

Examples from Argentina and Turkey

Like Nigeria, Argentina has been battling with economic turmoil buoyed by toxic inflation that has risen to a record 160.9% as of November. However, unlike Nigeria, Argentina’s newly elected president Javier Milei has taken bold steps to change the South American nation’s misfortune.

During his press conference last Friday, Presidential spokesman Manuel Adorni announced a government initiative to cut chauffeurs for public officials by 50%. Additionally, he revealed plans to sell two planes previously owned by the state-owned oil company YPF, citing their predominant use for what he described as “political privileges.”

“This is in addition to the reduction the government had already decided earlier this week […] We will continue to inform about the reduction of privileges every day,” he said. Adorni referred to the decision made the previous Monday to decrease ministries by 50% and secretariats by 49%, aiming to curtail public spending.

These measures are expected to save nearly US$3 billion for the state.

In Turkey, where inflation has risen to 62.0% in November, government officials are taking pay cuts and making other personal sacrifices to help the country’s troubled economy. The newly appointed head of the country’s central bank, Hafize Gaye Erkan, revealed that she has been unable to afford a home in Istanbul due to soaring inflation.

The 44-year-old former finance executive, who assumed her position in June after spending two decades in the United States, told the Hurriyet newspaper, “We haven’t found a home in Istanbul. It’s terribly expensive. We’ve moved in with my parents.”

In stark contrast with officials in Argentina and Turkey, Nigerian officials, including the president, appear resolute in pursuing a path of luxury.

On November 2, Tracka, a civil society organization that tracks governments’ expenditures, made efforts, through a letter, to stop the Senate from approving the N2.18 trillion 2023 supplementary budget, citing frivolous allocations. The allocations include a yacht for the president, cars for the First Lady, and renovations for office buildings worth billions of naira.

Tracka also wrote the Office of the Secretary to the Government of the Federation, urging the president not to give assent to the supplementary budget. Despite Tracka’s efforts to prevent the approval of the supplementary budget, it was ultimately assented to.

Nigeria’s participation in COP28, held in Dubai, UAE, earlier this month, sparked criticism regarding the excessive number of delegates representing the country, particularly amid its ongoing economic challenges.

Nigeria sent 1,411 delegates to the event, a figure second only to China, which had 1,411 delegates, and Brazil with 3,081 delegates. The trip reportedly cost Nigeria a whopping N2.7 billion. However, compared to these nations, Nigeria’s economic performance lags. China holds a GDP value of N17.89 trillion, Brazil stands at N1.92 trillion, while Nigeria reported N477.37 billion as of 2022.

Despite the impact the high cost of governance weighs on the economy, it’s troubling that numerous Nigerian public officeholders staunchly defend the government’s extravagant spending, often asserting that these excesses will streamline their work.

For instance, in defense of the exorbitant funds allocated for renovating the office of the Vice President, Senator Jimoh Ibrahim (APC Ondo South) offered his perspective in an interview with ChannelsTV; “The VP’s house will cost ONLY $15 million dollars. Only $15 million dollars. You cannot put people in uncomfortable working conditions!”

Wages in Most developed Economies Are Lower Relative to Pre-Pandemic

By
Paul Ugbede Godwin
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0
Every expects the numbers to keep rising. But it is not automatic

The COVID-19 pandemic has had a profound impact on the global economy, affecting various sectors and industries in different ways. One of the most noticeable effects has been the decline in real wages, which measure the purchasing power of workers’ earnings.

One of the most pressing issues facing the global economy today is the stagnation or decline of real wages, which are the earnings of workers adjusted for inflation. Real wages reflect the purchasing power and living standards of workers and their families, and they are crucial for the economic recovery and social welfare.

Some of the causes of the decline in real wages are the weak labor market, the erosion of collective bargaining, the rise of automation and outsourcing, and the unequal distribution of productivity gains. These factors have reduced the bargaining power and the share of income of workers, while increasing the profits and wealth of corporations and elites.

Some of the consequences of the decline in real wages are the increase in poverty and inequality, the decrease in consumption and demand, the deterioration of public services and infrastructure, and the rise of social unrest and political instability. These outcomes have negative effects on the well-being and security of workers and their families, as well as on the growth and stability of the economy as a whole.

Real wages in most developed economies are lower relative to pre-pandemic levels, meaning that workers can buy less goods and services with their income than before the crisis.

There are several factors that explain this phenomenon. First, inflation has risen sharply in many countries, driven by supply chain disruptions, higher energy prices, and increased consumer demand. Inflation erodes the value of money and reduces the real wage of workers who do not receive corresponding increases in nominal wages. Second, some workers have experienced wage cuts or freezes as a result of reduced business activity, lower profits, or increased competition.

Third, some workers have lost their jobs or hours due to lockdowns, social distancing measures, or structural changes in the economy. These workers may have to accept lower-paying jobs or rely on unemployment benefits, which are often insufficient to maintain their previous living standards.

The decline in real wages has significant implications for the economic recovery and social welfare. On the one hand, lower real wages reduce the disposable income of households and dampen their consumption spending, which is a key driver of economic growth.

On the other hand, lower real wages increase the risk of poverty, inequality, and social unrest, as workers struggle to afford basic needs and face greater uncertainty about their future prospects. Moreover, lower real wages may have long-term effects on human capital development, as workers may have less incentives or opportunities to invest in education, training, or health.

To address this challenge, policymakers need to adopt a comprehensive and coordinated approach that balances the objectives of supporting aggregate demand, protecting workers’ incomes, and enhancing productivity and competitiveness. Some possible measures include:

  • Implementing fiscal and monetary stimulus to boost economic activity and create more jobs.

  • Providing targeted and adequate income support to workers who have lost their jobs or income due to the pandemic.

  • Promoting wage bargaining and social dialogue to ensure fair and equitable distribution of productivity gains and cost adjustments.

  • Investing in public infrastructure, education, health, and innovation to improve the quality and quantity of human and physical capital.

  • Enhancing labor market flexibility and mobility to facilitate the reallocation of workers across sectors and regions.

  • Strengthening international cooperation and coordination to address global challenges such as climate change, trade tensions, and tax evasion.

By taking these actions, policymakers can help restore real wages to pre-pandemic levels or higher and ensure a more inclusive and sustainable recovery for all.

Ledger CEO says Recent Cyber Breach Was an Unfortunate Incident

By
Paul Ugbede Godwin
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0

Ledger CEO Pascal Gauthier has issued a statement regarding the recent cyberattack that compromised the personal data of more than 270,000 customers. In a blog post published on the company’s website, Gauthier apologized for the breach and explained the steps that Ledger is taking to prevent such incidents in the future.

According to Gauthier, the attack was an “unfortunate incident” that exposed the vulnerability of Ledger’s e-commerce infrastructure. He said that the attackers exploited a third-party API key that was used to send order confirmations and shipping notifications to customers. The attackers were able to access the database that contained the names, email addresses, phone numbers and postal addresses of Ledger customers who purchased hardware wallets between June 2018 and July 2020.

The cyberattack was carried out by a hacker group called Raidforums, who claimed to have obtained the data from a third-party e-commerce service provider that Ledger used to process orders. The hacker group initially leaked a sample of the data in December 2020, and then released the full database on a public forum in January 2021. The data was also sold on the dark web for an undisclosed amount of money.

The consequences of the data breach are severe for both Ledger and its customers. Ledger has faced a backlash from its users, who have expressed their anger and frustration on social media and online forums. Some users have reported receiving phishing emails and text messages from scammers pretending to be Ledger, asking them to update their firmware or enter their recovery phrases. Others have reported being harassed or threatened by phone calls or physical mail from unknown individuals who have access to their personal information.

Ledger has apologized for the incident and taken some measures to mitigate the damage. The company has launched an internal investigation and hired a security firm to audit its systems. It has also notified the relevant authorities and cooperated with law enforcement agencies. Ledger has offered a free one-year subscription to a digital identity protection service for its affected customers. It has also advised its users to change their passwords, enable two-factor authentication, and beware of phishing attempts.

However, these actions may not be enough to restore the confidence and loyalty of Ledger’s customers, who have entrusted the company with their most valuable assets: their cryptocurrencies. Ledger’s hardware wallets are designed to protect users’ private keys from hackers, but the data breach has exposed them to other forms of attacks that could compromise their funds or identities. Moreover, Ledger’s competitors, such as Trezor and KeepKey, may seize this opportunity to attract new customers or lure away existing ones.

The cyberattack on Ledger is a wake-up call for the cryptocurrency industry, which has been plagued by numerous security incidents in the past. It shows that hardware wallets are not immune to hacking, and that users need to be vigilant about their personal data and online security.

It also shows that hardware wallet providers need to invest more in their cybersecurity infrastructure and customer service and adopt best practices to prevent future breaches. The future of cryptocurrency depends on the trust and satisfaction of its users, and that trust can only be earned by providing them with reliable and secure products and services.

Gauthier assured that no financial information, payment details or cryptocurrency funds were affected by the breach. He also said that Ledger has notified the relevant authorities and is working with law enforcement agencies to track down the perpetrators.

He added that Ledger has taken measures to enhance its security systems, such as revoking the compromised API key, encrypting customer data, auditing its code and infrastructure, and hiring external experts to conduct penetration tests.

Gauthier acknowledged that the breach has damaged the trust and reputation of Ledger, which prides itself on providing secure solutions for storing and managing digital assets. He said that Ledger is committed to restoring that trust and protecting its customers from phishing attempts and other malicious activities.

He urged customers to follow the best practices for securing their devices and accounts, such as using a strong password, enabling two-factor authentication, verifying the authenticity of emails and websites, and updating their firmware.

Gauthier concluded his statement by expressing his gratitude to the Ledger community for their support and understanding. He said that Ledger will continue to work hard to deliver high-quality products and services that meet the expectations of its customers. He also invited customers to contact Ledger’s customer support team if they have any questions or concerns regarding the breach or their security.

Recent FOMC Meeting and Implications On Asset Prices in The Crypto Markets for 2024

By
Paul Ugbede Godwin
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0

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the US Federal Reserve. It meets eight times a year to review economic conditions and decide on the appropriate level of the federal funds rate, which is the interest rate that banks charge each other for overnight loans. The FOMC also sets the target range for the Fed’s balance sheet, which is the amount of assets that the Fed holds, such as Treasury securities and mortgage-backed securities.

The FOMC’s decisions have significant implications for the global financial markets, especially the cryptocurrency markets, which are highly sensitive to changes in interest rates and liquidity conditions. In this blog post, we will analyze the main takeaways from the recent FOMC meeting held on December 13-14, 2023, and discuss their potential impact on the crypto markets for 2024.

The main highlights of the FOMC meeting were:

The FOMC raised the federal funds rate by 25 basis points, from 0.25% to 0.5%, marking the first-rate hike since June 2019. The FOMC also indicated that it expects to raise rates three more times in 2022, and three times in 2023, bringing the federal funds rate to 1.75% by the end of 2023.

The FOMC announced that it will accelerate the tapering of its asset purchases, reducing them by $30 billion per month starting in January 2022, instead of $15 billion per month as previously planned. This means that the Fed will end its asset purchases by March 2022, instead of June 2022.

The FOMC revised its economic projections for 2022 and 2023, reflecting a more optimistic outlook for growth and inflation. The FOMC expects the US economy to grow by 4% in 2022 and 3.5% in 2023, up from 3.8% and 2.5% respectively in September. The FOMC also expects inflation to moderate from 5.3% in 2021 to 2.6% in 2022 and 2.2% in 2023, down from 4.2% and 3.0% respectively in September.

The FOMC’s actions and projections signal a more hawkish stance than expected, reflecting the Fed’s confidence in the strength of the economic recovery and its determination to contain inflationary pressures. The FOMC’s message was well received by the stock market, which rallied after the meeting, as investors interpreted the Fed’s moves as a sign of credibility and stability.

However, the crypto market reacted negatively to the FOMC’s announcement, as higher interest rates and lower liquidity tend to reduce the attractiveness of riskier assets such as cryptocurrencies. The crypto market also faced headwinds from regulatory uncertainty, as several countries announced or implemented stricter rules or bans on crypto activities.

As a result, the total market capitalization of cryptocurrencies dropped by about 15% in the week following the FOMC meeting, from $2.4 trillion on December 14 to $2 trillion on December 18, according to CoinMarketCap. Bitcoin, the largest and most influential cryptocurrency, fell by about 13%, from $48,000 to $42,000.

What does this mean for the crypto market outlook for 2024? We believe that there are several factors that will shape the future of crypto in the next two years:

The pace and magnitude of the Fed’s monetary policy normalization will be a key driver of crypto market sentiment and volatility. If the Fed raises rates faster or higher than expected, or if it signals a shift to a more restrictive policy stance, this could trigger a sell-off in crypto assets, as investors seek safer and higher-yielding alternatives.

Conversely, if the Fed maintains a gradual and cautious approach, or if it revises its policy outlook due to unexpected shocks or slowdowns in the economy or inflation, this could support crypto prices, as investors perceive crypto as a hedge against monetary uncertainty or inflation.

The evolution of regulation and innovation will be another crucial factor for crypto adoption and growth. On one hand, regulation can pose challenges and risks for crypto investors and users, as it can limit their access or choice of crypto services or products or impose higher costs or taxes on their transactions or holdings. On the other hand, regulation can also provide clarity and legitimacy for crypto actors and activities, as it can establish clear rules and standards for compliance and security or create new opportunities and incentives for innovation and collaboration.

The development of technology and infrastructure will be a third important factor for crypto performance and potential. Technology can enable new features and functions for crypto assets and platforms, such as scalability, and interoperability.

Significant shifts in the Blockchain Ecosystem

The blockchain ecosystem is constantly evolving and undergoing significant shifts that affect the development and adoption of decentralized applications (DApps). In this blog post, we will explore some of the recent trends and challenges in the blockchain space and how they impact the design and implementation of DA solutions.

One of the major trends in the blockchain ecosystem is the emergence and growth of layer-2 solutions, which aim to improve the scalability, performance, and user experience of DApps by moving some of the computation and storage off the main chain. Layer-2 solutions can be classified into two categories: state channels and rollups.

State channels allow users to open a channel between themselves and perform transactions off-chain, only settling on the main chain when the channel is closed. Rollups, on the other hand, aggregate multiple transactions into a single batch and submit it to the main chain, reducing the gas cost and increasing the throughput.

Layer-2 solutions offer several benefits for DA solutions, such as faster confirmation times, lower fees, and enhanced privacy. However, they also introduce new challenges and trade-offs, such as increased complexity, security risks, and interoperability issues. For instance, state channels require users to lock up funds in a smart contract and trust that the other party will not cheat or go offline.

Rollups rely on a centralized operator or a set of validators to process transactions off-chain and submit proofs to the main chain, which may introduce a single point of failure or corruption. Moreover, layer-2 solutions may not be compatible with each other or with existing DApps on the main chain, limiting the composability and network effects of DA solutions.

Another significant shift in the blockchain ecosystem is the rise of cross-chain interoperability, which enables different blockchains to communicate and exchange value with each other. Cross-chain interoperability can be achieved through various mechanisms, such as bridges, sidechains, pegged zones, and polkadot. Bridges are smart contracts that connect two blockchains and allow users to transfer tokens or data between them.

Sidechains are independent blockchains that are linked to a main chain and inherit some of its security and functionality. Pegged zones are special zones within a blockchain that can host tokens or assets from other blockchains. Polkadot is a network of heterogeneous blockchains that can interoperate through a shared relay chain.

Cross-chain interoperability opens up new possibilities and opportunities for DA solutions, such as accessing a larger pool of users, assets, and services across different blockchains, enhancing the diversity and innovation of DApps, and creating cross-chain composability and synergy. However, cross-chain interoperability also poses new challenges and risks for DA solutions, such as increased complexity, latency, and security vulnerabilities.

For example, bridges may require users to trust a third party or a multisig scheme to custody their assets on another chain. Sidechains may have lower security guarantees than the main chain or may not be compatible with other sidechains. Pegged zones may have different governance models or consensus mechanisms than the original chain. Polkadot may face scalability issues or governance conflicts among its parachains.

In conclusion, DA solutions are influenced by significant shifts in the blockchain ecosystem, such as layer-2 solutions and cross-chain interoperability. These shifts offer new benefits and opportunities for DA solutions but also introduce new challenges and trade-offs. Therefore, DA solution developers need to carefully evaluate their needs and goals and choose the best platform and architecture for their DApps.

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