Not surprisingly, early indicators point to a less bleak future for Sweden's still-open economy than for that of its European counterparts. A recent study by Swedbank shows that private consumption in Sweden shrank 17% between April 6 to April 19 compared to the same period last year, while revenue from hotel and restaurants was down 50%. Swedbank's chief economist Andreas Wallström, commented in daily Svenska Dagbladet that the economy is bleeding, but not to the extent as in countries where strict lockdowns were put in place.
In Norway, unemployment has shot from 5% to 10% since mid-March, while Sweden has seen only a 1% increase to 8% since late February. Meanwhile, in harder-hit countries such as Spain, the unemployment rate, which ended 2019 at 14%, is now expected to climb to nearly 21% in 2020, reports Spanish daily El Pais. Meanwhile, the International Monetary Fund predicts a drop in Spanish GDP of 8%, a drastic turn from the solid growth of 2% in 2019, while similar forecasts of an 8% drop in Portugal, Latvia and Lithuania, while in Italy and Greece, the IMF predicted the fall will be even greater: 9.1% and 10%, respectively.
We now live in an economy that is both infinitely more dynamic and geographically interconnected.
Still, early indicators offer little guidance for what to expect for the future, and tell us even less about the extent to which lockdowns should be held accountable for current economic impacts. Norway, as an example, might be seeing a steeper rise in unemployment rate than Sweden due its heavily oil-dependent economy, while countries like Spain and Portugal are almost certainly suffering worse downturns due to its already frail economies, which could crumble further if the summer tourist season is effectively canceled.
Other unknowns include how a possible second wave of COVID-19 would affect countries with different degrees of lockdowns, and the corresponding pace of post-pandemic recovery. A recent study led by two economists with the U.S. Federal Reserve shows that while areas most affected by the 1928 flu pandemic saw a persistent decline in real economic activity, cities that implemented early and stringent social distancing measures suffered no adverse economic effects over the medium term, but rather saw a relative increase in real economic activity after the pandemic subsided.
Still historical analogies have their limits: We now live in an economy that is both infinitely more dynamic and geographically interconnected, and while some national responses may emerge as blueprints for others, the global economic impact of the crisis will be just that — global.
It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.
PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.
Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.
Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.
Share capital of one billion
The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).
The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.
Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.
While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.
The infamous typo that brought the Air Next scam down
Raising Initial Coin Offering
Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.
For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."
What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".
Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.
Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.
Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.
- Crypto Tipping Point: Is Digital Currency Too Big To Fail ... ›
- Bitcoin, Petro, Libra ... Why Cryptocurrency Isn't Really Currency ... ›
- Inside The Himalayan Hideaway Of Chinese Bitcoin Mines ... ›