In this publication of Visual Capitalist we can see clearly the most significant cyber attacks in the period 2006-2020.

As original images post says «A “significant” cyber attack refers to a hack into a country’s government agency, a defense or high-tech company, or a crime with losses of more than $1M«.

The most common cyber attacks techniqes are:

1/ Structured Query Language (SQL) Injection Attack
SQL is the code used to communicate with a database. In an SQL injection attack, the hacker writes vindictive SQL code and inserts it into a victim’s database, in order to access private information.
2/ A man-in-the-middle (MitM)
This form of attack happens when a cyber criminal hacks into a communication channel between two people, and eavesdrops on their online exchanges.
3/ Phishing Attack
When a cyber criminal poses as a legitimate institution and emails a victim to gain personal details like login credentials, home address, credit card information.
4/ Denial of Service Attack (DoS)
This involves flooding a victim’s system with traffic, to the point where their network is inaccessible. The hacker doesn’t gain any valuable information from this style of attack.

I think this is interesting from an economic point of view, specifically in two ways for CFO/finance professional:
1/ The ability to value the cost of this type of intangible threat.
2/ The importances of servers and cloud architecture at the core of business and the need of diversify this new type of risk.

Like the whole new economy, which is based on intangible assets, economists have an obligation to focus on the management of our clients from this point of view; risks and their consequences are more based on intangible assets and we have to develop other types of intellectual tools. At least we have to adapt it.

The government wants to implement a social security reform that seriously harms the economic situation of the self-employed (freelancers).

It intends to apply this measure (change of law) in 2023.

This is de cost of social security by annual income levels:

9.000 to 12.600 euros/year, cost: 245 euros/month
12.600 to 17.000 euros/year, cost 260 euros/month
17.000 to 22.000 euros/year, cost 275 euros/month
22.000 to 27.000 euros/year, cost 290 euros/month
27.000 to 32.000 euros/year, cost 305 euros/month
32.000 to 37.000 euros/year, cost 320 euros/month
37.000 to 42.000 euros/year, cost 340 euros/month
42.000 to 47.000 euros/year, cost 360 euros/month
47.000 to 48.841 euros/year, cost 380 euros/month
More than 48.841 euros/year, cost 400 euros/month

This change will be implemented between 2023 and 2031.

The main problem starts in 2031, with these costs:

9.000 to 12.600 euros/year, cost: 235 euros/month
12.600 to 17.000 euros/year, cost 275 euros/month
17.000 to 22.000 euros/year, cost 305 euros/month
22.000 to 27.000 euros/year, cost 425 euros/month
27.000 to 32.000 euros/year, cost 545 euros/month
32.000 to 37.000 euros/year, cost 670 euros/month
37.000 to 42.000 euros/year, cost 800 euros/month
42.000 to 47.000 euros/year, cost 935 euros/month
47.000 to 48.841 euros/year, cost 1.075 euros/month
More than 48.841 euros/year, cost 1.220 euros/month

This is surprising, in general, when compared to other countries in Europe.

Let me give you an example. If you earn 50,000 euros a year, you have to pay, just for social security, 14,640 euros (29.3% of your income). If you add the 15% that you have to pay in advance to the Treasury, you are paying, in advance, 45% of your income…. now you have to add VAT, local taxes, professional insurances and the costs of your profession.

It is unbelievable, the Spanish state is going to take 50% upfront from the self-employed. Only Portugal and Italy have a similar situation, the rest of the countries are far away.

To make the situation worse, a self-employed person can change his situation 6 times a year. A crazy movie, because all countries in Europe have only one simple rate (or two sometimes).

I hope this change does not happen and the system improves between now and 2031. We will see.

In recent weeks we have read in many places about the looming inflation problem. Is it real or not, and should we be worried about it?

To understand how inflation works, I show an outline of the drivers of inflation that Asset Damodaran has just published on his blog, and their impact on financial assets, debt and value.

According with his conlusions:

1/ Inflation is back. Overall in commodities market.

2/ We don´t know whether this inflation will be permanent or transitory. Maybe in 2 years, when global supply chains have sorted out the pandemic-related problems, inflation will return to normal. It is not clear.

3/ Return to normal. If some or all of the inflation increase is permanent, and we are reverting back to more normal inflation levels (2-3%), there will be an adjustment, perhaps even painful, as interest rates rise and stock prices recalibrate.

4/ Possibility of a breakout (very hight inflation rates). If it is permanent, and we see inflation rise to levels not seen since the 1970s and 1980s (>5%), stocks and bonds will have to be repriced significantly. Not only will investors need to move money out of financial into real assets and collectibles, but companies and individuals that have chosen to borrow to capacity, based upon current low rates, will face a default risk reckoning. This possibility is low.

We may see 2 years of a high inflation rate and then return to «normal» with very low inflation rates.