"Currencies aren't just vibes". Big tech cutbacks. UAE pressures Pakistan. Not enough Dante.
Great links, images, and reading from Chartbook Newsletter by Adam Tooze
Thank you for opening your Chartbook email.
Iba N’Diaye, French/Senegalese (1928–2008), La tabaski (Le sacrifice du mouton), 1970
Big tech layoffs surge
Layoffs affecting 45,800 tech employees were announced last month, making March the worst month for reported tech-job reductions in at least two years, according to the tracking site Layoffs.fyi.
There is some trouble brewing, though. Tech companies are in effect playing a game of chicken with each other on capital-spending plans. They are shelling out as much as they can—more than their rivals, they hope—on AI chips and data centers that could put them in the lead in a race they feel they can’t afford to lose. That in turn is heightening competition over who can use AI to help do more with a lot less, freeing up money to spend on expensive chips.
On the other hand, some firms are merely trying to come into line with wider corporate hiring levels.
Source: Wall Street Journal
Pakistan caught in the Iran-UAE-Saudi nexus, Humza Jilani & Andrew England in the FT
As cash-strapped Pakistan tried to mediate an end to the US-Israeli war on Iran, the United Arab Emirates made a shock request of its longtime ally — repay $3.5bn immediately. Abu Dhabi’s request this month threatened to drain a fifth of Pakistan’s central bank reserves and imperilled a $7bn IMF bailout programme agreed in 2024. Saudi Arabia, which signed a mutual defence pact with Islamabad last year, swung to the rescue with $3bn in fresh central bank deposits and the extension of an existing $5bn in deposits for more than a year.
Abu Dhabi’s decision reflects its growing frustration with Islamabad, partly because of its deepening ties with Riyadh, but also what it considers Pakistan’s meek response to Iranian attacks on the Gulf after the US and Israel launched their war … Underlying this is simmering tensions between Saudi Arabia, which signed a defence pact with Islamabad in September, and the UAE. A rift between the Gulf’s powerhouses burst into the open over disputes in the civil war in Yemen, where they back rival factions, in December and January. The US-Israeli war with Iran papered over those cracks as the Islamic republic has responded by attacking both Gulf states.
But analysts say the Saudi-UAE tensions continue to fester, with Riyadh more closely aligned with Pakistan, Turkey and Egypt than its Gulf neighbour. The UAE’s ties with Islamabad date to Abu Dhabi’s independence from the UK in 1971. The first five chiefs of staff of the Emirati air force were Pakistani citizens, while Pakistan’s flag carrier Pakistan International Airlines provided aircraft and training to Emirates Airlines. The UAE in turn provided billions of dollars of financial support to Pakistan and hosts some 1.5mn Pakistani expatriates.
Relations became strained in 2015 when Islamabad bowed to public pressure and declined to join the Saudi-led coalition against Iranian-backed Houthi rebels in Yemen. Since late last year, Pakistan had been seeking to secure an agreement to roll over at least $2bn of the Emirati loans for two years, but Abu Dhabi rattled Islamabad by moving to monthly extensions in January, according to two people familiar with the matter. The UAE’s decision to seek immediate repayment this month surprised the finance ministry in Islamabad, as well as the IMF, Some observer warn of the risk of over-reliance on financing from Saudi Arabia, which is now equivalent to roughly half of Pakistan’s central bank reserves of $16bn.
The mutual defence pact had raised hopes of more Saudi investment and financial support in exchange for Pakistan’s military might. But two of the Pakistani advisers said Riyadh, which is facing tightening liquidity and a widening deficit while managing vast domestic financial commitments, had so far shown limited appetite in translating the accord into investments. “The Saudis never had any illusions about Pakistani help and were simply hoping Iran would think twice before attacking them. This proved wrong,” said Bernard Haykel, professor of near eastern studies at Princeton University, who is writing a book about the Crown Prince Mohammed bin Salman. “Saudi cannot afford to bail out Pakistan,” said Haykel.
Source: FT
This episode of OnesandTooze on Sudan and Islamabad was rewarding to record:
German consumers are feeling miserable again.
Source: Trading Economics
HEY READERS,
THANK YOU for opening the Chartbook email. I hope it brightens your day.
I enjoy putting out the newsletter, but tbh, what keeps this flow going is the generosity of those readers who clicked the subscription button.
If you are persuaded to click, please consider the annual subscription of $50. It is both better value for you and a much better deal for me, as it involves only one credit card charge. Why feed the payments companies if we don’t have to.
How the Eurodollar was born - Brendan Greeley in the FT
For contributing subscribers only.
"Crie" by the Senegalese artist Iba Ndiaye
Source: Tumblr AfricanArt Agenda
How illegal Colombian gold ends up in the US mint, by Justin Scheck Simón Posada and Federico Rios
Congress in 1985 prohibited the US Mint from making bullion out of foreign gold because it wanted to insulate the process from human rights abuses, primarily in apartheid South Africa. The Mint has flouted that law, across Democratic and Republican administrations, despite internal warnings. Now, even President Trump’s 24-karat gold coin, commemorating the United States’ 250th birthday, could come from a swirl of non-American gold from any number of sources.
The Mint, the biggest name in the global market for investment gold coins, is an example of how the industry’s guardrails have collapsed. Gold prices hover around $5,000 an ounce, about four times the price of a decade ago. That gives criminal organizations and fly-by-night operators a huge incentive to mine in wasteful, destructive and risky ways. Investors buy gold as a hedge against instability. Nearly every terrorist attack, war and financial meltdown in the past quarter-century has fueled a gold-buying frenzy.
But as prices climb ever higher, wealthy buyers are actually helping to create the very instability they are trying to hedge against. Gold mining funds Sudan’s brutal civil war and Russia’s invasion of Ukraine. Surging gold prices have helped Venezuela and Iran temper the effects of financial sanctions. Colombia’s biggest cartel, the Clan del Golfo, traffics in gold alongside cocaine — and uses the proceeds to maintain control through murder and bombings. Illegal miners deforest and pollute the Amazon, poisoning people there with mercury. Terrorist groups, including some linked to Al Qaeda, are getting into the gold business, too.
La Mandinga gold has no business making its way into the United States. Secretary of State Marco Rubio called the Clan “a violent and powerful criminal organization” last year when the United States designated the cartel a terrorist group. The Treasury Department keeps Clan del Golfo leaders on a financial blacklist, banning American companies from doing business with them. Government organizations and academics have documented the cartel’s gold mining activities here for years. (A Colombian lawyer for the cartel did not return a call for comment.)
Caucasia is a gold-rush city. Businesses sell excavators, pumps and million-dollar dredges for illegal riverbed mining. Fancy cafes and dance clubs have sprung up. Miners can sell gold to any of hundreds of storefronts. Every month, two shop owners told us, the Clan collects $400 from them, too. Alex Cuevas works in one such shop. One by one, miners pass him mercury-and-gold marbles through a hole in a plexiglass window. His hands tremble — a symptom, he says, of long-term mercury poisoning. The shop where Mr. Cuevas works, like others in town, sells to a government-owned exporter. The exporter said it checks the same database that Mr. Cuevas uses, verifying that the gold is legal.
The gold from La Mandinga is mixed with supplies from around Colombia and melted into bars. Export records show that many of them, worth about $255 million over the past year or so, arrive in Texas. There the gold becomes American. At a refinery outside Dallas called Dillon Gage, workers dump the imported gold into a glowing cauldron, mixing it with molten gold from other suppliers: South American mines, secondhand U.S. jewelry dealers and Peruvian pawn shops, according to records and interviews.
The Mint does not check. But the Mint goes beyond not asking questions. It openly buys from sources that could not possibly supply the newly mined American gold the law requires. In recent years, records show, the Mint has spent hundreds of millions of dollars on gold bars from the Canadian Copper Refinery, which gets its gold from the slime that is left over from processing copper, not from newly mined gold. Some of that copper comes from a Congolese mine owned in part by the Chinese government, export records show.
Source: New York Times
Not enough Dante
Hard not to smile when you read Italian Euroskeptics (if I read this account correctly) talking dirty about the issues with their high school literature curriculum. Imagine these were your problems! And yes I know that that the failures of the Italian education system as far as the majority of the population are concerned, i one of its main weak spots.
Iba N’Diaye often described as “jazz players”
If you’ve scrolled this far, you know you want to click: