Gabon, Haiti, US credit card debt and more
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Welcome to 'This Week’s Insights', the newsletter that doesn't just?tell you?what happened?but also?why it happened?and what?the future implications?might be.?
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This week we have:
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An Imminent Catastrophe in Azerbaijan ?
Last month, a former prosecutor for the International Criminal Court said, quote “there is reasonable basis to believe that a genocide is being committed” in Azerbaijan.?
The claims relate to Nagorno-Karabakh, a region in Azerbaijan that is home to roughly 120,000 ethnic Armenians, but completely surrounded by Azerbaijan land. ?
Since June the Azerbaijani government has completely blockaded a road from Armenia, which sits on Azerbaijan’s western border, that acts as a crucial supply route for fuel, food and medicine to the isolated region. ?
Armenia won control of the road, known as the Lachin corridor, in 1994, but skirmishes have persisted since, and Azerbaijan won power over it again in a 2020 war. ?
On August 2nd,?Azerbaijan's president said that the people who live in Karabakh live in Azerbaijan and they should choose whether they want to stay there as a minority, or leave. ?
Azerbaijan has offered to ship food in but the locals have refused, worried it may be the first step in forced integration. Local authorities now say one in three deaths in the enclave is a result of malnutrition. ?
Listen to A Humanitarian Catastrophe Is Unfolding in the Caucasus by David Ignatius on the Noa app.
Why Gabon’s Coup Is Not the Same
On Wednesday, four days after the country re-elected its incumbent president Ali Bongo, the military in Gabon enacted a coup and put the premier under house arrest. ?
Gabon is a country in West Africa with a population of 2.5 million people. Although the state is resource rich – Gabon pumps out 200,000 barrels of crude oil per day (the tenth biggest producer in the world per capita) – a third of the country lives below the poverty line, according to the World Bank. ?
Bongo’s rule as president, which started in 2009, was preceded by the 42-year reign of his father, who took power three years after Gabon gained independence from France in 1960. Both have been accused of running the country for their own personal benefit.?
In the 2016 election, Ali Bongo overcame his challenger when the final province to count votes reported a turnout of over 99%, edging him to victory. In last month’s election, Bongo’s rival claimed there was electoral irregularities. ?
This is the eighth coup in West or Central Africa since 2020 but this one is more a result of frustrated citizens than security worries, which were at the root of the coup in Niger just over a month ago.?
Listen to A Gabon Coup Would Bring Dramatic End to 55 Years of Bongo Family Rule by Adam Withnall on the Noa app.
Leave 'as Soon as Possible’ - US Embassy
On Wednesday, the US Embassy in Haiti said any Americans should leave the country “as soon as possible” amid ongoing turmoil. ?
The nation of more than 11 million people has long struggled, but recently it started a freefall.?
To name a few issues; a 2010 earthquake killed an estimated quarter of a million people; an ongoing cholera outbreak has resulted in almost a million cases since 2010; 200,000 people are internally displaced due to violence; and it’s reported that 80% of the nation’s capital Port-au-Prince is ruled by gangs.?
The UN Secretary General has called for a UN intervention, but any foreign interference may not be welcomed by Haitians. When the government called for international help last year it resulted in emphatic street protests against the prospect.?
领英推荐
Haiti gained independence from France in 1804 making it the second oldest republic in the Western Hemisphere. But since independence, France and the US have continuously meddled in its politics, making locals sceptical of foreign support.?
The idea of foreign intervention is controversial, so here’s articles with different perspectives:
Listen to Did the UN Cause Haiti’s Nightmare? by Thomas Fazi
A $1 Trillion Credit Card Bill
US households have passed a big milestone – they now have $1 trillion of credit card debt.?
On the surface, this doesn’t seem great.?The average interest rate is almost 21%, and the need to pay this off sucks up cash that could otherwise be spent.?To make matters worse, personal savings have been falling and prices have been rising.?
All in all, these look like the perfect ingredients for a drop in consumption and an economic slowdown.?
But the data suggests something else.?
Historically, credit card balances increase (i.e. people are borrowing faster than they’re paying off debt) when the economy is doing well, and turn negative when the economy is struggling.?
The theory is that rather than using more credit when they are struggling, people use more credit when they’re confident about the future.?So, it may actually be another piece of evidence that the US economy is getting stronger.?
Listen to Credit Card Debt at $1 Trillion Is a Sign of Consumer Strength by Karl Smith on the Noa app.
The Deal of the Year
In March the Swiss government brokered a deal for UBS to takeover its deeply troubled rival Credit Suisse. Five months on, it’s looking like UBS landed the deal of the year.?
In the second quarter of 2023, the enlarged group made a $29 billion pre-tax profit – the biggest quarterly profit in modern banking history.?
It’ll be a one off though as it’s a product of the difference between the almost $4 billion UBS paid and the value of Credit Suisse’s balance sheet.?
Strip that out and the group’s underlying profit was around $1 billion.?
But UBS won’t be going on a spending spree. The vast majority of the profit needs to be retained as banks have to keep a certain level of capital relative to the size of their assets and liabilities.?
Nevertheless, investors were happy and UBS’s share price jumped 7% on the results.
Listen to UBS’s Biggest Win? Escaping Credit Suisse’s Stigma by Paul Davies on the Noa app.
That's our five stories for this week.?Remember this newsletter is on Spotify so you can stay informed on the go.???
This week I have a long read from The New York Times that looks at a fascinating debate about land rights in the Amazon rainforest. Listen here!
Have a great day, weekend and week and enjoy the insights.?If you have any feedback on this newsletter, feel free to contact me?at Jonathan Lewis .?
We'll be back next Friday with five more stories.??
Jonathan.?