Recommended Weekend Reads

Business Strategy in a New Geopolitical Age, Chile’s Libertarian Presidential Candidate, One Moment and Two Speeches, Data Center Energy Demands, and What is the Mar-a-Lago Accord?

March 14 - 16, 2025

Below are our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend.   And let us know if you or someone you know wants to be added to our distribution list. 

Business Strategy in an Age of Heightened Geopolitical Risk

• How to Strategize in an Out-of-Control World       MIT Sloan Management Review

  During the past few years, company strategies have been disrupted repeatedly by major shocks like the COVID-19 pandemic, the outbreak of war in Ukraine and the Middle East, and breakthroughs in generative AI. In the first months of 2025, a stream of political surprises has been impacting company agendas — and further upheavals seem likely.   This turbulence is having a real impact on business: Our analysis of nearly 7,000 organizations over a 20-year time frame shows that variance in company profitability can increasingly be attributed to factors that lie beyond the company and its industry. (See “What Shapes Profitability?”) Contextual factors — like geopolitics, technology, and climate — now account for 43% of the variation in the net profit margins of public corporations.

The Indo-Pacific

• Conversations: China’s Naval Flotilla and Australia’s Response    Lowry Institute Podcast

  Defence analyst Marcus Hellyer talks with the Lowy Institute’s Sam Roggeveen about the unprecedented appearance of Chinese warships off Australia’s east coast. What message was Beijing sending? How well did Australia’s defense force perform in response? And what are Australia‘s future options with the United States in retrenchment?

• One Moment, Two Speeches   Center for Strategic and International Studies

  Two weeks ago, the world’s two most powerful countries witnessed a rare moment of symmetry. On March 4th  at 9:00 pm US EST, President Donald Trump strode into the Capitol to give his second administration’s first address to a joint session of Congress. Meanwhile, on the other side of the planet, at 9:00 am Beijing time, Chinese Premier Li Qiang was just finishing up his speech summarizing the annual Government Work Report(GWR) to the National People’s Congress. Both are two countries’ key national annual addresses in which the executive reports on the state of the country to the legislative branch. This side-by-side moment highlights not only major differences in the political systems and political theater, but also some surprising similarities in substance as well.

• Trump-ism and East Asia    Global Policy/Durham University

  Alastair Newton argues that Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for economies in East Asia which may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

Latin America

• The Radical Libertarian Reshaping Chile’s Presidential Race   Americas Quarterly

  He’s been called the “Gabriel Boric of the right”—maybe because, like Chile’s young president, he wears a beard and made a name for himself criticizing the country’s political establishment. But Johannes Maximilian Kaiser Barents-von Hohenhagen, 49, objects to the comparison.“ Kaiser, who proudly describes himself as a “reactionary,” is now taking a turn in the spotlight after a recent poll showed him tied for the lead in October’s presidential election. He is the latest right-wing populist in Latin America to channel widespread frustration with crime, immigration and politics as usual, although his story has some distinctly Chilean twists.

•  Inside a Mexican Cartel ‘Extermination’ Camp: Ovens, Shoes, and Teeth    Washington Post

  For months, the tips had been appearing on a Facebook page. There was a mass grave hidden in a rural village outside Guadalajara, in western Mexico, the messages said. Mexico has grappled for years with a crisis of disappearances, with more than 110,000 people reported missing. Relatives of the disappeared have unearthed hundreds of graves filled with corpses. This seemed like another. But the people who ran the Facebook page — a group in Jalisco state who search for the missing — were puzzled. After getting more anonymous tips, Indira Navarro, head of the group, and dozens of other victims’ relatives arrived on March 5 at an abandoned ranch outside La Estanzuela and started poking around. They dug up three underground ovens. They found hundreds and hundreds of singed bone shards — from skulls, fingers, teeth. It was what Mexicans call an “extermination camp.” But the image that’s really stunned Mexicans was of the shoes. There were piles of them — well over 200. The camp is a sign of how much criminal groups have penetrated the Mexican economy. They don’t just traffic drugs to the United States; they extort businesses, “tax” migrant smugglers, and run vast networks of contraband goods, from gasoline to wood.  Navarro’s group believes the ranch in La Estanzuela was a recruiting and training center for one such crime group. The area is dominated by one of the country’s largest cartels, Jalisco New Generation (CJNG).

American’s View of Currencies

• Cryptocurrency Ownership among U.S. Households     Federal Reserve Bank of St. Louis

  Cryptocurrency has become more prevalent since it first entered the global economy. However, no consistent measurement of cryptocurrency ownership among American households has emerged. This blog post uses what data are available through the Survey of Consumer Finances (SCF) to estimate the distribution of cryptocurrency ownership in the U.S., finding that roughly 4.3% of Americans held such assets.

• Thoughts for Your Penny?    Hoover Institution

  One of the concepts you come across in a well-taught monetary economics course is the idea of seigniorage. An online dictionary does a pretty decent job of defining it: “The profit made by a government by issuing currency, especially the difference between the face value of coins and their production cost.” Although the definition highlights coins, the concept applies to paper money also.  The US government makes a pretty penny (pun intended) on seigniorage. It’s not as much as it used to be because more and more people use credit cards and even cryptocurrency to buy goods and services. Still, it’s a good amount.  The biggest gain from seigniorage is on the $100 bill. Printing one costs the federal government just 9.4 cents.

  So, when the feds spend this $100, they make a nice profit of $99.90. Not bad. Printing a $1 bill costs the feds 3.2 cents. So even on a $1 bill, the feds make 97 cents.  But minting small coins loses money for the feds. In its 2024 Annual Report, the US Mint reports the cost of producing each coin denomination. The cost of producing a penny was $0.03. In other words, the cost of producing a penny was three times the value of the penny. Interestingly, the feds went underwater even on the nickel, whose cost, at $0.11, was over twice the value of the nickel. That’s why I stated earlier that the federal government should stop producing nickels also. It isn’t until you get to the dime that you find a coin that the feds make money on. Interestingly, the cost of producing a dime, at $0.045, is less than the cost of producing a nickel.

the Race for Critical Minerals and the Growing Electrical Demand for Data Centers

• Who is Paying for all that data center power?   Volts Podcast/Substack

  In this episode, Harvard Law's Eliza Martin and Ari Peskoe unpack how data centers' skyrocketing electricity demand could leave ordinary customers subsidizing Big Tech's power bills. Most chilling is the potential alliance between utilities and tech giants that threatens to derail much-needed utility reforms while entrenching fossil-fueled infrastructure.

• The Potential for Geothermal Energy to Meet Growing Data Center Electricity Demand   Rhodium Group

  Next-generation geothermal energy has a number of advantages in meeting growing electricity demand from data centers. This report estimates how much of this demand could potentially be served by geothermal over the next decade.

• Why the U.S. Keeps Losing to China in the Battle Over Critical Minerals    Wall Street Journal

  The U.S.’s desperate need for critical minerals—which include resources such as nickel, lithium and cobalt in addition to graphite—has been underscored by the Trump administration’s aggressive push for greater access in Ukraine and Greenland, rattling allies. In December, Beijing said it would ban certain mineral exports to the U.S. and conduct stricter reviews of graphite sales, in response to U.S. restrictions on semiconductor exports to China.   Yet with its thumb on many of the best resources, China can dictate prices. Washington’s policy flip-flops keep blowing up miners’ plans. And many Western mining companies struggle to navigate higher-risk countries where critical minerals—all needed for green technologies and national defense—are prevalent, leaving them flat-footed when unrest erupts. 

The Mar-a-Lago Accord: What Is It?  Will It Happen?

• What is the Mar-A-Lago Accord?              Apollo Academy/Apollo Capital Management

  The always brilliant Torsten Slok explains is brilliantly: The US dollar is the global reserve currency because America is the most dynamic economy in the world, and the US provides stability and security. As a result, there is upward pressure on the US dollar because everyone wants to own the world’s safest asset.  This safe-haven upward pressure on the dollar overwhelms the negative impact on the dollar coming from the US current account deficit. With safe asset flows putting constant upward pressure on the dollar, there is a need for a deal—a Mar-a-Lago Accord—to put downward pressure on the US dollar to increase US exports and bring manufacturing jobs back to the US. The Mar-a-Largo Accord is the idea that the US will give the G7, the Middle East, and Latin America security and access to US markets, and in return, these countries agree to intervene to depreciate the US dollar, grow the size of the US manufacturing sector, and solve the US fiscal debt problems by swapping existing US government debt with new US Treasury century bonds. In short, the idea is that the US provides the world with security, and in return, the rest of the world helps push the dollar down in order to grow the US manufacturing sector

•   Meeting in Mar-a-Lago: is a New Currency Deal Plausable?              Atlantic Council

  In 1985, finance ministers from France, Germany, Japan, the United Kingdom, and the United States came to an agreement in the Plaza Hotel in New York City to intentionally devalue the US dollar. In the five years leading up to the Plaza Accord, the US dollar had doubled in value, threatening to upend global trade and destabilize the international financial system. Today, Washington is once again chattering about the possibility of a currency deal. This time, the venue may move south for what Trump’s incoming chairman of the Council of Economic Advisers, Stephen Miran, described as a “Mar-a-Lago Accord.” In a September report, Miran declared the overvaluation of the US dollar responsible for the “roots of economic discontent.”
  

• Mar-a-Lago Accord, Schmar-a-Lago Accord  Steven Kamin/Mark Sobel/Financial Times

  In recent weeks, the buzz has been mounting about a new American plan — a “Mar a Lago Accord” — to upend the global monetary system. We can only hope it remains idle chatter. In brief, based on a detailed discussion paper by CEA Chair nominee Stephen Miran, the accord would have America’s trading partners help weaken the dollar and commit to providing low-cost, long-term financing to the US government, enforced by the threat of higher tariffs or removal of security guarantees.   Intriguingly, there has been no announcement by the Trump administration or even a tweet by Trump, but Miran’s paper — along with various utterances by Treasury Secretary Scott Bessent — have led Wall Street observers to believe such an initiative is indeed in the offing. And that’s too bad, because a Mar-a-Lago Accord would be pointless, ineffectual, destabilizing, and only lead to the erosion of the dollar’s pre-eminent role in the global financial system.