Let’s see… gang lords are dueling with “Los Federales” as well as the local cops (at least the ones they haven’t bought off yet), mostly using arms “imported” from the U.S., to insure the safe passage of drugs through Mexico to its biggest, baddest buyer (the U.S.); the violence across the nation wasn’t bad enough so they made sure that outbreaks of A/H1N1 flu (swine time) kept hotel occupancy in resort towns to ghost town levels; one fifth of the Mexican economy was generated by hot manufacturing demand from Mexico’s friendly neighbor to the north – but consumer demand is hemorrhaging red ink in this country; and Mexico’s economy makes even California look good!
The numbers get downright nasty. If we compare first quarter performance (GDP change, 2008 to 2009) as did the Wall Street Journal in their warm and fuzzy WORLD ECONOMIES PLUMMET headline on May 21st, we can see that the U.S. sucks with a 6.3% contraction, Germany is flailing with a 14.4% downfall, Japan jerks desperately down with a 15.2% drop and then there is Mexico… oh my God, there is Mexico… a 21.5% plunge off the cliff (and we’re not talking pearl divers!). They recently even had to withdraw a governmental bond issue from the international market (they run a deficit too) when there were almost no takers.
Tourists? Not even swine tourists? Revenues from this critical sector, its third biggest market segment (employing 2 million people), were $13 billion last year… $9 billion in 2009 if they’re lucky. Last year at this time, hotel occupancy was at a healthy 74%, and now it’s an “echo-in-the-halls” 29%!
Mexico was “blessed” with being a large vendor-manufacturer to the American automakers… how nice. Just visualize the factories and the workers down there with a 41% decline in orders. Yes, Mexico is a major oil producer, and yes, oil prices recently crossed the $60 marker on their way up. But while the big fall in the price of oil has hurt our love-buddies, Iran and Venezuela (hey Mahmoud and Hugo!), it also tanked (sorry) Mexico ’s economy down to yet another grungy level.
Mexico ’s rich families are not really very good at paying taxes, so that nation has pretty much squeezed off every (government owned) oil dollar they could … not reinvesting money in deteriorating equipment or upgrading their drilling technology. When the oil money comes in, there is so much need at every level for every dollar that this equipment may fail, sequentially, at a critical time in Mexico ’s future and most certainly will result in vastly reduced output at a minimum.
Okay, there are lots of countries out there much worse off than Mexico – large chunks of Eastern Europe for example – but the big difference is that Mexico is on our border. Their problems are, like it or not, our problems. China, India, Brazil… there’s real growth in them thar hills… in Mexico, there is a sad reality that if American spending habits do not resume to pre-meltdown levels soon (and remember, this has been what many believe is a permanent “reset” with U.S. unemployment expected to linger all the way through 2010), Mexico is looking “bleak” in an ugly staredown. Must be comforting for Mexicans living in Baja California that their neighboring state to the north is also having a really bad time.
I’m Peter Dekom, and we can go back to feeling sorry for ourselves now.
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