Tag Archives: Mexico

Who’s Most Afraid of a Latin American Debt Crisis (Apart from Latin America)? by Don Quijones

Posted on May 12, 2018 | 1 comment

The contagion metaphor often used in debt crises doesn’t really fit. It’s not like an overindebted entity “infects” healthy entities and the disease then spreads. The better analogy is a line of dominoes, and as one domino falls it knocks over a line of other dominoes, and all the dominoes represent overindebted entities. From Don Quijones at wolfstreet.com:

It’s not just countries that are at risk of contagion.

Economic history appears to be rhyming once again in Latin America. Perennial credit-basket-case Argentina was one of the first countries to suffer a major currency crisis this century. Now, its government has asked the IMF for a brand-new bailout. But if this classic last-gasp fix was meant to calm the markets, it isn’t working.

Previous Latin American debt crises have taught us two things:

  1. The direct impact on the general populace, already suffering from sky-high poverty rates, is devastating;
  2. Once the first domino falls, contagion can spread like wildfire.

The debt crisis of the early 1980s, which spread to virtually all corners of the region, famously paved the way to Latin America’s “lost decade.” Mexico’s Tequila Crisis of 1994-5 at one point became so serious that it almost brought down some of Wall Street’s biggest banks.

At the moment, as long as the US dollar and US yields continue to rise, emerging market jitters can be expected to grow. As British financial correspondent Neal Kimberley notes, markets often behave like predators, running down what they perceive as the weakest prey first — a role being filled, with usual aplomb, by Argentina.

Emerging market weakness is by now a generalized trend. The jitters could soon spread to Latin America’s two largest economies, Brazil and Mexico, which between them account for close to 60% of Latin America’s GDP. Both of the countries face general elections in the next two months. In Brazil the most popular presidential candidate, former president Luiz Inácio Lula da Silva, is running his campaign from behind bars, where he serves a prison sentence after having been convicted of corruption. In Mexico, the front runner, Andres Manuel Lopez Obrador, has the country’s business elite so spooked that it has launched a “Project Fear” against his candidacy.

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Posted in Banking, Business, Collapse, Debt, Economy, Financial markets

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Doug Casey on Deploying Troops to the Border

Posted on April 26, 2018 | Leave a comment

Doug Casey finds “intelligent design” and a lot of NGO money behind mass migrations to both the US and Europe. From Casey at caseyresearch.com:

Justin’s note: Donald Trump wants to put 2,000–4,000 troops on the U.S.–Mexico border. And it’s no secret why he’s doing this. Trump wants to secure the borders. He believes that the “security of the United States is imperiled by a drastic surge of illegal activity on the southern border.”

To be fair, this isn’t unprecedented. There have been three large-scale National Guard border missions since 2006. Still, I can’t help but wonder what might come out of this, given Trump’s strong views on illegal immigration.

So, I called Doug Casey for his take on this issue…

Justin: What do you make of this, Doug? Will deploying thousands of troops to the border curb illegal immigration?

Doug: Well, it looks like what could have been a crisis has been temporarily defused. What might have been thousands of migrants rushing the border has apparently dwindled to a few stragglers. A non-event.

But troubles on the Mexican border have a long and colorful pedigree. Especially starting from around 1912–1918. For one thing, one of my favorite authors, Ambrose Bierce, went to join Pancho Villa’s forces in 1913. He was in his 70s, and it was his way of checking out.

There were some great movies made about that time and place, as well. Vera Cruz, with Burt Lancaster. The Professionals, with Burt Lancaster and Lee Marvin. And possibly my personal all-time favorite, The Wild Bunch, with William Holden. There’s even a fun comedy about the era, Three Amigos, with Steve Martin.

In those days the border was a more fluid concept. In 1917, Pershing lead 5,000 US cavalrymen deep into Mexico, chasing Villa after a raid he made into the US. That was about the time of the famous Zimmerman telegram, where the Germans promised help getting Texas, New Mexico and Arizona back to Mexico, if the Mexicans declared war on the US. That was one reason the Americans entered WW1. No matter… the Mexicans will get that land back without a formal attack.

To continue reading: Doug Casey on Deploying Troops to the Border

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Posted in Government, Immigration

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Trump Administration To Release Obama-Era Fast And Furious Documents, by Mac Slavo

Posted on March 9, 2018 | 1 comment

After years of stonewalling, the Obama administration’s Fast and Furious documents are finally going to be released. This should be interesting. From Mac Slavo at shtfplan.com:

We may finally get some answers to the high-level Obama administration’s gun-running scandal dubbed “Fast and Furious.”  The Trump administration is promising to release the documents pertaining to that scandal that were withheld by former Attorney General, Eric Holder.

Operation Fast and Furious was the Obama-era operation in coordination with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) in which the federal government allowed criminals to buy guns in Phoenix-area shops with the intention of tracking them as they were transported into Mexico. But the agency lost track of more than 1,400 of the 2,000 guns they allowed smugglers to buy.

“For over six years, the House Oversight Committee has fought for additional documents related to Operation Fast and Furious. Today, the Committee finally reached a conditional settlement with the Department of Justice,” Amanda Gonzalez, spokeswoman for the House Oversight Committee, said in a statement to Fox News. “The Committee seeks all relevant facts so we can learn from the mistakes made by the Justice Department. We have a responsibility to uncover why they worked so hard to hide this information from the Committee, the family of [slain border patrol agent] Brian Terry, and the American people.”

Brian Terry was killed in 2010 by an illegal immigrant with a weapon used in the botched Operation Fast and Furious. Terry died in a gunfight between Border Patrol agents and members of a six-man cartel “rip crew,” which patrolled the desert along the U.S.-Mexico border looking for drug dealers to rob. The cartel member suspected of killing Terry was apprehended in 2017.

Terry’s brother, Kent Terry also wants the scandal investigated.

“We need to find out the truth, exactly what happened, how it happened, why it happened,” Kent Terry said on Fox & Friends Tuesday. “We need Mr. Trump, President Trump, to unseal the documents, reverse executive privilege so that we know what happened, and that we can hold the people accountable that are responsible.”

To continue reading: Trump Administration To Release Obama-Era Fast And Furious Documents

 

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The Cost of Illegal Immigration, by Ruthie Blum

Posted on February 5, 2018 | 1 comment

The annual costs of illegal immigration to local, state, and the federal government are far higher than the one-time cost of building a wall. From Ruthie Blum at gatestoneinstitute.org:

  • “At the federal, state, and local levels, taxpayers shell out approximately $134.9 billion to cover the costs incurred by the presence of more than 12.5 million illegal aliens, and about 4.2 million citizen children of illegal aliens.” — Matt O’Brien and Spencer Raley.
  • It is also rather more than the single payment of $25 billion that it will cost to build a wall — five and a half times more, and every year.
  • “Undocumented immigrants are at least 142% more likely to be convicted of a crime than other Arizonans. They also tend to commit more serious crimes…” — John R. Lott.
  • In 2015, included in the DEA’s drug-threat assessment was the fact that drug overdoses killed more people in the United States than car accidents or guns. Many of these drugs [were] smuggled in large volumes by drug cartels.”

In his State of the Union address on January 30, US President Donald J. Trump referred to the brutal murder of two 16-year-old girls from Long Island in December 2016 by members of the “savage MS-13 gang,” responsible for a spate of other gruesome killings in the area, as well.

Many of these gang members, he explained, had entered the United States illegally. “For decades, open borders have allowed drugs and gangs to pour into our most vulnerable communities,” he said.

Calling on Congress “to finally close the deadly loopholes that have allowed… criminal gangs to break into our country,” he listed the four pillars of his immigration-reform proposal:

  • A path to citizenship for 1.8 million illegal immigrants who were brought to America by their parents.
  • The construction of a “great wall on the southern border” and enforcement by agents patrolling and securing the border.
  • Ending the visa lottery, “a program that randomly plans out green cards without regard for skill, merit, for the safety of American people.”
  • Ending the “current, broken system” of chain migration of distant relatives, and limiting sponsorships to spouses and minor children.

To continue reading: The Cost of Illegal Immigration

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Posted in Crime, Government, Immigration, Politics

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NAFTA Effect: Global Manufacturers Bet on Dirt-Cheap Mexico, by Don Quijones

Posted on October 27, 2017 | Leave a comment

Mexico’s low wages are still compelling for many manufacturers. From Don Quijones at wolfstreet.com:

That wages have remained so low for so long is not by accident; it’s by design.

President Trump’s repeated bashing of the North American Free Trade Agreement between the US, Canada, and Mexico has failed to dull the allure of Mexico’s maquiladoras for global manufacturers looking to cash in on the country’s much cheaper labor costs. Tecma Group, a firm that helps US and Canadian firms relocate to Mexico, has more business than ever. In the past few weeks alone, it has helped a cleaning equipment company and packaging company move.

Mexico Consulting Associates, headquartered in Chicago, has three new clients interested in Mexico. Keith Patridge, who heads McAllen Economic Development, estimates that at least 12 companies will be installed this year in the north-western city of Reynosa. Another firm, Tacna Services, has helped two companies get set up in the Baja California area.

The southward migration of U.S. companies continues unchecked even as Trump threatens to abandon NAFTA, provoking fear and consternation among manufacturers that have production and supply chains spread across the three countries. If Trump followed through on his threat, traded goods would be subject to tariffs of around 3.5% in the case of Mexican companies and 7% in the case of US ones, according to Benito Barber, an economist for Latin America for Nomura Holdings.

On Tuesday a new coalition of major automakers, suppliers, and car dealers urged Trump not to withdraw from NAFTA. The members of the “Driving American Jobs” coalition include trade associations that represent major global car manufacturers such as General Motors, Toyota Motor, Volkswagen, Hyundai Motor, and Ford Motor.

The coalition has sponsored an advertising campaign aimed at convincing the White House and American voters that NAFTA has been instrumental in boosting production and employment in the US auto industry — a dubious claim given that all global vehicle manufacturers, which can manufacture just about anywhere in the world, always search for cheap labor to maximize the bottom line.

And in NAFTA-land the cheapest labor is in Mexico, where assembly line workers earn an average hourly wage of around $2.50. The average hourly wage for workers in US motor vehicles manufacturing is $28.70 and in auto parts manufacturing it’s $18.19, according the Bureau of Labor Statistics.

To continue reading: NAFTA Effect: Global Manufacturers Bet on Dirt-Cheap Mexico

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Posted in Business, Economics, Geopolitics, Governments

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Thoughts from Below the Rio Bravo: A Preliminary to Going into Hiding, by Fred Reed

Posted on September 1, 2017 | Leave a comment

Fred Reed engages in an uncommon exercise: he’s an American trying to look at America from a foreign perspective. He will, as he knows, take his share of shots (SLL knows how it feels). From Reed, at theburningplatform.com:

To understand of many Mexican attitudes toward the United States and immigration, you have to go back to the Mexican-American War of 1846-48, of which most Americans have never heard. The United States attacked Mexico in a war of  territorial acquisition, occupied Texas, California, New Mexico, and Arizona, and drove south to conquer Mexico City. It did it because it could.

The attitude of Americans who have heard of the war is usually, “Get over it.” Mexicans have not gotten over it. People get over things they have done to others more easily than they get over things others have done to them.  Tell Americans to “get over” Nine-Eleven, or Jews to get over Germany.

There is in Guadalajara a large and prominent monument to Los Niños Heroes, the adolescent cadets who marched out to defend Chapultepec as the Americans conquered Mexico City, much as the VMI cadets tried to defend Virginia in the Civil War. Countless Mexican towns have a street called Niños Heroes. They remember.

The base of the monument to Los Niñoes Heroes in Guadalajara. It reads, “Died for their country.” You know, like Iwo Jima and all.

This does not make for a keen appreciation of the Exceptional Nation. Nor does memory of the conquest arouse sympathy about immigration–or, as Mexicans see it, emigration. It explains the occasionally heard phrase, “La Reconquista.”

Throw in the drumbeat from racialist sites to the effect that Mexicans are stupid, filthy, criminal, and parasitic, and Trump’s asserting that they are rapists and what all, which resonates in Mexico as Hillary’s Deplorables speech did in Middle America. And of course there was the bombardment of Veracruz, of which Americans have never heard, and  Pershing’s Incursion, and Washington’s history of attacks, invasion, installation of dictators in Latin America and support for others.

To continue reading: Thoughts from Below the Rio Bravo: A Preliminary to Going into Hiding

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Posted in Foreign Policy, Geopolitics, Governments, History, Immigration

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After Fake Promises of Transparency, NAFTA Negotiations Start in Secrecy. And Lobbying is Heating Up, by Wolf Richter

Posted on August 19, 2017 | 1 comment

Meet the new trade agreement, same as the old trade agreeement. From Wolf Richter at wolfstreet.com:

Americans aren’t allowed to know what’s being negotiated at their expense.

The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy.

But corporate lobbyists have access. And they’re all over it.

The Electronic Frontier Foundation put it this way:

Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.

But during his confirmation hearing in March, Lighthizer had promised to make the negotiations transparent and to listen to more stakeholders and the public. The EFF reported at the time that in response to Senator Ron Wyden question – “What specific steps will you take to improve transparency and consultations with the public?” – Lighthizer replied in writing (emphasis added):

“If confirmed, I will ensure that USTR follows the TPA [Trade Promotion Authority, aka. Fast Track] requirements related to transparency in any potential trade agreement negotiation. I will also look forward to discussing with you ways to ensure that USTR fully understands and takes into account the views of a broad cross-section of stakeholders, including labor, environmental organizations, and public health groups, during the course of any trade negotiation.

He said that “we can do more” to ensure that we “have a broad and vigorous dialogue with the full range of stakeholders in our country.”

Senator Maria Cantwell tried to have Lighthizer address the skewed Trade Advisory Committees that currently advise the USTR, by asking:

“Do you agree that it is problematic for a select group of primarily corporate elites to have special access to shape US trade proposals that are not generally available to American workers and those impacted by our flawed trade deals?”

To continue reading: After Fake Promises of Transparency, NAFTA Negotiations Start in Secrecy. And Lobbying is Heating Up

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To Ted Cruz: Further Militarizing Mexico’s Drug War Is a Horrible Idea, by Brain Saady

Posted on June 22, 2017 | Leave a comment

Ted Cruz proposes spending billions more on the futile drug war, sending the US military down to Mexico to help its government. At least now you’re not considering a flaming crazy if you suggest legalizing various drugs. The needle moves, but slowly. From Brian Saady at antiwar.com:

Ted Cruz recently provided an exclusive interview to Breitbart News. He asserted that the U.S. military should be working in conjunction with the Mexican government to fight the cartels. He didn’t suggest a full-scale invasion, but he did propose something similar to our program, “Plan Colombia.”

If you’re not familiar, Plan Colombia is officially the U.S. foreign military aid program for Colombia aimed at preventing drug trafficking. The U.S. has provided the Colombian government with $10 billion of military aid over the last 15 years.

Senator Cruz said of Plan Colombia, “It was treated less as a law enforcement matter than as a military matter. Where our military went into Colombia and helped destroy the cartels.” His assessment was partially accurate because Plan Colombia isn’t purely an anti-drug strategy. Instead, it is essentially part of a broader U.S. geopolitical strategy in which our country uses the pretense of the drug war to resurrect Cold-War-style intervention.

However, Cruz’s belief that Plan Colombia helped defeat the cartels is completely wrong. First of all, that gives the impression that the program effectively reduced drug production. That couldn’t be further from the truth. The White House released a report in March stating that cocaine production in Colombia had reached record levels last year, roughly 710 metric tons.

Secondly, the program went into effect in 1999, which was many years after the Medellin Cartel had fallen and not long after the leadership of the Cali Cartel had been captured. Plan Colombia was first implemented when the most powerful drug trafficking organizations weren’t traditional crime organizations. Instead, the drug trade was fueling the country’s civil war between the right-wing paramilitary group, the AUC, and the communist rebels, the FARC.

Proponents of Plan Colombia believe that U.S. military support was a factor that led to the eventual disarmament of the FARC and the end of Colombia’s 52-year civil war. That point is debatable. But, even if you concede it, “peace” was reached at what cost?

To continue reading: To Ted Cruz: Further Militarizing Mexico’s Drug War Is a Horrible Idea

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Posted in Crime, Foreign Policy, Geopolitics, Governments, History, Uncategorized

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Mexico’s Economy Is Being Plundered Dry, by Don Quijones

Posted on April 20, 2017 | Leave a comment

Debt and corruption will be the ruination of Mexico. From Don Quijones at wolfstreet.com:

Debt is suffocating the economy, but where did the money go? 

The government of Mexico has a new problem on its hands: what to do with the burgeoning ranks of state governors, current or former, that are facing prosecution for fraud or corruption. It’s a particularly sensitive problem given that most of the suspects belong to the governing political party, the Institutional Revolutionary Party (PRI), which ruled Mexico uninterruptedly from 1929 to 2000. It returned to power in December 2012 with the election of Enrique Peña Nieto. And it clearly hasn’t changed its ways.

Some of the accused governors were so compromised they went on the run. In the last few weeks, two of them, Tomás Yarrington, former state governor of Tamaulipas, and Javier Duarte, former governor of Veracruz, were tracked down. Yarrington, accused of laundering proceeds from drug trafficking as well as helping Mexico’s Gulf Cartel export “large quantities” of cocaine to the United States, was ensnared by Italian Police in the Tuscan city of Florence. He faces possible extradition to the United States.

Yarrington’s successor as governor of Tamaulipas, Eugenio Hernández, a fellow PRI member who is also accused of close ties with narcotraficantes and money laundering, has not been seen in public since last June.

As for Duarte, he was caught this week by police in Guatemala. Like Yarrington, he wasn’t exactly laying low. Among the accusations he faces is that of buying fake chemotherapy drugs, which were then unknowingly administered by state-run hospitals to children suffering from cancer. He and his cohorts purportedly pocketed the difference. He is also alleged to have set up 34 shell companies with the intention of diverting 35 billion pesos (roughly $2 billion) of public funds into his and his friends’ deep pockets.

In just about any jurisdiction on earth, $2 billion is a substantial amount of money, even by today’s inflated standards. But in Mexico, where neither the super rich (accounting for a very large chunk of the country’s wealth) nor the super poor (accounting for roughly half of the population) pay direct taxes of any kind, it’s a veritable fortune.

To continue reading: Mexico’s Economy Is Being Plundered Dry

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Posted in Collapse, Crime, Cronyism, Debt, Government

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Is Mexico Facing “Liquidity Problems?” by Don Quinines

Posted on March 5, 2017 | Leave a comment

Mexico isn’t in a deep debt hole yet, but it’s certainly digging. From Don Quijones at wolfstreet.com:

When it comes to debt, everything is relative, especially if you don’t have a reserve-currency-denominated printing press.

At 49% of GDP, Mexico’s public debt may seem pretty low by today’s inflated standards. It’s a mere fraction of the debt loads amassed by bigger, richer economies such as Japan (229% of GDP), Italy (133%) and the United States (104%). But when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press.

In Mexico’s case it’s not so much the size of the debt that matters; it’s the rate of its growth. In the year 2000 the country had a perfectly manageable debt load of roughly 20% of GDP. Today, it is two and a half times that size.

Last year alone the Mexican state issued a grand total of $20.31 billion in new debt, the largest amount since 1995, the year immediately after the Tequila Crisis when the country needed an international bailout to rescue its entire banking system from collapse. The money it received also helped repay a number of giant Wall Street investment banks that had gone all in on Mexican assets.

There are plenty of reasons behind Mexico’s current debt issues. Top of the list is the dramatic reversal of fortunes of the country’s shrinking oil giant Petróleos Mexicanos, A.K.A. Pemex, which until a few years ago provided as much as one-third of the Mexican government’s national budget. After decades of “bad management, lack of vision, negligence, abuse and in many cases, corruption,” in the words of Mexico’s Business Coordinating Council, Pemex is now bleeding losses and buckling under €100 billion of debt.

If Pemex is unable to service its debts, Mexico’s government will have to step in, again. The problem here is that Mexico’s government is also struggling to rein in its own debt addiction, with some states already on the verge of bankruptcy. One state governor, Javier Duarte of Veracruz, did so much fiduciary damage during his mandate that he’s now on the run after allegedly misappropriating vast sums of public funds.

To continue reading: Is Mexico Facing “Liquidity Problems?”

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Posted in Debt, Economy, Government

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