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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:15 AM
Original message
Mexican economy in free-fall
The Mexican economy shrank at an annual rate of 10.3 percent in the second quarter of 2009... a continuing deceleration for the economy, an increase over the six-month average decline of 9.2 percent for the first half of 2009...Among the worlds major economies, only that of Russia has contracted more than Mexicos, about 10.9 percent.

The third second quarter contraction follows a drop of 8 percent in the first quarter and 1.6 percent in the fourth quarter of 2008...By far the largest drop was in services associated with tourism, 17.1 percent, followed by manufacturing, 16.4 percent.

The drop in GDP has been accompanied by a crisis in the peso/dollar exchange rate...

Since the imposition of the North American Free Trade Agreement in 1992, the economies of the United States and Mexico have become much more closely integrated. Mexico transformed itself from an economy that relied mostly on domestic demand less than 10 percent of GDP was involved in foreign tradeto an export platform, with over 30 percent of its GDP involved in foreign trade...Sixty percent of Mexicos imports...and two thirds of capital investments come from the United States. Over 90 percent of Mexicos exports go to the US. In 2008 the total value of exports fell by 34 percent, while imports fell by 33 percent. This includes a 54 percent drop in the dollar value of oil exports.

Among the commodities that Mexico exports is labor power. US corporations depend on a supply of labor power from Mexican workers for their plants in Mexico and the United States. The remittances of the latter, a major source of income for millions of Mexican families, are crucial for Mexicos GDP...

Since June 2008, the Mexican economy has lost 232,000 jobs, while the informal sector gained 99,000. If one adds this last group to the unemployed, the actual rate of unemployment would exceed 20 percent of the labor force. Such rates approach those of the 1930s and far exceed the jobless rates generated by the economic crisis of 1994...

At the same time, the Central Bank, with its policy of selling dollars to prevent the collapse of the peso, in effect has drastically reduced the money supply, increasing interest rates and further restricting economic activity...

The contractionary measures have been dictated by Wall Street. Last November, Fitch Ratings, a Wall Street Bond rating agency, gave a negative assessment of Mexican government debt. In May of this year, Standard and Poors also gave a Mexico a negative rating. Both agencies had threatened to reduce the governments bond rating, presently at BBB+, three steps above junk bond status. In effect...denying Mexico, a semi-colony of the US, the kind of bailout they have granted themselves...

http://www.wsws.org/articles/2009/aug2009/mexi-a26.shtm...



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raccoon Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:19 AM
Response to Original message
1. Kick. nt
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lapfog_1 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:29 AM
Response to Original message
2. And another factor in the Mexican economy collaspe...
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:38 AM
Response to Reply #2
4. hmm - no money to invest in their national oil industry.
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Terry in Austin Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:43 AM
Response to Reply #2
6. For non-clickers : it's oil
> another factor in the Mexican economy collaspe...

Drastic declines (13% last year) in Mexico's oil production.

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lapfog_1 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:45 AM
Response to Reply #6
7. Thanks, I should have identified it myself.
Too busy keeping up on the news this am.
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Toucano Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:33 PM
Response to Reply #6
11. Thanks.
I guess I am outed as a non-clicker.

;)
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imdjh Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 01:09 PM
Response to Reply #6
15. Then why is the price of gasoline higher than a recent low?
Who's tweaking the price of gasoline. Why can't Venezuela and Mexico dump gasoline on US markets?

Do Venezuela and Mexico actually produce gasoline? Do they have refineries?
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a la izquierda Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 01:14 PM
Response to Reply #15
16. Mexico produces and refines...
but the problem is that the infrastructure hasn't been updated in decades. And, add to that, decreasing supplies...
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subcomhd Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 12:14 AM
Response to Reply #15
20. That was an issue in the last presidential election
the PRD (now unfortunately in chaos) wanted to increase their refining capacity. My understanding is a lot of their oil gets refined in Texas.
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NickB79 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-28-09 01:15 AM
Response to Reply #6
28. Mexico has met Peak Oil. nt.
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truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:35 PM
Response to Reply #2
12. It is my understanding that the three major sources of revenue
For Mexico's economy have been:
Illegal drugs and all that entails (Including massive amounts of bribe money)

Tourism

Money sent back into the country by those who have gone north for work. (Some 80 billion a year.)

Money sent back has dropped significantly - as those who normally would find work in the USA are affected by the huge crash in the trades that came about once the housing market fell apart.

And Mexico's decision to eliminate some penalties on many different drugs might very much help tourism. Tourists have long been wary of the Federales, but now that the Mexican police have NO opportunity to hassle anyone over small amounts of drugs, tourism may revive.


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endless october Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:34 AM
Response to Original message
3. NAFTA is really kicking ass for them.
oh, whoops. no it's not.
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Selatius Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:39 AM
Response to Reply #3
5. It's kicking Mexican ass, but the elites that signed onto NAFTA probably don't give a rat's ass.
Mexico is a country that is cursed with a terribly corrupt government.
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Initech Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 11:54 AM
Response to Original message
8. A coworker and I were talking about this the other day.
He's Mexican and he said that he wouldn't go to Mexico right now for any amount of money because of the cartel wars. That's when you know things are *REALLY* fucked up! :scared: :yoiks:
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ThomWV Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:36 PM
Response to Reply #8
13. and the pity is in knowing that when lawless groups fight for contol lawlessness prevails
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a la izquierda Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 01:16 PM
Response to Reply #8
17. Ah, jeez, it's not that bad.
I've spent 3/4 of the last year there.

However, to be fair to your coworker, it depends on where he's from (or wants to go). The border and the state of Sinaloa are insanely dangerous. I was all over Mexico and didn't have so much as an iota of a problem.

Note: I'm not Mexican, either.
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Initech Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 10:53 PM
Response to Reply #17
19. I think he's from a border state but I'm not sure which one.
I'd definitely stay away from that area though. I've heard several reports of really crazy shit happening in Tijuana.
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a la izquierda Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 06:50 AM
Response to Reply #19
23. That definitely makes sense.
The border region is a bit of a mess right now, in most areas. I wouldn't go there if you paid me.

But the rest of Mexico? It's fine, so long as you're careful and don't call undue attention to yourself.
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ananda Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:13 PM
Response to Original message
9. Fuck NAFTA. Fuck Free Trade.
Pure evil.
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LuckyLib Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:31 PM
Response to Original message
10. I work and travel in Mexico often. It's a wonderful country, continually
screwn by MSM portrayals of the country as teeming with drug warfare and swine flu. Neither is the case. The cartels are targeting each other and have a very specific agenda -- they are not interested in average folks, tourists or otherwise, who go about their daily business.
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murray hill farm Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 12:39 PM
Response to Reply #10
14. Soooooooo true!
The border towns...equally miserable places on both sides of the border...are the picture we always get of Mexico as a whole. Just not true. Mexico is a wonderous and beautiful and friendly country.
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rapturedbyrobots Donating Member (364 posts) Send PM | Profile | Ignore Thu Aug-27-09 12:58 AM
Response to Reply #10
22. don't be so cavalier
...with other people's lives. the border region is very VERY dangerous. i am mexican and from el paso, tx right on the border with juarez. much of my family lives on both sides of that border. juarez is basically under military occupation. many, many businesses have shut down because people are too afraid to go out and shop. this is especially true of the restaurant/bar/night club entertainment industries. all of the good places to eat, drink and party used to be on the mexican side of the border as they all served as fronts for laundering cartel money. of course, these are the first places to be targeted during the cartel wars. they may have a 'specific agenda' but when cartel hitmen come in guns blazing they don't care who else gets caught in the cross fire i can guarantee that. my dad's friend, who owned a few restaurants/bars/clubs, was gunned down as he came out of one of his newer and trendier bars, the b bar. the two girls walking with him (one a friend of my cousin) also caught bullets. the last time i was home, i wanted to take my girlfriend to my favorite restaurant in juarez. after much pleading my mom finally convinced me not to go. 14 people were gunned down there that same night. so please, don't downplay the violence and the danger. people should be very very cautious if they have to go to the border region right now. and i would advise you to just stay away if you can.

but mexico is very large, and the central and southern regions are still very safe and enjoyable. i was just in guadalajara and guanajuato recently and it was great.
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LuckyLib Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 06:31 PM
Response to Reply #22
26. It goes without saying that the border region, particular urban areas in Sinaloa, is a nightmare.
If you're planning to travel in Mexico, you'd probably avoid cities like Tijuana and Juarez. Particularly nightlife, nightclubs.

But the portrayal of all of Mexico as profoundly dangerous angers me -- the MSM, the cable news crazies, have done a huge disservice to a wonderful country.
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HamdenRice Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-26-09 01:51 PM
Response to Original message
18. Might be true. Might not be true. The reality has no correlation with what is written in WSWS.
That's the problem with citing to WSWS. It could be true or could be a complete fabrication.

They are documented liars, so just because they posted it -- well, that has no bearing whatsoever on what may or may not actually be happening.
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 11:39 PM
Response to Reply #18
27. you know what, hampton? no one cares, the 333th time you post it.
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Rex Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 12:15 AM
Response to Original message
21. No big deal, just throw money at the problem until it 'goes away'...
No one counts the trillions anyway, who takes notes these days?
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mucifer Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 08:01 AM
Response to Original message
24. I wonder how much damage factory farming has done to Mexico.
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Blue_Tires Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-27-09 08:36 AM
Response to Original message
25. it was mentioned elsewhere that
the Mexican Gov't is just too small, centralized and ineffective to govern a nation and population of that size...and i imagine their income disparity is one of the worst in the hemisphere...
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