Saturday, March 7, 2009

The Mexican economy in 2008 and early 2009

So how is Mexico doing from an economic perspective?

For months, Mexican officials boasted their country was shielded from the worst ravages of the global economic crisis. Although President Felipe Calderon periodically rails against "doomsayers," reality is beginning to slap Mexico City in the face. Daily media reports detail the extent and depth of the economic problems descending on the nation.

According to the National Institute of Statistics, Geography, and Informatics, Mexico shed 750,000 jobs in 2008 alone, bringing the always officially low unemployment rate to its highest level since 2005....

The daily La Jornada reports $50 billion in foreign capital fled the country last year, and for the first time in recent years Mexican treasury bonds are losing their investment attractiveness. Mexico's banking sector has so far not exhibited the fatal weaknesses afflicting counterparts in the United States and Europe, but plenty of warning signs abound. According to Mexico's Banking and Securities Commission, the value of bad credit card debt shot up from $1.3 billion in November 2007 to more than $3 billion in November 2008.

But there is a lot of activity in one sector of the economy:

Although long operating in the shadows of Mexican society, the narco underworld is becoming more and more public. In big cities and small towns, messages against rivals that amount to political propaganda are draped from overpasses. An imprisoned old-school capo, Miguel Felix Gallardo, has his own website complete with Elvis-like photos. Allegedly, recent street demonstrations against the Mexican Army in a broad geographic swath of the country were financed by the narco.

Mexico's legions of struggling farmers, countless army deserters, and idle youth provide constant fodder for a narco-economy packed with hundreds of thousands of small-scale producers, processors, transporters, street dealers, look-outs, and hitmen. Jobs remain plentiful in the narco-economy, but the average life span of its workers is getting shorter and shorter.

More here.
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