Is Mexico a Failed Narco State on The Verge of Economic Collapse ?

Mexico being the 11th world economy in nominal terms and 15th in purchasing power, it is evident that it is a country that can't be ignored as a third world country anymore. Even after being struck during the 1994 crisis, low blows in the 2001 crisis, and then again facing significant drawbacks in the 2008 recession Mexico still remains a stable macroeconomic country. Though the extent of influence of the South American Crisis was not much, during the 2008 recession, the Gross Domestic Product contracted by more than 6%. Till the new president took office in December 2018, Mexico had an envious economic position in Latin America and other emerging markets. Its economic growth for the last 30 years has averaged roughly 2.1%. Mexico has reduced its growth forecast for 2019: from 2% to 0.2%. It seems the country is on the brink of a crisis: investors are running away from the country, and the rating agencies are drawing a wrong forecast for the country. Why? One of the main reasons might be the new president: Andres Manuel Lopez Obrador, also known as AMLO. But wait a minute! By the time we make this video, AMLO has been in power for precisely one year. Is this long enough to dismantle the whole Mexican economy? The truth is AMLO’s first months have been anything but quiet. This political leader promised radical changes, and he is delivering! Unfortunately for the Mexican economy, their new president, Andres Manuel Lopez Obrador, who, with a totalitarian control in both houses, is transitioning the country into an authoritarian communist regime. And as history has shown in Latin America(Cuba, Venezuela, Nicaragua), these types of regimes are not great for their economies. Mexican economy in 2019. Data up until October; has shown economic stagnation at 0% growth. And Mexico's outlook from most financial rating agencies is negative. Unemployment has risen, private investment has been daunted to unprecedented lows in the last 15 years, public investment is concentrated in clientelistic social programs and non-productive projects(cancellation of a major airport, an oil refinery with 2% feasibility, a touristic train costing around 10 billion dollars). In summary, although Mexico has enjoyed a strong emerging economy during the last 30 years, in 2019, this is changing, and Mexico is under risk of an economic crisis that would weaken its strong modern economic growth streak. Mexico depends on the Remittances of its immigrants in the US. Mexico depends on the US Dollar. Mexico's economy depends on the USA. Mexico fell into the neoliberalism trap 35 years ago and became 80% dependant on the US economy. Mexico has all the potential to be a 1st world powerful country alongside Indonesia, Brazil, India, etc. But in order to do that, they need to step up, end economic dependency with the US, diversify the economy entirely, and to get people out of poverty. Another 3% of Mexico's GDP is made up of PEMEX, the national petroleum company. PEMEX provides the funding for the social programs in Mexico (which have been pretty generous)- at this point, PEMEX is losing money - those programs will have to either find another funding source - go away - or a combination of the 2. AMLO appointed a personal friend with NO experience in oil or international business to run PEMEX, and AMLO is now prosecuting the country's experts on oil and international business on "corruption" charges. Doubling the wages in border towns from 5 dollars a day to 10 dollars a day, lowering prices, and reducing taxes for businesses. They’re all part of a new economic plan to curb mass migration to the United States. Mexico’s newly elected president says he’s responded aggressively to pressure from U.S. President Donald Trump to stop undocumented immigrants from crossing into the United States. The Future is not looking bright for Mexico. Welcome to The Atlantis Report. Mexico’s current president took office in December 2018. His name is Andres Manuel Lopez Obrador. This president is a leftist president whose party(founded by him) is affiliated to the Foro de Sao Paulo, a Latin American communist convention that groups the most leftist parties of Latin America including governments in power such as Venezuela's president Nicolas Maduro, Nicaragua's President Daniel Ortega and recently elected President Alberto Fernandez in Argentina. Mexican economy had been doing very well according to modern economic measurements. GDP growth averaged at 2% for the last 30 years, Mexico's international reserves have reached higher digits than those of the USA; foreign direct investment has increased year to year in the last 15 years, and Mexico used to be 11th largest world economy up until 2018(recently declined to 15th). Ever since the new president took office, he has canceled a 13 billion dollar world-class airport project that was already 35% in construction. And he created billionaire social programs to give away money to all sorts of sectors with no productive criteria. He permitted an illegal term expansion for a governor in Baja California, from 2 to 5 years. He lobbied a law that threatens private property (ley de extinción de Dominio) through his party's majority in both houses. He helped Pemex reach its worse financial situation in the last 30 years. He has assertively delegitimized the world's most renowned financial rating agencies knew they had started downgrading Mexico's risk ratings. And he has given asylum and publicly supported Bolivia's exiled dictator Evo Morales. These and many other actions, that in general, have created uncertainty for the markets and capitals. Jobs are in decline; the constitution is being amended; democratic institutions’ leaders are being replaced through nepotist selections from the current executive power. The case is that the Mexican economy has stagnated, showing 0% growth up to October 2019; and not showing any signs of stopping its decline with the ongoing administration's policies. I could go on and on, but I think I have given you enough data to understand why the Mexican economy is so bad this year. Another problem in Mexico is that there is great inequality of income, and many Mexicans live by the informal economy and several million in poverty, although the middle class is a large proportion of the population. The other problem is that economic growth is not increasing at desirable rates (5% or 6%) to overcome poverty, and since this year- 2019, it seems that the Mexican economy is almost coming to a recession, like many other economies in the world. So let's look back at some history of this country. Before the arrival of the Spanish in 1517, the Mexican economy was reasonably successful; the Spanish annals relate that Tenochtitlan was larger than any city that they had ever seen in Europe. After the Spanish conquest of Mexico, Mexico was converted into a mining and agricultural center for exportation, principally to Spain. The Spaniards, mestizos, and Native Americans sent, and Spain became the first World power. From the Mexican Independence of 1810 until the Mexican Revolution of 1910, Mexico was an on-and-off success, but the wars between the Liberals (mostly non-whites) and the Conservatives made an on-and-off mess out of the Mexican economy. When General Porfirio Diaz ascended onto the throne of power in Mexico, he attempted to turn the Mexican economy into an export-driven growth economy, but the result was disastrous, and culminated, arguably, in the first agrarian-communist revolution in the World. Needless to say, the economy was not the best. With the end of the Mexican Revolution in 1921, Mexico embarked into what become know as the “Mexican Miracle,” in that Mexico became a solidified nation, and embarked on large scale projects, including the expropriation of the British and American oil companies, massive steel mills, the internationally successful beer companies of today, UNAM, etc. The “Mexican Miracle” continued to gain vapor and speed. And by 1968, Mexico was able to sponsor the Olympic Games, besides the USA, the only country in the Americas to have ever done so until then. By 1968 Mexico had become one of the largest economies in the World, and per capita incomes had surpassed World averages, although such a benchmark is not particularly significant given that most people and countries on Earth are poor or nearly poor. In 1972 Mexico’s PEMEX discovered some of the largest oil deposits in recorded human history, and Mexico embarked in the “Golden Decade” of 1972 to 1982. The Mexican economy and Mexican companies began to grow at unbelievable rates. There was widespread talk in the media ( Time and Newsweek magazines) about the prospects of Mexico exiting the Third World, and entering the club of developed nations. This is probably the best economic decade in the history of Mexico, and many people in Mexico were actually earning more money than their counterparts in the USA. On February 14, 1982, they entered a period of deep financial crisis due to massive dollar borrowings against the supposedly invaluable oil reserves and declining oil barrel prices from 44 USD per barrel to 17 USD per barrel in the space of a few months. February 14, 1982, marks the beginning of the current Mexican economy, an economy that is struggling to get out of the doldrums, and dealing with social uprisings, like the Zapatistas in the south, and criminality, like the drug cartels, in the north. Mexico has fallen from the 9th largest economy in the World to the 16th, and it's per capita World standing has also fallen from 50th to 68th. The economic future of Mexico does not appear to be particularly bright. The Mexican Government has announced that the easily exploited oil deposits are now exhausted, and have now enlisted the aid of foreign firms to exploit oil reserves that are deeper and more difficult to extract. To an extent, this signifies the end of the “Mexican Socialist” experiment that has subsidized everything from food to education to health care for over 100 million Mexicans for nearly 100 years. Unless unforeseen circumstances, the economic future of Mexico will continue to be a challenge, particularly in light of the diminishing oil reserve revenues and of the wars being waged against and by criminal organizations, including the drug cartels. At the beginning of the 20th century, the peso was stronger than the dollar. The exchange rate was 2 dollars for 1 peso. The Mexican silver peso was used in China as inclusive as the current currency. In colonial times, the economy of New Spain was bigger and stronger than the British colonies of America. There was a period in which the Mexican economy grew at unprecedented rates. It was in the ’50s. Basically, the US economy was turning around from a war economy to a local economy, and Mexico provided a lot of goods to the US and the world. This is the period when the Mexican economy got industrialized and marked the passage from being a rural economy to an industrial one. Cities began to expand. Upward mobility was at it’s best (going to the university meant getting a good job and a good salary). This was the period known as the Mexican cinema “golden age.” Mexico became an overnight success. The Mexican miracle, that’s what they call it. But this only lasted two decades, until the ’70s. Then everything went south. Today the economy of Mexico is the 15th largest in the world in nominal terms and the 11th largest by purchasing power parity, according to the International Monetary Fund. The unemployment rate is 3.6%. There is a significant disparity in wages between the classes; a small percentage of people own most of the wealth, nearly as bad as in the US. Financial analysts predict that in 30 years, the Mexican economy will be the 5th largest economy in the world. This was The Atlantis Report. Please like. Share. 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