Reporting on the Mexican Cartel Drug War

World Leaders Meet In "A Mexico" Now Giving Brazil a Run For Their Money

Monday, June 18, 2012 |

Borderland Beat

"Are you better off  than you were five years ago?",  asks President Calderon of his citizens.  In 2011 Mexico's economy incresed at a faster pace than the Latin American economic gem,  Brazil, and is on track to repeat that fete again in 2012.  One wonders where Mexico would be but for the run away violence in a war that began two years before Calderon's Presidential Term....Paz, Chivis Martinez

Obama Arrives in Cabo

Elizabeth Malkin

Cabos- Mexicans looked on with envy in recent years as Brazilians won a reputation as Latin America’s chosen people. With a surging economy and a prominent place on the world stage, Brazil was the country poised for greatness while Mexico  remained mired in bloodshed and destitution.
But just as momentum can change suddenly in a match at the World Cup or an event at the Olympics — both competitions that Brazil will host in the next four years — so can the dynamics between nations.

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Last year, Mexico’s economy grew faster than Brazil’s, and it looks set to outpace its larger Latin rival again in 2012.
Brazil’s slowdown can be attributed partly to debt-burdened consumers and the erosion of industrial production, which is tied to the recent strength of Brazil’s currency, the real. On top of that, slowing global growth, particularly in China, has pushed down prices of the commodities that Brazil exports.
Meanwhile, Mexican factories are exporting record quantities of televisions, cars, computers and appliances, replacing some Chinese imports in the United States and fueling a modest expansion.
Economically, Mexico does not appear as grim a place anymore.
“The best way to improve your image is G.D.P. growth,” said Luis de la Calle, a former Mexican trade negotiator and an economic analyst here.
Mexico’s strengthening economy underlies the glossy veneer on display as President Felipe Calderón hosts the Group of 20 leaders of major industrialized and emerging economies at the luxury beach resort of Los Cabos on Monday and Tuesday.
In contrast to the widening crisis in the euro zone, which will be the focus of the talks, Mexico will be able to point to 17 years of macroeconomic stability, low inflation, manageable debt, an open economy and increasing competitiveness. The gross domestic product expanded 3.9 percent last year, ahead of Brazil’s growth of 2.7 percent.
Golf on the Schedule, Departing Chicago
And there are encouraging signs for the years ahead. Nissan, Mazda and Honda all announced that they would build new plants in Mexico, and new investments in aerospace and electronics are also on the horizon.
“Stars appear to be increasingly aligned for an economic outperformance” by Mexico, a report in May from Nomura Securities concluded. “A changing of the guard is slowly but surely taking place.”
The reversed fortunes of Latin America’s two largest economies are a sharp contrast to the euphoria over Brazil’s prospects as recently as 2010, when the economy grew 7.5 percent in the last year of President Luiz Inácio Lula da Silva’s government.
“The years of good growth are clearly in the past,” said Antony Mueller, a professor of economics at the Federal University of Sergipe in Brazil.
In one sign of unease, the Brazilian government threatened this year to cancel a 10-year-old automotive trade accord with Mexico. For most of the pact’s life, Brazil had sent more cars to Mexico, but last year that reversed, with imports of Mexican-made cars surging 70 percent to $2.4 billion. In March, Mexico agreed to cut its exports to Brazil to an average of $1.55 billion annually for the next three years and restore free trade after that.
The dispute highlights each country’s distinct approach to development. Mexico has been dedicated to open markets, free trade and deregulation. Brazil’s model involves muscular government intervention through big state-controlled companies.
At the same time, China’s rise has affected Brazil and Mexico in opposite ways: China competes with Mexico and buys from Brazil. Mexico struggled for much of the past decade as Chinese-made products replaced Mexican goods in the United States, which buys 78 percent of Mexico’s exports. And China’s demand for raw materials helped lift Brazil’s economy as stability allowed the government to redistribute the wealth and expand credit.
“Brazil has had two powerful narratives,” said Gray Newman, an economist for Latin America at Morgan Stanley. “If you believe in China, you believe in Brazil. That counted for a lot. The second narrative is that ‘We’ve become a normal country and created the conditions for the emergence of a middle class.’ Those narratives are so powerful.”
Mexico’s story has not been as positive, Mr. Newman said, with its fortunes tied to the United States and the government engaged in a war against powerful drug gangs. Even with the tide turning in their favor, Mexicans are so gloomy they do not see it, analysts say.
“This self-flagellation in Mexico is a malady,” said Mr. de la Calle, who argues against the conventional wisdom and describes Mexico as a middle-class country. “When I said, ‘You are not as badly off as you say you are — there is a reason to have hope for the future,’ the argument that I got back was that Brazil is doing much better.”
Indeed, the candidate who leads in opinion polls ahead of Mexico’s July 1 presidential election, Enrique Peña Nieto, began a recent presidential debate by asking people if they were better off and answering the question himself: “Surely, no.”
One reason for the malaise is Mexico’s drug war. The sight of miles upon miles of factories outside the industrial capital of Monterrey attracts far less attention than the image of nine bodies hanging from a bridge in the border city of Nuevo Laredo. Mexico’s Finance Ministry has estimated that the violence shaves at least 1 percentage point from G.D.P. growth.
Even though Brazil’s homicide rate trumps Mexico’s, the gory nature of the killings in Mexico and Mr. Calderón’s use of the military to combat traffickers have focused more attention on the death toll here.
And Mr. Peña Nieto is correct that growth has yet to trickle down to many workers. Real wages have barely increased. Indeed, one reason that Mexico has captured market share from China is the narrowing gap between Chinese and Mexican wages.
Brazil and Mexico probably have more in common than their supposed rivalry would suggest. Each has stabilized its economy after decades of veering from crisis to crisis and improved the well-being of many of its citizens.
In Brazil, “the dividends of what it did in the 1990s paid off with a political transition dovetailing with commodity prices,” said Lisa M. Schineller, a Latin America analyst for Standard & Poor’s. “It all came together.”
Now the two countries also face many of the same problems: inadequate schools, creaky infrastructure, bureaucracy and corruption.
Mexico’s political paralysis has stopped it from taking effective measures to break up monopolies, rewrite labor laws, collect more taxes and pry open the world’s most closed oil company, changes that would add 2.5 percentage points to its growth rate, the Mexican Institute for Competitiveness estimated.
The question is how these middle-income countries find a way to advance further, said Shannon K. O’Neil, a Latin American analyst at the Council on Foreign Relations. “Trying to move from G.D.P. per capita of $5,000 to $10,000 is much easier than moving from $10,000 to $20,000,” she said. “I think that’s the challenge that both face.”
 

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27 Borderland Beat Comments:

Anonymous said...

This is great news. I hope that all this bs is over soon. There are so many of us that want to move back. We had lives,family,and businesses back home. We left when we were threatened. If its true that cds is gonna let us live and prosper once they take over. It's just hard to trust them cartels. They should be more selective about who they recruit. Instead of asking power hingry assholes that will never be good for business. I hope all cartels are eradicated. But being a mexican i don't see any light at the end of the tunnel.i guess were gonna have to come to an understanding. Long live mexico

Anonymous said...

Good article.

Anonymous said...

Things may be better for the rich monopolistic elite, but they are far worse for everyone else.

Mexico is currently locked in a civil war between the ruling elites and the common people they prey on. The drug war is one of the symptoms of the ever widening gap between the rich and poor in Mexico.

Anonymous said...

I guess if you lived here you would know the truth. It is a great place to be!

Anonymous said...

Having worked in the global transportation industry for the past decade I can tell you that Mexico can take China's place in manufacturing if they would just get thier shit together, I know the people can work just as hard if not harder than the chinese. Transportation costs and the volitility of ship capacity that is manipulated by the shipping lines would be eliminated. There simply needs to be more security and less corruption, I have been in multiple meetings with BIG name global companies that STILL won't route cargo thru Mexico b/c of this which is the reason that the Mexico/US super highway from Lazaro up to the midwest is not happening.

Anonymous said...

I'm not sure this is "great news", Realistically it is better news than maybe many thought. But still with the ever PRI coming in, you can be sure there will be yet even more rich people getting more than what they are due because of ever corrupt PRI and more people falling into the poor category not receiving a chance to better their lives. Viva Mexico!

Anonymous said...

And the LIAR Leftist Zombies who wish to bring the Socialista AMLO into power will destroy all the gains and turn our beloved Mexico into a Banana republic like Venezuela or Cuba!

Anonymous said...

Oh yeah,Brazil is an absolute utopian society?
Its is one of the most dangerous city's in the world,"say that quietly"and one of the most rotten.The top 5% holding all the wealth,while the rest of the population basically has to steal to survive?Do you know that the Olympics will be more heavily guarded than South Africa?They are reclaiming and arbitrarily demolishing houses of poor people,and erecting fences so all the visitors can be"safe"?It is a horrible country,and a beautiful country with major social problems.As this article says,it had growth,but how much of that growth went into the same cliques that it always gos into?
Spread the wealth amongst your own people?
No,that is common sense,and human nature and greed come into play,everywhere.

Anonymous said...

I only hope that less and less Brazils are created on this planet.It is a portrait of class and wealth gone terribly wrong.It treats its own people disgracefully because they are poor.The same families and conglomerates have held most of the wealth for generations.As long as the poor stay in their stinking favelas and keep quiet and know your place,we will leave you alone to do what you want.Step out of line and we will kill you.Basically,"we don't give a shit about you"no wonder it is an ultra violent society.Do you blame them,i don't.

Anonymous said...

"Mexico can take China's place in manufacturing if they would just get their shit together"
So true brother,a huge labor pool desperate for work,not exploitation!Just across the border a neighbor like that.If a lot of people in positions of influence could get their ass into gear,it could happen.Take that business and manufacturing to Mexico.Instead of enriching China,enrich Mexico.But it would take a very strong man,almost dictatorial,to sweep all the bullshit aside,and get it done.But,how does he get the trust to go along with him?It is similar to China,just bursting to be given a chance,but its own people may also be an obstacle with all the cartel bullshit.Man,who knows,it may happen.Calderon has got balls though,you cant deny that,what-ever your politics

Anonymous said...

"Things may be better for the rich monopolistic elite, but they are far worse for everyone else"
All over the planet not just our countries,this gulf and greed seems to getting worse not better.
Our politicians are hated and distrusted as never before,with good reason.I have yet to see an economically struggling politician?They have become some of the most disreputable people in our society's and we continue to put up with their bullshit instead of them being threw out?
WHO CENSURES A POLITICIAN?

Anonymous said...

What part? We had to leave. Chihuahua is crazy. It was a coin toss every time you went out. I hate living in fear.

Anonymous said...

Of course the PAN oligarchs are having a great year. Ask the average Mexican the same question and he'll tell you a different story. A story of how the Representative of the United States Government in Mexico Sr. Calderon, has in just 6 years transformed this beautiful place into a nightmarish war zone that rivals anything seen in Iraq, Colombia, or Somalia. El pueblo demanda cambio. The US-funded civil war must end. Dile No a La Mota! Vota PRI !!!

Chivis said...

I agree with all comments even the last one which was being a cautious. Mex could be a sucessful mfg nation, an India or China, and my husband & I left the US for asian mfg long ago, and would love to be able to mfg in Mx. and the US again, But that is one element, security and social overhaul such as education for ALL children and a strong system of law and order is the way to fix the ills of Mex. Viva Mexico indeed....

Anonymous said...

"Sr. Calderon, has in just 6 years transformed this beautiful place into a nightmarish war zone"
So before Calderon said enough of this cartel and PRI corruption that has ruined Mexico.....
Mexico was a safe,peaceful,productive place with no violence and no corruption,no extortion,no killings,etc.Do you mean that Mexico?Where everything was fine and rosy?People,can you see the insanity of differing political ideas,and nationalism?
Just look at his words and beliefs?"Calderon is a representative of the USA"?Unbelievable,you couldn't make this shit up.

Anonymous said...

Vota PRI !!!?????????
A vote for utter corruption and a return to the people who made this system of today,the mess it is.Do you mean that PRI?With Pena Nieto,the darling of the corrupt.Yup,im pretty sure he can bring the violence back down.You can either strive to clean up and progress,or you can go back to greasing the wheels of corruption to get things done.What a choice you have.The PRI helped to create that choice.80 years of the PRI,and they still fucked everything up.Does that tell you anything?Yeah,i thought so,no.

Anonymous said...

I was in Mexico during PRI ruling, and in 2000 I moved to U.S. I know how corrupt and murderous the PRI was back in the days. Fuck the PRI, Fox was nothing but a talker and Calderon is not responsible for the murdering of people. One thing I know for sure Calderon is responsible for arresting and killing thousands of criminals and corrupted officials. Que viva Calderon.

I believe Mexico don't have a real good candidate for the presidency, my preference is Josefina, if not then AMLO.

Pena Nieto fuck no.

Anonymous said...

Yup, whole shitload of people working their asses off to earn barely enough to feed themselves.
Business is just booming though.
Country is being run by the most shameless cartel of them all (who seem to think that their clean hands and fancy suits excuses their acts).
That includes the US employers who are down there raping (just because they can).

Anonymous said...

"That includes the US employers who are down there raping (just because they can"
Thats why i said work,not exploitation,if they do good work,pay a good wage.They can afford to pay decent wages,and still make a profit,but the greedy bastards always want to squeeze as much as they possibly can.All over the world,even in the great economic miracle China,who is one of the worst,for squeezing every Renminbi(Chinese currency)it possibly can out of its own workforce.But then,at least you can earn money.

Anonymous said...

Oh yeah before Calderon everything in Mexico was great. No murders, no kidnapping, no robbery, no extortion, no child sex slavery, no child prostitution. Nobody disappeared. Plus, everybody that went to jail was found guilty after they received a fair trial in open court. NOT

Calderon did the only thing he could do. He had no choice. The fucking criminals had taken over the country while the police, army and judges stood around and whined that they weren't getting enough bribe money or blamed the gringos. The criminals were stealing Mexico blind, there was no accountability for anything.

AMLO is a whiny little punk. Always has been. You commenters that don't like Calderon's war - what do you propose? Nothing because you don't have a fucking clue. All you can do is complain - what else is new?

Anonymous said...

PRI?. Name one thing that PRI had done? the only thing that PRI has done is to take advantage of its citizens. portillo, salinas,echverria are the biggest crooks.

Anonymous said...

You people that think like this idiot is what's wrong with the world. Don't u realize that in order to compete with China u have to give Chinese pay rates. That means factory workers have to earn less than what they earn now. The only people to benefit is factory owners anD not tHe the middle class.DO SOME RESEARCH AND SEE HOW CHINA EXPLOITS ITS CITIZENS TO ACHIEVE WHAT IT HAS. IS THAT WHAT U WANT TO EXPLOIT FELLOW MEXICANS SO THE FEW GET RICH AMD THE MIDDLE CLASS DISAPPEARS

Anonymous said...

Viva Felipe Huevotes Calderon. he did what he had to. Gracias Senior Presidente. Pendejos blame him when the greater blame should be on us as parents to teach our kids not to be a joto sicario,

Anonymous said...

June 19, 2012 11:34 PM .
"Viva Felipe Huevotes Calderon. he did what he had to. Gracias Senior Presidente. Pendejos blame him when the greater blame should be on us as parents to teach our kids not to be a joto sicario"
I,m sorry brother,i had to post that shit again,because i am in total agreement with you,and i like common sense.Whatever your politics,Calderon has made a start on some of these cartels.He has killed and arrested many players,what is wrong with that?

Anonymous said...

"Don't u realize that in order to compete with China u have to give Chinese pay rates"
Dayyyyum boy,you is stupid.I think that is called sarcasm."the great economic miracle China"Get it?
Built on what?C,mon.

Anonymous said...

I think since NAFTA mexico has been gettin fucked in the labor department, farmers and there families could not compete with american growers so they flooded tha citys creating a massive workforce that has been exploited ever since, mexico is competing with china because they have been able to cut wages since the north american free trade agreement, funny thing is canada was not involved at all so they should call it like it is u.s. Fucking mexico for cheap car parts

Chivis said...

@ 3:39PM
notnecessarily so. Products are priced "landed" (delivered to destination). To send a 20' or 40' across the water, duties, damage, rejects, are much more expensive than to drive it across the border with our neighbor. those savings could apply to wages, wages do not have to be so cheap as china. and in china we must provide housing and food for workers. they come from farms, and mountains at long distances to work the work week and housing is a must. That is not cheap when you have 100+ employees.

My husband and I have been with our business in asia for 30 yrs and half that time in mainland china. Paz, Chivis

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