By Martin Arvizu
A while ago I wrote about how Mexican President Felipe Calderon made a statement in which he said that the current economic crisis in the United States would only cause a “glancing blow” to the economy in Mexico.
Today’s Top Story, written by Diego Cevallos for IPS News and published on Alternet.org, reports that Mexico recognizes that the “glancing blow” may do more damage than originally expected. Therefore, it is taking emergency financial measures to deal with the impact of the U.S. financial crisis.
Mexico’s billion-dollar-a-day dependence on the U.S. economy is only one part of the problem. Our hard times here are affecting the remittances sent home by many migrant workers who are experiencing financial difficulties, such as losing their jobs and sometimes their homes.
Cevallos writes that according to Agustin Escobar of the Center for Advanced Research and Studies in Social Anthropology(CIESAS), 8 percent of poor families in Mexico depend almost entirely on that cash flow to survive, and will find themselves in a critical position as a result of the drop in remittances.
Cevallos reports that remittances, according to a recent Inter-American Development Bank report, “are a key poverty reduction tool, as more than 57 percent of remittances are used to purchase daily necessities such as food, clothing and shelter.”
To top it off, Cevallos writes that according to Carlos Villanueva, president of the U.S based Asociacion Mundial de Mexicanos en el Exterior(AMME- Worldwide Association of Mexicans Abroad), there is a belief that Mexicans will return in mass numbers to Mexico, something that would undoubtedly hurt the its local job market.
Cevallos also reports that many, like Diego Lorente, head of Sin Fronteras (Without Borders), a non-governmental Mexican organization, do not believe that Mexicans will return, “I don’t think they will return en masse; no matter how hard they have been hit now, migrants aren’t going to give up what has cost them so much and especially not if the outlook in Mexico isn’t the best.”
Unfortunately Mr. Lorente must not be aware of Immigration and Customs Enforcement and the current attitude towards migrants in the United States. With all the recent immigration raids, many Mexican migrants are not being given the choice if they want to go back or not.
Lorente also added that if the mass immigration back to Mexico happened, “the possibility of an outbreak of social unrest in Mexico would be high.” I wonder what Lorente calls what is currently happening in Mexico between the government and the drug cartels; war games?
But Villanueva reinforces his belief that Mexicans will begin returning to Mexico with as many as a million returning in the next two years which will mean trouble for the Mexican economy.
As everyone knows the United States is Mexicans’ escape valve from poverty and corruption. Cevallos reports that Mexico would have to create more than a million jobs a year, but fails do so.
With the Mexican minimum wage as low as it is, I am willing to bet that half the jobs created do not compare with the jobs offered by the drug cartels.
Calderon stated on national television Thursday that Mexico has international reserves, it is covering its debt servicing requirements, its public finances are sound, the banking sector is free of troubles and the government has sufficient maneuvering room to confront the problem. He also said about a week ago that this crisis was only going to be a “glancing blow.” Remember?
I have been studying Mexico for quite a long time now folks, and have done my share of traveling there. About five years ago, when I first graduated from Arizona State University, I would argue with co-workers that Mexico was headed towards another revolution.
I pointed out that Mexico was once again favoring foreign investment over the good of its own population, the North American Free Trade Agreement for example. And that the uprising by the rebels in Chiapas and the popularity of Sub-Comandante Marcos was only the beginning.
I am not saying that is has happened yet. Although the current war between the drug cartels and the government is more than a little unnerving. The violence has yet to spill out into the general population. What I am saying is if you want to take a trip to Mexico, do it soon.
I am a foreigner living and working in Mexico and really enjoyed your article. The one thing that baffles me is the Mexicans seemingly lack of knowledge about their economy. And I have been trying to find out how house prices work here forever, it just seems like people ask for what they want and if someone is prepared to pay it, then good the deal is done. With intereste rates on a mortgage at 12-14% and credit card percentage rates sometimes at 60% no wonder the banks are in good shape!!
By: Riviera Maya Resorts on October 17, 2008
at 10:46 am
For the record I am a Mexican Citizen who legally lived, studied and worked as an engineer in the US for 18 years. Last year a very tempting work opportunity opened up to move back to my native Mexico and I took it. So far I am quite glad I made the move and have no immediate plans of moving back to the US (love the country and its people, and visit friends from time to time, but it isn’t home).
Interesting article…I agree with you in the fact that Mexico has been extremely addicted to sending its workforce to the US, just as much the US “had” been addicted to cheap labor. In the long term I am sure it is of no benefit to either country. While Mexico is sending its young productive people north of the border, we receive more and more of your senior citizens who can’t afford to retire up there. Mexico’s illegal immigrants provided for a while an initial benefit to those companies that needed cheap labor (not anymore under current economic conditions!), and Mexico welcomes your senior citizen’s money when they move down here… but they also help skyrocket the cost of living in those communities, adding economic strains to the locals who then can’t afford to live in their old communities (think San Miguel de Allende).
I don’t think Mexico is heading for another Revolution, I believe the “world” is heading to another revolution… think about what’s happending with the banking industry in the US for example –I wonder how many of those banks have plenty of cash in their offshore accounts, which could be used to fix up the mess they helped create back at home, but prefer that the little guys bail them out. Those bankers remind me of the old monarchs who ruled Europe for so long at the expense of the little guys, under the excuse of “Divine Rights”… have we now moved to a new form of “Divine Rights of Capitalism”, in which only the chosen ones benefit from its gains? If so, let’s not forget that when there’s such disparity of wealth in a given society, history has shown us that eventually the little guys will revolt. I think we’re seeing the start of a new enlightment period in the world… and it doesn’t matter what country you’re on, the people that helped create this mess are allies (gobernment and corporations), while its typical Joe’s and Jose’s on both side of the fence struggle in various way to make ends meet.
In terms of the comment that “Riviera Maya Resorts” left in regards to our lack of knowledge about our economy, I ask him: what did just happen with the Real Estate/Mortgage Industries up there?… wasn’t it a serious lack of knowledge from the consumers (overlooking loan terms), and huge amount of price speculation that created that mess?… where people were doing literally what you just described: people asked for what they wanted and as long as others were willing to pay for it, the deal was closed.
By: Ex US Resident on November 20, 2008
at 6:05 pm