-Caveat Lector-
Let see.
Japan; Germany (Europe); South America (Argentina, Venz. Mexcio)
all going bad...but the good ole USA to stay healthy?
I don't think so.
The bubble is slowly bursting.
flw
Downturn in Economy Deepens Across Mexico
Layoffs hit virtually all sectors and imperil social reforms promised by Fox
http://www.latimes.com/news/nation/updates2/lat_mexecon010701.htm
By CHRIS KRAUL, Times Staff Writer
Mexican yam wholesaler Mayer Zaga has cut prices on his products. "This is a crisis,
whether we understand it
or not," he says.
CHRIS KRAUL / Los Angeles Times
SAN ANDRES OCOTLAN, Mexico--From farms and automotive plants on the outskirts of
Mexico City to the
industrial heartland of Monterrey and the wineries and electronics firms in Tijuana
and Guadalajara, signs are
that this nation's recession is becoming more entrenched.
Every day, another big company or industry is hit by layoffs, the most recent
being the pivotal steel
industry, where hundreds last week received pink slips. Even the maquiladoras--the
factories on the border
with the U.S. that have been jewels of Mexican economic development--are feeling pain
as never before.
Tenant farmer or textile magnate, there is no shortage of victims who could be
overwhelmed by the
spreading recession. The hard times increase fears of social unrest as well as the
prospect of illegal
immigration, which could lead to more people dying in risky border crossings. With the
U.S. facing its own
economic troubles, more economic refugees won't be greeted with open arms.
The most prominent victim may be President Vicente Fox, whose ambitious plans to
transform Mexican
society require a good economy. A reform candidate whose election last year ended the
71-year rule of the
Institutional Revolutionary Party, Fox swept to power by promising to boost
prosperity, add 1.3 million new
jobs in his first year and create more social programs to address grinding poverty and
inequality.
Although still enormously popular, Fox has reason to be concerned. A failure to
deliver new jobs and
prosperity will weaken him politically and hinder efforts to carry out a bold slate of
reforms ranging from
boosting the rights of indigenous peoples to overhauling the judicial and tax systems.
The worsening times have farmers such as Rodolfo Hernandez in a bind. Corn,
carrot and lima bean prices
are sinking while the costs of diesel fuel and fertilizer are rising. All he expects
to harvest from his
25-acre farm here 40 miles southwest of Mexico City are headaches and big losses.
"In the past, at least there was movement, equilibrium. Now, there are no buyers
at all," said Hernandez,
40.
Times have become so brutal, he said, that his younger brother Antonio, an
out-of-work tailor, illegally
emigrated to Washington state, where he quickly landed a job in construction. Rodolfo
said he may follow if
things don't turn around soon. Antonio "knows the risks, but in spite of all that he
went with seven others
from the town."
Also alarmed is businessman Mayer Zaga, who has lowered prices by an average 17%
on the fabrics, threads
and apparel produced by his company, Zagis SA. He said his goal is to avoid having to
lay off any of the 3,000
workers at his multimillion-dollar firm, the country's largest yarn wholesaler.
"This is a crisis, whether we understand it or not," Zaga said as he surveyed the
gray-and-green ranks of
looms on the floor of his factory in Tepeji del Rio in Hidalgo state, 50 miles north
of the capital.
Mexico dipped into recession late last year, and figures are likely to show the
nation having continued
to be mired in one at least through the second quarter of this year, which ended
Saturday, according to
Ciemex/Wefa economic consultants of Philadelphia.
Mauricio Gonzalez, a director at GEA business consultants in Mexico City, said
disappointment could run
deep because of heightened expectations after Fox's election.
"Everyone was going to be happy and entertained. Now there is no party," he said.
"People are now
realizing it's not going to be as good as they thought and that maybe [the recession]
will affect them
personally."
Fox had counted on a recipe of free trade and his own businesslike efficiency to
rev up Mexico's economic
performance, generating enough income to help the government carry out sweeping new
initiatives in health
coverage and education. But tax collections have declined along with the economy,
dropping an alarming 7% in
May from the same month last year. The Finance Ministry is expected to soon announce a
second round of
spending cuts.
Instead of all the new jobs he had promised during the grueling election
campaign, Fox has seen the loss
of 200,000 jobs so far this year--and will be lucky to end the year with as many
workers as he started with in
January. Economist Rogelio Ramirez de la O of Ecanal, a Mexico City consulting firm,
thinks that the job base
could shrink by as much as 700,000. That would leave Fox 2 million jobs short of his
promised 1.3 million new
jobs.
"Fox will be under pressure in the coming months as the economy deteriorates and
as people present him
with his promises," said Raul Feliz, a macroeconomist at the independent Center for
Economic Research and
Teaching in Mexico City.
Feliz predicts "net zero to negative" growth in new jobs and sees serious
political problems ahead.
"Lower economic development makes everything more difficult," he said.
Duration of Downturn Out of Fox's Control
It was bad news like this that finally forced Fox in mid-June to admit for the
first time that Mexico was
in a recession and that he would probably miss his economic targets.
"We need to go to the Basilica and pray to the Virgin of Guadalupe" for a speedy
economic recovery, Fox
joked to reporters. But it was a rare moment of levity. He is said by associates to be
extremely worried about
the political fallout if the recession drags on.
That the recession's duration and severity are out of his hands is adding to
Fox's frustration. The
duration of the U.S. slowdown is the determining factor because a quarter of all
Mexican goods and services is
sold in the United States.
Since the U.S. recovery is an open question, so is Mexico's. The reliance on the
U.S. economy, which a
few years ago shielded Mexico's economy from foreign contagion, is now a handicap.
"Mexico was not that deeply affected by the 1997 Asian crisis because of its U.S.
exports. Today,
however, the alliance with the U.S. economy is playing the other way and Mexico has to
hang on," said Carlos
Janada, a Wall Street economist specializing in Latin America.
U.S. immigration officials also have reason to worry. If historical patterns hold
up, a prolonged Mexican
recession will generate more illegal immigration at a time when jobs are increasingly
scarce on the other side
of the border, GEA's Gonzalez said.
Wayne A. Cornelius, director of the Center for Comparative Immigration Studies at
UC San Diego, said
illegal immigration rose more than 50% in the two years of Mexico's last recession,
from 1994 to 1996, based
on U.S. Border Patrol apprehensions.
Making matters worse for the Southern California regional economy is that Mexican
businesses along the
U.S.-Mexico border are being hit harder than those in the rest of Mexico because of
the concentration of
maquiladoras, which produce goods mainly for export to the United States.
Although there has been no measurable effect on the San Diego economy so far,
with unemployment rates
holding steady, there could be a "developing effect," said James Gerber, professor of
economics at San Diego
State University and a border economics researcher.
"I've heard of Asian manufacturers who would like to move out of Baja, and there
has been a downturn in
employment in maquiladora firms, but it's not clear what's driving that," Gerber said.
"It could be the
slowdown in the United States, the overvalued peso, the uncertainty of the Mexican tax
structure or fears for
the security of foreign executives. All of that's in the mix."
Maquiladora exports are down 5% so far this year, giving rise to a unique
occurrence: layoffs in an
industry that has been accustomed to double-digit growth.
"We're seeing the first sustained drop in maquiladora jobs in 20 years," said
Alfonso Mercado, a
professor at College of Mexico in Mexico City who studies the U.S.-Mexico border
economy. "The region might
suffer a higher cost and longer [recovery] time than other regions in Mexico, and this
is new."
Japanese Firms Have Scaled Back Production
A deepening recession could mean higher unemployment, less consumption and lower
investment, whereas in
previous Mexican downturns, in 1982 and from 1994 to 1996, the Mexican border had a
much shorter crisis period
than the rest of the country, Mercado said.
Jose Ibarra, a maquiladora manager at Hitachi's television factory in Tijuana,
said most Japanese
consumer electronics firms have scaled back production in response to the U.S.
slowdown. Sales of Hitachi's
line of televisions are off 45% this year. Only its popular line of high-definition
digital TVs has kept
things from getting worse.
Unlike last year, when maquiladoras were desperate for workers, Hitachi has a
six-month waiting list for
job applicants, Ibarra said.
"There aren't the jobs there used to be, especially for people who have less than
high school skills,"
Ibarra said. "The people know the situation is bad."
Like their counterparts in the United States, Mexican consumers by and large have
not felt the weight of
the recession. A strong peso and wage hikes have increased individual purchasing
power. This has pushed up
consumer purchases by 6.5% this year, even as the nation's manufacturing output has
declined by an estimated
3%.
But the purchases are uneven. Even as some of the poor have trouble making ends
meet, there are waiting
lists for new vehicles at imported-car dealerships in Mexico City, as more affluent
consumers try to take
advantage of the strength of the peso, one of the world's strongest currencies against
the dollar this year.
The peso's strength derives in part from a massive inflow of foreign capital,
including $6.25 billion in
cash that U.S. banking giant Citigroup is paying to acquire the parent firm of
Banamex, Mexico's largest
independent bank.
Economists say it's only a matter of time before the problems in Mexico's
industrial and agricultural
sectors filter down to consumers. Wage increases, easing credit and the strong peso
will eventually be negated
by the effects of job losses and declining consumer confidence.
Automotive engineer Juan Carlos Martinez of Toluca has gotten the message. About
20% of his co-workers at
the Johnson Controls plant outside Mexico City have lost their jobs since February,
partly because of
production cutbacks at DaimlerChrysler in Toluca, a big customer.
"A year ago, it was easy to find a job. There were vacancies everywhere," he
said. "But then came the
recession and everything froze."
Copyright 2001 Los Angeles Times
<A HREF="http://www.ctrl.org/";>www.ctrl.org</A>
DECLARATION & DISCLAIMER
==========
CTRL is a discussion & informational exchange list. Proselytizing propagandic
screeds are unwelcomed. Substance—not soap-boxing—please! These are
sordid matters and 'conspiracy theory'—with its many half-truths, mis-
directions and outright frauds—is used politically by different groups with
major and minor effects spread throughout the spectrum of time and thought.
That being said, CTRLgives no endorsement to the validity of posts, and
always suggests to readers; be wary of what you read. CTRL gives no
credence to Holocaust denial and nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://peach.ease.lsoft.com/archives/ctrl.html
<A HREF="http://peach.ease.lsoft.com/archives/ctrl.html";>Archives of
[EMAIL PROTECTED]</A>
http:[EMAIL PROTECTED]/
<A HREF="http:[EMAIL PROTECTED]/";>ctrl</A>
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
SIGNOFF CTRL [to:] [EMAIL PROTECTED]
Om
