Gun battles between drug gangs in Ciudad Juarez. An army general kidnapped, tortured, and murdered in Ciudad Juarez. And now the collapse of the Mexican bond market. From today’s Los Angeles Times:
The Treasury had to pay a little more than expected Thursday to sell $14 billion in 30-year bonds, the final leg of a record three-part bond sale this week to fund Uncle Sam’s soaring cash needs.
At least investors showed up to buy — as opposed to what happened in Mexico on Wednesday: The government of President Felipe Calderon had to pull a planned sale of 21-year bonds after investors balked.
“There was no demand” for those securities, Gerardo Rodriguez, head of the Finance Ministry’s Public Credit Department in Mexico City, told Bloomberg News.
Mexico’s near term future looks even grimmer. Petroleum revenues are declining. The flow of remittance dollars from north of the border will contract as migrants lose their jobs or return home. And the El Paso Times has its hands on a leak from US Joint Forces Command that Mexico stands alongside Pakistan as one of the two countries to be monitored most closely for risk of sudden collapse into state failure. (H/T U.S. News Capital Commerce)
These concerns may explain why Congress has rebuffed suggestions to restrict stimulus-created employment to legal American workers only. They may think that Mexico needs remittance dollars even more than Americans need jobs.
5 responses so far
1 oenolicious // Feb 13, 2009 at 4:16 pm
Hasn’t this bit already been played and shown to be fraudulent? How can the El Paso Times have its hands on a leaked document when I went right online and found the document myself? It had one paragraph in the entire section on Latin America. I’ve always liked you David, but this is just silly.
2 BummerDietz // Feb 13, 2009 at 7:37 pm
Try these search terms: “Mexico peso crisis” or “December mistake.” You’ll learn about the Mexican melt-down that led to a $20 billion US guaranty of Mexican debt (which was never called, by the way), part of a $50 billion package; rising oil prices helped Mexico retire those bonds.
Now, add falling oil prices, an ongoing narco war, and billions of dollars of loss from dollars remitted from Mexicans in the US.
So what, exactly, is off base here? There is no military issue if Iceland goes bankrupt, but would the US really allow a narcolord or a Chavez type, in Mexico? I doubt it.
3 oenolicious // Feb 14, 2009 at 9:37 am
Try Googling the JOE. This story has been out there for over a month and yes it was one paragraph talking about narcogangs. Mexico isn’t exactly Pakistan.
4 dragonlady // Feb 14, 2009 at 9:07 pm
Mexico is going downhill fast. It’ll touch us sooner than we think. It already has in the border states.
5 BummerDietz // Feb 17, 2009 at 11:20 am
When their respective currencies collapse/devalue, the country goes shortly therafter.
You must log in to post a comment.