Mexico’s economy is weakening
On Wednesday I posted an article that pointed out a largely positive review by Morgan Stanley of Mexico and their economy. Having noticed a negative bias in the article, I amended it to reflect the tone originally given in the Morgan Stanley piece. That said, I would like to point out a Bloomberg video clip and another from the Wall Street Journal, which illuminate some of the pitfalls of investment there. Below are some additional links that should shed more light as well.
Related articles
Mexico emerges as concern for U.S. – Politico
Mexican ‘drug lord’ on rich list – BBC News
About Edward Harrison
- Jamie Dimon on the economy 17 Dec 2008
- World Economic Forum: Experts voice their views on the economy 12 Feb 2009
Mexico has a much more serious problem than crime. Much of its revenues come from its prolific Cantarell oil field but production is rapidly falling and no amount new investment will allow Mexico to produce as much oil from it as it used to. In the absence of this revenue the federal government will have to cut back on many support programs and that is likely to lead to a great deal of social instability.
VangelV,
I echo your sentiments. Despite the depression, the underlying problem that created high oil prices before the credit bubble collapsed is still there: peak oil. Non-OPEC oil production has peaked – Mexico, Russia, the UK and Norway in particular. Saudi Arabia is the only country with any reasonable amount of spare production capacity. And doubt exists as to how long Ghawar will be able to produce at these levels.
If you want a good read on oil, try Gregor Macdonald’s site. This recent entry has some things to say about Mexico and non-OPEC peak oil:
http://gregor.us/non-opec/you-peaked-babe/