Mexico: The next emerging-market trouble spot?

Mexican revolutions: 1810, 1910 . . . and 2010?

Catching up on some reading over the weekend, I came across a provocative opinion piece on Mexico by economist Walter Molano of investment bank BCP Securities in Greenwich, Conn. It won't give any comfort to U.S. investors who are having second thoughts about emerging markets in the wake of the deep declines in share prices in China, India and other developing nations this year, or because of newly rich Russia's increasingly combative approach toward the West.

Writing on the economics website RGE Monitor last week, Molano noted that the Mexican economy this year has been "a sea of relative tranquillity in a convulsed world." He didn't say, but I'll add, that the country's stock market has fared better than most, and the peso has been strong against the dollar.

But Molano sees parallels with the country's economic and social situations today and the backdrops of 1810 and 1910 -- the years that the last two Mexican revolutions began:

Today, cracks are visible on the Mexican veneer. Violence is raging, as frustration from the lack of economic opportunities forces people to resort to narcotrafficking and kidnapping as a way to survive. So-called revolutionary groups are reappearing, blowing up pipelines and extorting businesses. In less than two years, Pemex will squeeze the last remaining oil out of Cantarell. This will be a body blow to the government’s fiscal accounts. The monopoly rents generated in telecommunications, media and cement may have produced some of the wealthiest men on the planet, but it saddled the economy with enormous costs and bottlenecks.

The unwillingness of the victors of the Mexican Revolution to give quarter means that they will probably have to be dislodged by force. Unfortunately, the clock is running out. With less than two years to go until the 10th year of the new millennium, history suggests that another bloody revolution may be somewhere on the horizon.

Molano's view is dire, but maybe no less so than that of many Mexicans. "We live in paranoia, chaos and anarchy," Cecilia Turriago, an economist at an undisclosed company, told a Bloomberg News reporter in Mexico City last weekend, where tens of thousands marched to protest soaring crime rates. "This is the only way to let these irresponsible authorities know that we're tired of this and we're not going to stand to live in a city that has been kidnapped."

Read Molano's commentary here.

Comments

[John]

Mexico has acculturated and inured itself to violence and blood ever since Mayans found pleasure in rolling human skulls while killing the losing team, ritually torturing and sacrificing fellow Mayans, paying money to see bulls taunted for entertainment and roosters kill each other, provided a safe haven for war criminals.

Now they say enough!

They finally realize that after centuries of cultural violence, not to mention intimidation,fear, and abuse of women and sexual exploitation of children; commiseration and dismissal of violence by los federales; corruption and insularity; endemic xenophobia and patriarchy, that they have had enough.

But don't tell us what to do. Just give us more money.

When Mexican immigrants wistfully extol the beauty and charm of Estados Unidos de Mexico, I ask, "Then why are you here?"

A country that devalues the human spirit is an abomination regardless of being a dictatorship or a democracy.

[Jonny Wonder]

Mexico had the means, since prior to their "revolutions" to be one of the richest countries in the planet. They were receiving tons of foreign direct investment until they nationalized (aka stole) all the corporations capital/infrastructure that was developed in their country. They deserve their current situation as much as Venezuela. Maybe this time around they'll respect property rights, and stop their oligarchical, semi-socialist ways.

[Carlos Aguilar]

It amzes me to see so called "Americans" critize Mexico as a historically violent society when their own is fuilly engaged in traumatizing the people of Iraq in the quest for cheap oil. Look at yourselves first and the trauma that you have inflicted on others before you critize. Mexico has never dropped naphalm on innocent children, like the US has done.

[Californiano]

What no one talks about is what is so obvious in Mexico - Mexicans of European descent (white) at the top of the economy with the Mestizo & Indigenous being the poor and working class. Mexican media of all types portrays only Mexicans with European looking features.

[MB]

...and what do we americans get for providing a safe haven of opportunity to millions...

...we get blamed and hated for trying to keep arrivals at an orderly rate.

unbelieveable.

stop the reconquista.....

[coakl]

That revolution will breed refugees headed northward. Hurry up and finish building the border fence. Better yet, make it a true wall with concrete barriers and rolls of razor wire.

[Francisco Hernandez]

I think it is unfair to look to blame just one side in a complex situation like the Mexican economy. First of, the Mexican government has done many things to hurt itself in the long run (i,e. they set up a trade agreement with the United States where the US reaps a lot of benefits like cheap labor, but tries to keep Mexican products out because of unconfrmed reports about lead and other toxins). If we look at what the United States has done to help it has done more harm then good. One of the other commentors said that the United States protects rights here and pushes for others to protect them as well, but this is all bogus propaganda because they only push for protection of rights in countries that provide some benefit to the US. Human Rights was an issue in Iraq, well in Mexico women are being victimized in the BORDER REGIONS (both countries share a common border) and murdered at an alarming rate, but nothing has ever been uttered by the US government. Protests are constantly put down by violence yet we don't support the right of people to voice opinions. Yes people in the country have spoken out but nothing officially has come from the government.
In my mind both governments have dropped the ball and the people who often times are just trying to do the best they can carry the stigma of their misguided governments. I am an American but am often ashamed of our governments actions. I am of Mexican hertiage and am often ashamed of their governmental actions.

[Radical Raul]

This article needs to be corrected.

Russia is not the only one becoming combative. Our installation of a missile defense is considered by Russia a direct threat, and the chances of Iran ever having the capabilities to launching long range nuclear tipped missiles is nil to none.

We are just as responsible for the escalating of another cold war as is Russia and the neo cons in this country are trying their damnedest to bring on WWIII

Can anyone in the media in this country get their facts straight?

http://ericmargolis.com

[gerardo]

After 7 years from breaking the hold of the "Perfect Dictatorship", the changes of renewal in Mexico are evident: a newer political consciousness that its reflected in legislation current with our times, in law and order , ecology and social and political issues which were suppressed or not existing in the past, the mexican society have achieved great strands in such a short time towards become what mexicans hoped through time to become a nation with real justice and economic equality.
Although Mexico is not starting from ground zero, and there are many ills affecting the country which will take great pain on the population to be endure, and without guaranty of success, the mexican society has taken the plunge.
The american people is affected by short memory; it's not remember, who move the border line and in what circumstances. This american nation has fought wars with every neighbor it has had,- and beyond, The great achievements of this truly great nation (without sarcasm) haven't been without intervening other peoples lives to protect "interests" abroad, and use and exploit their nations and their peoples, causing through time of its rising unjustified suffering and death, in the name of profit.

[Andre]

It is very clear to every Mexican out there that the country is changing, and the change has been started from the citizens not the politicians. The new generation of mexican scholars are leading citizen groups to re-build a better Mexico. Politicians are being preassured into submission and transparency is expected. Rome wasn't built in one day. I see a bright future for Mexico. Now, the article was about Mexico and its economic potential, the article never compared it to U.S, but it is alway easy to use a country in war to try to make a point. Both countries have their flaws and I can't believe that there can not be a good article about Mexico without someone trying to put it down. It' time to bring new arguments into the table, immigration is an old subject and it will be solved when the Mexican economy gains strength.

[Gabriel Lara]

Yes a revolution is in the horizon but not as Mulano expects: we (Mexicans) will let enter the US through our border the Japanese, Nicaraguans, Salvadorians, Vietnamese, Iraqis, Cubans, Cambodians, Koreans - well the list include every citizen of the world to which the US warmongers have dropped Napalm, Atomic Bombs, “Intelligent” Boms, “Patriot” missiles, “Daisy Cutter” bombs, fragmentation bombs – and all of the weapons of mass destruction that the US DO have and love to produce and test in living humans. We will claim justice. Enough bombing is enough bombing!

[Rod]

2010 Mexican Revolution will be remembered as the spark that lights on the wick of the last days before Doom's day

[Jaime Gonzalez]

Saudi Arabia has had one ruling power(family) for over 80 years which is about 10years more than the Mexican PRI. Sauid Arabia is the homeland of Osaba bin Laden. The U.S. is homeland to over 40million people of Latin American decent who love both their adopted home and the country they come from. The Middle East is closer and probably in need of a real revolution.

[David]

The article is way overheated. It's true that drug violence and kidnappings are a huge security problem in Mexico, but the notion that a revoluton is brewing is ridiculous.

Also, for the causes of the drug problem one has to look at demand in the US for drugs. If the US legalized consumption, the drug lords would be out of business and violence would subside.

The violence, however, is fueled by the export of US guns. Hundreds of gun stores are set up along the US border to facilitate Mexican criminal consumption. They sell us cocaine and heroin; we sell them the guns that are used to subvert crime prevention and impede enforcement.

[Tiliz]

Man, some of the comments given here are quite intellectual and some downright racist.
Mexico is not building up to a new blood thristy revolution, change, and the evolution of thought, perhaps. Mexico will change, it has potential as do all things, to change for better or for worst.
Coincidences don't make reality and don't always come true
I believe in my homeland and its potential
Oh and by the way, seeing our own faults on others is a psycological term known as projection. We never see the faults within ourselfs, but rather in others

[Marcos]

...and mostly with american weaponery...

[Karl]

Instead of bickering about the corruption and violence in Mexico and how a Third Revolution is in the making, we should concentrate on efforts on how to help Mexico industrialize and provide the Mexican Dream to their citizenry so they don't have to die or be outcasts in our society. Let's look at how backward Spain was at the turn of the last century. With the economic and political aid lent to it by its more prosperous northern neighbors it has been able to become a powerhouse for southern Europe. If we help Mexico industrialize, we will become more prosperous as we will be able to sell more high tech goods to Mexico. For the nay sayers, I say look at the multi party system now in Mexico, the new American style legal system enacted by the government, and the increasing amount of credit available to many more consumers to just say a few. And let us not forget a federal government not hostile towards us. As for the crime and drug dealers, the federal government has made great strides in breaking down organized crime. They should implement higher salaries for police and better training. This can only be achieved with better and higher tax collection system which is one of the lowest in all of Latin America.

[BobEsponja]

I'm sure that Molano's psuedo-analysis was meant to make some quick market dollars on ignorance & panic. Revolution? Mexicans rejected the PRI (the perfect dictatotrship) and the PRD (formed by various communist splinter groups) for a center-right Catholic connected party. Revolution? Look at what happened to Marcos and the EZLN. Vanished to the south of France (well, Marcos, but not his Indian troops).
Mostly we're concerned about crime, which is fueled by a multi-billion dollar a year cocaine industry. Where does the coke come from? Columbia. Where does the coke go? Up American noses. Where do the AK 47's for the gangsters come from? American gun shops. Ain't no gun shops here.
So, if American's would get their nose candy habit under control, then Mexico would stop being a freeway off-ramp for the drug trade and life could settle down a bit, and we could get back to being the number 6 economy in the world and selling Bart Simpson paintings on velvet to American tourists.

[Ned Ludd]

Yes, Praise Jesus for those peace-loving Europeans who brought Christian brotherhood to the bloodthirsty Mayans and their fellow savages of the Americas, civilizing them just like they did the Saracens, the Jews, the Irish, the Africans, and the Asians, forever turning the other cheek, always forsaking the first stone, and never once shedding a drop of blood in the name of the Lord or His Regents on Earth (except of course when they needed spices or scapegoats or land or slaves or gold or silver or bananas or coffee or sugar or canals or petroleum and had to wage Holy War...).

Why can't Mexicans be more like them?

[martscan]

Ned Ludd gets my vote.

[martscan]

FACTS:

TOTAL CRIME: US 2.73 X MEXICO

AGGRAVATED ASSAULT: US 1.6 X MEXICO

GUN MURDERS: US 1.25 X MEXICO

MURDERS: US .43 of MEXICO

[ELJEFEJESUS]

Walter Molano a BCP Securities may just want to scare down Mexico stocks so he can buy in...

after all, out of all of Latin America, where there are always some conflicts and social pressures, Mexico already got past its most contentious election and now faces a common enemy in drug gangs. Mexico is a big and proud nation with a relatively subdued and civilian millitary that is still willing to crush revolts such as the 1994 Zapatista rebellion, so it is certainly capable of keeping itself together.

Still, there are risks of minor instability from such groups as unions, peasant groups, and extremists. That is something completely different from a revolution, which typically seeks to either split a nation that does not identify as one whole nation, or to overthrow a centralized dictatorial regime. Mexico has a democracy and a strong sence of national identify.

Revolution? Look first at centralized, millitary governments in Latin America such as Venezuela under Hugo Chavez as oil prices drop, or at a huge nation such as Brazil which is holding together a nation so huge as to have high risk of dividing up like the former USSR into regions with different identities.

As oil production has fallen, Calderon has moved to reform oil before there is great financial strain. Also Mexico has been filling the vacuum left by dropping comodity production and prices with industrialization in its growing auto industry.

For a nation frustrated at violence, look at Columbia a few years ago, which changed by taking steps similar to what Mexico is beginning to do.

For frustration at lack of economic oportunities, look elsewhere first, as Mexico has been changing into one of the most developed Latin American countries with declining reliance on commodities and agriculture and instead increased industrialization and service industries.

You want revolution? Look at Mexico's housing boom with traditional financing due to long-term interst rate improvements... and you will see that you will have to look elsewhere for revolution.

[rudy - thousand oaks]

To say that Mexico has a cultural heritage of murder dating back to the Mayans is saying that we see something in them that we don't like about ourselves. Manifest Destiny and US foreign policy since the turn of the last century has been responsable for the death of million of people. Can we deny that the US is one of the most violent cultures of all time. We can deny it but our history speaks for itself.

Our failed drug policies, our insatiable appetite for illegal drugs, is causing most of the violence and murder in Mexico. Legalize the drugs and the violence and corruption will subside. Remember prohibition. There too much money and there are too many jobs in the war on drugs for that to ever happen.

Mexico has had a history of corruption but on closer inspection who is going to say that their corruption is worse than the institutional corruption in the US. The only difference is where the fruits of the corruption ends up. In Mexico it is the elite. In the US it is the elite. So once again it is a case of seeing something in them that we don't like about oursleves.

Mexico is no different than the US. It is a country of peace loving wonderful people who just want opportunities to improve the quality of their lives in a stable environment.

I have traveled extensively in Mexico for over thirty years and found that the average Mexican would give you the shirt of his back. Here in the US, not a chance.

So their economy is falling appart and the average person is left to pay the price. Short term profit motives are comming home to roost. How is that different than our own circumstance?

My hat is off to the people of Mexico. At least they are taking to the streets. What are we doing,laying blame elsewhere.

[Jonny Wonder]

"Our failed drug policies, our insatiable appetite for illegal drugs, is causing most of the violence and murder in Mexico. Legalize the drugs and the violence and corruption will subside. Remember prohibition. There too much money and there are too many jobs in the war on drugs for that to ever happen."

Our policies? Surely you speak in jest, for you have no knowledge of history, Mexican or otherwise. Go back to school. All of you.

[enrique lereto]

Stop defending Mexico!!! Look at this country for what it is. Stop blaming other countries and look no further than within ourselves. We were at one time rich with oil and natural resources. Only small African countries have done a worse job of managing natural resources. Another revolution is almost necessary for Mexico to be taken seriously by foreign direct investors....Or we proud Mexicans can sit at home blame the US for our poor living conditions, lack of jobs, and infrastructure. Stop being typical and stand up for ourselves. VIVA LA MEXICO!