Follow the Money:
Why the U.S.
Mainstream Media has
Mexico Under Siege.
April 11, 2010
posted by Johnny
Punish · 56 Comments
Share THE NEW GLOBAL
ECONOMIC REALITY
First: A reality
check on Mexico
Mexico is in a
unique position to
reap many of the
benefits of the
decline of the US
economy. In order to
not violate NAFTA
and other agreements
the U.S.A. cannot
use direct
protectionism, so it
is content to allow
the media to play
this protectionist
role. The U.S. media
– over the last year
– has portrayed
Mexico as being on
the brink of
economic collapse
and civil war. The
Mexican people are
either beheaded,
kidnapped, poor,
corrupt, or narco-traffickers.
The American news
media was
particularly
aggressive in the
weeks leading up to
spring break. The
main reason for this
is money. During
that two-week
period, over 120,000
young American
citizens poured into
Mexico and left
behind hundreds of
millions of dollars.
Let’s look at the
reality of the
massive drug and
corruption problem,
kidnappings, murders
and money. The U.S.
Secretary of State
Clinton was clear in
her honest
assessment of the
problem. “Our
insatiable demand
for illegal drugs
fuels the drug
trade. Our inability
to prevent the
weapons from being
illegally smuggled
across the border to
arm these criminals
causes the deaths of
police officers,
soldiers and
civilians,” Clinton
said. The other
large illegal
business that is
smuggled into the
U.S.A. that no one
likes to talk about
is Human Traffic for
prostitution. This
“business” is
globally now
competing with drugs
in terms of profits.
It is critical to
understand, however
that the horrific
violence in Mexico
is over 95% confined
to the three
transshipping cities
for these two
businesses, Tijuana,
Nogales, and Juarez.
The Mexican
government is so
serious about
fighting this, that
they have committed
over 30,000 soldiers
to these borders
towns. There was a
thoughtful article
written by a
professor at the
University of
Juarez. He was
reminded of the
Prohibition years in
the U.S.A. and
compared Juarez to
Chicago when Al
Capone was
conducting his reign
of terror capped off
with The Saint
Valentine’s Day
Massacre. During
these years, just
like Juarez today,
99% of the citizens
went about their
daily lives and
attended classes,
went to the movies,
restaurants, and
parks.
Is there corruption
in Mexico? YES !!!
Is there an equal
amount of corruption
related to this
business in the
U.S.A.? YES !!!.
When you have a pair
of illegal
businesses that
generate over
$300,000,000,000 in
sales you will find
massive corruption.
Make no mistake
about the Mexican
Drug Cartel; these
“businessmen” are
100 times more
sophisticated than
the bumbling
bootleggers during
Prohibition. They
form profitable
alliances all over
the U.S.A. They do
cost benefit
analysis of their
business much better
than the US
automobile industry.
They have found over
the years that the
cost of bribing U.S.
and Mexican Border
Guards and the
transportation costs
of moving marijuana
from Sinaloa to
California have cut
significantly into
profits. That is why
over the past 5-7
years they have been
growing marijuana in
State and Federal
Parks and BLM land
all across America.
From a business
standpoint, this is
a tremendous cost
savings on several
levels. Let’s look
at California as an
example as one of
the largest
consumers. When you
have $14.2 billion
of Marijuana grown
and consumed in one
state, there is
savings on
transportation, less
loss of product due
to confiscation and
an overall reduction
cost of bribery with
law enforcement and
parks service
people. Another
great savings is the
benefit to their
employees. The
penalties in Mexico
for growing range
from 5-15 years. The
penalties in
California, on
average are 18
months, and out in 8
months. The same
economic principles
are now being
applied to the
methamphetamine
factories.
FOX News continues
to scare people with
its focus on
kidnapping. There
are kidnappings in
Mexico. The
concentration of
kidnappings has been
in Mexico City,
among the very rich
and the three
aforementioned
border Cities. With
the exception of
Mexico City, the
number one city for
kidnappings among
NAFTA countries is
Phoenix, Arizona
with over 359 in
2008. The Phoenix
Police estimate that
twice that number of
kidnappings goes
unreported, because
like Mexico 99% of
these crimes were
directly related to
drug and human
traffic . Phoenix,
unfortunately, is
geographically
profitable
transshipping
location. Mexicans,
just like 99% of
U.S. Citizens during
prohibition, go
about their daily
lives all over the
country. They get
up, go to school or
work and live their
lives untouched by
the border town
violence.
These same
protectionist news
sources have misled
the public as to the
real danger from the
swine flu in Mexico
and temporary
devastated the
tourism business. As
of May 27 2009 there
have been 87 deaths
in Mexico from the
swine flu. During
those same five
months there have
been 36 murdered
school children in
Chicago. By their
logic, if 87 deaths
from the swine flu
in Mexico warrants
canceling flights
and cruise ships to
Mexico, then close
all roads and
highways in the USA
because of record
43,359 automobile
related deaths in
the USA in 2008.
What is just getting
underway is what
many are calling the
“Largest southern
migration to Mexico
of people and real
estate assets since
the Civil War” A
significant
percentage of the
Baby Boomers have
been doing the
research and are
making the life
changing decision to
move out of the
U.S.A. The number
one retirement
destination in the
world is Mexico.
There are already
over 2,000,000 US
and Canadian
property owners in
Mexico. The most
conservative number
of American and
Canadian Baby
Boomers who are on
their way to owning
property in Mexico
for full or part
time living in the
next 15 years is
over 6,000,000. Do
the math on
6,000,000 people
buying a $300,000
house or condo and
you will understand
why the U.S.
Government is trying
to tax this massive
shift of money to
Mexico through H.R.
3056. The U.S.
government calls
this “The Tax
Collection
Responsibility Act
of 2007”. Those who
will have to pay it
are calling this the
EXIT TAX.
Mexico: A better
economic choice than
China
Another large exodus
from the U.S.A is
high paying skilled
jobs. The job shift
in automobile
sector, both car and
parts manufacturing,
is already known by
most investors. In
the last few months
as John Deere and
Caterpillar have
been laying off
thousands of workers
in the U.S.A., and
hiring equal numbers
in Mexico. The most
recent industry that
is making the shift
is the aerospace
manufacturers . In
the city of
Zacatecas there is
currently a $210
million aerospace
facility being
built. With the 11
U.S. companies
moving there, it is
estimated to provide
over 200,000 new
high paying jobs in
the coming years.
One of the main
factors for the
shift in job south
to Mexico instead of
China is realistic
analysis of total
production, labor
and delivery costs.
While the labor
costs in China are
40% less on average,
the overall
transportation costs
and inherent risks
of a long distance
supply chain, and
quality control
issues, gives Mexico
a distinct financial
advantage.
Mexico’s real
economic future
Mexico has avoided
completely the
subprime problem
that has devastated
the U.S. banking
industry. The
Mexican banks are
healthy and
profitable. Mexico
has a growing and
very healthy middle
and upper middle
class. The very
recent introduction
of residential
financing has Mexico
in a unique position
of having over 90%
of current
homeowners owning
their house
outright. U.S. banks
are competing for
the Mexican,
Canadian and
American cross
border loan
business. It is and
will continue to be
a very safe and very
profitable business.
These same banks
that were loaning in
a reckless manner
have learned their
lesson and are
loaning here the old
fashioned way. They
require a minimum of
a 680 credit score,
30% down payment,
and verifiable
income that can
support the loan. In
most areas of Mexico
where Baby Boomers
are moving to, with
the exception of
Puerto Penasco
(which did not have
a national and
international base
of buyers), there is
no real estate
bubble. The higher
end markets ($2-20
million) in many of
these destinations
are going through a
modest correction.
The Baby Boomers
market here is
between $200,000 and
$600,000. With the
continuing demand
inside the Bay of
Banderas, that price
point, in the coming
years, will
disappear. This is
the reason the
Mexican government
is spending billions
of dollars on more
infrastructure north
along the coast all
the way up to
Mazatlan.
The other major area
where America has
become overpriced is
in the field of
health care. This
massive shift of
revenues is
estimated to add
5-7% to Mexico’s
GDP. The name for
this “business” is
Medical Tourism. The
two biggest
competitors for
Mexico were Thailand
and India. Thailand
and India’s biggest
drawback is
geography. Also
recent events,
Thailand’s inability
to keep a government
in place and the
recent terrorist
attack in Mumbai,
have helped Mexico
capture close to
half of this growth
industry. In Mexico
today there are over
56 world class
hospitals being
built to keep up
with this business.
Mexico is currently
sitting on a cash
surplus and an
almost balanced
budget. Most
Americans have never
heard of Carlos Slim
until he loaned the
New York Times $250
million. After that
it became clear to
many investors
around the world
what Mexicans
already knew: that
Mexico had been able
to avoid the worst
of the U.S. economic
devastation.
Mexico’s resilience
is to be admired.
When the U.S.
Federal Reserve
granted a $30
billion loan to each
of the following
countries Mexico,
Singapore, South
Korea, and Brazil,
Mexico reinvested
the money in
Treasury bonds in an
account in New York
City.
According to oil
traders, Mexico’s
Pemex wisely as the
price of oil shot to
$147 a barrel put in
place an investment
strategy that hinged
on oil trading in
the range of $38-$60
a barrel. Since the
beginning of 2009
Mexico has been
collecting revenues
on hedged positions
that give them
$90-$110 per barrel
today. Mexico’s
recent and under
reported oil
discovery in the
Palaeo Channels of
Chicontepec has
placed it third in
the world for oil
reserves, right
behind Canada and
Saudi Arabia.
The following is a
quote from Rosalind
Wilson, President of
the Canadian Chamber
of Commerce on March
19, 2009. “The
strength of the
Mexican economic
system makes the
country a favorite
destination for
Canadian
investment”.
