Economy Lessons

Economy Lessons

“Capitalism and political systems - like companies - must constantly evolve to stay vital.”

Thomas Friedman

 

By: Erreh Svaia

Mexico's road ahead is a rocky one, as thoughts about the so called Mexican moments are already into oblivion, we can blame the outside markets volatility, conflicts in other parts of the world, imperialism, China's protectionism and dumping strategies, but internally we have a lot of things to solve, this days two major political parties are changing their leadership, and it's a clear sign of things to come, the right wing polluted by corruption will be following the same path, with a party president considered a puppet of the former one, accused of being too tolerant about corruption, while the official party goes back to the golden age of authoritarianism concentrating all power on its relationship with the president of the nation considered weak, inept and ultimately unpopular, even a third party, the left wing PRD, announced a change in their leadership, one more sign of the deep crisis politics are suffering in the country.

Recently, for the president, two very unfortunate commentaries helped to aggravate his already weak reputation, commenting that to our relief other economies are performing worse than us, and also saying that we are more competitive thanks to the revaluation of the dollar, half right, it works partially to exports, but is really painful to imports and inner markets, given the fact that it is starting to push inflation towards higher levels and price controls set by the government are starting to be conceived, someone said Venezuela?

Rather than listening to the president's unfortunate economy lessons, we must pay attention to the important lessons the world markets are giving us, with the stagnated economies in Japan and the European Nation, their big sized, unequal, and slow moving policies, the territorial conflicts in Ukraine that restrained Russia´s economy, the deep effect of oil based economies in Russia, Brazil and Venezuela, the economic collapse of the populist left wing in Argentina, the corruption cases in Brazil, the brilliant pragmatic and progressive direction of countries like Panama, Costa Rica or Chile, the political conflict between Germany and Greece, and the current bubble about to burst in China, a country that seemed to be the world’s major bet on economic growth, a daring experiment on socialism planning and capitalism free market that gave the world some hope about a post everything economy.

In the sad internal markets, it seems that the beautiful economic landscape presented before the elections has collapsed, reality has checked in and we are facing a not so strong economy that is starting to show signs of exhaustion, fiscal reforms have strengthened the government but weakened internal consume, and the positive numbers of Walmart, a big player and clue indicator of internal consume is starting to rear its ugly head, as numbers and sales are beginning to decline, add that to the start of the school year when consumption traditionally contracts, and you are about to conjure the elements of an even worse decline in consumer dynamics.

I don't consider myself a pessimist, but an optimist well informed should be aware that a storm is coming and that we are on the verge of a black september.