Saturday, January 15, 2011

Am I Being Naive?

The question always comes up, "Aren't you worried about living in Mexico?" Frank Holmes,chief executive officer and chief investment officer of U.S. Global Investors Inc. that manages approximately $4.8 billion in 13 no-load mutual funds and for other advisory clients, has written an article titled Is Mexico a Country on Fire? Is the country going to the hell of drug dealers kidnapping for ransoms? Actually, Holmes says that as the economy in the U.S. goes, the Mexican economy is leveraged to ours. If the U.S. grows at 3%, Mexico will grow at 4.5% to 5%.

The Mexican BOLSA is up 20% in the last three months, total monthly exports are at a new record high, and "retail sales as of October,  posted a 4.4 percent year-over-year change—more than twice the level seen in July."  Mexican GDP is upwards of $1 trillion  and public debt is about 25% of GDP as opposed to the U.S. of almost 100% of GDP.  Bill Gross of PIMCO, the largest fixed income investor, advises buying Canadian and Mexican debt and selling U.S. debt.

The one major negative is that "2010 ranks as the deadliest year yet in Mexico’s war against the drug cartels, with 11,041 drug-related deaths as of mid-December, representing a 385 percent increase since 2007, according to global intelligence firm Stratfor."



The high number of deaths is likely a result from the capturing and killing of several kingpins which set off a power struggle among the remaining crooks. You might think this has created a modern-day Tombstone but the law enforcement captures have left many of the cartels significantly weaker.

Am I being naive and overlooking the risk or is Mexico poised to expand and carry its citizens to higher standards of living?

2 comments:

  1. Thank you for your informative article and link...Life is full of risk, just try to relax on your front porch some evening in Baltimore, D.C. or Miami. A few bullets wizzing past you each night will open your eyes.

    As to the expanding higher standard of living for Mexicans, I was surprised and a little jealous when I moved to Mazatlan. My boyfriends Healthcare benefits rival mine in the USA, especially dental treatment!

    Also, in Sinaloa, although there are no Food Stamps, I have witnessed Dispensa, the discount foods package available to Mexicans, in action. A highly mobilized, publicized and organized outreach, providing basic family nutrition to the farthest corners of every tiny dirt road Colonia in Mazatlan.
    Viva Mexico!

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  2. Just as in the US, there are dangerous areas in Mexico but most of the country is quite safe. I am an American, and have lived full time in Loreto for 5 years. I will say without reservation this is a GREAT place to live, quiet, peaceful, no crime, friendliest people on earth. The money is arriving here quickly, buy your lot before they go out of sight.

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