As the economy degenerates in the United States, many Mexicans and cross-border investors are watching warily.
It wasn’t long ago that Mexicans were stuffing cash inside shoeboxes and mattresses in wide distrust of their own banking system. In 1982, the Mexican government (temporarily) nationalized banks. In 1994, Mexicans saw much of their savings depleted after a string of bank failures and peso devaluations.
On one hand, Mexicans are used to erratic interest rates and peso values, but recent years of stability seemed to indicate the worst was over and a segment of the population has become increasingly reliant on credit to buy homes, cars and other costly goods.
Regardless of Mexico’s own personal credit card debt, the country is inextricably linked to the United States. A downturn in demand for goods manufactured in Mexico is bound to create some pain, especially along factory-filled border states such as Baja California. Reports also already show a decline of money being sent back to Mexico (remittances) from immigrants in the United States.
I’m not an economist, nor an expert in border business issues, but former San Diego Union-Tribune reporter Diane Lindquist has written about this stuff for years. Lindquist started a web site recently called mexbiznews.com with a running news feed of business-related news and her own reporting on Baja California development projects, such as the Punta Colonet and liquefied natural gas terminals. You can access it from my blogroll list, or you can check it out here.
*Disclosure: Diane is a former colleague of mine from the Union-Tribune. We both took a voluntary buyout in December, 2007.
Screen shot of mexbiznews.com