Positive NOB Article about the Mexican Economy

arbon wrote:Brazil is going to win the World Cup this year. 3 to 1 fav'

Mexico is @ 100 to 1.

Are all the bookies wrong ...take your pick.

True, Goldman & Nomura  projected growth  and  Fitch and Moodys increases in ratings are all forward looking "speculations",  but they look backward at real data to make their predictions.

The $11 billion in new investment in bricks and mortar   manufacturing,   mining,   logistics/distribution,   high tech,   automotive, and oil production    have much more substance  and results,   than predictions or the supposed "speculations".   The  $11 billion  will create  real   millions   of new jobs and exports.

Sports betting only keeps 5% as a vig, paying the rest out to winners,  so $11 billion of sports bets does not create the economic output of building  $11 billion in manufacturing plants.

Does US have similar increases in bricks and mortar investments to make real products,  by international companies => new money  to make real products?

Or  does the US  rely on churn:   adding service jobs that build nothing and create hamburgers eaten by the already-obese -  that make more heart-attacks , - which makes more hospital and doctors visits  that  - create more churn in insurance markets  due to the highest rates of medical spending per person on the planet - and give politicians something to fight over,  -     keeping   Limbaugh, Beck, and Rupert Murdoch's Fox talking heads spun up,   sucking in yet-more $billions in advertising $$,    -   that  gives the grumpy-sector Americans yet-more years of things complain about?    

An economy based on creating and treating heart-burn and heart attacks?

A giant grease factory, that uses most of the grease it makes to keep its machinery heavily lubricated?

Would you rather have a consumer-based economy  or  one that builds and makes things?

CHILLIN wrote:And how many shares do you own in the Mexican stock market, how much cash would you leave in a Mexican bank?

The biggest asset in Mexico is its people - not because they have nice shiny smiles, and are wonderful to their children but because they are willing to put up with so much B.S. and not push the system over, again.

Yes,    we have much more money in Mexican banks,  Mexican real estate,  and the Bolsa    than we do in the USA.

If you bought the Dow Jones industrial stocks in late 2007,  you would have had to hold them until 2013 just to   break even  0% return.   This generously assumes that you dumped GM before it went bankrupt -  because the Dow Jones   replaced  GM...  which means it is a crooked "standard" .

If you bought into the Bolsa in late 2007 and sold in 2013,  you would have a 30% return.

Which one would you bet on?   A market that tanked by 50%,  and gave a net 0% return over 6 years -   or   a market that gained 30%  over 6 years ?

How many Mexican banks and financial companies were   bailed-out   or collapsed during the fiscal crisis?   0    

How many US and British banks and financial companies  were  bailed-out  or   collapsed   during the fiscal crisis?

Would you rather have a 30% return  (with no stocks going bankrupt)    or    a  0% return   with major hidden bankruptcies?

Selective memory for facts that fit our ideologies, beliefs and world-views can lead to some strange places & odd choices.

In addition to your last two posts which I agree whole heartedly with...

The rate of exchange to buy US dollars with Mexican pesos over the last 10 years....

If your took the highest exchange rate and the lowest exchange rate and computed the average, the rate of exchange today is about at that average.
I believe the Canadian dollar has fluctuated more (now lower) vs. the US dollar over these same 10 years, even though we hear a lot about the vaunted Canadian economy.

snow', quote...
"Would you rather have a consumer-based economy or one that builds and makes things?"... neither

"Selective memory for facts that fit our ideologies, beliefs and world-views can lead to some strange places & odd choices."

There is only one major Mexican owned bank.

Defunct banks
Banca Confia (failed); acquired by Citibank and now absorbed into Banamex
Banca Cremi (bought and became Banco Unión)
Banca Promex (begin as Banco de Zamora)
Banca Serfin (merged with Banco Santander Mexicano); absorbed into Banco Santander Serfin
Banco Bilbao Vizcaya (bought by BBVA Bancomer)
Banco Central Mexicano (failed, early 20th century)
Banco de Londres, México y Sudamerica (first Mexican bank, later Banca Serfin)
Banco de Oriente (bought by BBVA)
Banco del Atlántico (bought by BITAL, BITAL was later taken over by HSBC)
Banco del Centro (BANCEN) or (BANCENTRO) (bought by Banorte)
Banco del Sureste
Banco Hipotecario
Banco Internacional (bought by Prime and became BITAL)
Banco Longoria
Banco Mexicano Somex (bought by Invermexico and became Banco Mexicano)
Banco Mexicano (bought by Banco Santander and became Banco Santander Mexicano); now part of Banco Santander
Banco Mercantil Mexicano (merged with Banco Nacional Mexicano to form Banco Nacional de México, 1884)
Banco Nacional Mexicano (merged with Banco Mercantil Mexicano to form Banco Nacional de México, 1884)
Banco Sofimex
Banco Unión (failed and bought by Banorte)
Bancreser (later Bancrecer)
Banpaís (bought by Asemex)
Banpeco (bought by BNCI)
Banoro
Banrural

The only point, the important point is that the posted Mexican inflation rate (4.4 %)is higher than the posted bank rate (3.5 %).

And the credit rating is stable, which is as well as can be expected
at this time.

And from the ever so positive US State Department comes an article on the oil and gas potentials in Mexico:
"MEXICO
SPECIAL INTEREST
Challenge in Exploiting Shale Oil Reserves in Northern Mexico - 18 March
2014 During the recent North American Leader's Summit, Canadian Prime
Minister Stephen Harper, Mexican President Enrique Peña Nieto and US
President Barack Obama discussed how the Mexican government could play a
critical role in tapping shale oil reserves located in Northern Mexico.
As a sign of commitment on the part of the Mexican government to
participate in wide-sweeping energy reforms, President Peña Nieto has
pushed through a dramatic reversal of the country's seven-decade-old ban
on private oil and gas drilling in hopes of joining the energy boom and
stimulating the Mexican economy. In doing this, Peña Nieto aims to lure
companies that are drilling in the deepwater Gulf of Mexico and the
Texas shale patch to lead the development of Mexico's potential 42
billion barrels of oil.

Where Does Mexico Stand in Terms of Current Oil Production?
Mexico is the world's number 7 producer of oil, but its output is
decreasing. The country hit its peak in 2004 when it was producing 3.4
million barrels per day. Today, Pemex is producing around 2.5 million
barrels per day as new technology has thwarted the company from
accessing untapped reserves. According to the US Energy Information
Administration (EIA), Mexico most likely has up to 680 trillion cubic
feet (tcf) of natural gas reserves. Early Pemex studies are more
conservative than the EIA estimate and acknowledge the possibility of
between 150 and 459 tcf of shale gas in five different geological
provinces within Mexico.

But according to Jordy Herrera, Mexico's Energy Minister, "Even in the
most conservative scenarios, exploiting these shale gas resources could
and should spark the development of a national industry without
precedent." He further added that the shale industry could attract
investment of between $7 billion and $10 billion a year. Without shale,
national production of natural gas is only expected to grow 0.5 percent
over the next 15 years, while demand is seen rising 2.5 percent. That
would mean expanding imports at a constant rate of 6.5 percent to keep
up.

Where are the Most Promising Shale Reserves?
The Eagle Ford formation in Mexico's Burgos basin is by far the most
promising shale reserve with between 27 and 87 tcf of dry gas and
liquids-rich resources, according to a Pemex presentation. Eagle Ford
alone produces some 1.2 million barrels of oil a day, and half of the
38,000 square mile field lies within Mexico. While no other nation has
managed to duplicate US and Canadian success in hydraulic fracturing-the
method used to drill shale oil and gas, Mexico has perhaps the best shot
because it can access the Eagle Ford.


Possible Problems Associated with the Extraction of Shale Oil Reserves
The first and most pressing issue to foreign investors regarding shale
oil extraction is the presence of Mexican drug cartels in shale rich
regions; principally Tamaulipas, Nuevo Leon, and Coahuila. The presence
of these groups poses a threat to foreign investors as they may be
targets of kidnapping, extortion, and outright theft. A second issue
faced by shale extractors is the vast amount of water needed to drill
reserves. In Coahuila where a vast quantity of the untapped shale is
located, the water supply is scarce. In fact, Coahuila is Mexico's
second driest state and agriculture activities alone require
three-quarters of the state's total supply.

There are no specific national regulations in place yet for shale
development, as they are set to be finalized by mid-March 2014. Still,
even if shale exploration does become a reality in Mexico, US companies
wishing to become involved will face hurdles in terms of drug cartels
and a limited water supply; both of which are factors that could
ultimately undermine their profit margins.

Comment: For 75 years, Pemex, a Mexican state owned petroleum company,
has enjoyed a monopoly on crude oil production. But this all changed in
December 2013 when Congress, with support of President Enrique Pena
Nieto, removed this monopoly and formally welcomed private investment
into the country's oil, gas and electricity sectors. Of particular
interest to foreign oil companies are the vast reserves of shale oil in
northern Mexico. In fact, Mexico has the world's fourth-largest reserve
of shale gas and if tapped, could result in huge revenues for the
Mexican government. However, the ever imposing presence of drug cartels
has raised obvious security issues that may influence private investors
in looking for shale oil reserves elsewhere.

Drug Cartels and the Threat they pose to Foreign Investors:
The vast majority of shale oil reserves are located in Tamaulipas, Nuevo
Leon, and Coahuila; states which are almost exclusively controlled by
the Gulf Cartel and Los Zetas. And while oil drillers commonly face
innumerable dangers during the drilling process, the threat of
kidnapping, theft, and extortion may be dangers US based companies are
not willing to take. Los Zetas are already heavily involved in the
theft of Pemex crude oil, gasoline, diesel, and liquefied petroleum. In
2011 alone, Los Zetas stole $250 million worth of fuel at market prices;
a quantity that translated to nearly one million barrels of fuel. And
in 2012, Pemex employees discovered 539 siphons from their pipelines in
Tamaulipas.

The same came be said of coal mining in Coahuila. In the last few years,
Los Zetas have assumed control of this once legally run enterprise.
They use their own poorly-paid workers to mine the coal or they buy it
at rock bottom prices from legitimate coal miners who are forced to
comply. Los Zetas then re-sell the coal to a state-owned company at a
profit 30 times greater than the initial investment."

I would suggest taking note of just how much of this article being distributed via "Wardens" is spent blaming the cartels and failing to address the roadblocks from the previous nationalizing of the oil business or how the billions of required foreign investment will be protected.

I think I have posted this before. It is a little out of date but is still very accurate. Foreign investment, serious foreign investment without ridiculous bribes/incentives, will only happen when Mexico establishes rule of law. Which the former Mexican Ambassador to the U.S.A. predicts within the next 10 years.

http://www.wilsoncenter.org/sites/default/files/rios_rule_law_mexico_growth.pdf

The world wide oil industry is controlled by the U.S.A. I know this as fact as a former Buyer (lower level Purchasing Agent) for British Petroleum, Aberdeen and the Shetland Sullum Voe Terminal). Countries like Iran that strike out on their own soon find the system breaking down - parts, software, expertise are not available. Oil stops flowing. If you want to play "OIL", you have to include the U.S.A.

arbon wrote:snow', quote...
"Would you rather have a consumer-based economy  or  one that builds and makes things?"... neither

"Selective memory for facts that fit our ideologies, beliefs and world-views can lead to some strange places & odd choices."

There is only one major Mexican owned bank.

Defunct banks
Banca Confia (failed); acquired by Citibank and now absorbed into Banamex
Banca Cremi (bought and became Banco Unión)
Banca Promex (begin as Banco de Zamora)
Banca Serfin (merged with Banco Santander Mexicano); absorbed into Banco Santander Serfin
Banco Bilbao Vizcaya (bought by BBVA Bancomer)
Banco Central Mexicano (failed, early 20th century)
Banco de Londres, México y Sudamerica (first Mexican bank, later Banca Serfin)
Banco de Oriente (bought by BBVA)
Banco del Atlántico (bought by BITAL, BITAL was later taken over by HSBC)
Banco del Centro (BANCEN) or (BANCENTRO) (bought by Banorte)
Banco del Sureste
Banco Hipotecario
Banco Internacional (bought by Prime and became BITAL)
Banco Longoria
Banco Mexicano Somex (bought by Invermexico and became Banco Mexicano)
Banco Mexicano (bought by Banco Santander and became Banco Santander Mexicano); now part of Banco Santander
Banco Mercantil Mexicano (merged with Banco Nacional Mexicano to form Banco Nacional de México, 1884)
Banco Nacional Mexicano (merged with Banco Mercantil Mexicano to form Banco Nacional de México, 1884)
Banco Sofimex
Banco Unión (failed and bought by Banorte)
Bancreser (later Bancrecer)
Banpaís (bought by Asemex)
Banpeco (bought by BNCI)
Banoro
Banrural

You list the mergers, acquisitions, and take overs.
What has that to do with depositors losing any money?
Banks chartered to operate in Mexico, abide by Mexican banking regulations, not the country where the "owners or partial owners" reside; therefore...Mexican banks.

Having been raised as an "oil company brat" with STANDARD VACUUM OIL COMPANY/ESSO/EXXON in a period when India was first making noises about nationalizing the foreign oil companies, I was pretty clear on the topic at the time.  When push came to shove, India finally did one of the few smart things they have ever done - they formed partnerships with the foreign oil interests.  The article that follows gives one some insight on just how Mexico might have to structure things:
http://www.fundinguniverse.com/company-histories/indian-oil-corporation-ltd-history/

slainte39 wrote:
You list the mergers, acquisitions, and take overs.
What has that to do with depositors losing any money?
Banks chartered to operate in Mexico, abide by Mexican banking regulations, not the country where the "owners or partial owners" reside; therefore...Mexican banks.

I guess you missed Spencer's post looking for participants in a class action suit after an investment in low income housing, marketed as a Bank investment fund, went broke - they say, due to negligence. More important, Have you heard of the Oceanografia scandal, which involves many millions of dollars of fake and fraudulent loans made by Banorte and Banamex.

http://www.thenews.com.mx/index.php/home-articulos/20026-pan-end-probe-then-talk-energy

CHILLIN wrote:

Have you heard of the Oceanografia scandal, which involves many millions of dollars of fake and fraudulent loans made by Banorte and Banamex.

Did either of those bank's average customers/depositers lose any money due to that scandal?

I doubt anyone lost money other than the workers and contractors for Oceanografia that will be out of work. I'm cynical enough to bet that a lot of the contractors who are going to replace them will be from the U.S.A. and Canada. Ultimately the customers will pay, they always do - the government is not going to bail them out.

Central Bank: No Sign of Mexican Economic Recovery
http://www.laht.com/article.asp?ArticleId=1814512&CategoryId=14091

CHILLIN wrote:

slainte39 wrote:
You list the mergers, acquisitions, and take overs.
What has that to do with depositors losing any money?
Banks chartered to operate in Mexico, abide by Mexican banking regulations, not the country where the "owners or partial owners" reside; therefore...Mexican banks.

I guess you missed Spencer's post looking for participants in a class action suit after an investment in low income housing, marketed as a Bank investment fund, went broke - they say, due to negligence. More important, Have you heard of the Oceanografia scandal, which involves many millions of dollars of fake and fraudulent loans made by Banorte and Banamex.

http://www.thenews.com.mx/index.php/home-articulos/20026-pan-end-probe-then-talk-energy

I didn't miss it, but you must have missed the fact that investments through any financial entity is different from a bank deposit....apples and oranges.  Stocks (acciones) and other investments become worth less or worthless all around the world, every day.

article from todays informador. bank of mexico the source, cant be much clearer.http://www.informador.com.mx/economia/2014/519097/6/economia-no-ha-dado-senales-claras-de-mejoria-reconoce-banxico.htm