Wall Street not a crisis here?

Mexico may not be as badly hurt by the Wall Street meltdown as you might think.  Thanks in large part to both higher crude oil prices and tax reforms, PEMEX’s balance sheet for January through August of this year shows a heathy 22 billion dollar surplus.  Although continuing to import refined gasoline is a huge drain on profits (the prices rose 73 percent over the same period compared to last year: from 10 billion dollars to 73 billion dollars), as reported in Monday’s El Financiero.

The business paper reported the same day that Economy Secretary Gerardo Ruiz Mateos was certain that “internal controls” on the Mexican economy would prevent crisis in Mexico.  The Secretary pointed to couter-cyclical spending programs (what used to be called “Keynesian economics”) and a pent-up demand for housing and a relatively healthy internal market for goods and services.  However, Ruiz Mateos did say that “structural reforms” were needed in the energy sector.

In light of PEMEX’s healthier than expected balance sheet, however, the administration will be hard-pressed to sell the urgency of these reforms, which means we can exect a protracted debate on what these reforms will entail… something probably better than pushing through changes that would have exposed the Mexican company (and the Mexican economy) to risky U.S. investments.