Like a rock…
The peso took a nosedive yesterday (probably temporary)… but this is an excellent opportunity to make contributions to the Mex Files go further… your dollars, Euros, pounds… are a much safer investment here than anywhere else, apparently.
And, though Mexico is taking a hit, Mexicans themselves are being realistic. Carlos Slim, in Mercopress this morning, goes up in my estimation, being willing to face reality and not — like his Wall Street brethren is willing to suck it up and deal with the situation. Muy macho:
Mexican billionaire Carlos Slim and Latinamerica’s richest man is calling the current financial crisis the worst he has ever seen and anticipated it is going “to impact everybody”. It’s a very difficult situation and it will affect all economies he added.
Slim says today’s crisis is “more complex” than any other since 1929, when stock markets plummeted, triggering the Great Depression.Slim spoke Monday minutes after U.S. lawmakers rejected a financial bailout that US Treasury officials had hoped would calm jittery investors.
Instead, markets plunged in the US, and Latin American indices saw some of their biggest losses in years.
Slim suggested that bank shareholders and executives should shoulder some responsibility for failing financial institutions, predicting that they “will obviously lose their capital in a substantial manner”.
Ironically, or otherwise, Mexican banks are sound, and Latin America in general is probably a safe place to park your funds. As a matter of fact, Carlos Slim is involved in setting up yet another Mexican bank… specifically designed for those poor people (and IXE bank is expanding into retail banking) the right-wingers in the U.S. would have us believe are responsible for the collapse in their own country, as opposed to the management and criminally irresponsible lack of oversight and their failure to investment in goods and services, but instead, to gamble:
Mexican billionaire Carlos Slim and Bangladeshi Nobel Prize winner Muhammad Yunus are joining forces to offer credit to poor people in Mexico.
Slim and Yunus are creating Grameen-Carso, a lending institution that in its first phase will provide at least 80,000 loans.
Slim is committing at least US$45 million to the venture, which they expect to expand to other parts of Latin America.
Slim said Monday the institution will follow the model developed by Yunus’ Grameen Bank.
Yunus and his Grameen Bank in 2006 won the Nobel Prize in economics for pioneering the use of microcredit to spur creation of small businesses in poor nations.
mexfiles.net 
Wow! Carlos Slim going into microcredit with Yunus! What good news. Thank you for spreading it.
I wouldn’t celebrate too early. If he’s gonna charge the kind of interests he charges for credit in Sears or Telmex, we’re screwed. (Not to speak about the prices themselves in Telmex and Telcel… the commisions for ATM use in Banorte…)
This crisis was caused by socialists in government wanting to give everyone a home lone, even the people who were irresponsible with their own money.
These people couldn’t pay back the loan, and instead of allowing Freddie Mac and Fannie Mae to run like a real bank and suffer losses and possibly fail, Democrats kept denying regulatory oversight.
When you lend money to people that don’t understand it, you get failure. Credit crisis is an easy thing to avoid, don’t force bank to give out loans that they don’t feel comfortable with. Then when the banks, the people, or both fail to pay back the money that they promissed that they would, don’t bail either out. That is true right wing economics.
I am sure that Mr. Younas actually expects money to be paid back to him in a timely manner. Otherwise he would not get a profit back from these people. No profit margin means that the business (bank) will fail to pay its employees, operating costs, and will get into debt and soon fail. That is Capitalism and you can not artificially try to control it. This is why Socialism fails, it trys to publicize the risk and the reward of business. All too often, people with no hope for getting paid more for their efforts will not work as hard.
This is a problem that Democrats have set up, they have wished, begged, and pleaded for a recession since January of 2001. Freddie Mac and Fannie Mae were government run businesses, a sin according to right wingers in the US. Also take note that there were earmarks all over this bill that would have given money to ACORN a voter registration group that has and is being investigated for voter fraud. Barrak Obama and the Democrats have blood all over their hands since they were elected in 2006. They needed an issue and nothing was going their way. (Obamma has called upon former Fannie Mae CEO Franklin Rains for advice.)
Now a confession… Ready? Bush and McCain are not Conservatives, Libertarians, or Capitalists. They have been criticized by Rush Limbaugh and several libertarian-conservative commentators for their stance on free trade. Bush in particular for his “cmpassionate conservatism”, which really means Christian dominated Socialism. The Republican Party was afraid to nominate a true conservative so they got stuck with Centrist John McCain. McCain can’t seem to debate Obama because he agrees with him on a lot of issues especially the idea of a free market. This election will once again be a choice between two Centrists, or otherwise known as “the lesser of two evils”.
Yunis’ bank(s) have been very profitable, making what would be laughable loans to most banks (in the range of ten or twenty U.S. dollars). Part of it is that, dealing with the very poor (and often illiterate in countries like Bangladesh), they can do business the old fashioned way — a handshake and a promise that will be fulfilled. AND… what is brilliant about these kind of banks is they work through “lending pools” — basically, if you welsh on your debt, your whole village — and your grandma — is going to get on your case. Plus, the banks go out and teach the borrower how to manage the finances. It’s not really new in Latin America (department stores and even WalMart have banks) but they’re interest rates are a tad high on “business loans” that may be a blender… or a steam iron… or a bicycle.
Slim is no fool. He started out rich and got obscenely rich very simply. He recognized that if he wanted to sell “stuff” in his department stores and cafes and telephone companies, people had to have the money to shop in department store, and a little extra to hang out in a cafe, or make a telephone call.
And, Latin American economic thinking isn’t so hung up on the materialist categories (“socialist”, “Capitalist”, etc.) that see human beings in purely economic terms. Whether “spiritual” (like “Liberation Theology”) or psychological, economic theories look more how humans interact — it’s probably one reason Joseph Stiglitz and Noam Chomsky (two very different thinkers) are so popular. Even a “conservative” Latin American capitalist like the Peruvian Hernando de Soto looks at “social capital”
Cheers
“…,” one of the main points about microcredit as practiced by Yunus and his Grameen Bank projects is that loans are low-interest. Yunus will not cooperate in scamming the poor in any country. He has a proven track record, or so the Nobel committee found.
I still say this is very good news.
Yeah, in the end Mr. Younas’ plan is a capitalist one and more capitalism is always a good thing. Hopefully people in Mexico will vote for more capitalist polocies in the future and improve their economy to be on par with Canada’s, this will end the need for Mexicans to risk their lives for a better life in the US. I hate the border and immigration polocies as much as the next libertarian (with the exception of Ron Paul), knowing that it will probobly not change anytime soon, it would be in Mexico’s best interest to improve their economy. Mr. Younas is a great addition to Mexico, might be just as important as the tallent lended by Norman Borlaug.