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No one expects the Spanish acquisition

14 August 2012

Wow… government austerity really works well… for other countries.

Those who don’t believe that government spending isn’t the motor that allows for private investments to grow might want to consider what’s happening in Spain right now.

Francisco Garzon, of the Spanish Economic and Commercial Office in Mexico, told El Universal that with public and private deficits in the hands of a Spanish government seeking to implement structural reforms that are meant to tackle the problem, and return to a growth, the present economic climate requires employers to choose other investment destinations.

“In recent months we have detected a large number of Spanish companies showing an interest in Mexico, both as a foreign market, and as an investment opportunity. Mexico is a priority country at present. More and more companies realize they most go abroad,and where better than a country offering legal security and a related culture.”

(Eduardo Camacho, El Universal. My translation)

There’s always has to be the lingering fear that the mother country will, as she did for a good three hundred years, pull as much out of Mexico and return as little as possible — and Spanish investments in the energy sector have been controversial, but this could be a boon for Mexico.  Spanish investments are already substantial in key sectors of the Mexican economy:  the automotive, aeronautical, tourism, renewable energy, real estate, finance, construction, telecommunications and high tech industries.

With the Spanish government cutting back on government investments, hard to see much market for those big ticket items (like highways and renewable energy projects) on the Peninsula, and with the right not looking to cut back on populist government projects (although it does seek to privatize them) and “austerity” talk from the left not focused on development but on executive perks and what Ronald Reagan would have called “waste, fraud, and abuse), Iberian investments are probably going to be focused on long-term investments (one doesn’t build a new auto plant, expecting to pull out and go home in a few years) which means these will be turning into Mexican investments… sorta payback for those three hundred years of colonialism.

In the 1930s, the Spanish people got shafted with the assistance of the Germans.  The cultural austerity of the Franco regime sent the intellectuals and artists fleeing to Mexico… which, being a “country offering legal security and a related culture” was able to integrate into Mexico the cultural elites.  The present Spanish government — again with active German support — has opted to screw the Spanish people again, although more though indirect, economic means than aerial bombardment and firing squads looks to be giving Mexico an unexpected opportunity to integrate not the financial elites (mainly heirs to Franco or those that robbed the “New World” for 300 years)  but at least their money.

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