Mexico on the Verge of a New Tequila Crisis?

Plunging price of oil, soaring debt, itchy hot money, public rage
By Don Quijones, freelance writer, translator in Barcelona, Spain, and editor at WOLF STREET. Mexico is his country-in-law. Raging Bull-Shit is his modest attempt to scrub away the lathers of soft soap peddled by political and business leaders and their loyal mainstream media.
As the old adage goes, things have an annoying habit of occurring in threes. It’s particularly true in the case of crises, which tend to fuel each other in a potentially lethal feedback loop. And Mexico is already experiencing blowback from two separate but strongly interlinked crises.
One is primarily social in nature, resulting from the rise of public rage and resistance following the disappearance of 43 students from the narco-controlled town of Iguala. The other is essentially political: support for the current government is in freefall after a string of funding scandals involving the country’s President, Enrique Pea Nieto.
Public anger is blossoming as the full scale of collusion between the local government and organised crime finally comes to light. As John Gibler, an author and independent journalist told Democracy Now, it’s no longer possible to talk about corruption in Mexico; what we essentially have are two sectors in an industry that have fully merged: the police and drug traffickers. Stuck in the middle are millions of law-abiding Mexicans who just want to go about their lives without the constant fear of disaster hanging over their heads.
But what if there were to emerge a third crisis – an economic one? On the surface Mexico’s economy is in a stable enough condition. Growth continues to splutter at around 2% this year (far less than the 3.5% originally forecast by the IMF). The country continues to serve as a vital global manufacturing hub, in particular for its largest trading partner, the U. S. And the historic bugbear of inflation seems to be under control, hovering around 3%.

This post was published at Wolf Street on December 3, 2014.