BajaNomad

End of recession. Green shoots in Mexico?

aldosalato - 7-21-2009 at 07:06 AM

It seems that the worse is already behind us. Last 12 months have seen a vertical collapse of economic activities in Mexico and even more in Baja California Sur. But now the economy seems finding a new base where is starting to trade up again.
Peso is strengthening at 13 and seems even going higher.
Interest rates at all time low are opening a new wave of Mexican financing.
Fiscal reform that will eliminate the double level of taxation of IETU and ISR should be approved in coming months and that should give a new life to investments.

And Paola Espinoza from La Paz won the gold in diving.

[Edited on 7-21-2009 by aldosalato]

Osprey - 7-21-2009 at 07:36 AM

Maybe that's what you see in La Paz but on East Cape and Los Cabos your report might be received as news that the area has been in a deep coma and it just moved a finger. The number of business failings is shocking and thousands are hurting and see no end real soon -- not soon enough to help them keep their heads above water.

backninedan - 7-21-2009 at 03:45 PM

I don't see it here in Loreto either. Tourism is still way down, property sales are very slow and unemployment remains high.

Much of this may be due to Loreto Bay fallout and not a true reflection of the economy in other areas of Baja......................or not.

Whoo Hoo! I have a customer?

OLIGUACOMOLE - 7-21-2009 at 04:06 PM

Most of the business we receive our tourists traveling down or up the Mex. #1. July and August are two of our busiest months. More families in July and lots of Euro's in August. Mulege is 110, but at the beach her it might be 95. This is good for our biz.
This year I will say we are at 30% of normal or compared to last year. Also, I have more people splitting orders. Tips for employees are a little less.
On the positive side I have finally caught up on lost sleep!
P.S. Our biz is not effected by the man full- o -beans.......fire:

JESSE - 7-21-2009 at 04:22 PM

What we are seeing is the improvement from the swine flu mess, not the recession. In La Paz theres been an improvement because of Mexicans vacationing, and some of the funds from the federal goverment "flu rescue" package is trickling down. Signs of recession improvement will probably begin to show at the end of November. It is still going to be a rough summer.

Costa Baja Resort has been doing a good job at attracting rich Mexicans and their boats to the Marina and it shows. Right now the Mexicans are the ones with money to spend here, very few of anything else in town.



[Edited on 7-21-2009 by JESSE]

Bajahowodd - 7-21-2009 at 04:28 PM

Jesse's right. We saw very few tourists other than Mexicans. The Thankgiving and after through Spring Break will be the true measure. The stock market has been moving up. But average folks seem to be concentrating on saving as oppposed to spending. Maybe if some of those 401ks really start to climb, people will feel more confident.

tripledigitken - 7-21-2009 at 04:54 PM

How many of those with 401k's are still in stocks? Many that i talk to got out in March (at the low).

bajamigo - 7-21-2009 at 04:59 PM

Quote:
Originally posted by tripledigitken
How many of those with 401k's are still in stocks? Many that i talk to got out in March (at the low).


Consistent with the theory of buying high and selling low...and making it up on volume.
;D

[Edited on 7-21-2009 by bajamigo]

aldosalato - 7-21-2009 at 05:19 PM

Calderon just announced a fall of 9% GDP in Mexico yesterday
http://online.wsj.com/article/BT-CO-20090720-714252.html

but Puebla is also the place where a new investment of 1billion USD has been announced and many more will come in next months thanks to a very competitive Mexican economy.
http://www.individual.com/story.php?story=104049600

Well you all said it.......... it cannot get worse than this!
Now that we all aknowledge that we lost 30-50% in USD term of all our investments let's just cheer up and let's look forward.
The world has not come to an end! And Mexico has the numbers to move forward for the next decade. My bet is that mainland Mexico will recover faster than Baja area and only when more savings will be built again in the economy Baja will move forward again as the best place for sun and fun.

[Edited on 7-22-2009 by aldosalato]

[Edited on 7-22-2009 by aldosalato]

Bad economic times behind us?? Are you kidding ?

ElFaro - 7-21-2009 at 05:25 PM

Quote:
Originally posted by aldosalato
It seems that the worse is already behind us. Last 12 months have seen a vertical collapse of economic activities in Mexico and even more in Baja California Sur. But now the economy seems finding a new base where is starting to trade up again.


Baja has to get over the "big 5" hurdles...

1. Home equity and tight lending by banks has dried up any xtra cash Gringos have to invest in overpriced Real Estate in Baja or spend on vacations. Alot of empty condo bldgs between TJ and Ensenada for years to come.

2. Continued violence on the border of cops getting killed and beheaded, kidnappings, and perceived shakedowns of Gringos crossing into Mexico.

3. Long lines and wait times to return from Baja and soon long lines and wait times going south into Baja.

4. Passports now mandatory to return from Mexico perceived by many as not worth the hassle to travel south.

5. Failed developments taking people's money , land legal issues undermining home ownership, local crimes of opportunity.

These issues will continue to plague Baja for years to come especially with the economy stateside continuing to slide with no end in site. Alot of foreclosures still to come.

A friend of mine who is involved in farming operations in Baja told me they don't see much turn around in Baja for the next 5 to 10 years.

805gregg - 7-21-2009 at 05:40 PM

Quote:
Originally posted by tripledigitken
How many of those with 401k's are still in stocks? Many that i talk to got out in March (at the low).


I left mine in and its starting to re-bound, I gained back about 50% of my previous losses.

arrowhead - 7-21-2009 at 08:33 PM

Quote:
Originally posted by aldosalato
And Mexico has the numbers to move forward for the next decade. My bet is that mainland Mexico will recover faster than Baja area and only when more savings will be built again in the economy Baja will move forward again as the best place for sun and fun.


In addition to what ElFaro just said, Mexico is going to pump its last barrel of oil available for export within the next 5 - 7 years. Since oil revenues fund 40% of the Mexican federal budget, you can expect the entire economy to come crashing down. Oil revenues --- gone. Tourist dollars -- off 70%. Remittances from Mexicans abroad -- dropping off rapidly. The world recession is going to last for years with little to very slow growth.

I have actually never heard anybody use the term "competitive economy" when referring to Mexico.

fishbuck - 7-21-2009 at 09:10 PM

I just did a little reading about the Mex oil production. That is a little disturbing.

aldosalato - 7-21-2009 at 10:06 PM

Quote:
Originally posted by arrowhead
Quote:
Originally posted by aldosalato
And Mexico has the numbers to move forward for the next decade. My bet is that mainland Mexico will recover faster than Baja area and only when more savings will be built again in the economy Baja will move forward again as the best place for sun and fun.


In addition to what ElFaro just said, Mexico is going to pump its last barrel of oil available for export within the next 5 - 7 years. Since oil revenues fund 40% of the Mexican federal budget, you can expect the entire economy to come crashing down. Oil revenues --- gone. Tourist dollars -- off 70%. Remittances from Mexicans abroad -- dropping off rapidly. The world recession is going to last for years with little to very slow growth.

I have actually never heard anybody use the term "competitive economy" when referring to Mexico.


http://tinyurl.com/l6dmu2

Canada Spends Big to Save GM, So Why Not Mexico?

There is your answer.
And remember the 2 trillion USD government bailout.............

[Edited on 7-22-2009 by aldosalato]

Bajahowodd - 7-21-2009 at 11:37 PM

Mexico has had its pride stuffed in its anus about oil for a long time. There's a whole bunch of crude in the Gulf of Mexico that requires technology beyond Mexico's grasp. Their politicians are going to have to suck it up and partner with foreign firms if they don't want to become net importers in the near future.

arrowhead - 7-22-2009 at 01:03 PM

Quote:
Originally posted by aldosalato
There is your answer.
And remember the 2 trillion USD government bailout.............


OK, I know you think that is an answer, but I don't get it. Mexico is full of maquiladoras owned by foreign companies to take advatage of cheap labor. But how is does that translate to green shoots for Mexico? For example the average labor rate for GM in the US is $28 per hour. The labor rate for GM in Monterrey is $2.80 per hour. But all the manufacturing profits get streamed back to Detroit -- free. You have heard of NAFTA, right? The only thing that remains in Mexico is the $2.80 per hour labor. The sales price of a GM car in Mexico is actually higher than the price for the same car in the US, due to taxes and a less efficient market system. At $2.80 per hour, the average Mexican GM worker would have to work 10,000 hours --over 5 years-- to earn the price of a new car. And that is if he could save 100% of his salary.

So, where are the green shoots? It just means that, all things being equal, GM cars we buy in the USA are cheaper for us because Mexicans are willing to build them for us for $2.80 per hour.

aldosalato - 7-22-2009 at 02:57 PM

I ve been recently living in Australia for a few months and visited my relatives and friends in Italy. Developed countries have so many financial imbalances with bigger long term problems than Mexico. Basically all their industrial and commercial base is bankrupt without government intervention. Welcome to modern capitalism with private profite for the crooks and social losses for the masses..........And the financial world is sucking and destroying so many resources that actually having a smaller financial system will be a benefit for the long term....... only time will tell but I prefer to stay in this country for the future of my kids without forgetting all its problems and injustice.

[Edited on 7-22-2009 by aldosalato]

arrowhead - 7-22-2009 at 04:01 PM

Quote:
Originally posted by aldosalato
Welcome to modern capitalism with private profite for the crooks and social losses for the masses.


Well, now I know you're talking about Mexico. Read this. I think those green shoots you are seeing are some kind of a fungus that grows on dead things.

http://www.signonsandiego.com/uniontrib/20060514/news_mz1e14...

Bajahowodd - 7-22-2009 at 04:29 PM

I think aldosalato is on to something. Despite so many differences culturally, the developed world actually does face the onslaught of the priviledged. It really doesn't amount to a hill of beans difference to compare a salary among the US, UK, MX or DK. No matter where you go, the history is the same. A very small group of unbelieveably wealthy people are calling the shots. The world as we know it is in danger of devolving into a serfdom overseen by a few.

aldosalato - 7-22-2009 at 04:34 PM

Quote:
Originally posted by arrowhead
Quote:
Originally posted by aldosalato
Welcome to modern capitalism with private profite for the crooks and social losses for the masses.


Well, now I know you're talking about Mexico. Read this. I think those green shoots you are seeing are some kind of a fungus that grows on dead things.

http://www.signonsandiego.com/uniontrib/20060514/news_mz1e14...


That is exactly the current problem of Mexico...... but if you think that Italy, US, Australia, societies are much better you are just living in an illusion. Think about AIG, Citibank, GM. Think about the 2 trillion US deficit (only in US but more in other countries) that was stolen to your future generation and you will just realize that maybe there are crroks on top everywhere

[Edited on 7-22-2009 by aldosalato]

msteve1014 - 7-22-2009 at 04:38 PM

The recession must be over. I just started a new job. Now I can't go to Mexico and spend money. I think it is going to take a good long while before things really start to look better for enough people to make a difference. North or south.

Barry A. - 7-23-2009 at 03:58 PM

Quote:
Originally posted by 805gregg
Quote:
Originally posted by tripledigitken
How many of those with 401k's are still in stocks? Many that i talk to got out in March (at the low).


I left mine in and its starting to re-bound, I gained back about 50% of my previous losses.


Yep, Gregg is right!!! The S&P 500 is up about 40% since the March '09 low. If you wern't in the Market you lost a lot of profits. All my Mutual Funds (9) are ahead, and again earning profits. History repeats itself. However, only my Vanguard GNMA's are ahead of where they were in Oct. of 2007 before the melt-down.

Up, up and away!! :spingrin:

Barry