HugsFromMexico.com

How I will protect myself against the economic recession...

In a previous post, I was wondering if the financial/economic crises would hit me and/or my business in Mexico.  Fortunately, until now, there has been no impact on my business. 

However, I should be honest; I'm not convinced this won't change. So I'm preparing myself, cutting expenses both in business and personal life. 

Business wise, the purchase of the brand new Acura TL will be postponed :-( and of the 6 phone lines we have (included 3 cells), 1 or 2 will be canceled.    And I'm going to try to renegotiate the rent of the real estate infrastructure we have...  And I'm sure I will be able to renegotiate also the rent of the Mexico City office. There you have a monthly saving of at least USD 3,000 !!!

On a personal base, there is not much money to save: I've always been conservative in my spending, so I will keep my standard of living. 

However, there is one thing where I can save a few hundred dollars a month!  Yes, on my credit card debt!

Friends of mine, who know my conservative spending pattern would say: WHAT???  DO YOU HAVE A CREDIT CARD DEBT?    Well I have, although I don't really take care about it as I bought building materials for my house with that credit card debt...  WHAT???  HAVE YOU BEEN BUILDING A HOUSE ON A CREDIT CARD DEPT? Yes I did, but this was the only way to do it (please note my post about real estate in Mexico) but I had a plan" to maintain the interest rates under control...

I'm not going to enter in detail, but my secret is my income in Dollars and the inflation in Mexico.  The value of the USD increased approx 20% and inflation in Mexico is over 5%.  So, that's 25%.  And the interest rates of my credit cards are 25%, 29% and 49% (I have 3 cards). So if you discount 25%, I'm paying in real terms 0%, 4% and 24% of interest.  I don't worry about the 0% and 4 %, however, I wanted to cut 24% rate.

So I went to the bank.  I have an excellent credit history, so I thought, let's ask a personal loan to pay off my credit card.  And yes!  I got the loan!  In the past (to have funds for building the house) I got loans at a 29% rate, so I was happy. 

So I started signing papers, but for some reason, I couldn't find the interest rate, even not in small letters!  So I asked...  And when I received the answer, I understood why they didn't tell me...  50% interest!!!  Of course, I told the bank to keep their money: I was not going to pay that rate.  The bank told me this was a "favorable" rate for a personal loan, taking into account my excellent credit history… Other clients where paying up to 70%!!! Asking why they didn't offer me 29% as in the past, the answer was "the economic recession"  Wow!  in other countries they lower the interest rates when economy is down...  In Mexico they increase it...

Anyway, I told them I was only prepared to pay 29%...  I never thought they would accept... But they did :-).  As a result, I paid off my credit card debt and if the Dollar doesn't lose value against the Mexican Peso (which I doubt), I will pay of my loans during the following 30 months at a net rate of 4% (interest of 29% minus 5% inflation minus 20% devaluation). That's even less than the interest rate of a mortgage in the :-)

Why I'm sharing this information?  Well because I’m lucky guy with brains and education, being able to "use the system"  However, I feel sad for the millions of Mexicans, who are paying off credit cards at a 60%  to 70% interest rate...

Plane crash...

Remember my post about the plane crash with on board the Mexican Interior Minister?  Well, today, the results of the investigations of the "black box" of the plane have been made public.   And believe me, I DO BELIEVE they are real because it where US aviation officials, British specialists and Bombardier officials (Bombardier is the manufacturer of the crashed Learjet) who did the investigations…  Imagine, even the Mexican government doesn’t trust it’s own investigators!

Anyway, the plane crash was an accident due to an error of the pilot.  Errors are human, so that’s not the point…  However, the error was due to the lack of experience of both pilots!  Both pilots where licensed, but didn’t have the required training and experience to fly a Learjet 45!  That not me telling this!  These are facts, revealed by the Mexican government!

HOW THE FU%q IS THAT POSSIBLE?  Only in Mexico this can happen!  Even a small, insignificant country such as Belgium, with no terrorism to fear use military planes to fly their government officials!  Mexico, where government officials can be attacked any time, uses an old Learjet with two inexperienced (and probably underpaid and under motivated) pilots to fly around their second most important official!  Give me a break!!!

The financial and economic crises in Mexico

Since the world crises started a few weeks ago, I'm still wondering if there will be a a financial and/or economic crises for me personally and my business...  Asking colleague entrepreneurs in Mexico, is no way finding that out.  If you ask a Mexican how his/her business is doing, he/she will always answer...  BAD!  I have to believe Mexicans, they do live in a permanent economic crises.  Of course I'm talking about middle and higher social levels of the Mexican society...  The real poor people ARE living in permanent crises, that's for sure, but that's another subject.

So back to the crises in Mexico.  Honestly I don't see any crises yet.  I'm still surprised to see that the highways are overloaded during the weekends, when people travel from Mexico City to touristic destinations in Morelos State and Acapulco...  Go to WallMart, and people are still buying...  And, brand new BMW's, Mini Coopers, SUV's are still lined up on the parkinglosts of the malls.  And in the malls, people are still buying goods in (over)priced luxury stores such as Liverpool or Palacio de Hierro... 

No, November 2008, I still don't see any impact of a so called financial - economic crises in Mexico, although, I admit, the media talks about it.  Let's hope I'm NOT wrong!

If Mexico could vote... Obama or McCain?

I haven't been giving any personal opinion about the US elections for one simple reason...  I don't care!!! I cannot vote, I’m not a US citizen and I'm not living in the US...  Why taking care about something I have no control on anyway?

Anyway, in Mexico, now that the US elections are getting close, it is news in the media.  The funny thing is the opinion of the "vox populi" and the one of the "intellectuals" which is completely opposed…

The “vox populi” is pro Obama, arguing Mexicans (with voting rights in the USA) will vote Obama and that he will end the war in Iraq.  I can understand the first point (although I think it's not a good argument), however I don't understand the second one: what's the interest of Mexico if the USA is or is not in war with Iraq?

The intellectuals tend to vote (if they could of course) for McCain. Might be surprising, but they do, and have good arguments...  They say that Obama and the democrats, certainly with the recession, are protectionists and will reduce commerce with Mexico.  And that would be catastrophic for Mexico...  And the democrats have a point: in 1994, the USA had a trade surplus with Mexico of USD 1,349 millions...  In 2007, this became a trade deficit with Mexico of USD 51,976 millions!  In other words, Mexico has been exporting for USD 166,500 to the US, while the US "only" exported for USD 114,549 millions to Mexico… These figures are from the US government, you can check them here: http://www.census.gov/foreign-trade/balance/c2010.html. If these figures would change (in disadvantage for Mexico), unemployment, devaluations and poorness (and thus crime) would increase in Mexico…

Also, they say (the intellectuals), there is a wrong perception from the “vox pupuli” that Obama and the democrats are pro Mexicans and pro immigration. And I do agree: on human side, democrats might be pro Mexicans, but electorally, they can’t sell the idea to Joe Six (afraid to lose his job) to legalize illegal’s… This is opposed to the republicans, who represent the “the rich and business owners” in whose interest it is to have cheap illegal Mexicans…

My point of view? Taking into account the interests of Mexico, and being an intellectual myself ;-) I would tend to vote McCain… However, if could vote, I would vote Obama for sure. I think the US needs a fresh wind of optimism in order to reactivate the economy… And I believe Obama is the best option… And that’s in my interest too! Optimistic Americans mean Americans travelling to Mexico… And that my business, serving Americans in Mexico :-)

 

What Mexico and Ghana share!

According results of Transparency International, with a rank of 69, Ghana is a LESS corrupt country than Mexico, ranking at 72! Good news is that Mexico is still less corrupt than Iraq, Haiti and Somalia…  

I have a theory that Mexicans have a gene that makes them corrupt by birth! Let me explain…

Mexicans always have been an oppressed population… First, before the colonization, they where oppressed by a bunch of warriors, the Aztecs… Then the Spaniards oppressed them from 1492 to 1810. Then Mexico became independent, and the Gringos and French invaded them… Finally in 1938, after the revolution and after kicking out the Americans and British (and their oil interests),  Mexicans became more or less independent. This time to become oppressed by a Mexican political elite running the country…

Of course, if you are oppressed, there is no reason for you to do the things the right way… Actually, you will do your best to do things in the wrong way! So after several centuries of oppression, Mexicans have (in my point of view) a gene which disable them doing the things in the right way… This results in a corrupt society…

And after a closer look at Transparency International’s report, I detected that the 10 less corrupt countries are countries which have never been colonized AND never colonized others… (except The Netherlands, ranking 7)… 

Although if you check the list of the most corrupt countries you will see that all of them have a history of colonization, oppression and wars… 

Transparency International Corruption Report here: http://www.transparency.org/publications/publications/annual_reports/annual_report_2007

Happy 2008!!!

I know, I know, I know…  I abandoned this blog for a while! Anyway, for the year 2008, one of my purposes is sending more posts in order to maintain you updated about Mexico and the live in this country as seen from a foreigner’s pint of view.

Saludos, Peter.

Study Spanish in Mexico at Anders Languages México: http://www.andersmexico.com !

No new Immigration policies in the USA

The announcement that US congress won’t discuss any new immigration bill until ‘future notice’ has been a big disappointment in Mexico.   Personally I believe Mexico should take care about its own citizens instead of expulsing them to the USA, but the reality is that this is not possible.  At least not in a short term: therefore 2/3 of the Mexicans should be educated before!!!

I believe the United States (as any other country in the world) has the right to know who is residing in their country.  I also believe, that the USA has the right to protect its borders and the deport any illegal citizen!  Actually, Mexico, has much stricter immigration policies then the USA.  As a foreigner in Mexico, I know about Mexican immigration and I highly recommend any foreigner to be LEGAL in Mexico if they don’t want to be treated as a criminal!

However, this is not the point now.  The fact is that millions of Mexicans are living illegally in the USA and that you CAN NOT:

1. Deport them all.  USA economy need the cheap Mexican labor!  Besides, Mexico is not able to receive all these citizens neither: it would collapse the Mexican economy, what would have its consequences in the USA too.  Remember the Tequila crisis in 1994!

2. Ask then to go back and make them apply for a USA visa.  The illegals have no money or savings and CAN NOT survive several months in Mexico, while wating for a visa.

The first error the USA made is to allow that so much illegal got settled.  The USA immigration laws are COMPLETELY OUTDATED!   I suggest the lawmakers of the USA to check the immigration policies of Canada and Australia.  The governments of these societies know exactly what type of immigrants they need to guarantee economic growth, and aggressively search for them in countries such as Mexico.

So how to resolve the problem?

1. Give a General Amnesty to ALL the illegal immigrants who DO NOT HAVE a criminal record.  I know, this is NOT honest for the thousands of people who try to enter the USA legally, but the USA economy NEED these illegal immigrants.  Sending them back will destabilize the USA economy, which is right now not at it’s best level…

2. Implement afterwards very strict but easy to understand immigration laws, which can be flexible according the needs of the national economy.  Canada and Australia Immigration laws are –in my opinion- worth to take as a model.

3. USA economy and government should invest in infrastructure and job creation in Mexico.  If there are jobs in Mexico, Mexicans won’t need to go to the USA.  Mexicans want to live in Mexico: it’s the economic situation which make them go to the USA...  Forget about the Mexican governments doing their job!  The social-political-economic situation of Mexico is so complex, that it will need generations to get the things fixed...

Saludos,

Peter.  Study Spanish in Mexico at Anders Languages México: http://www.andersmexico.com !

Real Estate in Mexico

One of the most frustrating things in Mexico is the real estate market.    Fortunately for me, I’m about finishing the building of my own house, but I’ve been renting during 10 years before…

First of all, a lot of the houses are between ugly and very ugly.  An architect is not a legal requirement to build a house, and to save money, the brick layer takes over the job of an architect.  The result is some really ugly constructions.  Secondly, Mexican do not have the culture of maintaining their stuff.  As a result, houses which are between 10 and 15 years old, seem much older.    Now, I’m not telling you there are no nice buildings/houses in Mexico.  Actually, Mexico has some world-famous architects, being Ricardo Legorreta one of them.  You can visit his site at http://www.legorretalegorreta.com

Renting a NICE house costs tons of money: for USD 2,000-3,000 you find a more or less acceptable middle class house or apartment in Mexico City.  But if you want go to upscale market, monthly rents of US 10,000 are not an exception.   For residents of New York, London ort Tokyo this might be cheap, but for Mexican standards, these are fortunes.  Other problem of renting a house is the relationship with the houselord: contracts are on a annual base, and a lot of house lords don’t take care about maintaining their property in a good shape. 

Buying a house is difficult too: a house of good quality is expensive, and with an interest rate between 9% and 16% for a mortgage, you end up paying after 20 years 3 times more for your house.  Even if we take into account the inflation, you will have paid 220% of the initial value of your house!

And my question is: will your property really have increased 220% in value after 20 years?  I doubt it: the quality of the houses in Mexico is poor and the maintenance Mexicans give to their houses and neighborhoods is poor too.  So you when finished paying your mortgage, you will have to pay again to restore your property…

So what is the alternative?  Build your own house with savings!  That’s why you see a lot of unfinished houses in Mexico.  Mexicans safe money, and when they have some money, they build a part the house.  One of my staff members started building her house 10 years ago.  And she believes she will need 5 more years to finish it!

Saludos,

Peter.  Study Spanish in Mexico at Anders Languages México: http://www.andersmexico.com !

Public schools

Yesterday, the government agreed a 8% salary increase for all the teachers of the public school system.  That’s more or less a real increase (after inflation) of 4%.  Although the wages of teachers are low, there are certainly not working very hard…  Besides their official holidays, they also “take” additional holidays:  for example, today it was “Teachers day”, a good reason according the teachers to take a day off.  But in order to have a nice long weekend, they also took vacations yesterday!   And we could also add all the days teachers go on strike (with pay): last year in Oaxaca they’ve been on strike more or less 6 months!  As you see, productivity is not a concern of the teachers here…

I really wonder WHAT teachers are doing in Mexico.  Mexican students rank far below average in comparison with students of other parts of the world.  Does that mean that Mexican kids are stupid?  Of course not, but if the teachers are worthless…

When will Mexico understand that education is the ONLY WAY out of poverty?  With this increase of wages without asking quality in return, the Mexican government once again delays the country’s progress…

Interesting detail:  The sub-secretary of education Mr. Fernando González Sánchez is the son in law of Mrs. Elba Esther Gordillo.  And that woman is the president of the Union who “negociated” the increase in wages!  Give me a break!

This said, I not telling you that all the teachers are bad…

Saludos,

Peter.  Study Spanish in Mexico at Anders Languages México: http://www.andersmexico.com !

The brain drain in Mexico

Mexico produces some outstanding intellectuals, scientists, artists,…  Problem is that that the mayority of these people leave Mexico attracted by foreign universities and investigation institutes which offer better salries and a lot of resources for investigation.

Some countries, such as Canada, openly promotes Canada as a better place for Mexican “brains”!

A recent example is Mr. Raúl Rojas, Mexican, working at Berlin’s university.  He created the "Spirit of Berlin", the first car which drives in normal traffic without a driver.  Another proof of Mexican creativity which is successful abroad.  By the way, did you know that the color TV was invented by Mexican?

Of course, I do not blame the Mexican brains who are seeking professional success abroad: in Mexico, the only things they receive are low salaries (average USD 20,000 year) and universities with no or limited resources enough for investigation… 

Saludos,

Peter.  Study Spanish in Mexico at Anders Languages México: http://www.andersmexico.com !