Fear and Loathing in Mexico City: The Trump Election

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Nov 21, 2016 (San Diego). The United States is a racist country, fear, loathing, and those are three ways the presidential contest result was described during a family gathering in Mexico City. This meeting also included family from the United States. We also heard this loathing in Mexican media.

The first observation,  which is that the United States has a problem with race is very real. Until the United States faces up to its original sin, that be slavery, the country is going to continue to have that problem. There is another original sin the nation as a whole has to face: Genocide of first peoples, but that did not quite come up.  Of note, this was one of my aunts, for whom until now, the United States was perfection while Mexico could never do anything right. So in that sense, this is significant.

There is palpable fear of how destructive the coming Trump administration will be, to both Latin American descendants in the United States, and bilateral relations. Mexico- US Relations have been troubled, and at times downright hostile. There was also some talk of Mexico realigning with other world powers.  Though China never crossed any lips at that family gathering, it is not impossible. There have been moves already from Mexican President Enrique Pena Nieto to deepen Mexico’s strategic relationships with China. As early as September Xinhua Net reported:

He stressed that China and Mexico should keep close high-level exchanges, promote communication at different levels and in various fields, and outline a roadmap for their cooperation in the coming five years.

Xi urged the two sides to make full use of their complementary advantages, align China’s 13th Five-Year Plan and innovation-driven development with Mexico’s structural reform, and strengthen cooperation in industrial investment, infrastructure, special economic zones, finance, telecommunications, new energy, geo-spacial information and nano technology.

The two sides should facilitate people-to-people exchanges, keep close communication in major international and regional issues, Xi said, expecting Mexico to display its regional influence in advancing China-Latin America relations and building the Forum of China and the Community of Latin American and Caribbean States (CELAC).

There is more. The deep water port in Nayarit is expected to bring Chinese goods to Mexico. People expected this port to be a way to avoid the Teamsters in the United States. But there is a suspicion that this port could easily become a regular port of call for the Chinese Navy.

Then there was a congressman from the Partido de la Revolucion Mexicana (a left-wing party), that called Trump’s election, and BREXIT, the end of the neoliberal order in front of the cameras. Neoliberalism is the economic system adopted first by the Labor party in the UK in the 1990s, but also by Democrats under Bill Clinton. It seeks to put the market at the center of all decisions and privatize as many public services as possible. This has led to deep structural reforms in both countries. In the US it led to the reforms to the Welfare system, and as late as 2013 and attempt to a grand bargain by President Barak Obama. It just did not go far enough for Republicans. It is also at the heart of the educational reforms we are seeing, including the rise of the charter school system.

In Mexico, the first thing that was privatized was the phone company. Carlos Slim profited greatly and became the wealthiest Mexican in the world, with his wealth in the billions. Donald Trump’s victory already affected his fortune. Forbes reports that his fortune has indeed dropped by $4.7 billion.

The drop lowers Slim’s net worth to $49 billion at midday East Coast time on Wednesday, down from FORBES estimate of $53.7 billion on Tuesday when markets closed. Shares of America Movil, the telecommunications company in which Slim holds a 62% stake, are down 9% in the U.S. and almost 4% in Mexico as of 1:15 pm E.T. Analysts who follow America Movil said the drop is due to a mix of peso weakness and to investors who were cashing out of the company assuming that the stock will fall further.

Trump’s surprising win also put pressure on the Mexican peso. At about midnight Tuesday, when Trump’s chances of winning the election hovered around 80%, the peso had weakened 13%, to almost 21 pesos per U.S. dollar. The peso recovered slightly on Wednesday, and is worth about 19.8 pesos per U.S. dollar.

These are just the first shocks.

The end of the North American Free Trade Agreement is not something distant, or alien. Mexicans are discussing that both at private meetings, like this family gathering, and the media. The United States needs both houses of Congress to sign on to it, and give notice to both Canada and Mexico. This will lead to a very heavy contraction of the economies of the United States, Canada, and Mexico, leading quite possibly to a regional depression. Border regions such as California will be deeply affected. This link will take you to El Financiero, with two good graphics showing the contraction.

So as we all get ready for the swearing in of president Tump, we might be getting ready for an economic shock not unlike that of the Great Depression, and a comming isolation of the United States. This was also a theme in conversations. The United States is seen as an empire in decline, and like Russia, it is going down a road towards isolation.



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