AMLO Update: Tactical shift emerges from PRD camp

This may be posturing, to get some concessions and appointments from the new government. They need to nip this in the bud by forming a committee to deal with this preemptively.

At least I hope so.

If not, this could be a real problem for the new government and pain for us as well.

"If not, this could be a real problem for the new government and pain for us as well."

If support for AMLO's challenge to the elections were to grow, it would be a very big problem. But apparently, the air is running out of AMLO's balloon and the damage the PRD has done to itself in the Federal District (Mexico City) by their shutdown of the central business district, which has both hurt and angered a significant number of their own supporters, could bode ill for the PRD over the long run. They were hoping to move the center of their power progressively northward and right now, given what we're seeing as the additional evidence of the Chiapas elections (see previous posts), it's receding in the opposite direction. I think Fox and the PAN have taken the right tack to simply let the PRD do itself in and it's paying dividends right now.

There are three big events coming over the next month: the decision of the Electoral Tribunal on the recounts, which we could see in a couple of days; Vicente Fox's Address to the National Congress on September 1, it's the Mexican equivalent of the State of the Union and which the PRD has promised to disrupt; and the Independence Day celebration of September 16, when AMLO is scheduling his "Democratic National Convention." We'll know a lot more when we see what happens with these three events.

And if the Chiapas election is annulled due to PRD fraud it will only add to the anti-AMLO turn events have taken recently.

>>>I think Fox and the PAN have taken the right tack to simply let the PRD do itself in<<<

As the PRI did in opposing Fox's potential reforms these past several years.

Interesting....Thanks for the info...

"As the PRI did in opposing Fox's potential reforms these past several years"

An interesting observation that raises a followup.

The PAN is coming into a pre-eminent position of power because the PRI and the PRD are both self-destructing, not because they have successfully delivered on their program.

The PAN has done ok in delivering on their program where Congress has allowed, I guess. I just read that foreign direct investment in Mexico is nearly 70% greater than it was during the same amount of time (5 years) under former president Ernesto Zedillo (when Zedillo admittedly had to confront the psychological consequences of the "tequila effect"). Meanwhile mortgage rates are lower than they've been in several decades, too, although one could argue that's a result of bank openings made possible by the Zedillo Administration to avert a total banking sector meltdown. Nevertheless, thanks in part to the high cost of petroleum (and stern austerity by Fox in some ways I guess) national debt's just 24% of total GDP, in contrast with over 70% (and rapidly growing) here in the USA. Debt's getting repaid early, in fact. Can you imagine having a president with the backbone and aversion to doling contracts out to allies who could accomplish such tasks up here?

It's neat how the conservative PAN is now using Mexico's campaign finance reform laws to poke at the Leftist PRD's blocking major roadways with its tents and other obstructions:

http://www.el-universal.com.mx/nacion/141981.html

The PAN has insightfully cited to the costs of port-a-potties, large drinking water containers and the daily renting of structures ("gruas") that make such nuisances possible. They rather credibly estimate that many millions of dollars are likely involved, too. Such expenditures are from a PRD that has whined about noncompliance with electoral laws. There may be something to this...

I'd love to get an Austrian Economist (not an economist from Austria, "Austrian Economics" is a school of economic thought) to respond to your post #46 on the economic turnaround in Mexico under the Fox presidency, the phenomenological evidence for which you have expressed quite succinctly.

Austrian Economics focuses a lot of attention on the productivity of capital and a major point of emphasis which Austrian economists make is that inflationary monetary policies driven by the need to finance governmental debt strip capital of its full potential productivity because the purchasing power of currency is diminished. Over the last six years the Fox administration, which has been "frozen in place" so far as its legislative agenda is concerned, has been forced to turn its attention to spending Mexico's national capital reserves on reducing its debt. That debt was 50 Billion dollars when Fox took office and it has since been reduced to 40 Billion, a reduction of 20%. The ensuing effect is that capital resources which were previously used to finance a significant portion of Mexico's national debt have been freed up for use by Mexico's private sector and the impact is recognizable. The pent-up demand for investment capital was reduced, which brought interest rates down and increased the purchasing power of the peso, and the Mexican economy began to show real results as it began to stand on its own two feet. That phenomenon made Mexico a more attractive market for international capital investment, which has been flowing into the country over the past three years or so, since the turnaround became evident. The only problem Mexico really faces in terms of the financing of its domestic economy is the "top heaviness" (my term) that remains in place from its past, because its banking and financial system is still not one that diffuses capital efficiently throughout the country, something I have been pointing to over the past few weeks.

So even though it cannot be said that the PAN party implemented a legislative agenda which turned Mexico around, they can hold themselves up as "honest stewards" of the national economy since the positive effects of their management of Mexico's finances are plainly evident. They are just a few steps away from a brilliantly-executed turnaround from the disastrous economic consequences of the PRI which in the 1980's and 1990's nearly ruined the country completely.

I think it will be great if banks like BofA can operate independently and fully in Mexico. Anyhow, as for:

>>>The ensuing effect is that capital resources which were previously used to finance a significant portion of Mexico's national debt have been freed up for use by Mexico's private sector and the impact is recognizable.<<<

Have taxes declined? I guess what you mean is that interest rates have declined, enabling borrowers to get capital and fuel economic growth? I haven't read Ludwig Von Mises' stuff in a while but I doubt he'd agree that bureaucrats have been eliminating their own jobs even when the country's well-being requires it. Not in Mexico City and certainly not in Washington D.C. (where civil service protections are still ridiculously padded but that is scheduled to change in 2009 unless the new president reverses Bush's reforms).

I do not know about taxes, but interest rates and inflation have both declined in Mexico.

And Mexico's lack of bureaucratic reform is still a drag on its development. But as you pointed out, we're guilty of that offense ourselves.